Legal firm looks into the impact of this possible change.

The Monetary Authority of Singapore (MAS) is looking into the possibility of widening the scope of permissible fund managers that would allow single family offices (SFOs) to manage variable capital companies (VCCs), according to news reports.

An SFO is an entity that manages assets for or on behalf of only one family and is wholly owned or controlled by members of the same family. SFOs are commonly used by high net worth individuals (HNWIs) to manage their own monies. It allows the internally controlled fund manager to rely on existing licensing exemptions under the Securities and Futures Act and Financial Advisors Act.

In a legal update, legal firm Harry Elias Partnership provides details on the VCC structure and the VCC Grant Scheme (VCCGS) and explains why widening the scope of permissible fund managers may be important for HNWIs looking to set up a fund to manage their own monies.

VCCs and VCC Grant Scheme

According to PwC, VCC is a new legal entity form / structure for all types of investment funds in Singapore. It can be formed as a single standalone fund or as an umbrella fund with two or more sub-funds, each holding different assets.

Currently, a VCC must be managed by a Singapore-licensed fund manager. This means HNWIs who are setting up in Singapore usually have to engage in external licensed fund managers.

There are key benefits of SFOs managing a VCC. First is that the segregation of sub-funds may mitigate risks since the assets of one sub-fund cannot be used to discharge the liabilities of another fund under the same umbrella VCC. Legal firm Harry Elias Partnership said this prevents the commingling of assets between sub-funds. This also extends to insolvency, as each sub-fund of the same umbrella VCC must be separate.

Second, foreign funds structured similarly to the VCC can redomicile to Singapore via a simple registration process as long as it comprises one or more collective investment schemes. This allows foreign funds to preserve their corporate history and identity.

Third is that the VCC’s options of an umbrella fund structure generate cost efficiencies by having sub-funds under the same umbrella VCC share a board of directors and service providers such as fund manager, custodian of assets, and auditor.

Fourth is greater ease of varying share capital and allowing the payment of dividends using capital.

What SFOs may aim in managing their own VCCs is qualifying for the VCC Grant Scheme that opens up SFOs access to tax treaty benefits and grant incentives. Under the scheme, MAS will cofund up to 70% of qualifying expenses for the establishment of a VCC, capped at $150,000 per application.

To apply for the grant scheme, applicants should be Qualifying Fund Managers who have already incorporated or redomiciled a VCC. Qualifying Fund Managers are defined as licensed or registered fund management companies, or certain exempt financial institutions such as banks.

Each applicant may only apply for grants for work done in relation to a maximum of three VCCs.

Applicants should submit their VCC Grant Scheme application within three months from the incorporation or transfer of their VCC. The scheme will be available until 15 January 2023.

Potential tax incentive gains

KPMG's partner and head of real estate & asset management of tax Teo Wee Hwee and asset management tax team director Pearlyn Chew said a VCC is treated for income tax purposes as a single entity, whether for a stand-alone VCC or an umbrella VCC, and similar to that of a private limited company, subject to certain modifications. An example of potential leverage a VCC can have is the availability of Singapore funx tax incentives.

The bottomline, according to Harry Elias Partnership, with the benefits under the scheme, this will significantly lower or defray the cost of setting up a SFO using a VCC for HNWIs.

“Fund management companies and HNW/UHNW individuals and families should seriously consider whether they wish to adopt the SFO structure and the VCC structure for incorporating or re-domiciling their funds in Singapore and should do so as soon as possible in order to take advantage of the VCCGS and relevant tax incentives,” the firm added.

They specialise in various areas such as shipping, intellectual property, energy, and aviation, amongst others.

Singapore Business Review has put together 20 of the most promising legal luminaries aged 40 and under for the year 2018. After careful selection from hundreds of nominees with specialisations ranging from disputes resolution and litigation, mergers and acquisitions, finance, and construction to intellectual property, copyright, media law, family law, and energy, 20 legal minds rose to the top as Singapore's best lawyers in their fields.

On its fifth year, Singapore Business Review's list includes lawyers specialising in shipping, aviation, cross-border mergers and acquisitions, joint ventures, private equity transactions, and international arbitration. These lawyers are arranged from youngest to the oldest.

It aims to shun inconvenient rules which plague investment funds.

Singapore pioneered a specialised corporate structure to attract more investment funds to set up shop in the city-state. Through the passage of the Variable Capital Companies (VCC) Bill, fund managers will be able to experience greater operational flexibility to solidify Singapore’s position as a full-service international fund management centre.

