Your Snapshot of Key Legal Developments in Asia
Issue 4 - Oct/Nov/Dec 2018
- Amendments to Occupational Risk Benefits
- MLVT Reminds Strict Compliance with Law against Forced Labour and Child Labour
- Minimum Wage Determination for 2019 for Workers in Textile, Garment and Footwear Industries
- Payment of Wages
- Key Changes in the Proposed Amendments to China Maritime Code
- Adoption of Amendment to the PRC Company Law Optimises the Share Buyback Mechanis
- China Implements Temporary Exemption of Withholding Income Taxes for Overseas Investors' Direct Investment Using Distributed Profits
- Government Waives the Need for Import Licence for Steel and Cement
- Industry and Commerce Office Issues Notification on Enterprise Seal Making and Sign of Enterprise Name
- Law on Penal Code Takes Effect on 1 November 2018
- Federal Court Holds that Exclusion Clauses Seeking to Protect Contract Breakers from Liability are Invalid
- Patent Infringement in Relation to Headscarf
- The Effect of Disclaimer and the Use of Trade Mark on the Internet
- Regional Comprehensive Economic Partnership - The Next ASEAN Focused Regional Economic Agreement
- Liberalisation of Bond and Sukuk Market: Seasoned Corporate Bonds & Sukuk
- House of Representatives Approves Anti-Racial, Ethnic and Religious Discrimination Bill
- Bill on Regulation of Islamic Banks Hurdles Final Reading
- SEC Requires Companies to Declare Beneficial Owners
- Amendments to Corporation Code Approved by Senate on 3rd Reading
- MAS Issues Guidelines for the Provision of Digital Advisory Services
- Singapore Employment Act Extended to All Employees
- Consultation on Proposed Changes to Delisting Rules
- Court of Appeal Upholds Setting Aside of Investor-state Arbitral Award
- New Labour Protection Law
- Competition Notifications Issued
- International Business Centre (IBC) Scheme under the BOI
- New Transfer Pricing Law
Amendments to Occupational Risk BenefitsOn 18 October 2018, the Ministry of Labour and Vocational Training ("MLVT") issued Prakas No. 480 MLVT/P.NSSF to amend Articles 6, 11 and 13 of Prakas No. 109 dated 16 June 2008 on occupational risk benefits, in order to clarify and adjust certain aspects of health benefits provided under Prakas No. 109.
The new Article 6 clarifies the calculation of the average wage for the purposes of social security. It provides that the average wage shall be an average contributory wage of a period no longer than six months prior to the date of accident. In addition, the new Article 11 adds a new category of survivor benefits when the victim worker only has a spouse or children in burden. It stipulates that the survivor will receive 56% of the average daily wage of the victim worker. Finally, Article 13 replaces previous application forms that were used for different types of benefits with a one-format form (called "Occupational Risk Benefit Form") that will be used by the applicant in filing for all types of benefits from occupational risk scheme.
MLVT Reminds Strict Compliance with Law against Forced Labour and Child LabourOn 12 October 2018, the Ministry of Labour and Vocational Training ("MLVT") issued announcement No. 034/18 MLVT.A ("Announcement") in relation to forced labour and child labour. The Announcement informs the owners and directors of factories, enterprises, institutions, brick handicrafts and other businesses that forced labour and child labour were not found during the labour inspection. They are also reminded that they must strictly comply with labour requirements and child labour prohibition as set forth by the Labour Law and other relevant Prakas as follows:
- They must continue to oppose any form of labour exploitation. They are prohibited from imposing limitations on employees' freedom of work by private debts and financial institution debts.
- All businesses, handicrafts and service providers shall not employ any minor under the age of 15. For businesses engaged in entertainments for adults, it is prohibited to employ minors under the age of 18.
Minimum Wage Determination for 2019 for Workers in Textile, Garment and Footwear IndustriesOn 5 October 2018, the Prakas on minimum wage determination for workers in textile, garment and footwear industries for 2019 was issued by the Ministry of Labour and Vocational Training ("MLVT").
Under the Prakas, starting from 1 January 2019, the minimum wage for workers in the textile, garment and footwear industries will be US$182 per month. Probationary workers will be paid a minimum wage of US$177 per month to be increased to US$182 per month upon the successful completion of the probationary period.
Payment of WagesOn 21 September 2018, the Ministry of Labour and Vocational Training ("MLVT") issued Prakas No. 442 MoLVT on Wage Payment requiring all enterprises and establishments governed by the Cambodian Labour Law to pay wages to their workers / employees twice a month starting from January 2019. Such payment shall be made as follows:
- First time payment (to be made in the second week of the month) is 50% of actual wage per month.
