Your Snapshot of Key Legal Developments in Asia
Issue 1 - Jan/Feb/Mar 2017
- Interest Rate of Loan Limited to a Maximum of 18% per Annum from 01 April 2017
- Tax Incentives for SMEs Voluntarily Registering for Tax
- Market Interest Rates for Fiscal Year 2016
- New Rules on Advertising for Mobile Network Operators
- Approval of Provisions for Doubtful Loans for Domestic Banks
- Independent Power Producers Face Risks under New Power Purchase Regulation
- New Era in Oil & Gas Sector as Government Moves from Cost Recovery to Gross Split Mechanism
- Amendments to Government Regulation on Mineral and Coal Mining Business Activities
- New Rule on Merger and Consolidation of Public Companies
- Supreme Court Moves to Close Corporate Crime Loophole
- The Lao National Assembly Passes Decree on Biofuels
- Employer's Maximum Contribution Payable to the Social Security Fund
- Data Protection Update: Appointment of New Personal Data Protection Commissioner; Amendment of the Personal Data Protection (Class of Data Users) Order; and Approval of Codes of Practice for the Insurance and Banking Data User Forums
- Malayan Banking Berhad v Mahkamah Perusahaan Malaysia & Anor - Employer’s Liability for Fixed-Term Contracts
- First Phase of the Companies Act 2016 Operational
- Employees' Insurance Scheme Approved by Cabinet
- Gas Supply (Amendment) Act 2016 and Gas Supply (Amendment) Regulations 2017 Come into Operation
- New Template Employment Contract to be Released
- Myanmar Investment Commission Notification No. 10 / 2017
- Philippines Accedes to the Paris Agreement
- Senate Proposes Increase in Maternity Leave from 60 days to 120 Days
- DICT Sees Need for Third Major Player in Telco Industry
- Department of Labor and Employment Releases New Policy on Contractualization
- Companies (Amendment) Act 2017 and Limited Liability Partnerships (Amendment) Act 2017
- Amendments to Stamp Duties Act: Changes to Seller's Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR)
- Proposed Framework for Singapore Variable Capital Companies
- Consultation on Listing Framework for Dual-Class Shares
- MAS Proposes New Framework for Venture Capital Fund Managers
- New Decree No. 03/2017/ND-CP Guiding Casino Business Operations
- Decree No. 06/2017/ND-CP Legalising Betting Business for the First Time
- New Regulations on Lending Policy between Credit Institutions/Foreign Bank Branches and Customers
- New VIAC Arbitration Rules applicable from March 2017
- New Circular on the Cross-border Provision of Public Information
Interest Rate of Loan Limited to a Maximum of 18% per Annum from 01 April 2017On 13 March 2017, the National Bank of Cambodia ("NBC") issued a Prakas No. B7-017-109 on Setting Interest Rate Ceiling of Loan ("Prakas").
According to the Prakas, all microfinance institutions and rural credit operators shall set interest rates on loans not exceeding 18% per annum. The aforesaid interest rate ceiling is applicable to new loan agreement, including restructured loans and refinancing, entered into from 1 April 2017 onwards.
Any microfinance institution and rural credit operator that fails to comply with this Prakas shall be subject to the general disciplinary sanction under Article 52 of the Law on Banking and Financial Institutions.
Tax Incentives for SMEs Voluntarily Registering for TaxOn 7 February 2017, the Royal Government of Cambodia enacted Sub-Decree No. 17 ANKr.BK ("Sub-Decree No. 17") with the clear objective of creating a transparent and equitable tax system by encouraging all businesses to register for tax.
Sub-Decree No. 17 addresses this objective by providing that small and medium-sized enterprises ("SMEs") which voluntarily register with the General Department of Taxation ("GDT") in 2017 and 2018 are provided a two-year exemption on Tax on Profit. During the two-year exemption on Tax on Profit, SMEs will also be exempted from the annual 1% Minimum Tax and the monthly Prepayment of Profit Tax.
In the year following the end of the two-year exemption on Tax on Profit, SMEs will be subject to the applicable standard Tax on Profit rates and / or Minimum Tax in accordance with the regulations provided by the Law on Taxation.
Market Interest Rates for Fiscal Year 2016On 2 February 2017, the GDT released Notification No. 2142, which provides for the “market rates” for determining the caps on interest rate deductions for loans in Khmer Riel ("KHR") and United States Dollars ("USD") for the 2016 financial year.
- For loans denominated in KHR, the market rate is 15.29% per annum based on the average interest rates of the 3 largest local commercial banks.