Analysts are confident that the law will bring tremendous benefits to the local asset management industry.

Singapore Business Review caught up with partners from two law firms to discuss how the bill may change Singapore's fund management industry.

“The VCC Bill is an extremely positive development for the fund management industry in Singapore,” said Amit Dhume, partner from CNP Funds Practice. “This will provide fund managers with greater operational efficiencies and further strengthen Singapore’s position as an attractive wealth management jurisdiction.”

A specialised structure

Investment funds that are incorporated under the Companies Act (Chapter 50) are held back from the normal operations of investment funds such as the flexibility to pay dividends and redeem shares as well as the ability to consolidate certain administrative functions.

“Companies incorporated under the Companies Act work fine for operating business ventures (such as commodity trading, hotel operations, consulting companies etc.), but do not have the requisite features required for operating an investment fund,” Dhume explained.

For instance, routine asset management activities—such as the return of capital to shareholders either by way of capital reduction or redemption of shares—involves various procedures under the Companies Act, including the execution of solvency statements by all directors.

Also read: Singapore enacts legislative framework for investment funds

“This may be beneficial from the perspective of a normal operating business, but causes impediments in operating an investment fund. Flexibility to return monies to investors quickly and efficiently is important for investment funds. This is an especially important aspect for open-ended funds (i.e. investment funds that allow investors to frequently subscribe for and redeem shares),” Dhume noted.

Kai-Niklas Schneider, partner at Clifford Chance, explains that the new corporate structure offered by the VCC law is beneficial for investment funds domiciled in and managed by fund managers in Singapore.

“This expands the fund vehicle options available to fund managers in Singapore and addresses the limitations of using a Singapore incorporated company. The VCC will also be able to benefit from Singapore’s extensive network of tax treaties and tax exemption schemes available for onshore funds in Singapore, which is an attractive proposition for investors and managers,” he said.

“A VCC that will be incorporated under the proposed VCC Act will be permitted to issue and redeem shares at net asset value without undergoing any lengthy administrative procedures,” Dhume said.

“This would reduce the need to deal with multiple service providers. We have already started to receive queries from foreign fund managers who are interested in the proposed VCC structure and are contemplating having a presence in Singapore so that they can manage funds that would be VCCs,” he added.

The Accounting and Corporate Regulatory Authority (ACRA) will act as the registrar of VCCs and administer the new Bill, except for the anti-money laundering and counter-financing of terrorism obligations of VCCs which will be overseen by the MAS.

“The VCC will also have the flexibility to incorporate separate “segregated portfolios” or “cells” within a VCC that will be able to house sub-funds. Each sub-fund will be permitted to have different investors and investment strategies,” Dhume explained.

There will be segregation protection available for each sub-fund and the assets and liabilities of each sub-fund will be ring-fenced, such that the creditors of one sub-fund will not have recourse to the assets of another sub-fund,” Dhume added.

“Unlike existing fund vehicle options, the VCC will not require additional structuring in order to access Singapore’s tax treaty network. The VCC also addresses the limitations of the Singapore incorporated company by permitting a flexible capital structure, ensuring confidentiality of shareholders and allowing segregation of portfolios,” noted Schneider.

He added that the VCC is a welcome addition to the structuring options available to Singapore fund managers. “Fund managers considering structuring options for their next investment fund should consult with their legal advisors regarding the VCC as an option,” Schneider says.

The changes may strengthen Singapore’s position as an international centre for debt restructuring.

Corporate law in Singapore is expected to be affected by amendments to the Securities and Futures Act, as well as the Companies Act. The proposed changes are said to be in line with the city-state’s initiative to reinforce its major financial centre status. Six partners share their thoughts including what the new year has in store for Singapore’s legal industry.

Amit Dhume, partner, funds and financial services, Colin Ng & Partners, says that as far as the area of corporate law is concerned, amendments to the Securities and Futures Act (SFA) recently passed by the parliament will bring investment schemes that invest in physical assets like plantations under the regulatory ambit of the Monetary Authority of Singapore. “This will offer better protection to retail investors,” says Dhume. “The manner in which net personal assets is calculated for a person to qualify as an ‘accredited investor’ will also be tightened, and accredited investors will have an option to be treated as a non-accredited investor by financial institutions.”