- Second time payment (to take place in the fourth week of the month) is the remaining actual wage plus additional wage and other benefits to be received each month.
Key Changes in the Proposed Amendments to China Maritime CodeThe Ministry of Transport of the People's Republic of China has recently issued a public consultation paper on the draft proposed amendments to the China Maritime Code ("CMC").
The current CMC was implemented in China 25 years ago. Due to developments in trade and the shipping industry, as well as other areas of law, there is a need to update the current maritime legal system to keep up with these developments. Yu Zheng (Partner (Foreign Lawyer)) of Rajah & Tann Singapore LLP was part of the CMC Amendments Committee that reviewed the existing CMC and made recommendations to the China Ministry of Transport on amendments to the CMC.
The key changes include the following:
- CMC to apply compulsorily where load port or discharge port is China
- Expansion of carrier's right to lien over cargo
- Expansion of port operators' potential liability as carriers
- Pollution Damage Claims – Claimant's direct right of action against P&I Club
- Limitation period for suits between carrier and cargo interests is now 2 years and unilaterally renewable
- Increase of liability limitations to match the 1996 Protocol
Adoption of Amendment to the PRC Company Law Optimises the Share Buyback MechanisOn 26 October 2018, the Standing Committee of the Peoples' Republic of China ("PRC") National People's Congress approved the Amendment to the PRC Company Law (the "Amendment"), which took effect as of the same date. The Amendment only provides one revision to the current Company Law, i.e., the revision to Article 142 of the Company Law, which is concerning the buyback of shares.
The Amendment broadens the circumstances for a company limited by shares to buy back its own shares, and the following circumstances are newly added into Article 142 of the Company Law: (a) for the purpose of employee stock ownership plan or the employee stock incentive plan; (b) where the listed company buys back its shares to convert the convertible corporate bonds it has issued; and (c) where the listed company has to buy back its shares to protect the company's value and its shareholders' rights and interests. The Amendment also streamlines the decision-making procedures for the share buyback, where under the aforesaid 3 newly added circumstances, the company may buy back up to 10 percent of all the shares it has offered, if this buyback is approved at the meeting of the board with the attendance of more than two-thirds of the directors on the board in accordance with the rules of its articles of association or the authorisation granted at the general meeting of shareholders. The buyback shares, under the newly added 3 circumstances, shall be traded in a public and centralised manner and shall be transferred or cancelled within three years.
China Implements Temporary Exemption of Withholding Income Taxes for Overseas Investors' Direct Investment Using Distributed ProfitsOn 29 September 2018, the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission and the Ministry of Commerce of the Peoples' Republic of China ("PRC") had jointly promulgated the Notice on Expanding the Applicable Scope of the Policy of Temporary Exemption of Withholding Income Taxes for Direct Investment Made by Overseas Investors with Distributed Profits (the "Notice"). One month later, on 29 October 2018, the PRC State Administration of Taxation ("SAT") issued an Announcement on the same subject matter (the "Announcement") to clarify some issues in relation to such temporary exemption of withholding income taxes enjoyed by overseas investors.
According to the Notice, the applicable scope of the temporary exemption of withholding taxes for overseas investors has been expanded to all projects and sectors for which foreign investment is not prohibited. Meanwhile, the Notice has set out several conditions which the overseas investor who intends to declare temporary exemption of withholding taxes shall meet concurrently, including the modes of the direct investment with the distributed profits, the sources of such distributed profits and the way to which the distributed funds shall be transferred. On the ground of the Notice, the Announcement further clarifies that using distributed profits to make up the registered capital which the overseas investor has subscribed shall fall within the circumstance that the overseas investor is entitled to declare the exemption as set out in the Notice.
The Online Single Submission System is now Administered by the Investment Coordinating Board (BKPM)In 2018, the Government issued Government Regulation No. 24 of 2018 on Electronic Integrated Business Licensing Services ("GR No. 24/2018"), which established the Online Single Submission ("OSS") portal. The OSS system integrates the process of applying for multiple regulatory permits in one place and is aimed at providing businesses with a one-stop shop with a 24/7 service for receiving all clearances. The licenses and permits that can be granted via the OSS portal include the social security programs (BPJS), location permits, environmental license, building construction permit (IMB) and foreign employees utilization plan (RPTKA). After its establishment, the OSS portal was spearheaded by the Coordinating Ministry for Economic Affairs ("CMEA").