- For loans denominated in USD, the rate is 9.47% per annum based on the average interest rates of the 12 largest local commercial banks.
New Rules on Advertising for Mobile Network OperatorsOn 15 February 2017, the Telecommunication Regulator of Cambodia ("TRC") issued Letter No. 0276 TRC on the control over the commercial advertising of all mobile network operators in Cambodia. This Letter sets out the actions that the Government will take to strengthen the engagement in dealing with unfair competition, as well as to protect the interests of users.
The TRC requires all mobile network operators to:
- request for prior approval from the TRC for any type of advertisement;
- immediately stop all advertising about money exchange or promotion that features lies to users and/or cost base; and
- provide to the TRC the cost base used for voice mail and mobile data for every semester.
Approval of Provisions for Doubtful Loans for Domestic BanksThe Ministry of Economy and Finance ("MEF") issued Prakas No. 1535 dated 23 December 2016 to set out the procedures on the provisions for doubtful loans of domestic banks, which include both banks and financial institutions and micro-finance institutions ("MFIs"), in accordance with paragraph 4 of the Article 6 of the Law on Taxation in Cambodia. The Prakas sets out the classifications of loans and the respective provision rates for tax deduction.
This Prakas also requires domestic banks to amend the past tax on profit ("TOP") returns to reflect these allowable provisions for doubtful loans.
Penalty and Interest Exemption for Amendments of Filed Tax ReturnsThe GDT of the MEF issued Notification No. 1219 on 19 January 2017 outlining the penalty and interest exemptions resulting from the amendment of filed tax returns.
This Notification No. 1219 outlines how voluntary amendments of filed tax returns will work, and the benefits that come with it. Taxpayers who believe that they have underpaid taxes in previous periods may amend their filed tax returns and pay the underpaid taxes accordingly for at least last three years without incurring penalties and interest from the GDT. This tax amnesty period ends on 1 April 2017.
Once the amnesty period ends, any under-declared taxes found by the tax auditors or that may surface based on the self-amendments of filed tax returns will be subject to normal penalty rates ranging from 10% to 40%, plus applicable interest at the rate of 2% per month.
Registration Procedure and Protection of Geographical Indication MarkOn 29 December 2016, the Ministry of Commerce ("MOC") issued Prakas No. 422 MOC.IP.P on Registration Procedure and Protection of Geographical Indication Mark ("Prakas 422") to implement Law NS/RKM/0114/006 on Geographical Indication Mark dated 20 January 2014 ("Law 0114/006").
According to the above Prakas, the Department of Intellectual Property Rights of MOC is the competent authority in registering geographical indication mark, receiving opposition filed against such registration, managing, permitting the use of national sign of geographical indication, and implementing court decisions or decisions of the Council in charge of Geographical Indication Mark.
Any products such as agricultural, agro-alimentary, hand-craft or any other transformed products in a region could be subject to registration for protection as geographical indication mark. The applicant for such registration must be a geographical indication association of producers or operators according to Article 5 of this Prakas and Article 7 of Law 0114/006.
China Passes the General Provisions of its Civil LawThe National People's Congress of the People's Republic of China (the "PRC") passed the General Provisions of the PRC Civil Law (in Chinese, 中华人民共和国民法总则) (the "General Provisions") on 15 March 2017, which will take effect on 1 October 2017. The General Provisions are the opening chapter of the PRC civil code planned to be enacted in 2020. The General Provisions are based on a 1986 version, called the General Principles of Civil Law, which has only undergone a minor amendment in 2009. However, the General Provisions are far more than an amendment and deemed to be a great progress in many aspects.
The General Provisions consist of 11 chapters and 206 articles, covering principles of civil law, definitions of terms in the civil legal system, civil rights, basic rules for civil acts, agency, civil liability, and litigation, among other subjects. Some key highlights include:
- Entitlement of Rights of the Fetus
- Protection of Rights of Young and Elderly
- New Classification of Legal Persons
- Protection of Personal Data
- Effectiveness of Entrustment Agency after Death of Principal
- Prohibition of Defamation of "Heroes and Martyrs"
- Extension of Statute of Limitations
Independent Power Producers Face Risks under New Power Purchase RegulationThe Minister of Energy and Mineral Resources recently issued Regulation No. 10 of 2017 on the Principles Governing Power Purchase Agreements ("MEMR 10") as part of its efforts to overcome persistent delays in the closing of Power Purchase Agreements ("PPA") between Independent Power Producers ("IPP"), the sellers of electricity, and state power utility Perusahaan Listrik Negara ("PLN"), as the buyer. From the Government's perspective, MEMR 10 is intended to provide greater certainty and thus help reduce the time needed for negotiating PPAs. The ultimate question, however, is whether MEMR 10 will actually expedite the signing of the PPAs or is it skewed to the benefit of PLN, thus potentially lessening the appetite of IPPs and their lenders to invest in projects promoted by PLN?