Sandra Seah, joint managing partner, Bird & Bird ATMD LLP, notes the SFA may be amended to provide stronger safeguards for retail investors and to strengthen enforcement against market misconduct. Commercial entities offering securities will likely need to reassess how best to manage their risk in their product offerings. “The changes to more stringent regulation and stricter supervision by MAS of the capital markets will allow fairer and more transparent markets to support trade and economic growth,” she says.

Sim Lin Piah, director, banking & finance department, Tan Peng Chin, believes that changes to the Companies Act in 2017 will have the most impact on cases in the next 12 months. “Such changes include obligations on companies – including foreign companies registered in Singapore – to disclose beneficial ownership in line with the Financial Action Task Force goals and new provisions to support debt restructuring,” he says.

The former, he notes, will have a wider impact but the latter – embracing the concept of rescue financing, and which will be accessible to all companies “with a substantial connection to Singapore” – will have profound implications for the restructuring and insolvency practice. He adds that the proposed changes to the Companies Act in 2017 are in line with Singapore’s initiative to reinforce its major financial centre status, and to position itself as a hub for restructuring and insolvency practice.

Sharing similar sentiments is Seah, who says the Companies Act will be amended to include new provisions to support creditor schemes of arrangements and to enhance creditor protection. “Such amendments may strengthen Singapore’s position as an international centre for debt restructuring and possibly encourage more companies to apply for judicial management in this challenging economic environment,” notes Seah.

Enhancing disputes capabilities
It has been an interesting start to 2017 on the dispute resolution front, says Sean La’Brooy, partner, professional liability and insurance practice, Colin Ng & Partners. “It is likely that we will see more international parties bring their disputes to Singapore, particularly for international commercial arbitrations, in light of the introduction of a framework for third-party funding under the Civil Law Act (Amendment) Bill 2016 which was passed by Parliament on 10 January 2017,” says La’Brooy.

La’Brooy further notes that Parliament also passed the Mediation Bill 2016 which is part of efforts to develop Singapore as an international commercial mediation centre. “A key aspect of the Bill is that it will allow parties to record settlements arising from mediation as an Order of Court,” says La’Brooy. “With greater enforceability and confidentiality assured, mediation will be an attractive alternative to court proceedings as a dispute resolution mechanism for businesses of all sizes to consider.” The Ministry of Law says introducing third-party funding will enable international businesses to use funding tools available to them in other centres, promoting the city-state’s growth as a leading international arbitration venue.

According to Lorraine Tay, joint managing partner, Bird & Bird ATMD LLP, one of the challenges faced today is the tide of uncertainty, heightened by political changes around the globe. Tay also says that the world is already beginning to see some impact on the political and economic state of play in Asia, particularly with key players like China, Japan, and the Philippines.

“From Singapore’s perspective, it is important that we continue to play a pivotal role and provide stability as an international hub, with a transparent, efficient, and effective legal framework,” says Tay. “In this regard, with the passing of two recent bills – Civil Law Amendment Bill and the Mediation Bill – Singapore seeks to bolster its offering as a commercial arbitration and dispute resolution hub.”

Paul Sandosh​am​, partner, Clifford Chance, says historically, a slower economy tends to result in an increase in disputes. “We therefore expect to see more litigation, arbitration, insolvency​,​ and restructuring work,” he ​notes​. “There is also likely to be more M&A with cash-rich companies and companies able to borrow at low interest rates looking to acquire undervalued entities and assets.”

In terms of possible upcoming challenges, one of the things Sandosham ​cites is ​the fact ​that disruptors and the service-based economy​, ​such as Uber and Airbnb​, ​have shifted the expectations placed on legal services providers – to be more nimble, and provide regulatory advice aligned with this new world. “Now, more than ever, firms need to be informed on trends and approaches that are shaping an evolving market,” he says.

Experts call the introduction of new cyber security bill ‘timely’.

The Singaporean government is pushing for the enactment of a cyber security bill in a bid to boost the city-state's information infrastructure and fend off cyber attacks that target governments, industries and individuals.

"We will develop a national cyber security strategy to strengthen Singapore’s information infrastructure. Priority will be given to our critical sectors of energy, water, transport, health, government, infocomm, media, security and emergency services, and banking and finance," the Ministry of Communications and Information (MCI) says.

Among other things, the bill will provide for the allocation of at least 8% of the national budget for information technology to cyber security expenditure in the long-term. According to the state ministry, the bill "will give the Cyber Security Agency of Singapore greater powers to secure our critical information infrastructure."