On 21 December 2018, the CMEA issued Letter No. S-389/M.EKON/12/2018, which confirmed the transfer of the implementation of the OSS system from CMEA to the Investment Coordinating Board ("BKPM"). This included the operational aspect of business licenses and permits service, and the OSS system itself. As such, from 2 January 2019 onwards, the BKPM is operating the services for business licenses and permits in the forms of:
- a service room (OSS Lounge), which will be located in the BKPM Office; and
- a service centre (call centre number 1500765) and technical help service through e-mail: email@example.com or firstname.lastname@example.org or email@example.com.
Government Waives the Need for Import Licence for Steel and CementThe Government has issued an order calling for the revocation of the import licence requirement beginning year 2019. Imports of steel and cement will instead be regulated by customs officials at border crossings in line with the regulations. The move follows the Prime Minister’s Ordinance on Regulatory Amendment and Coordination Mechanism of Business Operations in Laos, No. 02/PMO dated 1 February 2018 on trade across borders, which is implemented by the Ministry of Industry and Commerce under Order No.1364/MOIC.DIMEX dated 28 September 2018.
The ordinance is part of the efforts initiated by the Government to speed up and streamline business operations in Laos. It is hoped that this will result in the improvement of Lao's international competitive ranking and ease-of-doing-business ranking, particularly the “Trading across Border” indicator.
The Government intends to implement similar measures to create a more favorable climate in its bid to reduce Laos' ease-of-doing-business ranking from its current 141st place among 190 economies, to two digits by 2020.
Industry and Commerce Office Issues Notification on Enterprise Seal Making and Sign of Enterprise NameOn 26 November 2018, the Industry and Commerce Office of the Ministry of Industry and Commerce ("MOIC") issued Notification No. 2832/PSO.ERMD ("Notification") on Enterprise seal making and sign of enterprise name. The Notification applies to the Provincial Industry and Commerce Department, District Industry and Commerce Office, and Enterprises (Individual or Legal entities) registered with the Office of Ministry of Public Security, Ministry of Information, Culture and Tourism, Ministry of Public Works and Transport and other relevant authorities.
The key provisions of the Notification include:
- Enterprise seal making: After being granted business registration certificates ("Certificates") by the Enterprise Registration Office of the MOIC, the relevant enterprises can request, upon presentation of the Certificates, for the manufacture or making of the enterprise seals without the approval of the Ministry of Public Security.
- Sign of enterprise name ("Sign"): After being granted the Certificates, the enterprises can request for the manufacture or production of their Signs from entities authorised by the Ministry of Information, Culture and Tourism, upon presentation of their Certificates.
The Notification has been effective since 5 October 2018. It replaced Notification No. 1542/ PSO.ERMD dated 21 June 2018 on Enterprise seal making and sign of enterprise name.
Law on Penal Code Takes Effect on 1 November 2018The Lao Government has published the new Penal Code, which took effect on 1 November 2018. The new law aims to ensure that penalties for offences are harmonised. It also aims to make it easier for the relevant authorities, such as investigative officials, prosecutors and judges, to refer to and enforce the relevant laws. This landmark legislation is the first legal code enacted in Laos. It not only provides amendments to the Penal Law 2005, but also incorporates the penal provisions of twenty other laws encompassing a range of areas of law, from commercial law, women and children’s law, health law, and environmental law, into one code. The Penal Code has notably amended most of these laws by imposing increased penalties or stipulating additional acts that constitute offences.
Federal Court Holds that Exclusion Clauses Seeking to Protect Contract Breakers from Liability are InvalidIn a landmark decision, the Federal Court had, on 17 December 2018, held that contract breakers (in that case a commercial bank) cannot rely on exclusion clauses to shield themselves from claims for damages by the counter-party arising from a breach of the contract or negligence. The Federal Court struck down as invalid a common exclusion clause in loan agreements which absolved a commercial bank from "any amounts for loss of income or profit or savings, or any indirect, incidental consequential exemplary punitive or special damages of the Borrower". It was opined that such a clause is manifestly unjust to bank customers and contrary to public policy, and in any event against Section 29 of the Malaysian Contracts Act 1950.
With the above development, it is likely that commercial entities (including banks) are likely to immediately review the standard terms and conditions of their agreements with customers, with specific focus on the extent and wording of exclusion clauses.
Patent Infringement in Relation to HeadscarfThe headscarf is a traditional head gear / apparel used in the Middle East as well as by many Muslims around the world. A patent infringement case relating to a ready-to-wear headscarf was filed before the High Court. This case involves the novel issue of the patentability of what is essentially an item of clothing which, on the face, may appear to be a simple invention.
The High Court decided in favour of the patentees. It was held that the patent registered by the patentees is valid and that the Defendants have infringed the registered patent. The decision will have a major impact on other future cases involving similar cheap-to-produce products and / or patentable simple inventions.
