Legal Updates for June 2022Establishing and Disproving Insolvency – Golf Course Holding Company Avoids Winding Up Application
In Energy Resource Investment Pte Ltd v International Golf Resorts Pte Ltd [2022] SGHC 134, the Singapore High Court was faced with an application to wind up a company on the ground that the company was unable to pay its debts. The company in question was the ultimate holding company of Joondalup Resorts, a luxury golf resort in Australia.
The Plaintiff had sought to wind up the company on the basis of three shareholder loans that it demanded payment on. The Defendant argued that two of the three loans in question were provided as capital and subject to a commercial understanding amongst the shareholders that would prevent the Plaintiff from unilaterally demanding payment of his loan. In relation to a third loan, the Defendant acknowledged this would be payable in future and it would have the means to pay this when due.
In its decision, the Court considered whether there was a triable issue in relation to the loans that were disputed and also whether the company had the means to make payment for the 2nd loan. The Court held in favour of the company, declining to order its winding up on the basis that the debts alleged to be owed were in fact disputed, and that Plaintiff had failed to establish the Defendant was insolvent and therefore unable to repay its loans.
The company was successfully represented by Vikram Nair, Foo Xian Fong, Glenna Liew, Mazie Tan and Ashwin Menon of Rajah & Tann Singapore LLP.
Singapore's Regulatory Framework for Sovereign Green Bond Issuance - Key features of Singapore Green Bond Framework
Financing is critical to propel sustainable investments and projects. In this regard, the Monetary Authority of Singapore ("MAS") has developed the Green Finance Action Plan to promote financing for sustainable development. The Singapore Government announced that the public sector intends to issue up to S$35 billion of green bonds by 2030. Proceeds from the public sector green bonds will be used to finance expenditures in support of the Singapore Green Plan 2030, such as green infrastructure projects. The issuance of public sector green bonds is intended to jumpstart corporate green bond issuances, deepen market liquidity for green bonds, and attract green issuers, capital and investors.
In the coming months, MAS (on behalf of the Singapore Government) will be issuing the first sovereign green bond under the Significant Infrastructure Government Loan Act 2021 ("SINGA"). Ahead of this, the Singapore Ministry of Finance published the Singapore Green Bond Framework ("Framework") on 9 June 2022 that sets out a regulatory and governance framework for green bond issuances by the Singapore Government under SINGA.
This Update outlines the salient features of this Framework, which sets out, among other things, how proceeds from green bonds issued may be used, how projects are evaluated and selected, how proceeds are managed, and requirements on post-issuance reporting on allocation of proceeds and impact on the environment.
Scope of Duties in a Family Partnership – Court of Appeal Decides on Breach of Fiduciary Duties and Defence of Laches
There are certain fiduciary duties imposed on the partners of a partnership. Even in the context of a family partnership, where corporate governance practices may be conducted less formally, the courts have demonstrated that the same fiduciary duties continue to apply.
In Ng Lim Lee v Lee Gin Hong [2022] SGCA 47, the Singapore Court of Appeal that the Appellant partner in a family partnership had breached his fiduciary duties by making use of the partnership's assets for his personal expenses, and rejected the defence of laches (which was based on an alleged delay in bringing the claim). In reaching its decision, the Court set out the applicable principles in the doctrine of laches.
The Respondent was successfully represented in this appeal by Harish Kumar and Marissa Zhao of Rajah & Tann Singapore LLP.
MOF Consults on 5 Proposed Amendments to GST Act
On 13 June 2022, the Ministry of Finance ("MOF") commenced a public consultation on five proposed amendments set out in the draft Goods and Services Tax (GST) (Amendment) Bill 2022. The five amendments arise from:
- Measures announced in the 2022 Budget Statement (covered in our February 2022 Legal Update titled "Forward, Together: Singapore Budget 2022"), covering:
- The two hikes in GST rates on 1 January 2023 and 1 January 2024;
- The GST treatment of travel arranging services; and .
-
A periodic review of Singapore's GST regime to improve GST administration and the clarity of existing legislation.
The consultation will run from 13 June 2022 to 4 July 2022. A summary of the main comments received and MOF's responses to the same will be published in August 2022.
In this Update, we elaborate on the amendments.