MCI adds that the bill aims to develop the cyber security ecosystem in Singapore, and grow cyber security talent and manpower.

"We will also seek international cooperation on cyber security to overcome the transnational nature of cyber threats, and work with the private sector to raise public awareness of the importance of cyber security," the ministry adds.

Singapore Business Review (SBR) spoke with several experts to talk about the bill. Specifically, the team from SBR asked them 3 main questions:

1. Is there a need for new cyber security bill?

2. How do you assess the adequacy of Singapore's current cyber security bills?

3. What do you think should be the scope of the new cyber security law?

Here's what the experts had to say

SBR is now accepting nominations for 2015 edition.

Due to the success of the inaugural listing of 40 and under most influential lawyers in Singapore last year, which generated over 240,000 views to-date, we are once again opening nominations for lawyers within the age group who have risen to a level of leadership and responsibility and wield some sort of influence in the legal profession for 2015 edition.

We are looking for lawyers who are:

1.thought leaders - develop creative and innovative ideas that have potential to guide future directions of their respective companies/ the industry in general.

2. influencers - have the ability to communicate their message either in terms of organizational leadership or through use of communicative media.

3. promising - showing promise of favourable development or future success in the legal field (advised on one of the country’s major transactions/deals, and/or advised on one of the country’s most controversial cases).

If you think you deserve to be part of this list or know someone who does, nominate now!

To nominate, send to us the following information:

Name of the lawyer:
Company affiliation:
Age:
Brief personal background and career highlights:
Why he/she deserves to be in the list:

Deadline for nomination will be on September 30, 2015.

There is no limit in the number of nominees for each legal firm but lawyers who made it to last year’s listing are automatically disqualified.

Just in case you missed last year’s listing, you may refer to the following link.

Contact persons:

Krisana Gallezo-Estaura
[email protected]

Lee Anne Babierra
[email protected]

Pilot test to be launched in 2016.

On 20 September 2013 the Finance Ministers of Singapore, Australia, Korea and New Zealand signed a Statement of Intent on the establishment of the Asia Region Funds Passport.

Colin Ng & Partners said that once implemented, the Passport would facilitate the ability of eligible collective investment schemes in Passport member economies to be offered in other Passport member economies in accordance with the Passport arrangements.

How will fund managers and investors benefit from the Passport?

This will provide investors in the region access to a broader range of quality investment products and also strengthen the region's fund management capability. The signatories also endorsed the Framework Document which sets out the initial guiding principles and basic arrangements for the Passport.

The signatory nations will now have public consultations within their economies on the detailed rules which would be necessary to implement the principles and basic arrangements set forth in the Framework Document.

The Framework Document states that to ensure that the benefits of the Passport accrue to Passport member economies, the Passport will be limited to collective investment schemes authorised and constituted in Passport member countries.

How does a collective investment scheme become eligible?

This means that to be eligible to offer a collective investment scheme under the Passport, the collective investment scheme must be constituted and authorised, approved, registered or licensed in a Passport member country and have met the regulatory requirements to offer the interest in the collective investment schemes to the public.

The fund manager must be authorised, approved, registered or licensed and have its principal place of business in that Passport member country.

It is expected that the host economy laws and regulations will apply where they relate to the direct interaction between the investor and the Passport fund.

For example, the host economy laws and regulations will apply in the distribution of Passport funds to investors, the disclosures that Passport funds are required to provide investors, the manner in which complaints by investors are dealt with and other marketing or communications directed at investors.

The home economy laws and regulations will apply to the licensing of the fund manager, authorisation and operation of the collective investment scheme, general duties of fund managers and its directors and officers, outsourcing and service provider requirements, risk management requirements and meetings of Passport fund members.

Colin Ng & Partners added that there will also be special Passport rules dealing with the streamlined authorisation process, advanced qualifications and experience, delegation, custody of assets, valuation, short selling, use of derivatives, redemption and suspension etc.

The parties are working towards implementation of the Passport by 2016. The Passport will be established initially with a limited number of Passport member economies which form the pilot group for the initiative and other economies will be added in future.

(This article was first published by Colin Ng & Partners)

Here's a case to teach you a lesson.