This case is significant as it is one of the rare patent infringement suits filed in Malaysia relating to commercial products, in this case a ready-to-wear headscarf. This case also highlights the importance for businesses to register their inventions to protect their rights.
Christopher & Lee Ong successfully acted for the patentees of the Malaysian patent of the headscarf.
The Effect of Disclaimer and the Use of Trade Mark on the InternetIn a case involving online marketing and booking of hotels, the High Court ruled that online marketing and online booking platform presence amounts to "use" of a registered trade mark in Malaysia. Millennium & Copthorne International Limited ("M&C") filed a trade mark infringement case against M Hospitality Group Sdn Bhd ("M Hospitality"). M&C is part of the Millennium & Copthorne Group ("M&C Group") which, inter alia, owns and operates hotels, serviced apartments and residences, and hospitality-related services around the world.
Among the hotels operated by M&C Group is the world renowned "M Hotel" which is operating in Singapore and China. The trade mark "M Hotel & Logo" is registered in the name of M&C in Malaysia. M Hospitality operated a 2-3 star budget hotel in Puchong, Malaysia under the name of "M Hotel".
M Hospitality counterclaimed for the removal of the registered "M Hotel & Logo" trade mark from the Register of Trade Marks. M Hospitality also alleged that M&C did not use their "M Hotel" marks in Malaysia under Section 46 of the Trade Marks Act 1976 since there are no physical M Hotels by M&C in Malaysia.
The High Court ruled in favour of M&C. The High Court decided that online marketing and online booking platform presence amounts to "use" of the registered trade mark in Malaysia and thus, dismissed M Hospitality's counterclaim. We believe this is a novel issue as we are not aware of any reported case which has dealt with this legal issue in detail before. Further, M Hospitality was found to have infringed M&C's registered trade mark even though the trade mark registration of M&C comes with a disclaimer on the letter "M" and the word "Hotel".
Christopher & Lee Ong successfully acted for M&C in this case.
Regional Comprehensive Economic Partnership - The Next ASEAN Focused Regional Economic AgreementThe Regional Comprehensive Economic Partnership ("RCEP") is a mega-regional trade agreement currently being negotiated between the 10 ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and 6 Asia-Pacific countries namely, Australia, China, India, Japan, New Zealand and South Korea (collectively, "RCEP Members"). The RCEP Members collectively have a population of more than 3.5 billion and a combined GDP of around US$27 trillion (32% of Global GDP). Launched initially in November 2012 as an ASEAN initiative, RCEP aims to foster inclusive development, promote innovation, drive sustainable growth and support job generation among the RCEP Members.
RCEP will cover various aspects of the economy such as trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce and small and medium enterprises ("SMEs"). Recognising the importance of being inclusive, RCEP will lower trade barriers and has the potential to enhance trade and investments among RCEP Members.
During the 2nd RCEP Summit ("RCEP Summit") which recently took place in Singapore on 14 November 2018, trade ministers of RCEP Members recognised the significant progress made throughout the year on RCEP negotiations. Recognising the urgency to conclude the RCEP negotiations as soon as practicably possible, the ministers have undertaken the collective commitment to ensure the conclusion of RCEP in 2019.
Almost 62% of Malaysia's trade involves RCEP Members and at least 60% of Malaysia's exports go towards the countries covered by RCEP. Given that 10 out of 16 RCEP Members are considered Malaysia's top trading partners, RCEP will provide Malaysian companies and consumers with increased commercial opportunities and partnerships with other RCEP Members. While Malaysia actively promotes free trade and is generally seen to be an open economy, reduced trade barriers coupled with enhanced market access will no doubt make Malaysia more attractive to foreign investors and encourage cross-border investments amongst RCEP Members.
Click to read our client update.
Liberalisation of Bond and Sukuk Market: Seasoned Corporate Bonds & SukukIn its quest to facilitate greater retail participation for the RM1.3 trillion outstanding bonds and sukuk issued in the local corporate bond and sukuk market, the Securities Commission Malaysia ("SC") announced measures to liberalise its regulatory framework to facilitate such participation. The liberalised framework consists of the new Guidelines on Seasoned Corporate Bonds and Sukuk ("Guidelines") and amendments to Guidelines on Issuance of Corporate Bonds and Sukuk to Retail Investors, the Guidelines on Sales Practices of Unlisted Capital Market Products, as well as Division 2 of the Prospectus Guidelines, which came into effect on 11 October 2018.