Click here to read our client update.
New Era in Oil & Gas Sector as Government Moves from Cost Recovery to Gross Split MechanismThe Government has instituted a new mechanism for sharing out production from oil and gas fields as between the State and its contractors ("Contractor") under Production Sharing Contracts ("PSC"). The new "Gross Split" mechanism is set out in Minister of Energy & Mineral Resources Regulation No. 8 of 2017, which came into force on 16 January 2017, while the first PSC to employ the new arrangement was signed on 18 January 2017, covering the Offshore North West Java working area operated by state energy firm Pertamina, which had recently expired.
Click here to read our client update.
Amendments to Government Regulation on Mineral and Coal Mining Business ActivitiesThe Government has issued Government Regulation No. 1 of 2017 regarding the Fourth Amendment to Government Regulation No. 23 of 2010 regarding the implementation of Mineral and Coal Mining Business Activities (11 January 2017) ("GR 1/2017"). GR 1/2017 aims to strengthen the development of domestic mineral processing and refinery business. However, the changes introduced by GR 1/2017 may not be attractive to foreign entities looking into investing in Indonesia’s downstream mining sector.
Previously, the percentage of shares to be divested and the timetable for divestment depended on whether a company was engaged in underground mining or smelting operations. Under the new Regulation, the share divestment requirement applies uniformly, regardless of whether a mining company carries out underground mining or smelting operations. Moreover, all Mining Business License (Izin Usaha Pertambangan or "IUP") and Special Mining Business License (Izin Usaha Pertambanga Khusus or "IUPK") holders must begin divesting their shares after 5 years of production, so that by the 10th year, Indonesian party(-ies) own at least 51% of the shares.
New Rule on Merger and Consolidation of Public CompaniesOn 23 December 2016, the Financial Services Authority (Otoritas Jasa Keuangan / "OJK") issued OJK Regulation No. 74/POJK.04/2016 on the Merger or Consolidation of Public Companies ("New Rule"). The New Rule, which revokes Bapepam Rule No. IX.G. on the Merger or Consolidation of Public Companies or Issuers, is aimed at simplifying the rules governing mergers or consolidations, and improving the quality of information disclosure. It expands the information that must be contained in the disclosure so as to include:
- disclosure of the new controlling shareholders resulting from the merger or consolidation; and
- additional information on changes in core business.
Click here to read our client update.
Supreme Court Moves to Close Corporate Crime LoopholeThe Supreme Court recently issued a regulation setting out the procedures for handling criminal offenses committed by corporations. The new rules, which entered into force on 29 December 2016, provide a partial remedy to one of the most obvious deficiencies in Indonesian law, namely, the lack of a solid legal framework for addressing corporate crime.
Click here to read our client update.
New Trademarks Law Enhances Indonesia's Intellectual Property RegimeThe House of Representatives ("DPR") enacted the Trademarks Bill into law on 27 October 2016. The new legislation ("2016 Trademarks Law") had long been anticipated as it relates to the requirement under the ASEAN Economic Community ("AEC") accords for all ASEAN member countries to implement the 1989 Protocol to the Madrid Agreement Concerning the International Registration of Marks.
The new legislation is aimed at encouraging local businesses to broaden their markets, both locally and overseas, supported by the availability of immediate and effective legal protection. It provides a trademark owner with the option of filing a trademark through a foreign country's trademark office ("International Bureau"), in accordance with the Madrid Protocol. It further modifies the trademark process and introduces the possibility of engaging independent experts to conduct the trademark examination process, a concept that was first introduced in the new Patents Law, which was enacted on 27 July 2016.
Click here to read our client update.
The Lao National Assembly Passes Decree on BiofuelsThe Lao National Assembly ("NA") passed the Decree on Biofuels (No. 410/GO, 10 November 2016) ("Decree") last year, opening the door for biofuels investment in the Lao PDR. The Decree sets out the procedures for the production, storage and distribution of biofuels, as well as the procedures for the importation of input and eventual export of biofuels.
The Decree stipulates that biofuel production is a concessionary business, requiring the investors to establish a project company in the country, and enter into a concession agreement for biofuel production with the Lao Government. It sets out detailed requirements and timelines for project development, which will require careful attention to ensure regulatory compliance. The Decree also mandates the investors to must submit a detailed "Biofuel Development Plan" consisting of a strategic plan, with short, medium and long-term plans. The investment itself must be "environmentally sustainable" and "economically viable".