Most sellers and buyers of property are familiar with the requirement for the parties to sign some document before an agreement for the sale may be concluded. This is sometimes in the form of a sale and purchase agreement signed by both parties together with payment of a deposit by the buyer. In other cases, it is sometimes done through an option to purchase signed by the seller and given to the buyer in exchange for a cheque as consideration for the option. The agreement for the sale is subsequently concluded when the buyer exercises the option by signing its acceptance form and paying the balance of the deposit within the stipulated time.

It is also possible for a buyer of a property, in a bid to ‘entice’ the owner to sell the property, to make a offer to the owner to grant to the buyer an option to purchase, such offer being commonly backed by an option fee (usually amounting to 1% of the intended purchase price). We have seen an increasing number of cases adopting such arrangements but the lack of familiarity with how such arrangements work may cause problems. The recent case of Chew Ai Hua, Sandra v Woo Kah Wai and another (Chesney Real Estate Pte Ltd, third party) [2013] SGHC 120 is a good example of this.

CHEW AI HUA, SANDRA V WOO KAH WAI AND ANOTHER (CHESNEY REAL ESTATE PTE LTD, THIRD PARTY)

In the Chew Ai Hua case, the two defendants were joint owners of a condominium unit in Minbu Road (the Unit) that was under construction. They engaged Chesney Real Estate Pte Ltd (Chesney) to assist them in the sale.

After the parties verbally agreed to the price of $920,000 through their respective property agents, the plaintiff made a written offer to purchase the Unit at $920,000. She did it by way of a letter sent through her property agent. The letter gave the defendants 3 days to accept her offer by delivering a signed option to purchase (to be on the terms stated in the letter) to the purchaser. It also enclosed a cheque for the $9,200 option money.

The letter of offer from the plaintiff was conveyed to a director of Chesney and an option to purchase (the Option) was prepared by one of Chesney’s staff. However, the Option was not prepared in accordance with the requirements of the letter of offer. The first defendant subsequently signed the Option on behalf of both defendants and deposited the plaintiff’s cheque into his bank account. The Option was given to the plaintiff’s property agent the day before its expiry. Unfortunately, the day of expiry was a Saturday and also the eve of the Chinese New Year. At the trial, there were differing versions as to what actually happened around this time. In any event, the plaintiff was not able to exercise the Option before its expiry.

At the end of the trial, the judicial commissioner found that:

the plaintiff’s offer to buy the Unit was accepted by the defendants through their conduct of banking in the plaintiff’s cheque and in retaining the option money beyond the deadline of the offer; this resulted in a contract for the grant to the plaintiff of an option to purchase the Unit that should comply with the requirements of the plaintiff’s offer; the Option did not comply with the requirements of the plaintiff’s offer; and consequently, the defendants had breached the contract.

JOSEPH MATTHEW AND ANOTHER V SINGH CHIRANJEEV AND ANOTHER

One of the cases that the judicial commissioner relied on was Joseph Matthew and another v Singh Chiranjeev and another [2010] 1 SLR 338. In that case, the apartment owners had emailed their property agent to say they were "taking a decision to sell" their apartment at the offered price and instructed the agent to bank in the purchaser’s cheque for the option fee but they did not sign the option.

The High Court’s finding in that case that there was a binding agreement to grant an option for the sale of the apartment even though no option had been signed by the owners was upheld by the Court of Appeal. The Court of Appeal said that the contract to grant an option for the sale of the apartment was binding when (at the latest) the option fee had been deposited into a seller’s bank account and the signing of the option to purchase was "merely a necessary part of the process of giving effect to a binding agreement (to grant an option) that had already been entered into" by the parties.

OUTCOME OF THE CHEW AI HUA CASE

As the defendants had already sold the Unit by the time of the trial, the judicial commissioner did not grant an order of specific performance for the sale of the Unit to the plaintiff or the issuance of a fresh option to purchase. Instead, he ordered that the defendants should refund the option money of $9,200 and also pay the plaintiff damages assessed based on the difference between the original price of $920,000 and the market value of the Unit as at the intended date of completion of their contract. He also ordered pre-judgment interest to be paid by the defendants to the plaintiff.

COMMENTS

The Chew Ai Hua case highlights some of the problems that may arise when venturing into less common contractual arrangements. Neither the sellers nor the buyers appear to have consulted their lawyers until after the contract had been concluded and such an approach is risky. The case is also a timely reminder of the importance of having contractual documents properly drafted and of acting in a manner consistent with one’s legal position.

(Written by Joo Khin Ng and Richard Tan Ming Kirk, Stamford Law)

That's effective July 1.