The Guidelines set out the requirements for making available, offering for subscription or purchasing, or inviting to subscribe or purchase seasoned corporate bonds or sukuk to retail investors. These Guidelines do not apply to the following:
- asset-backed securities ("ABS") as defined under the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework ("LOLA Guidelines"); or
- corporate bonds or sukuk that are structured like an ABS and have the following features but which do not fall under the purview of the LOLA Guidelines:
- where the corporate bonds or sukuk are without recourse to an originator or obligor; or
- where the ability to meet obligations under the senior tranche is enhanced by the less senior tranche.
- a licensed bank, licensed investment bank or licensed Islamic Bank;
- a public listed company whose shares are listed and quoted on a stock exchange;
- Cagamas Bhd;
- Danajamin Nasional Bhd;
- Khazanah Nasional Bhd;
- a public company whose share are not listed and quoted on a stock exchange, provided that:
- the corporate bonds or sukuk are irrevocably and unconditionally guaranteed in full by any of the entities referred to in the above paragraphs (i) to (v) or the Credit Guarantee and Investment Facility; or
- the sukuk are issued by a public company established by any of the entities referred to in the above paragraphs (i) to (ii), with full recourse to be establishing entity in its capacity as obligor.
Branches of Foreign Banks Now Permitted to Provide Financing to Local BusinessesThe Central Bank of Myanmar ("CBM") recently issued Notification No. 6/2018 dated 8 November 2018 ("Notification") giving all branches of foreign banks the right to provide financing and other banking services to local businesses.
This directive seeks to address the issues that local companies traditionally face when trying to secure financial assistance from branches of foreign banks operating in Myanmar. Prior to the Notification, foreign banks were limited to lending only to foreign entities in foreign currencies. With the Notification, these branches of foreign banks are now allowed to provide financing to domestic companies in both local and foreign currencies. Foreign bank branches are also permitted to set their own rates for foreign currency loans, which must be in line with market rates.
However, foreign bank branches will not be allowed to accept immovable property as collateral. They are also not allowed to offer retail banking services such as personal savings accounts, money transfers and card services.
Businesses welcomed the move, which came after CBM allowed foreign banks to provide export financing in December 2017, followed by banking services related to the provision of export financing in the early part of 2018.
Currently, there are 13 foreign bank branches in Myanmar as well as 25 local private banks and 4 government banks that are allowed to operate in Myanmar's banking and finance sector.
House of Representatives Approves Anti-Racial, Ethnic and Religious Discrimination BillThe House of Representatives approved on second reading House Bill 8637, otherwise known as the Anti-Racial, Ethnic and Religious Discrimination Bill ("Bill"). The Bill seeks to protect and enhance the rights of all people to human dignity, reduce social, economic and political inequalities, as well as remove cultural inequities. It also aims to ensure that there will be free exercise and enjoyment of religious profession and worship without any form of discrimination or preference.
The Bill defines acts of discrimination as "any act involving distinction, exclusion, restriction, or preference made on the basis of race, color, descent, national or ethnic origin, religion, or religious affiliation or beliefs, which has the effect or purpose of impairing or nullifying the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other field of public life."
Under the Bill, any person, natural or juridical, including a government agency or a private corporation, institution or company, who performs a discriminatory act may be held liable and may suffer the penalties prescribed in the proposed law. Any person who requests, instructs, induces, encourages, authorises or assists another to commit acts of discrimination shall also be liable.
It mandates all agencies, corporations, companies, and educational institutions, as well as any individual providing employment, housing, education, and the delivery of basic goods and services to establish a Non-Discrimination and Equal Opportunity Committee, which shall exercise administrative jurisdiction to investigate acts of discrimination. Failure to ensure the effective implementation of the Bill shall be deemed refusal to address the issue of discrimination and shall be considered in itself as an act of discrimination, and shall equally be liable for discrimination.
Violations of the proposed Act shall attract a penalty of imprisonment of 30 days to six months and / or a fine of P10,000 to P100,000, depending on the circumstances and gravity of the offense committed.
Bill on Regulation of Islamic Banks Hurdles Final ReadingThe House of Representatives, voting 121-0 without abstention, approved on third and final reading House Bill 8281 ("Bill") or "An Act Providing for the Regulation and Organization of Islamic Banks".
Speaker Gloria Macapagal-Arroyo, the author of the Bill, said that the lack of effective access to responsive financing is one of the main challenges to the growth and development of Micro, Small and Medium Enterprises ("MSMEs") in the country. She highlighted that this obstacle is "doubly experienced by the Filipino Muslim entrepreneurs in the Autonomous Region in Muslim Mindanao ("ARMM")-Bangsamoro Region and in different parts of the country with the absence of banking and financial services that are compliant with the principles of Shari'ah or Islamic law".