The Decree pre-approves the use of oil palm, cassava, sugarcane and corn for the production of biofuels.
Employer's Maximum Contribution Payable to the Social Security FundThe current Social Security Law (No. 34/NA, 26 July 2013) ("Social Security Law") and Implementing Guidelines (No. 2751/MLSW, 24 July 2015) ("Implementing Guidelines"), mandate local as well as foreign employees to contribute to the Social Security Fund ("Fund"). Under the Social Security Law and Implementing Guidelines, an employer must contribute 6% of the employee's salary to the Fund and an additional 5.5% (of the employee's salary) must be withheld and contributed to the Fund.
The maximum base salary per month had increased from LAK 2,000,000 to LAK 4,500,000 with effect from 1 January 2017 pursuant to the Minister's Agreement on the minimum and maximum employee earning cap to calculate contributions into the Fund (No. 1740/MLSW, 25 April 2016 ("Minister's Agreement"). Therefore, the maximum contribution payable by the employer for employees earning LAK 4,500,000 or more is LAK 270,000 per month per employee.
Data Protection Update: Appointment of New Personal Data Protection Commissioner; Amendment of the Personal Data Protection (Class of Data Users) Order; and Approval of Codes of Practice for the Insurance and Banking Data User ForumsThe Minister of Communications and Multimedia has recently appointed a new Personal Data Protection Commissioner to oversee the implementation and enforcement of the Malaysian Personal Data Protection Act 2010 ("PDPA"). Commissioner Puan Khalidah binti Mohd Darus assumed her office on 23 January 2017.
In a related development, the Personal Data Protection (Class of Data Users) (Amendment) Order 2016 ("Amendment Order") came into operation on 16 December 2016. The Amendment Order added several classes of data users that are required to register themselves with the Personal Data Protection Department. These include licensees under the Pawnbrokers Act 1972 and licensees under the Moneylenders Act 1951.
The Commissioner has approved and registered three Personal Data Protection Codes of Practice (“Codes”) to date, i.e. for the utilities sector (electricity), insurance / takaful industry sector, and the banking and financial sector. Companies falling within these sectors are required to re-examine their existing data protection notices, policies, procedures, and practices, as well as their internal operations, in order to ensure that the relevant Codes are fully operationalised within their respective companies / organisations.
It is expected that the first instances of enforcement of the PDPA will occur in Q2 or Q3 of this year.
Further details on this can be found in our update which can be accessed here.
Malayan Banking Berhad v Mahkamah Perusahaan Malaysia & Anor - Employer’s Liability for Fixed-Term ContractsThe High Court in the case of Malayan Banking Berhad v Mahkamah Perusahaan Malaysia & Anor  2 CLJ 70 clarified the remedies available to a fixed-term contract employee in an action for unfair dismissal. In such an action, an employer's liability for a fixed-term contract employee will be limited to the unexpired term of their contract. The employee's post-dismissal earnings will also be considered in rescaling the employer's liability.
In this case, the employee was on a 12-month fixed-term contract with a 6-month probationary period. At the end of the probationary period, the employee was not confirmed and she pursued an action for unfair dismissal against her employer. The Industrial Court ruled in favour of the employee and awarded back wages of 12 months with a rescaling of 20% for post-dismissal earnings.
The employer filed an application for judicial review against the Industrial Court's decision, arguing that even if the employee had completed her probationary period, her employment would have still be terminated upon expiry of the contract. The High Court agreed with the employer and awarded the employee back wages of 5 months and 2 weeks instead. The back wages was also rescaled by 40% for post-dismissal earnings as she was earning almost 3 times her salary before she was dismissed.
First Phase of the Companies Act 2016 OperationalThe first phase of the Companies Act 2016 ("CA 2016") came into operation on 31 January 2017 as notified in the Gazette. Several provisions in the CA 2016, including Section 241 of the Act relating to the requirement for company secretaries to register with the Registrar of Companies, and Division 8 of Part III relating to corporate rescue mechanisms on corporate voluntary arrangement and judicial management, have yet to be effective until the next phase of implementation.
With the first phase in operation, the previous Companies Act 1965 is repealed and companies will now need to comply with the new CA 2016 including requirements under the Companies Regulations 2017. Some of the key changes under the new CA 2016 include the abolition of par value shares; the simplification of the process of incorporation; the removal of the AGM requirement for private companies; the abolition of the requirement for memorandum and articles of association; the introduction of new alternative capital reduction procedures; new financial assistance regime; and new corporate rescue mechanisms.
