Your Snapshot of Key Legal Developments in Asia
Issue 1 - Jan/Feb/Mar 2021
- Key Aspects of Cambodia's New Sub-Decree on National Internet Gateway
- SERC Issues Prakas on Reporting Obligations and Request for Approval of Central Counterparties and Derivatives Brokers
- Law on Organization and Functioning of Non-Banking Financial Services Authority
- MEF Issues Prakas No. 009 on Reclassification of Taxpayers
- Implementation of Online Systems for Labour and Vocational Training Related Public Services
- China Issues Anti-Monopoly Guidelines for Internet Platform Economy
- China Expands Foreign Investment Security Review Rules
- MOFCOM’s First Order of 2021 – Rules on Counteracting Unjustified Extra-territorial Application of Foreign Laws
- A New Age in Employment
- Indonesia's New Investment List Widens Investment Opportunity
- For Public Companies, New Rule on Going Private and Obligation regarding Controlling Shareholders
- Bank Indonesia Introduces Rule on Payment System
- Notice from Bank of Lao PDR on the Monitoring of Use of Payment Services
- Dissolution of the Ministry of Science and Technology
- Lao Government Issues Decision on Management and Monitoring, Treatment, Disposal of PCBs in the Transformer
- Registration of Taxpayer Identification Numbers for Individuals
- First Corporate Liability Charge under the Malaysian Anti-Corruption Commission Act 2009
- LSS4 or LSS@MEnTARI: Results and Analysis
- The Malaysiakini Decision: Apex Court’s Ruling on Liability of Online Intermediary Platforms for Third-Party Content
- Amendments to the Industrial Relations Act 1967
- Licensing Framework for Digital Banks
- Military Takeover 1 February 2021
- Amendments to the Ward and Village Tract Administration Law and the Law Protecting the Privacy and Security of Citizens
- Amendments to the Penal Code
- Amendments to the Electronic Transactions Law
- Major Revisions Made to the Tax Code to Provide Relief to Businesses and Boost Investments in the Philippines Especially for Knowledge-Based Industries
- Anti-Red Tape Authority Issues Guidelines for the Mandatory Onboarding to the TradeNet platform
- IPOPHL Expands Enforcement Powers Against Online Counterfeiting and Piracy through its Revised Rules of Procedure
- House Consolidates Bills to Amend and Modernize the Intellectual Property Code
- SEC Issues Beneficial Ownership Transparency Guidelines
- ASEAN Capital Markets Forum Launches Five-Year Action Plan
- Sustainability Financing: Taxonomy Proposed for Singapore-based Financial Institutions to Identify "Green" Activities
- Data Management for Businesses: Launch of ASEAN Data Management Framework and Model Clauses on Data Transfer
- Multimodal Transport Act: Standardising Framework for Multimodal Transport Operators throughout ASEAN
- Singapore High Court Issues Significant Judgment on Freezing Injunctions in Cross-Border Insolvency and Asset Recovery Claim
- Labour-Related Relief Measures to Ease Impact from COVID-19 Outbreak
- Tax Relief Measures in Light of COVID-19 Pandemic
- Guideline on Unfair Trade Practices of Online Food Delivery Platforms
- Board of Investment's Acceleration Measures for 2021
Key Aspects of Cambodia's New Sub-Decree on National Internet Gateway
On 16 February 2021, the Royal Government of Cambodia issued Sub-Decree No. 23 on the Establishment of National Internet Gateway ("Sub-Decree"). The Sub-Decree aims to facilitate and manage internet connections for the enhancement of effective and efficient national revenue collection, protection of national security, and assurance of social order, culture, and tradition.
Sub-Decree contains 11 chapters and 20 articles. The National Internet Gateway ("NIG") includes the Domestic Internet Exchange ("DIX") and the International Internet Gateway ("IIG"). The operator of the NIG ("NIG Operator") shall apply for and obtain a licence from the Telecommunication Regulator of Cambodia ("TRC"). Both the DIX and IIG must be operated in Phnom Penh, Sihanoukville Province, Poi Pet City, and Bavet City, and other areas to be identified by the Ministry of Post and Telecommunications ("MPTC"). Any approval/permit on the cross-border physical connection issued prior to 16 February 2021, which is the effective date of the Sub-Decree, shall be abrogated after 12 months from such effective date of the Sub-Decree, except the rights granted under the Licence of the Operation of International Telecommunications Gateway and the Licence of Submarine Cable Landing Station Operation.