Speaker Arroyo said that Islamic banking in the country is limited by three challenges: (i) lack of a clear and regulatory framework for Islamic banking and finance, where existing laws do not provide for the policy infrastructure needed to enable Islamic banks to thrive, and also subject Islamic financing products to more taxes; (ii) lack or scarcity of experts on Islamic banking and finance; and (iii) lack or very low investor awareness and acceptance of Islamic banking and finance.
The Bill defines Islamic banking business as a banking business whose objectives and operations do not involve interest (riba), which is prohibited by the Shari'ah, and which conducts its business transactions in accordance with Shariáh principles.
Under the Bill, Islamic banks may exercise the general powers of a universal bank that are consistent with the principles of Shari'ah. The Bangko Sentral ng Pilipinas ("BSP"), which shall exercise regulated powers and supervision over the operations of Islamic banks, may authorise the creation of Islamic banks. It may also authorise conventional banks to engage in Islamic banking activities through a designated Islamic banking unit within the respective banks, provided that the Islamic banking unit is separate from their conventional banking transactions.
Moreover, the BSP may authorise foreign Islamic banks to establish Islamic banking operations in the Philippines under any of the modes of entry provided for under Republic Act No. 7721, as amended, otherwise known as "The Liberalization of Entry and Operations of Foreign Banks."
Islamic banks will be allowed to perform banking services, such as accepting or creating current, savings accounts and investment accounts, foreign currency deposits, and act as correspondent banks and institutions among others.
The Islamic banks shall be licensed and regulated in the same manner as a universal bank and the BSP shall issue the necessary rules and regulations governing Islamic banking.
Speaker Arroyo said that there are more than 600 Islamic financial institutions operating in more than 75 countries. However, there is only one Islamic bank operating in the Philippines. The enactment of the law is expected to provide a robust ecosystem where more entrepreneurs, especially in the ARMM-Bangsamoro Region, can thrive and prosper, and more opportunities for greater financial inclusion are created.
SEC Requires Companies to Declare Beneficial OwnersOn 27 November 2018, the Philippines' Securities and Exchange Commission ("SEC"), pursuant to its mandate to assist in the implementation of the Anti-Money Laundering Act to prevent money laundering and terrorist financing purposes, issued Memorandum Circular No. 17, series of 2018 ("MC No. 17-2018").
MC No. 17-2018 revises the current format of the General Information Sheet ("GIS") which will now require all SEC-registered stock and non-stock domestic corporations to disclose the identity, specific residential address, nationality, tax identification number, as well as percentage of ownership, of their respective beneficial owners. Under MC No. 17-2018, a beneficial owner refers to any natural person who "ultimately owns or controls the corporation" or "has ultimate effective control over the corporation".
In addition to disclosing the identity of the beneficial owners, domestic corporations are also required to identify any intermediate layers of the company's ownership structure if a corporation is owned through multiple layers. The information shall be declared in the GIS and illustrated in an ownership chart to be attached thereto showing the intermediate layers with their corresponding ownership amounts.
Compliance with MC No. 17-2018 shall be required beginning 1 January 2019.
Amendments to Corporation Code Approved by Senate on 3rd ReadingThe Senate has passed on third and final reading Senate Bill No. 1280 ("SB 1280") which seeks to amend Batas Pambansa Bilang 68 or the Corporation Code of the Philippines (the "Corporation Code"). The measure was authored and sponsored by Senate Minority Leader Franklin M. Drilon and co-sponsored by Senate Majority Leader Juan Miguel F. Zubiri. It was approved with 20 affirmative votes.
Some significant amendments proposed by SB 1280 are as follows:
- One Person Corporation. SB 1280 proposes that a single shareholder, who may be a natural person, a trust, or an estate, may form a corporation on its own, with the requirement that it must carry the letters "OPC" either below or at the end of its corporate name. Currently, the Corporation Code requires at least five (5) incorporators to form a corporation.
- Perpetual existence of corporations. Under the Corporation Code, corporations have a maximum term of 50 years. Under SB 1280, corporations shall have perpetual existence unless otherwise provided in its Certificate of Incorporation. It is also proposed that corporations whose respective terms have expired may, at any time, apply for a revival of its corporate existence. Upon approval of the Securities and Exchange Commission ("SEC"), an amended certificate of incorporation shall be issued, giving it perpetual existence.
- Requirements on corporate officers. Under the Corporation Code, the president is the only officer who is required to be a director. The elected treasurer of a corporation may or may not be a director, and neither the president or the treasurer is required to be a resident of the Philippines. Under SB 1280, it is proposed that both the president and the treasurer must be directors of the corporation and at least one (1) of them must be a resident of the Philippines.
