MAS to get more powers under reforms

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.