The Sub-Decree also requires NIG Operators to cooperate with relevant authorities in ensuring that national revenue collection, safety, public order, dignity, culture, tradition and societal customs are maintained. To this end, NIG Operators are required to monitor traffic data consistently and submit traffic data reports to MPTC and TRC on a regular basis.
For more information, click here to read our Legal Update.
SERC Issues Prakas on Reporting Obligations and Request for Approval of Central Counterparties and Derivatives Brokers
On 18 January 2021, the Securities and Exchange Regulator of Cambodia ("SERC"), previously known as the Securities and Exchange Commission of Cambodia, issued a new Prakas No. 001/21 SECC/P on the Obligations to Provide Reports, Notify, and Request for Approval of Central Counterparties and Derivatives Brokers ("New Prakas").
The New Prakas sets out the following obligations of central counterparties and derivatives brokers in accordance with the Law on the Issuance and Trading of Non-Government Securities and the Sub-Decree in relation to this, as well as relevant regulations:
- the reporting obligations;
- notifying SERC of relevant changes or occurrences within the organisation; and
- seeking SERC's written approval before undertaking specified events or activities.
The New Prakas is issued to monitor and supervise the central counterparties' and derivative brokers' observance and compliance with such obligations and to ensure transparency, accountability, and good order among the stakeholders. The New Prakas applies to the central counterparties and derivatives brokers who have obtained licences/permits from SERC.
For more information, click here to read our Legal Update.
Law on Organization and Functioning of Non-Banking Financial Services Authority
The Law on Organization and Functioning of Non-Banking Financial Services Authority ("Law") was promulgated on 16 January 2021. Under the Law, a Non-Banking Financial Services Authority ("Authority") is created to regulate and supervise the non-banking financial sector in Cambodia. It is established to: (i) enhance and ensure the effective implementation of regulations relating to the non-banking financial sector; (ii) monitor the development of the non-banking financial sector; and (iii) promote the development and utilisation of financial technology in the non-banking financial sector.
The non-banking financial sector includes, but is not limited to, insurance and private pension, securities, social security, trust, accounting and audit, real estate, pawnshops, and transfer as security.
The Authority is governed by the Non-Banking Financial Authority Council. It has the General Secretariat, Insurance Regulator of Cambodia, Securities Regulator of Cambodia, Social Security Regulator, Trust Regulator, Accounting and Audit Regulator, and Real Estate and Pawnshop Business Regulator as its subordinated entities.
For more information, click here to read our Legal Update.
MEF Issues Prakas No. 009 on Reclassification of Taxpayers
The Ministry of Economy and Finance has issued Prakas No. 009 on the Reclassification of Taxpayers under the Self-Assessment Regime (or the Real Regime of Taxpayers) dated 12 January 2021 ("Prakas No. 009"). Prakas No. 009 applies to all taxpayers who have registered from 12 January 2021, and specifically reclassifies taxpayers based on turnover and sectors.
All types of taxpayers — small, medium, and large — are required to declare the actual turnover to the General Department of Taxation ("GDT"). If GDT finds that the taxpayers have not declared the actual turnover, it may, at its discretion, reclassify taxpayers based on total assets of the taxpayers, which include current and non-current assets.
Prakas No. 009 replaces Prakas No. 025 on the Classification of Taxpayers under the Self-Assessment Regime (or the Real Regime of Taxpayers) dated 24 January 2018.
For more information, click here to read our Legal Update.