- Disqualification of directors, trustees or officers. Under the Corporation Code, there are two disqualifications that may prevent a person from qualifying as a director, trustee or officer in any corporation: (1) conviction by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years; or (2) a violation of the Corporation Code. SB 1280 proposes to add three more disqualifications, namely: (1) conviction by final judgment of a violation of Republic Act No. 8799, otherwise known as the Securities Regulation Code; (2) conviction by final judgment or being found administratively liable for any offense involving fraud, theft, estafa, counterfeiting, misappropriation, forgery, bribery, false oath, perjury and other fraudulent acts; and (3) conviction by final judgment by a foreign court or equivalent foreign regulatory authority of acts, violations or misconduct similar to the foregoing.
- Securities deposit requirement for foreign corporations. The Corporation Code currently requires foreign corporations to deposit with the Securities and Exchange Commission securities consisting of bonds or other evidence of indebtedness, for the benefit of present and future creditors, with an actual market value of at least one hundred thousand pesos (₱100,000.00). It is proposed that the actual market value of the required securities deposit be increased from ₱100,000.00 to ₱500,000.00.
MAS Issues Guidelines for the Provision of Digital Advisory ServicesIn October 2018, the Monetary Authority of Singapore ("MAS") issued the Guidelines for the Provision of Digital Advisory Services to facilitate the provision of these services in Singapore. The Guidelines incorporate feedback received pursuant to a public consultation in June 2017 as well as learning points from MAS' engagements with the industry.
The guidelines will improve clarity on how existing rules apply in the context of digital advisory services. To make it easier for entities offering digital advisory services to operate in Singapore, the guidelines also set out refinements in the licensing and business conduct requirements under the Securities and Futures Act ("SFA") and Financial Advisers Act ("FAA").
The Guidelines can be viewed here.
Singapore Employment Act Extended to All EmployeesIn November 2018, the Singapore Parliament passed the Employment (Amendment) Bill. The amendments will see all employees being accorded greater protection and rights. Some of the key changes include expanding the core provisions of the Act to cover all managers and executives regardless of their salary levels, amending the definition of dismissal to include forced resignation, mandating statutory leave entitlements to all employees and not just Part IV employees, and increasing the salary level threshold of employees entitled to statutory protections under Part IV of the Act (such as stipulations on working hours and rest days).
The above changes will take effect from 1 April 2019.
Consultation on Proposed Changes to Delisting RulesOn 9 November 2018, Singapore Exchange ("SGX") Regulation ("SGX RegCo") issued a consultation paper on proposed amendments to the voluntary delisting regime. The proposed amendments are aimed at aligning the interests of the offeror and shareholders, in particular minority shareholders, as much as possible, and relate to the exit offer and the shareholder approval thresholds for the voluntary delisting resolution.
The consultation ended on 7 December 2018. Subject to feedback received, SGX hopes to implement the new rules in 2019. Click here to read our client update.
Court of Appeal Upholds Setting Aside of Investor-state Arbitral AwardIn Kingdom of Lesotho v Swissbourgh Diamond Mines (Pty) Limited and others  SGHC 195, the Singapore High Court allowed the Kingdom of Lesotho's application to set aside an investor-State arbitral award. This marked the first time the Singapore courts allowed an application to set aside an investor-State arbitration award on the merits. The application engaged novel issues of international arbitral law, international investment law and public international law.
Click here to read our client update.
New Labour Protection LawOn 13 December 2018, the meeting of the National Legislative Assembly ("NLA") passed the Draft Labour Protection Act 2541 B.E. (1998 A.D.) ("Amended LPA"). The Amended LPA is now pending publication in the Royal Gazette. Based on the draft Amended LPA publicly available, which is the draft proposed to the NLA for consideration, the Amended LPA will come into force 30 days after its publication in the Royal Gazette. However, based on media reports, the Amended LPA is expected to come into force around the end of January 2019.
The key amendments include the following areas:
- Severance pay
- Interest on money owed to employees
- Transfer and termination of employees
- Business leave and maternity leave
- Wages, overtime payments and payments for working on holidays
- Suspension and relocation of business
- Penalties against employers for breach of LPA provisions
Competition Notifications IssuedNovember-December 2018 saw a number of notifications issued by the Trade Competition Commission to implement the new Trade Competition Act B.E. 2560 (2017) ("2107 Act"), which repealed and replaced the first competition law in Thailand, the Trade Competition Act B.E. 2542 (1999). Further implementing regulations and notifications were required to clarify and implement the full scope of the 2017 Act.
