Rajah & Tann Regional Round-Up
your snapshot of key legal developments in Asia
Issue 3 - Jul/Aug/Sep 2021

Singapore Introduces Proposed New Laws to Counteract Foreign Interference

The Ministry of Home Affairs ("MHA") has introduced the Foreign Interference (Countermeasures) Bill ("Bill") for first reading in Parliament on 13 September 2021. The Bill seeks to reduce the risk of acts of foreign interference by electronic communications activity through the strengthening of Singapore's ability to prevent, detect and disrupt such interference. 

MHA has noted the threat of hostile information campaigns ("HICs"), particularly through social media and communications technologies, and that Singapore is vulnerable to such attacks as a highly digitally-connected and diverse society. To counter this evolving threat, the Bill not only establishes new offences targeting the perpetrators of such attacks, but also sets out obligations on relevant parties such as those providing social media services, email or instant messaging services, internet access services, and running websites. 

In this regard, the Bill confers a wide range of powers on the Minister for Home Affairs to issue various orders on relevant parties, such as directions to investigate, expose, and counter HICs. These provisions seek to empower the Government to effectively deal with acts of foreign interference by electronic communications activities, including emails, online communications, SMS, and MMS. 

The Bill also seeks to combat the use of local proxies by foreign entities to push their agenda, imposing various obligations on Politically Significant Persons (PSPs) who are directly involved in Singapore's political processes.

For more information, click here to read our Legal Update. This Update highlights the key elements of the Bill, and in particular what social media service providers and relevant electronic service providers as well as members of the media and telecommunications industry should be aware of regarding potential obligations and restrictions. 

Singapore SPACs Listing Framework Takes Effect on 3 September 2021

With effect from 3 September 2021, Special Purpose Acquisition Companies ("SPACs") are allowed to list on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST Mainboard"), providing companies an attractive alternative capital fund raising route. 

This follows Singapore Exchange Limited ("SGX") consultation paper released in March 2021. The consultation paper set out key features of the listing framework that are aimed at balancing investors' interests against the capital raising needs of the market. These include the proposed admission criteria, listing requirements and some key safeguards to protect the interests of minority shareholders of SGX SPACs. For background and a discussion on the proposals in the consultation paper, please refer to our 2021 April Client Update titled "SGX Proposes to Permit Listing of SPACs in Singapore", available here

With significant support from the respondents to the SGX consultation for the introduction of a SPACs listing framework in Singapore, SGX proceeds with its proposal to offer SPACs as an investment product in the Singapore capital market. Taking into account feedback received, SGX has revised some of its initial proposed requirements/measures in the Consultation and we highlight the material items below: 

  1. Lower Minimum Capitalisation Requirement and Minimum IPO Issue Price

  2. Initially, SGX proposed that a SGX SPAC must satisfy a minimum capitalisation requirement of S$300 million. This is generally more stringent than those prescribed by the securities exchanges in the US that allow SPAC listing. Noting that this may reduce the competitiveness of SGX SPACs as against those of other securities exchanges with SPAC regimes and that the target company for business combination is typically three to eight times the initial size of the SPAC, SGX has lowered the minimum capitalisation requirement to S$150 million. Consequently, suitable acquisition targets companies will have a market capitalisation of more than S$450 million, comparatively higher than that for an issuer seeking a primary listing on the SGX-ST Mainboard. The minimum IPO issue price has also been lowered from the proposed S$10 per share to S$5 per share. 

  3. Shorter Permitted Timeframe for SGX SPAC to Complete Business Combination

  4. SGX recalibrated some of its initial proposed measures to address the concerns and dilution risks of SPACs with reference to feedback received pursuant to the consultation exercise. As it is in the interests of shareholders to complete the business combination earlier than later, SGX has shortened the permitted time frame for a SGX SPAC to complete the business combination from 36 months to 24 months, with an extension of time of up to 12 months if a binding agreement for the business combination has been signed before the end of such 24-month period. 

  5. Detachable Warrants or Convertible Securities from SPAC Shares

  6. SGX will not proceed with its original proposal to require warrants or other convertible securities to be non-detachable from the underlying shares of the SPAC as the detachability of warrants is a fundamental feature of a SPAC in other jurisdictions in attracting investors. Instead, SGX requires a SGX SPAC to specify the adopted maximum percentage cap (including bases) on the resultant dilutive impact to shareholders subsequent to a business combination arising specifically from the conversion of issued warrants (or other convertible securities) by the SPAC at IPO.

Changes to the SGX-ST Mainboard Listing Rules to implement the SPACs listing framework took effect on 3 September 2021. 