Implementation of Online Systems for Labour and Vocational Training Related Public Services
The Ministry of Labour and Vocational Training ("MLVT") has issued Prakas No. 430/20 MLVT/Pr.K.CBN on the Implementation of Labour and Vocational Training Related Public Services via Online Systems ("Prakas"). The online systems were launched to strengthen the quality and effectiveness of public services, and foster transparency and accountability in the public sector. They were launched upon the request of the private sectors. These online systems are:
https://lacms.mlvt.gov.kh/ for labour-related public services;
https://tvcms.mlvt.gov.kh/ for vocational training-related public services; and
https://fwcms.mlvt.gov.kh/ for foreign workforce-related public services.
The above online systems are accessible from 11 January 2021 for those using the public services listed under the authority of MLVT, and from 1 March 2021 for those using the public services listed under the authority of the Provincial/Municipal Department of Labour and Vocational Training and One Window Service Offices ("Sub-National Offices"). In the event that the employers or the employees cannot access the systems during the initial period of this implementation, they are advised to directly contact MLVT or the Sub-National Offices for related public services.
Employers and employees must be aware of the new public service fees set out in Joint-Prakas No. 335 MEF.Pr.K on the Public Services Provided by MLVT dated 27 March 2020 when using the public services.
China Issues Anti-Monopoly Guidelines for Internet Platform Economy
On 7 February 2021, the Anti-Monopoly Commission of the State Council of China issued the Anti-Monopoly Guidelines for the Platform Economy (国务院反垄断委员会关于平台经济领域的反垄断指南, "Guidelines") with immediate effect, with an intent to regulate China's fast-growing digital economy to: (i) prevent and stop monopolistic behaviours; and (ii) promote the sustainable and healthy development of online commerce.
The Guidelines consist of six chapters with 24 articles. Compared to its earlier draft Guidelines which were released for public comments on 10 November 2020, the final Guidelines generally adopt a similar scope and structure as the draft version, but appear to adopt a more balanced approach with respect to some controversial issues, such as the role of market definition and effects analysis. The final Guidelines emphasise that defining the "relevant market" is usually required when investigating monopoly agreements, abuse of dominance and merger control in the Internet platform sector, as opposed to the draft Guidelines which provided that the authorities may not need to clearly define the relevant market when, amongst others, investigating (i) horizontal monopoly agreements which fix prices or divide markets, or (ii) vertical monopoly agreements which fix resale prices or limit minimum resale prices.
For the Variable Interest Entities ("VIEs") related mergers and acquisitions ("M&As"), the Guidelines expressly state that transactions involving VIEs are subject to merger control in China in the normal way, which remains unchanged since the draft Guidelines. It is worth noting that before the final Guidelines were released, the PRC State Administration for Market Regulation had already taken enforcement actions against three VIE-related M&As by Alibaba Investment Co., Ltd., Tencent-backed China Literature Group, and Shenzhen Fengchao Network Technology Co., Ltd., respectively, imposing the statutory maximum fine (RMB 500,000) on each entity for their failure to notify of their respective transactions for merger control.
The Guidelines clearly signal that a radical overhaul in antitrust enforcement approach to Internet platforms is underway, but there is still a long way to go as the State Administration for Market Regulation must first ensure that the Guidelines are properly implemented.
China Expands Foreign Investment Security Review Rules
On 18 January 2021, the Measures for Security Review of Foreign Investment (外商投资安全审查办法) ("SR Measures"), which was jointly issued by the PRC National Development and Reform Commission ("NDRC") and the Ministry of Commerce ("MOFCOM") on 19 December 2020, took effect. The SR Measures consist of 23 rules, covering among others the types of foreign investment which will be subject to review, the regulatory authority, scope of national security review, review procedures and timelines, and implementation and consequences of violations.
Compared with the existing PRC national security review mechanism introduced in 2011 that focused exclusively on the mergers and acquisitions of domestic enterprises by foreign investors, and the national security review trial regime launched in 2015 applicable only in the free trade zones, the SR Measures have introduced a revised national security review regime, expanding its application nationwide for different types of foreign investment. These include not only direct investment through acquisitions, but also indirect investment and "greenfield" investment in the form of establishing a wholly foreign-owned subsidiary or a joint venture. As for the sectors covered by security review, the SR Measures segregate them into two categories: (i) military-related industries and investments in areas of proximity to military facilities regardless of the element of control; and (ii) critical/important non-military sectors where foreign investors may exercise "actual control". The sectors in the second category include agricultural products, energy and resources, equipment manufacturing, infrastructure, transportation services, IT and Internet/online products and services, financial services, and critical technologies.