With effect from 1 July 2013, the offences of tax evasion and serious fraudulent tax evasion under the Income Tax Act, and the offences of tax evasion and improperly obtaining refunds under the Goods and Services Tax Act have been designated as money-laundering predicate offences.

According to Rajah & Tann partner Francis Xavier, this action is part of a slew of measures Singapore is taking to strengthen its framework for international tax cooperation to combat cross-border tax offences.

The Monetary Authority of Singapore ("MAS") had earlier announced this change in a consultation paper titled "Designation of Tax Crimes as Money Laundering Predicate Offences in Singapore" issued in October 2012.

MAS had also proposed to implement a regulatory framework for financial institutions to apply existing anti-money laundering ("AML") measures such as know-your client checks, transactional monitoring and other control measures to identify money laundering of proceeds from serious tax crimes.

Prior to the new rule, Baker & McKenzie partner Edmund Leow noted that Singapore's main AML legislation is the corruption, Drug Trafficking and Other Serious Crimes (Confiscation of benefits) Act ("CDSA").

The CDSA makes it a crime to engage in the money laundering of benefits from a total of 417 predicate offenses, such as criminal breach of trust and dealing with the property of terrorists. However, tax evasion in itself is not one of the predicate offenses. 

20 banks punished over rate rigging.

The Monetary Authority of Singapore (MAS) on June 14 has announced that it had punished 20 banks in Singapore over benchmark manipulation. It's year-long probe found that 133 currency traders at those banks had attempted to manipulate Singapore’s interbank lending rate (SIBOR) and two other foreign exchange benchmarks from 2007 to 2011.

In line with this, MAS has released a consultation paper for a new regulatory framework for the setting of financial benchmark interest and exchange rates.

According to key Allen & Gleddhill, the following are the key features of the proposed framework:

- Manipulation of any financial benchmark will constitute a market misconduct offence that attracts criminal or civil penal;ty sanctions
- The Mas proposes to designate the following as "designated benchmarks": SIBOR; Swap OFfer Rate (SOR); foreign exchange spot benchmarks (FX Benchmarks).
-All entities involved in carrying out the activities of "administering a designated benchmark" will be required to be licensed by the MAS (the Administrators')
-Any entity that carries out the activity of providing or transmitting information or expressions of opinion to an Administrator, or to another entity which transmits such information to the Administrator in connection with a designated benchmark will be licensed by the MAS as"submitters".

Here's legal experts take on the implications going forward:

Eric Chan, Drew Napier

In the light of the global scandal concerning financial benchmarks, which continues to unfold, the measures proposed by MAS should be welcome to help reassure financial markets of the credibility and reliability of financial benchmarks. Plainly the existing system is flawed in permitting traders working in the participating banks to engage in the behaviour that has now come to light.

Significantly, one impact of the new measures, should they be implemented in the form proposed in the consultation paper, is that the Association of Banks in Singapore, which has traditionally been an association body rather than an operating entity, would come under MAS regulation in its capacity as administrator for SIBOR, SOR and the NDF FX Rates.

Jeremy Hewitt, RPC

The “rigging” of interbank borrowing rates, particularly LIBOR, has generated considerable attention in the worldwide media although, to date, it has not developed into a significant (let alone systemic) “claims” event for E&O or D&O insurers in any Asian jurisdiction. It is doubtful whether the MAS investigation into SIBOR, and the sanctions imposed on the banks, will change that notwithstanding the sums it has ordered the banks concerned to deposit are huge.

First, the MAS will be returning the sums deposited by each bank once it is satisfied that their internal controls and procedures have been improved sufficiently so as to prevent any future instances of manipulation of benchmarks. In the meantime, each bank will have to submit a report to the MAS every three months explaining the measures it has taken to strengthen its internal controls.

Therefore, the only financial “penalty” being imposed on the banks (at this stage) is the interest they will forfeit on the sums they deposit with the MAS; irrespective of currency, interest rates on deposits in Singapore (like elsewhere) are extremely low, often less than 1%, which (in effect) reduces the loss to the banks significantly.

Second, for now, it is hard to see the deposits (and associated loss of interest) as anything other than a regulatory penalty, which is usually carved out of the definition of “Loss” and/or specifically excluded from coverage under banks’ E&O Policies.

Third, at this stage, we do not anticipate the MAS investigation leading to civil claims in Singapore against those banks implicated in the scandal.

