Legal Updates for April 2024Regional Competition Bites Q1 2024
In our first Regional Competition Bites for 2024, we continue to see important regulatory developments unfolding across Southeast Asia. Malaysia is finally set to introduce merger control legislation in parliament this year, while the Philippines has raised mandatory merger notification thresholds. Regulators across the region are increasingly focused on sustainability considerations, with Singapore formally issuing its environmental sustainability collaboration guidelines. They have also been active in collaborating with other regulators and agencies to enhance information exchange and detect violations.
The Rajah & Tann Asia Competition & Antitrust team remains actively engaged in navigating the evolving competition law landscape of the region. Please feel free to reach out to us for further discussions on these developments.
New Tripartite Guidelines on Flexible Work Arrangement Requests: Implementation, Implications, and Practical Tips
Following the widespread adoption of telecommuting and staggered working hours amidst the COVID-19 pandemic, the job market in Singapore has seen an increasing demand for flexible work arrangements ("FWAs"). This demand is expected to grow not just in light of Singapore's rapidly ageing population, as more employees will need to balance work with caregiving responsibilities in order to remain in the workforce — but also as employees and employers both re-examine the fundamental premise and very nature of work itself.
In a much-needed step to clarify the new normal, on 16 April 2024, the Ministry of Manpower ("MOM") launched the Tripartite Guidelines on Flexible Work Arrangement (FWA) Requests ("FWA Guidelines"). The FWA Guidelines establish (i) how formal FWA requests should be made; (ii) how employers should consider such requests in a proper manner; and (iii) the requirement to communicate decisions on such requests in a transparent and timely manner.
The FWA Guidelines will come into effect on 1 December 2024 and will apply to all employers. In this Update, we discuss the implementation of the FWA Guidelines, the implications for employers, and practical tips for employers to consider ahead of time.
Singapore's Cybersecurity Regime Set to Undergo Update - Cybersecurity (Amendment) Act Introduced in Parliament
In Singapore, the Cybersecurity Act regulates cybersecurity threats and incidents, critical information infrastructure ("CII"), and cybersecurity service providers. To keep pace with emerging threat factors and operational practicalities, the Cyber Security Agency of Singapore ("CSA") has introduced the Cybersecurity (Amendment) Bill ("Bill"). The main amendments in the Bill include the following:
- Updating existing provisions relating to the cybersecurity of CII;
- Expanding CSA's oversight to cover the cybersecurity of Systems of Temporary Cybersecurity Concern; and
- Creating two new classes of regulated entities – Entities of Special Cybersecurity Interest and Foundational Digital Infrastructure.
This Update highlights some of the key features of the Bill and its proposed amendments, as well as CSA's insights on the operation of the Bill's provisions and its intentions for future engagement with stakeholders.
New Regulated Activities under Payment Services Act and New User Protection Requirements for Digital Payment Token Service Providers from 4 April 2024
On 4 April 2024, the Payment Services (Amendment) Act 2021 came into effect, revising the Payment Services Act 2019 in the following main areas:
- Broadening the definition of "digital payment token" ("DPT") services;
- Widening the definition of "cross-border money transfer" services; and
- Empowering the Monetary Authority of Singapore ("MAS") to impose additional measures to regulate DPT service providers to enhance consumer protection and maintain financial stability.
To operationalise these changes, amendments to the Payment Services Regulations 2019 and a set of new MAS Guidelines have been published, which will take effect in stages from 4 April 2024.
This Update provides a brief summary of these newly regulated activities and the new requirements imposed on DPT service providers.
MAS Launches COSMIC Platform for FIs to Share Information on Customers Exhibiting Red Flags to Combat ML/TF
On 1 April 2024, the Monetary Authority of Singapore ("MAS") launched COSMIC (Collaborative Sharing of Money Laundering / Terrorism Financing (ML/TF) Information & Cases), the first centralised digital platform to facilitate the sharing of customer information among prescribed financial institutions ("Prescribed FIs") to combat money laundering ("ML"), terrorism financing ("TF"), and proliferation financing ("PF") globally.
On the same day, the Financial Services and Markets Act 2022 ("FSMA") was amended to set out the legal basis and safeguards for such sharing. On 28 March 2024, the MAS Notice FSM-N02 Prevention of Money Laundering and Countering the Financing of Terrorism - Financial Institutions' Information Sharing Platform ("COSMIC Notice") was issued, providing MAS' requirements for the Prescribed FIs to establish and implement robust controls to facilitate the sharing of risk information on COSMIC and protect the confidentiality of the information being shared and the interests of legitimate customers. The COSMIC Notice took effect on 1 April 2024, save for the provisions dealing with outsourcing arrangements which will take effect on or after 11 December 2024, together with the coming into effect of the MAS Notice 658 on Management of Outsourced Relevant Services for Banks.
With the launch of COSMIC, the Prescribed FIs in this initial phase (expected to last for approximately two years after its launch) currently comprise the six banks who co-developed COSMIC together with MAS (DBS, OCBC, UOB, Citibank, HSBC, and Standard Chartered Bank). As a start, COSMIC will focus on three key financial crime risks in commercial banking: (i) misuse of legal persons; (ii) misuse of trade finance for illicit purposes; and (iii) PF. Under COSMIC, FIs can securely share with one another information on a "relevant party" who exhibits multiple "red flags" that may indicate potential financial crime concerns along the lines of (i) to (iii), if stipulated conditions and thresholds are met. A "relevant party" is a person who is, or who seeks to be, or who has been, a customer of a Prescribed FI, and who has been prescribed as such under subsidiary legislation.