There are still a number of issues to be clarified under the SR measures, including without limitation (i) how to define "critical/important" in the above-mentioned sectors, and (ii) the distance requirements for "proximity" to military facilities, leaving a wide discretion to the regulators in interpreting the SR Measures. Therefore, it is advisable for the interested parties who are currently investing or proposing to invest in China to seek legal advice or consult the regulators at an early stage to evaluate whether their proposed investment in China may be subject to the national security review.
MOFCOM’s First Order of 2021 – Rules on Counteracting Unjustified Extra-territorial Application of Foreign Laws
On 9 January 2021, the Ministry of Commerce of China ("MOFCOM") issued the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures (阻断外国法律与措施不当域外适用办法, "Blocking Rules"), which came into force on the date of its promulgation.
The Blocking Rules consist of 16 articles, which establish blocking mechanisms against the improper application of the "long-arm jurisdiction" of foreign laws and sanctions ("Foreign Sanctions") on Chinese entities through various measures. These measures include the following:
- Imposing reporting obligations on Chinese citizens, legal entities and other organisations adversely affected by the Foreign Sanctions within 30 days;
- Establishing a working mechanism to assess and determine the existence of unjustified extra-territorial application of the Foreign Sanctions;
- Issuing prohibition orders ("Prohibition Orders") declaring the Foreign Sanctions unjustifiable and unenforceable, and prohibiting the acceptance, execution, or observation of relevant foreign legislation and other measures;
- Allowing Chinese entities to apply to MOFCOM for exemption from compliance with the Prohibition Orders; and
- Allowing Chinese entities adversely affected by the Foreign Sanctions to seek civil recourse in Chinese courts from entities which have infringed such Chinese entities' legitimate rights and interests by complying with the Foreign Sanctions.
As the Blocking Rules have been released early this year and their terms are general in nature, it is difficult to predict how they may be enforced. It is expected that the Chinese government will issue more detailed implementing regulations to clarify the uncertainties found in the Blocking Rules, as they typically do with similar general regulations. At the same time, there have also been heated discussions recently on whether boycotting cotton from the Xinjiang Uyghur Autonomous Region based on alleged enforced labor will trigger the issuance of a Prohibition Order under the Blocking Rules.
A New Age in Employment
Following the enactment of the Omnibus Law, the Government issued Government Regulation No. 35 of 2021 to further regulate fixed-term employment agreement, outsourcing, working hours and time-off, and termination of employment.
While the changes brought by this regulation are extensive, the below key points are worthy of highlighting:
- The maximum term of a fixed-term employment agreement is now increased from two years to five years. Employers should note that they must pay compensation after the expiration of the agreement.
- A court approval is no longer required to terminate employment. Employers can terminate by simply issuing a notification of termination at least 14 days before the termination date.
- New termination payment formulae that categorise the amount that must be paid based on the reason for termination have been introduced.
- Outsourcing companies must obtain a license from the Ministry of Manpower. An outsourcing company must also enter into an employment agreement with each outsourced employee.
Indonesia's New Investment List Widens Investment Opportunity
Another follow-up to the Omnibus Law was the enactment of the highly anticipated Priority Investment List under Presidential Regulation No. 10 of 2021 to replace the Negative Investment List. The new investment list significantly widens investment opportunity in Indonesia, and is designed to boost economic growth in the country.
Compared to the previous regime, all business sectors listed in the new list are open for foreign investment unless expressly declared as closed. The number of conditionally open business fields was reduced from 350 to only 46. By way of example, investment in the telecommunications, health, and trading, all of which were previously closed or capped to a certain percentage, is now 100% open.
At the same time, the Government also showed its commitment to protect the local industry by allocating 51 business fields for micro, small, and medium enterprises ("MSMEs") and cooperatives. Any investment in these fields must be conducted in cooperation with MSMEs or cooperatives.