Employees' Insurance Scheme Approved by CabinetHuman Resources Minister Richard Riot Jaem recently announced, while launching the Human Capital Strategic Initiatives by the Human Resource Development Fund ("HRDF"), that the Cabinet has approved a bill to create a special insurance programme for retrenched workers. The proposed Employees' Insurance Scheme bill ("EIS Bill") was approved by Cabinet on 17 March 2017. It was also reported that the Minister of Human Resources plans to table the proposed EIS Bill in Parliament in July.
Under the scheme, employers and employees are required to contribute towards the worker's insurance account, the same way they now do for Social Security Organisation ("SOCSO") coverage. The scheme seeks to assist retrenched workers by providing temporary financial assistance and opportunities for re-skilling and upskilling.
The proposed EIS Bill had not gone down well with the Malaysian Employers Federation ("MEF"), which claimed that the EIS Bill is not fair and would lead to increased costs that would burden private companies. Earlier this month, Minister Riot's deputy, Ismail Abdul Muttalib, told the Dewan Rakyat that the proposed EIS Bill was targeted for implementation next year.
Gas Supply (Amendment) Act 2016 and Gas Supply (Amendment) Regulations 2017 Come into OperationThe Gas Supply (Amendment) Act 2016 ("Amendment Act") came into effect on 16 January 2017 in Malaysia. Subsequently, the Gas Supply (Amendment) Regulations 2017 came into operation on 16 February 2017, amending the Gas Supply Regulations 1997 to complement the amendments introduced by the Amendment Act. The Amendment Act widened the ambit of regulated activities in the gas supply industry. Another significant effect of the Amendment Act is that it enables third party access ("TPA") to regasification terminals ("RGTs"), transmission pipelines and distribution pipelines, thus liberalizing the gas supply industry.
The Regulated Activities
Prior to the Amendment Act coming into operation, the Gas Supply Act 1993 primarily regulated the downstream activities of the distribution, retail or use in the supply of gas between the licensee and consumer, through pipelines and piping system. Post-amendment, the regulatory scope of the Gas Supply Act has been extended to other activities comprising the importation into RGTs, regasification, shipping and transportation of gas. Pursuant to the Amendment Act, parties involved or intending to participate in various aspects of the gas supply chain are now required to apply for a licence from the Energy Commission to carry out any of the following activities:
- Import into RGTs;
- regasification of gas;
- shipping of gas;
- transportation of gas;
- distribution of gas;
- retail of gas; and
- use of gas.
For the purpose of liberalizing the gas supply industry, the Energy Commission has, as at the date of this update, developed and issued the following TPA codes and Guidelines:
- the TPA Code for regasification terminals;
- the TPA Code for transmission pipelines;
- the TPA Code for distributions pipeline
- Guidelines on Competition for the Malaysia Gas Market in relation to Market Definition, Anti-Competitive Agreements and Abuse of Dominant Position; and
- Guidelines on Licence Application.
New Template Employment Contract to be ReleasedUnder the Myanmar labour laws, employers are required to register their employment contracts with their employees. The township labour offices in Myanmar temporarily suspended registration of all employment contracts from mid-February 2017 in anticipation of the release of a new template employment contract, scheduled to be released by the end of February 2017. However, the draft new employment contract template has yet to be released, and township labour offices have since resumed registration of employment contracts using the current template.
Myanmar Investment Commission Notification No. 10 / 2017The Myanmar Investment Law ("MIL"), which repealed the old Foreign Investment Law ("FIL") and Myanmar Citizen Investment Law ("MCIL"), was enacted in October 2016. A new addition to the MIL was the introduction of Myanmar Investment Commission's ("MIC") power to promote investments into certain areas and sectors. For example, MIL introduced the differentiation of tax incentives based on the location of the investment to promote investments in less developed areas of Myanmar, and also authorises the MIC to issue notifications setting out the promoted sectors.
On 22 February 2017, MIC issued Notification No. 10 / 2017 to specify:
- which regions will be designated as Zone 1 (Less Developed) regions, where investment businesses would be entitled to a period of 7 consecutive years of income tax exemption;
- which regions will be designated as Zone 2 (Moderately Developed) regions, where investment businesses would be entitled to a period of 5 consecutive years of income tax exemption; and
- which regions will be designated as Zone 3 (Adequately Developed) regions, where investments business would be entitled to a period of 3 consecutive years of income tax exemption.
Separately, the much anticipated new Myanmar Companies Law has yet to be enacted, and indications are that the said enactment may only take place sometime in the second half of 2017.