On 28 December 2018, seven Notifications of the Trade Competition Commission were published in the Government Gazette, giving further guidance on the criteria, procedures and conditions in areas such as mergers, market dominance, the acquisition of assets or stocks, bringing goods as samples, settlement fines and advance rulings from the Trade Competition Commission.
On 1 November 2018, there were five new Notifications of the Trade Competition Commission published in the Government Gazette. These five Notifications became effective on 2 November 2018. These Notifications cover the areas of market definition and market share, prohibited acts of market dominance, joint undertakings resulting in a monopoly or reduction of competition, and actions resulting in damage to other business operators.
International Business Centre (IBC) Scheme under the BOIOn 11 December 2018, the Thailand Board of Investment ("BOI") announced a new investment promotion scheme, International Business Center ("IBC"), to replace the International Headquarters ("IHQ") and International Trading Centers ("ITC") scheme. The IBC under BOI is essentially the combination of IHQ and ITC schemes. No new applications for IHQ and ITC will be accepted by the BOI as of 11 December 2018.
The criteria and conditions under the IBC scheme are as follows:
- The promoted entity must have a business plan for providing services to affiliates with the following scope:
1.1 Organizational administration and management, business planning and business coordination;
1.2 Procurement of raw materials and parts;
1.3 Research and development;
1.4 Technical support;
1.5 Marketing and sales promotion;
1.6 Human resources and training;
1.7 Advisory relating to finance;
1.8 Economic and investment analysis and research;
1.9 Credit management and control;
1.10 Treasury center;
1.11 International trading center; and
1.12 Other services as announced by the Revenue Department.
- The promoted entity must have a paid-up registered capital of not less than THB 10 million;
- The promoted entity must permanently employ not less than 10 employees who have the necessary knowledge and skill for the IBC. In case the promoted entity provides only treasury services, not less than 5 similarly competent employees must be permanently employed;
- For engaging in international trading center, the promoted entity must also engage in at least one of the activities listed from 1.1 to 1.10 above;
- Duty exemptions on raw and essential materials imported for manufacturing and export are not granted; and
- The promoted entity is not eligible for merit-based privileges.
New Transfer Pricing LawOn 21 November 2018, an amendment to the Revenue Code was published in the Government Gazette, introducing a new transfer pricing regime in Thailand.
One of the key changes introduced is that companies deemed to be related parties as defined under the amendment will be required to prepare and submit transfer pricing disclosure unless they come under the threshold for such reporting. The reporting requirement will come into effect for those companies whose financial year starts from 1 January 2019.
Revenue Department auditors will have 5 years in which to seek further information regarding the transfer pricing filing.
Ratification of the CPTPPOn 12 November 2018 the National Assembly of Vietnam unanimously voted to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP"), making Vietnam the 7th country to ratify the multilateral trade agreement, together with Mexico, Japan, Singapore, New Zealand, Canada and Australia. The CPTPP, having met the requirement for at least 6 signatories, would come into effect from 30 December 2018.
The CPTPP was concluded following the US' earlier withdrawal from the TPP, after the remaining states sought to revive the comprehensive trade agreement.
Draft Decree on the Law on Cyber SecurityOn 31 October 2018, the Government released the highly-anticipated draft guiding decree to the controversial Law on Cyber Security, for public comment.
Relevantly, the draft decree has provided some guidance as to the scope of subjects that will need to comply with the Law on Cyber Security's data localisation requirements. Under the draft, the subjects will cover organisations – both Vietnamese and foreign – which provide telecommunication services, hosting and data-sharing services, domain names services, e-commerce, online payment, payment intermediation, mobility services via cyberspace, social network, online games and email.
However, despite the broad scope of subjects, the draft is presently still under consultation and subject to further refinement following the consultation with the public. The Government is likely to issue an updated draft in the coming time.
Compulsory Social Insurance for Foreign Employees under Decree 143/2018/ND-CPOn 15 October 2018, Decree 143/2018/ND-CP came into force to guide the social insurance for foreign employees. Since 2014, the Law on Social Insurance had envisaged the contribution of social insurance for foreign employees and their employers. However, until October 2018, it was not implemented due to an absence of guidelines that specified, among others, the rate of contribution required.
Under the new decree, commencing from 1 December 2018, employers will need to contribute 3.5% of the foreigner employee's salary towards social insurance (covering sickness, maternity and occupational illness allowances). From 1 January 2022 onwards, the social insurance regime for foreigners will mirror those applied to Vietnamese employees, meaning that employers are to contribute 17.5% and employees are to contribute 8%, subject to a salary cap of 20 times the minimum wage.