Public Consultation on 23 Proposed Amendments to Income Tax Act
On 8 June 2022, the Ministry of Finance ("MOF") announced a public consultation on 23 proposed amendments to the Income Tax Act 1947 ("ITA"). The amendments are set out in the draft Income Tax (Amendment) Bill ("Draft Bill"), and comprise:
- Eight amendments to reflect tax measures announced in the 2022 Budget Statement, including:
- Enhancing the progressivity of personal income tax ("PIT") of tax-resident individual taxpayers, and aligning the tax rates of non-tax-resident individual taxpayers to the revised top marginal PIT rate for tax-resident individuals.
- Facilitating the disclosure of company-related information for official duties.
- 15 amendments arising from the periodic review of Singapore's tax system to revise existing policies, improve tax administration, and enhance the clarity of existing legislation, including:
- Providing expressly that the Comptroller of Income Tax ("Comptroller") has the power to extend filing deadlines in the ITA.
- Amending the definition of "local employee" under section 37O of the ITA to recognise central hiring and secondment arrangements under th e Mergers and Acquisitions (M&A) Scheme.
- Streamlining provisions on the Board of Review ("BOR") and adopting discretionary one-member coram approach for BOR hearings.
The consultation will run from 8 June 2022 to 6 July 2022. A summary of the main comments received and MOF's responses to the same will be published in August 2022.
GFIT Progresses in Developing a Green Taxonomy for Singapore and ASEAN to Facilitate Sustainable Financing
The Green Finance Industry Taskforce ("GFIT") proposed a Singapore Taxonomy for Singapore-based financial institutions ("FIs") with the key objective of encouraging more capital flows towards sustainable activities ("GFIT Taxonomy"). In GFIT’s first consultation paper issued in January 2021, GFIT consulted on the broad principles and approach for the GFIT Taxonomy (“2021 Consultation Paper”). GFIT introduced a traffic light approach to classify an economic activity as green, amber, or red, to differentiate an activity's contribution to one or more of the environmental objectives proposed by GFIT. The 2021 Consultation Paper also sought the views of FIs on, among other things, whether the GFIT Taxonomy would impose additional cost and compliance burden for them and whether businesses could cope with the disclosure requirements required under the GFIT Taxonomy.
Following broad-based support for a Singapore Taxonomy, GFIT is now consulting on the second version of the GFIT Taxonomy that has incorporated feedback received on the 2021 Consultation Paper and considered other significant developments in the sustainability space. The second version of the GFIT Taxonomy is set out in GFIT's second consultation paper issued on 12 May 2022 ("2022 Consultation Paper").
This Update provides an overview of the key proposals being consulted on in the 2022 Consultation Paper and highlights the new/revised aspects in the second version of the GFIT Taxonomy.
SGX RegCo's Expectations on Issuers to Ensure Effective Shareholders' Engagement at General Meetings
On 23 May 2022, the Singapore Exchange Regulation ("SGX RegCo") issued a Regulator's Column setting out its expectations relating to the conduct of general meetings ("GMs") of issuers listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") to ensure that issuers engage shareholders effectively at the GMs ("May 2022 Regulator's Column"). SGX RegCo also updated the "FAQs on The Holding of General Meetings" (23 May 2022) ("FAQs") to clarify its expectations set out in the earlier "Guidance on the Conduct of General Meetings Amid Evolving COVID-19 Situation". The FAQs apply to all SGX-ST listed issuers ("Listed Issuers"), including business trusts (BTs) and real estate investment trusts (REITs).
Amid the COVID-19 pandemic in the past two years, many Listed Issuers have conducted their GMs virtually following legislation that was enacted to enable and facilitate that. With Singapore relaxing its safe measurement measures, Listed Issuers may resume conducting their GMs physically. SGX RegCo states that Listed Issuers continue to have the option to hold GMs virtually or in a hybrid format. Regardless of the format GMs are conducted in, Listed Issuers must, among others, ensure that shareholders are provided with the necessary information to make informed decisions, be able to fully participate and exercise their voting rights at GMs.
This Update highlights certain key takeaways from SGX RegCo's May 2022 Regulator's Column and the updated FAQs on what SGX RegCo expects of Listed Issuers to ensure effective shareholder engagement at GMs conducted physically, virtually or in hybrid format. Listed Issuers holding their annual general meetings for financial years ending 30 June 2022 or after must conform with these expectations. Listed Issuers holding any other GMs on or after 1 October 2022 to seek shareholder approval for corporate transactions must also take into account these expectations. Listed Issuers are advised to carefully review SGX RegCo's expectations and put in place the necessary arrangements.
|