Philippines Accedes to the Paris AgreementPresident Rodrigo Duterte has signed the landmark Paris Agreement, an international pact that builds upon and implements the objectives of the UN Framework Convention on Climate Change to combat climate change. This calls for the reduction of carbon emissions, which have been linked to the occurrence of natural disasters and extreme weather conditions.
The Philippine accession to the Paris Agreement entails coming up with programs and strategies to fulfil the country's commitments set out in its Nationally-Determined Contributions ("NDCs"). The NDCs, formulated pursuant to Paragraph 2, Article 4 of the Paris Agreement, contain each member state's proposal and commitment to a set of environmental targets to be met within the relevant timeframe. The Philippines promised to reduce carbon emission by 70% by 2030, among others. In addition, being a signatory to the Paris Agreement allows the Philippines access to an international climate fund (of about USD$100 billion a year) as financial support from developed countries to help the Philippines adapt to climate change, and to assist in technological developments, risk assessments, management tools, and others.
On March 14, 2017, the Senate of the Philippines unanimously ratified the accession to the Paris Agreement, making the Philippines officially a signatory to the historic international agreement.
Senate Proposes Increase in Maternity Leave from 60 days to 120 DaysOn 6 March 2017, the Senate approved, on third and final reading, Senate Bill No. 1305, or the "Expanded Maternity Leave Law" ("Senate Bill"). Under the Senate Bill, all female workers, regardless of civil status or legitimacy of their children, shall be granted 120 days paid maternity leave and an option to extend for another 30 days without pay. Solo parents will be granted 150 days paid maternity. The measure also grants 30 days leave to fathers and alternate caregivers.
The current maternity leave law for both the public and private sectors only provides for 60 days paid leave, or 38 days short of the 98 days prescribed under the International Labor Organization's Convention 183.
The Senate Bill has yet to be approved by the Philippine House of Representatives or signed by the President into law.
DICT Sees Need for Third Major Player in Telco IndustryThe Secretary of the Department of Information and Communications Technology ("DICT") has said that the Philippines needs to have a third core player in the telecommunications ("Telco") industry. The DICT Secretary welcomed local and foreign telco firms which have the capability to establish mobile communication facilities that can provide quality service to the consumers. This invitation has come in a bid to open up the competition in the Telco industry in the country, as the industry is presently dominated by only two firms.
Speaking on whether there is a need for more competition in the Philippines, the DICT Secretary confirms that "we need more competition in the telecommunications market to improve the level of service. The soonest the best for the consumers in terms of better service, greater coverage, and more affordable pricings."
In connection with the effort to open up the industry to more participants, the DICT has ordered the National Telecommunications Commission ("NTC") to start its legal proceedings for the recovery of unused and unpaid mobile frequencies. An audit by the NTC revealed that a number of establishments have not been using or paying the required fees for their frequency spectrums. These mobile frequencies will then be reassigned to new Telco firms which they may use for public service. The Secretary has assured that the availability of frequencies will be enough for a third player.
It should be noted that the Telco industry, being a public utility, is constitutionally limited to Philippine companies at least 60% of the capital stock of which are owned by Filipinos.
Department of Labor and Employment Releases New Policy on ContractualizationOn March 19, 2017, the Department of Labor and Employment ("DOLE") recently released Department Order No. 174, series of 2017 ("DO 174"), laying down new rules governing contracting and subcontracting arrangements. DO 174 does not prohibit all forms of contractualization but merely regulates contracting and sub-contracting.
Among its other features, DO 174 modified the definition of "labor-only" contracting, which is absolutely prohibited. "Labor-only" contracting refers to an arrangement (a) when the contractor does not exercise control over the performance of the work of the employee, and (b) where the contractor who supplies workers to a principal does not have substantial capital or investment, and the workers recruited and placed by such person are performing activities which are directly related to the main business operation of the principal. Unlike the previous policy, DO 174 did not include in this definition an arrangement where the contractor's workers are performing activities which are usually necessary and desirable to the business of the principal. DO 174 also removed "good faith and exigencies of the business" as grounds for justifying otherwise prohibited acts in contracting arrangements, such as contracting out of work due to a strike or lockout, and requiring contractor's employees to perform jobs that are being done by regular employees of the principal company.
Companies (Amendment) Act 2017 and Limited Liability Partnerships (Amendment) Act 2017The Companies (Amendment) Bill and the Limited Liability Partnerships (Amendment) Bill were passed in Parliament on 10 March 2017. The amendments are part of efforts to strengthen Singapore as an international centre for debt restructuring and to ensure that Singapore's corporate regulatory regime remains internationally competitive and continues to stay robust.