This Update outlines key requirements under the FSMA and the COSMIC Notice.
MAS Targets to Repeal RFMC Regime on 1 August 2024, Shares Implementation and Transitional Arrangements
On 28 March 2024, the Monetary Authority of Singapore ("MAS") issued its Response to feedback received on the Consultation Paper on the Repeal of Regulatory Regime for Registered Fund Management Companies ("RFMCs") covering the following:
(a) Its intention to repeal the regulatory regime for RFMCs on 1 August 2024. Existing RFMCs intending to continue with regulated fund management activity after the date of the repeal must apply to become licensed fund management companies that are restricted to serving accredited or institutional investors ("A/I LFMCs").
(b) The implementation and transitional arrangements, such as application to be an A/I LFMC, the continuity of operations during applications and applicable requirements.
This Update highlights key points RFMCS should note and action to prepare for the repeal of the RFMC regime.
Analysing Interim Injunctions in the Context of Restraint of Trade Clauses
When a former employee leaves his erstwhile employer to join a rival company, should the erstwhile employer be allowed to maintain the interim injunctions it obtained against the former employee, on the basis of a non-compete clause and a confidentiality clause (in the employment contract between the former employee and the erstwhile employer)?
The team of Lee Eng Beng SC, Timothy Ang and Liu Yulin from Rajah & Tann Singapore LLP’s Commercial Litigation Practice Group successfully represented the defendant former employee in discharging the interim injunctions before Singapore’s High Court in MoneySmart Singapore Pte Ltd v. Artem Musienko [2024] SGHC 94. The issue was whether the interim injunctions should be maintained. The High Court held that: (a) the non-compete clause was not valid and enforceable, and thus there could not be a good arguable case that the clause had been breached; (b) the claimant failed to establish a good arguable case that the alleged information was confidential and that the defendant had breached, or would breach, the confidentiality clause; and (c) the balance of convenience was in favour of the defendant and it was inequitable to allow the interim injunctions to continue.
The decision clarifies the legal principles applicable in determining whether to grant or maintain interim injunctions, in a situation where a negative covenant has been breached or is likely to be breached, and in the specific context of restraint of trade clauses. Bare and unsubstantiated assertions of legitimate proprietary interests or that there is a real risk of breach are insufficient. Interesting points to note when drafting such clauses include the impact of a non-compete clause that has been drafted in a cascading manner, and the applicability or otherwise of the employer’s election and the doctrine of severance to such clauses. Companies should also note that the manner in which they handle information (including whether they take precautions to maintain the confidentiality of the information, selectively disclose confidential information, and expressly inform their employees about the confidential nature of certain information) would impact the Court’s assessment on whether or not such information constitutes confidential information in the first place.
Judicial Assistance between Singapore and China – Singapore Court Highlights Importance of Observing Prescribed Treaty Procedure
The Treaty on Judicial Assistance in Civil and Commercial Matters (中华人民共和国和新加坡共和国关于民事和商事司法协助的条约) ("Treaty") between Singapore and the People’s Republic of China ("PRC") provides for the mutual provision of judicial assistance by both countries and sets out the applicable procedure for such requests.
In the recent case of Kiri Industries Ltd v Senda International Capital Ltd and another (Fan Jing, non-party) [2024] SGHC(I) 7, the Singapore International Commercial Court considered an examination order that had been obtained by the plaintiff in the Singapore courts against the defendant company and two of its officers who were non-parties and foreign nationals resident in PRC. On application by the defendant company and one of the officers ("Applicants"), the Court set aside an order giving the plaintiff leave to serve the examination order on the two officers in Hong Kong and PRC, as well as an order for substituted service of the examination order. In reaching its decision, the Court highlighted the importance of observing the channels set out in the Treaty when it comes to the service of orders or the taking of evidence in PRC, as the plaintiff's failure to utilise these channels was a major factor in the setting aside of the service orders.
The Applicants were successfully represented in this application by Toh Kian Sing SC, Mark Cheng, Priscilla Soh, Darren Lim, and Ryan Mao of Rajah & Tann Singapore LLP.
Tax Liability Insurance in Singapore: Benefits, Trends, and Challenges
Tax liability insurance products fully or partially indemnify the insured's tax risks, offering coverage for scenarios such as tax liabilities imposed by tax authorities, defence costs against tax claims, and gross-up taxes on proceeds. This coverage effectively transfers tax liability to the insurance company, providing businesses with financial protection against unexpected tax liabilities.
Compared to America and Europe, the tax liability insurance market in Asia is still nascent, presenting significant growth opportunities. Notable players in the region include India, Singapore, and Australia, where tax liability insurance is readily available.
In this Update, we discuss the benefits and coverage of tax liability insurance, global market trends, and the tax challenges that businesses may face in Singapore. Our Tax team possesses extensive experience in tax insurance, and are well-equipped to advise on any tax challenges you may face.
Guide to Lending and Security in Southeast Asia
It is increasingly common to see the footprint of finance transactions spanning different jurisdictions. It is thus vital for businesses to be able to manage the cross-border legal issues that may arise from such regional arrangements. This Guide provides a useful overview of key legal and regulatory requirements and addresses typical issues and considerations concerning lending and security in Southeast Asia, focusing on Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
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