For more information, click here to read our Legal Update.

Developments in Cross-Border Paperless Trade - Singapore Collaborates with Australia and Trade Partners on Blockchain and Other Trade Initiatives

There have been a number of recent developments in Singapore in the area of cross-border paperless trade.

Singapore's Infocomm Media Development Authority ("IMDA") and Singapore Customs began a blockchain trial with the Australian Border Force ("ABF") on 23 November 2020 to simplify cross-border trade between Singapore and Australia. The trial, which aimed to prove that trade documents could be issued and verified digitally across two independent systems, was part of an initiative under the Singapore-Australia Digital Economy Agreement ("SADEA"). The trial successfully concluded on 18 August 2021.

The trial successfully tested the interoperability of two independent systems – ABF's Intergovernmental Ledger and IMDA's TradeTrust reference implementation – which are digital verification platforms developed with blockchain technology and used to share electronic trade documents. Certificates of Origin, which are typically required by governments to verify the authenticity and provenance of goods, were used as the first test case.

Besides the SADEA, Singapore has entered into the Digital Economy Partnership Agreement with New Zealand and Chile, which came into force on 7 January 2021. In addition, Singapore is currently in negotiations with South Korea to develop the Korea-Singapore Digital Partnership Agreement (KSDPA), and the United Kingdom to develop the UK-Singapore Digital Economy Agreement (UKSDEA). Other more modern, non-digital only free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the recently signed Regional Comprehensive Economic Partnership (RCEP) also contain provisions and commitments relating to paperless trading under their e-commerce chapters.

On the local front, to facilitate digital economy, the Electronic Transactions (Amendment) Act 2021 was amended and came into force on 19 March 2021. Among other matters, it allows the use of digital documentation with international ports and reduces the reliance on hard copy trade documents. Another noteworthy development is the launch of the Singapore Trade Data Exchange (SGTraDex) on 17 July 2021, which is a data infrastructure framework that makes use of a common data highway to facilitate data sharing between supply chain ecosystem partners.

For more information, click here to read our Legal Update.

Capital Gains, Branch Profits, Royalties: Updates to the Singapore-Indonesia Double Taxation Agreement

On 23 July 2021, the Agreement between the Government of the Republic of Singapore and the Government of the Republic of Indonesia for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance ("Updated DTA") entered into force, following Indonesia's ratification of the Updated DTA on 11 May 2021.

In its official statement, Indonesia's Directorate General of Tax stated that the Updated DTA is meant to strengthen efforts to prevent tax evasion, protect and increase Indonesia's tax base, and at the same time encourage increased investment from Singapore. Similarly, Singapore's Ministry of Finance stated in its press release of 23 July 2021 that the Updated DTA would boost bilateral trade and investment flows between the two countries.

We examine some of the key changes arising from the Updated DTA below, including:

  1. The new Article 13 on capital gains;
  2. A reduction in branch profit tax;
  3. A reduction in royalties tax;
  4. Removal of exemption for interest paid on government bonds or debentures;
  5. Abolishment of articles on income not expressly mentioned and limitation of relief;
  6. Expanded exchange of information provisions; and
  7. Application of the principal purpose test.

For more information, click here to read our Regional Tax Update.

Singapore Court of Appeal Considers Application of UNCITRAL Model Law on Cross-Border Insolvency for the First Time

As Singapore continues to advance its position as an international hub for restructuring and insolvency, it has implemented a number of changes to its legislative framework. One of the key developments has been the adoption of the UNCITRAL Model Law on Cross-Border Insolvency ("Model Law"), which has been given force of law in Singapore. The Model Law provides procedural mechanisms to facilitate the conduct of cross-border insolvencies.

The case of United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd [2021] SGCA 78 was the first instance in which the Singapore Court of Appeal has considered the application of the Model Law. The Court of Appeal considered the principles relating to the recognition of foreign proceedings and when local proceedings should be stayed in favour of foreign proceedings.

In this case, the Singapore Court of Appeal accepted that Malaysian insolvency proceedings constituted the foreign main proceeding, but declined to grant a stay of Singapore proceedings, allowing the Respondent bank to continue with its court application for declarations relating to its security interests. The decision demonstrates that local proceedings will not always give way to foreign main proceedings, highlighting the relevant factors that the court will take into account.

The Respondent was successfully represented by Lee Eng Beng, SC and Torsten Cheong from the Restructuring & Insolvency Practice and Appeals & Issues Practice.

For more information, click here to read our Legal Update.

Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.


Rajah & Tann Singapore LLP

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Francis Xavier, SC, PBM
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Chia Kim Huat
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Howard Cheam
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