The key legislative changes that took effect from 31 March 2017 included requiring companies and limited liability partnerships ("LLPs") to maintain registers of controllers at prescribed places, and requiring liquidators to retain records of wound up companies and LLPs for five years instead of two. To take effect within the first half of 2017 is the introduction of an inward re-domiciliation regime in Singapore to allow foreign corporate entities to transfer or re-domicile their registration in a foreign jurisdiction to Singapore, instead of the current practice of setting up a Singapore-incorporated subsidiary.
The key changes targeted to be implemented in early 2018 include the alignment of timelines for holding annual general meetings ("AGMs") and filing annual returns with the financial year end ("FYE") for companies, and exempting all private companies from holding AGMs subject to specified conditions and safeguards.
Click here to read our client update that we issued when both Bills were introduced in Parliament. More information can also be found on the ACRA website.
Amendments to Stamp Duties Act: Changes to Seller's Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR)On 10 March 2017, the Stamp Duties (Amendment) Bill was read and passed in Parliament. The legislative amendments took effect on 11 March 2017.
In summary, the holding period for which Seller's Stamp Duty will apply was reduced from 4 years to 3, with the stamp duty rate payable being reduced by 4% for each year. The total debt servicing ratio ("TDSR") will also no longer be applicable to borrowers who take up loans secured on their residential properties, but which are not taken for the purchase of the property, where the loan does not exceed 50% of the property's value.
The Government also introduced the payment of stamp duty for the sale and purchase of equity interest in property holding entities ("PHE"). The stamp duty, known as Additional Conveyance Duty, is applicable to significant owners of equity interest in PHEs, which include companies (whether incorporated in Singapore or not), partnerships, limited liability partnerships and property trusts.
Click here to read our client update.
Proposed Framework for Singapore Variable Capital CompaniesThe Monetary Authority of Singapore ("MAS") is proposing to set up a legislative framework for a new corporate structure that is tailored for collective investment schemes ("CIS"). The consultation ends on 24 April 2017.
The new structure will be known as the Singapore Variable Capital Company or S-VACC, and it seeks to provide an alternative to incorporating a company under the Companies Act for the constitution of CIS in Singapore. It aims to provide investment managers greater flexibility and allow CIS to consolidate the fund domicile with the respective fund management activities.
The proposed S-VACC framework is intended to cater to both open-ended and closed-end investment funds, and allow for segregation of assets and liabilities of sub-funds within an umbrella structure.
Click here for more details.
Consultation on Listing Framework for Dual-Class SharesThe Singapore Exchange ("SGX") has issued a consultation paper on a possible listing framework for dual class shares ("DCS"). The consultation ends on 17 April 2017.
The consultation seeks feedback on whether there should be admission criteria over and above current Mainboard prerequisites such as a minimum market capitalisation of S$500 million, and possible safeguards against the risk of entrenchment of the controlling shareholder and the risk of expropriation where the controlling shareholder can further his own interest at the expense of other shareholders.
Click here to read our update on the public consultation.
MAS Proposes New Framework for Venture Capital Fund ManagersIn February 2017, the Monetary Authority of Singapore ("MAS") published a consultation paper proposing a simplified authorisation process and regulatory framework for managers of venture capital funds (VC managers). The consultation ended on 15 Mar 2017.
In summary, MAS intends to simplify the authorisation process and regulatory regime for VC managers. The simplified regime takes into account the extent of contractual safeguards that are already present in typical fund management contracts negotiated by VC managers' sophisticated investor base.
Click here to read our update on this.
Singapore to Introduce Carbon TaxOn 20 February 2017, during the Budget 2017 speech, Minister for Finance Mr Heng Swee Keat announced the government's plans to introduce carbon tax in Singapore starting from 2019.
Click here to read more about the new carbon tax and the impacts it may have on businesses operating in Singapore.
Re-employment Age to be Raised to 67 from 1 July 2017The Retirement and Re-employment (Amendment) Bill was passed on 9 January 2017. The 3 key changes to the Retirement and Re-employment Act that will take effect on 1 July 2017 are as follows:
- the re-employment age will be raised from 65 to 67;
- a new option to allow re-employment by another employer will be introduced; and
- removal of the existing option of employers to cut wages of employees at age 60.
Foreign Litigants and Security for CostsTo appeal against a decision of the court, a litigant has to provide security for costs in order to cover the potential costs the respondent may incur in arguing the appeal. In Yuanta Asset Management International Limited v Telemedia Pacific Group Limited, the Court examined security for costs issues in the context of foreign litigants, and when this might warrant a higher quantum of security.