Going forward, increased regulation of financial institutions is clearly on the way in Singapore. The MAS has stated that it will be introducing “new criminal and civil sanctions for manipulation of any financial benchmark”, although it has not yet said what those sanctions will be. The MAS has also stated that it will “subject the setting of key financial benchmarks to regulatory oversight”, although, again, it has not yet specified the nature of this oversight or the potential penalties for breaches.

Banks and their insurers should, therefore, watch this space for further announcements and brace themselves for insureds’ increased exposure to regulatory investigations in the meantime.

A further, bigger, issue which banks and their insurers should watch is whether the regulators in Hong Kong, and elsewhere in the world, follow suit. Regulators in Hong Kong, in particular, are flexing some muscle across a wide range of regulatory issues at the moment. 

Tougher national tax legislation is just a start.

According to Colin Ng & Partners Manisha Rai, Raphael Bloch and Bill Jamieson, Singapore is moving fast to improve its regulatory framework and network of cooperation treaties in order to ensure its compliance with international standards on mutual exchange of information and on repression of tax offences.

Singapore actions on the international scene, they said are concomitant with recent developments to designate tax crimes as money laundering predicate offences creating new obligations for financial institutions.

Here are Singapore's 3 important local and international undertakings:

1. Singapore Signed Convention on Mutual Administrative Assistance in Tax Matters on May 29, 2013.

It's a Convention drafted by the OECD in order to enhance the international cooperation on the exchange of tax related information but also to facilitate the collection of taxes among the signatories. This Convention has now been entered into by 55 countries and 6 other agreed to sign it soon1.

2. Singapore announced on 14 May 2013 in a joint statement from the Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS) and the Monetary Authority of Singapore (MAS) that it will implement the following measures:

Extend EOI assistance; Obtain bank and trust information from financial institutions without having to seek a Court Order;and FATCA Inter-Governmental Agreement.

3. In October 2012, MAS issued a consultation paper to seek feedback on the designation as from 1 July 2013 of tax crimes as money laundering (ML) predicate offences.

According to Colin & Ng, this change of status will have a substantial impact for Singapore financial institutions (FI) including inter alia banks, insurance companies and market license holders. FIs may face criminal prosecution for laundering the proceeds of criminal activities when they hold the proceeds of tax crimes; i.e. a holding such proceeds is a serious offence under the Corruption, Drug Trafficking and Other Serious Crimes Act (CDSA) (please refer to schedule 2 of the Act for a list of serious offences). In this respect, FIs may be sentenced to fines up to SGD 1m, confiscation of the benefits and a withdrawal of their licenses. Individuals may be sentenced to fines of SGD 500,000 and up to 7 years of imprisonment.

On 28 March 2013, the MAS issued a response to the feedback received during the October 2012 public consultation exercise 

5 new initiatives to encourage Singaporeans to have more babies.

The Child Development Co-Savings (Amendment) Bill 2013, passed in Parliament on April 8 has introduced new benefits in support of a Pro-Family environment in Singapore.

According to Allen & Gledhill, to encourage employers to implement the new benefits which were first announced by the Ministry of Manpower on January 21, the Government will reimburse employers who voluntarily grant their employees the extended childcare, paternity and shared parental leave schemes from 1 January 2013 (for any Singapore citizen births), even before the enhancements are made mandatory through legislation.

Read on from Allen & Gledhill the 5 new initiatives as introduced under the amended bill.

1. Maternity protection: Working mothers will be entitled to maternity benefits if they are dismissed without sufficient cause or dismissed on grounds of redundancy at any stage of their pregnancy. Currently, they are protected only if they are dismissed without sufficient cause within a period of six months before delivery, or if they are dismissed on grounds of redundancy within a period of three months before delivery.

2. Shared parental leave: Working fathers will be entitled to share one week of the 16 weeks of maternity leave, subject to the agreement of the mother, if the mother qualifies for Government-paid maternity leave. The Bill also provides for the Government to reimburse the employer who grants the employee shared parental leave.

3. Paternity leave: The Bill introduces one week Government-paid paternity leave for a male employee who is the natural father or adoptive father of a Singapore citizen child born on or after 1 May 2013. The Bill also provides for the Government to reimburse the employer who grants the employee paid paternity leave, if certain requirements are satisfied. 

4. Extended childcare leave: An employee who is a parent of a Singapore citizen child between the age of seven and 12 will be entitled to paid extended childcare leave. The Bill also provides for the Government to reimburse the employer who grants the employee paid extended childcare leave.

