Legal Updates for August 2018Voting Rights of Secured Creditors in Judicial Management
When a company enters judicial management, Singapore legislation draws a distinction between its secured and unsecured creditors in terms of their respective voting rights. In Re Swiber Holdings Ltd and another matter [2018] SGHC 180, the Singapore High Court considered the novel issues of what constitutes a secured creditor in this context, as well as the implications of the security being held over the property of a third party instead of the company itself. The judicial managers in this case were represented by Sim Kwan Kiat and Wilson Zhu of Rajah & Tann Singapore LLP.
Court of Appeal Decides Whether Intangible Assets Can Be Abandoned
While the doctrine of abandonment is commonly recognised in the context of chattels, the scope of its application in common law especially in relation to intangible property is still under development. In Lee Chen Seong Jeremy v Official Assignee [2018] SGCA 51, the Court of Appeal issued the first Singapore decision applying the doctrine to an intangible asset. The Appellant in this case was successfully represented by Adrian Wong and Tao Tao of Rajah & Tann Singapore LLP.
Mareva Injunctions in Aid of Foreign Court Proceedings
In China Medical Technologies, Inc (in liquidation) and another v Wu Xiaodong and another [2018] SGHC 178, the Singapore High Court considered the court's power to grant a Mareva injunction in aid of foreign proceedings. The Court also laid out the threshold requirements for when the Court's power to grant such an injunction would arise, and the factors to be considered in deciding whether to grant the injunction. The Plaintiffs here managed to obtain a Mareva injunction, and were successfully represented by Kelvin Poon, Nigel Pereira and Chew Xiang of Rajah & Tann Singapore LLP.
The Validity of ‘Floating’ Choice of Law Clauses and Jurisdiction Clauses
In cross-border commercial disputes, choice of law clauses and jurisdiction clauses are especially relevant, as they bear significant weight in determining the issue of jurisdiction. Shanghai Turbo Enterprises Ltd v Liu Ming [2018] SGHC 172 marks the first instance where the Singapore High Court had to consider the validity of ‘floating’ choice of law clauses and jurisdiction clauses, whereby the proper law or jurisdiction is not determined until a subsequent event. The Defendant in this case was successfully represented before the High Court by Toh Kian Sing S.C., Jared Kok and Chen Zhida of Rajah & Tann Singapore LLP.
SIC Consults on Amendments to Clarify Application of Take-Over Code to Companies with Dual Class Share Structures
On 26 June 2018, the Singapore Exchange announced a new listing framework (“Framework”) for issuers with dual class share (“DCS”) structures. The introduction of the Framework has implications on the requirements of the Singapore Code on Take-overs and Mergers (“Code”), in particular, the thresholds for triggering a mandatory offer, and what the ratio of offer values between MV shares and OV shares should be in the event of a take-over or merger transaction.
The Securities Industry Council (“SIC”) is therefore consulting on proposed amendments to the Code to take into account the introduction of the Framework.
Court of Appeal Issues Novel Decision on Non-Traditional Assessment of Damages
While damages for breach of contract are traditionally assessed on the basis of compensating the claimant for their loss, alternative heads of damages have developed in English common law. In Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2018] SGCA, the Singapore Court of Appeal had the opportunity to consider these novel heads of damages, issuing its first decision on Wrotham Park damages, which are based on formulating a hypothetical bargain between the parties. The 1st to 4th Appellants were represented by Kelvin Poon, Kevin Tan and Alyssa Leong of Rajah & Tann Singapore LLP, who successfully persuaded the Court against awarding Wrotham Park damages on the facts of the case.
MAS Issues Revised Code of Corporate Governance
On 6 August 2018, the Corporate Governance Council ("Council") submitted its final recommendations on revisions to the Code of Corporate Governance ("Code") to the Monetary Authority of Singapore ("MAS"). The recommendations took into account feedback received after a public consultation in January 2018.
MAS has accepted all the Council's recommendations and has issued the revised Code. Singapore Exchange has also reviewed the Council's recommendations and has made amendments to the Listing Rules.
The revised Code will take effect for companies in respect of annual reports relating to financial years commencing 1 January 2019 onwards.
The revised Listing Rules will also take effect on 1 January 2019 except for revisions relating to the nine-year tenure for independent directors and the requirement for independent directors to comprise at least one-third of the board, which will take effect on 1 January 2022.
SGX Introduces Framework for Dual Class Share Listings
The Singapore Exchange ("SGX") has given the go-ahead for the listing of issuers with dual class share ("DCS") structures. This follows two earlier consultations in February 2017 and March 2018, where public feedback was sought on the proposed framework for DCS structures.
The amendments to the Mainboard Rules took effect on 26 June 2018. This update takes a look at the key features of the Framework.
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