Click here to read our client update.
New Decree No. 03/2017/ND-CP Guiding Casino Business OperationsOn 15 March 2017, Decree No. 03/2017/ND-CP on casino business operations ("Decree 03") came into effect. Decree 03 sets forth conditions for licensing in the casino business, specific regulations on casino business operations, and a 3-year pilot permission for Vietnamese citizens to play in casinos.
Under Decree 03, enterprises must obtain both Certificates of Investment Registration and Certificate of Eligibility in order to legally operate in the casino business. The issuance of these two certificates corresponds to the condition that enterprises must invest in a project within a casino-included entertainment complex with an investment capital of at least USD 2 billion.
Casino-operating enterprises will operate its casino business under strict regulations on location, operation time, number of gaming machines/tables, and types and categories of prize-winning games.
On a pilot basis, Vietnamese citizens are now able to play in casinos if they are at least 21 years of age, fully capable of civil acts, and are financially capable of playing casino. In addition, they must not be persons whose parents, spouses or children request the casino-operating enterprises to prevent them from playing at the casinos.
Decree No. 06/2017/ND-CP Legalising Betting Business for the First TimeOn January 2017, the Government released Decree No. 06/2017/ND-CP on the business of betting on horse racing, greyhound racing and international soccer ("Decree 06"). Decree 06 came into force from 31 March 2017.
Under Decree 06, only enterprises with an Eligibility Certificate for the business of betting on horse and/or greyhound racing may organise such races and use their results for betting. For international soccer betting, only one enterprise is allowed to pilot this type of business, for a period of 5 years.
Decree 06 also regulates the conditions on persons betting and the amount of bets. Persons must be at least 21 year olds, have full legal capacity, and are not persons who are prohibited from betting. A minimum of VND 10,000 and a maximum of VND 1,000,000 for each type of bet is imposed under Decree 06, and such bets must be made in Vietnamese Dong.
New Regulations on Lending Policy between Credit Institutions/Foreign Bank Branches and CustomersCircular No. 39/2016/TT-NHNN, which prescribes lending transactions of credit institutions and/or foreign bank branches with customers ("Circular 39") took effect from 15 March 2017. Key provisions include:
- Permitted borrowers comprise enterprises or individuals. This means non-legal entities, such as households, cooperatives or other organisations without legal person status, are not eligible to borrow capital at credit institutions.
- If customers fail to make due payment of interest, they will have to pay late payment interest charged at the interest rate agreed upon between them and credit institutions, capped at 10% p.a. on the outstanding balance of late payment interest in accordance with the period of late payment.
New VIAC Arbitration Rules applicable from March 2017On 1 March 2017, new Rules of Arbitration of the Vietnam International Arbitration Centre ("VIAC") took effects, replacing the former 2012 Rules. The major focus of the 2017 Rules lies in addressing cost-related issues and expediting the proceedings. Three key changes:
- Multiple contractual disputes (Article 6): Parties now can make a single request for arbitration for all claims arising out of or in connection with more than one contract.
- Consolidation of claims (Article 15): Parties may agree to consolidate two or more arbitrations pending under the Rules into a single arbitration.
- Expedited procedure (Article 37): Subject to the parties’ agreement, an Expedited Procedure will be applied in resolving the dispute. While no specific expedited procedures have been prescribed, the it may involve adjudication through a sole arbitrator, shortening of time limits, and carrying out hearings without the presence of the parties and/or by means of teleconference, video-conference or other appropriate means.
New Circular on the Cross-border Provision of Public InformationOn 26 December 2016, the Ministry of Information and Communications ("MIC") issued Circular No. 38/2016/TT-BTTTT providing detailed regulations on the cross-border provision of public information ("Circular 38"). Circular 38 took effect from 15 February 2017.
Under Circular 38, offshore entities that provide cross-border public information into Vietnam and meet the specified criteria must provide contact information to the MIC by direct submission, by post or email (email@example.com). Circular 38 also specifically implements content restrictions provided under Article 5 of Decree No. 72, in which the use and provision of the internet should not, inter alia, oppose the Socialist Republic of Vietnam, threaten national security, incite violence, arouse racial and religious animosity, propagate pornography or contradict national traditions (infringing content).
Telecommunication enterprises and onshore data center service providers are required to report infringing content by direct submission, post or email to the MIC within 3 hours of discovery. In addition, onshore data center service providers must either periodically or upon the MIC's request notify the MIC of their service supply to offshore service providers.
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.