5. Adoption leave: The Bill amends the Act to mandate employers to provide up to four weeks of Government-paid adoption leave for female employees who have adopted a child and meet the eligibility criteria. The Bill also provides for the Government to reimburse employers who grant their employees adoption leave. 

[email protected]
 

Colin Ng & Partners explains the implication to businesses.

Sarika Connoiseur Cafe (the Appellant”) is the owner and operator of the The Conoisseur Concerto (“TCC”) chain of café outlets in Singapore. The Appellant promoted and offered for sale a coffee beverage containing Nutella hazelnut spread under the NUTELLO sign. Ferrero SpA (“the Respondent”) successfully sued for trade mark infringement of its NUTELLA trade mark under Sections 27(2)(b), 55(2), 55(3)(a) and 55(3)(b)(i) of the Trade Marks Act (Cap. 332, 2005 Rev Ed) (“TMA”) and for passing off.

The Appellant failed on all points of the issues it raised in the appeal and the decision of the High Court was upheld.

According to Beverly WEE, Associate at Colin Ng & Partners, the Court of Appeal (“CA”) agreed with the High Court that the NUTELLO sign and NUTELLA word mark were visually and aurally similar but did not think that the marks were conceptually similar.

"Since NUTELLA and NUTELLO are invented words, void of meaning and underlying ideas, it would be difficult if not impossible to determine a concept common to the two. The CA also commented that the distinctiveness of the registered trade mark is a factor to be considered when analysing the three aspects of similarity viz. visual, aural and conceptual."

"Given the significant degree of inherent distinctiveness that the NUTELLA word mark possessed as an invented word, the mere alteration of the last letter would not lend support to a finding of dissimilarity."

Here's more from Wee:

In the final analysis, the visual and aural aspects of similarity were considered more important than that of conceptual dissimilarity because only verbalization and recognition of the word-only NUTELLO sign and NUTELLA mark respectively were necessary to purchase products sold under the same. As such, the sign and mark were found to be similar.

The respective goods of parties were also found to be similar as the CA was persuaded by the market survey and Internet blogs evincing consumer perception of the NUTELLO beverage as falling within the ambit of the fairly broad “chocolate products” specification for which the NUTELLA mark was registered.

The CA found that final requirement of likelihood of confusion was made out. In coming to its decision, it considered (i) that the 30% of the relevant public likely to be confused as shown by survey evidence tendered by both parties constituted a substantial portion of the relevant public; and (ii) the similarity between the NUTELLO sign and NUTELLA word mark and the distinctive character of the latter.

IMPLICATION
The CA's affirmation of the High Court's decision is a cautionary tale to businesses of the potential liability in attempting to modify the trade mark of another to become its own. This practice has been observed to be particularly prevalent in, though not limited to, the food and beverage industry. It is good practice for businesses to have a general awareness of the circumstances in which the use of a sign in the course of business can constitute trade mark infringement.  

Maldivian government now operates the Airport since Dec 8, 2012.

The Singapore Court of Appeal has overturned an injunction preventing the Maldivian government from cancelling a concession agreement for the running of the Malé International Airport (now the Ibrahim Nasir International Airport). This has allowed the Maldivian government to take charge of the Airport. 

The Injunction was lifted on 6 December 2012, and by 8 December, the Appellant had taken over operation of the Airport from the Responden

Here's more from Rajah and Tann partner Prakash Pillai:

The Maldivian government (“the Appellant ”) had granted a 25 year concession agreement to the Respondent allowing it to operate the Airport. However, the relationship between the parties soon deteriorated, and the Appellant sought to have the Respondent vacate the Airport.

The Respondent thus sought an injunction from the Singapore courts to prevent the Appellant from taking over the Airport.

The Singapore High Court granted an injunction to the Respondent, restraining the Appellant from interfering with the Respondent’s obligations under the concession agreement.

The Appellant then brought the dispute to the Court of Appeal. 

The apex court reversed the High Court’s decision, setting aside the Injunction. In Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd [2013] SGCA 16, it was held that the Singapore courts had the power to grant an injunction against a foreign state under the circumstances, but chose not to exercise its discretion to do so as the balance of convenience lay in favour of cancelling the injunction.

Since the appeal, the Appellant has formally taken over the Airport. Nonetheless, arbitrations over the validity of the initial concession agreement are ongoing, and remain to be decided.