Lastly, six business sectors are closed, and business sectors that are services in nature or fall under the defence and security framework can only be carried out by the central government.
For Public Companies, New Rule on Going Private and Obligation regarding Controlling Shareholders
In the capital market sphere, the Financial Services Authority or OJK enacted Regulation No. 3/POJK.04/2021, where it introduced rules on going private, as well as reinforcing the obligation to disclose controlling shareholders.
On going private, OJK allows a public company to go private voluntarily or based on a request from OJK or the Indonesia Stock Exchange ("IDX"). For a voluntary go private, the public company needs to obtain its independent shareholders' approval, buyback all shares owned by its public shareholders, announce the go private plan to the public, and apply to OJK to revoke its effective registration statement.
On the other hand, either OJK or IDX can order a public company to go private in certain situations, for example if the public company is found to have breached the law or if the public company's business continuity is adversely impacted by a specific event.
Meanwhile, disclosure of controlling shareholders is now mandatory. A public company must disclose its controlling shareholders when it submits its registration statement, and disclose periodically if there are changes to such shareholders. It is important for public companies to note that the determination of controlling shareholders carry certain liabilities for the shareholders.
Bank Indonesia Introduces Rule on Payment System
Bank Indonesia Regulation No. 22/23/PBI/2020 covers new grounds in regulating companies that provide payment services and infrastructures. The key elements of this regulation are as follows:
- Instead of granting licences based on the types of product or functions offered, Bank Indonesia now regulates risks and activities, thus dividing payment system providers into front-end service providers (i.e. e-money issuers, e-wallet providers, and payment gateway providers) and back-end service providers (i.e. principals, switching providers, clearing providers, and settlement providers).
- Bank Indonesia separates economic interests and voting rights in a front-end service provider. For example, while foreign investors can hold up to 85% of an e-money company (previously only 49%), only domestic parties can hold voting rights (thus being a controller of such provider).
Notice from Bank of Lao PDR on the Monitoring of Use of Payment Services
On 2 March 2021, the Department of Payment System Management, Bank of Lao PDR ("BOL") issued Notice No. 161/DPSM on the monitoring of the use of payment services of commercial banks, non-commercial financial institutions, and legal entities that provide payment services ("Notice"). Inspections have shown that a number of groups and companies have used the products, channels, and payment tools of commercial banks, non-commercial financial institutions, and legal entities without complying with the regulations of the BOL and Payment Service Providers. Examples of such regulations relate to the use of QR Code label to receive money transfer to a third party, and the use of Point of Sales tools (POS) to exchange foreign currency and for payment for goods or services not within their stores. These constitute a violation of the Law on the Payment System.
Therefore, BOL issued the Notice for commercial banks, non-commercial financial institutions and legal entities that provide payment services to implement the following:
- Strict and heightened monitoring, inspection, and search of data of clients prior to providing payment services, especially those who use the products, channels, and payment tools of commercial banks, non-commercial financial institutions, and legal entities payment services providers.
- Widely disseminate to businesses and consumers their management rules and the use of their products through notices, advertising media, and social network.
- Carefully review the agreements/applications for using the products, channels, and payment tools that they entered into with the businesses and ensure that the latter comply with the relevant regulations relating to payment of products and services. They must ensure that the businesses are not in breach of the regulations.
- In cases where a business is found to have engaged or suspected of engaging in any activity that is in breach of the relevant rules and regulations, such business shall be stopped immediately, and the relevant information reported to BOL.
- Where there is suspicion that individuals, entities, and stores are using the payment services of commercial banks, non-commercial financial institutions, and legal entities for money laundering or terrorist financing, the information should be compiled and reported directly to the Anti-Money Laundering Intelligence Office (AMLIO), copying BOL.
Dissolution of the Ministry of Science and Technology
On 25 February 2021, the Politburo Members of Lao People's Revolutionary Party ("Politburo Members") issued a resolution No. 06/PMLRP on the dissolution of the Ministry of Science and Technology ("Ministry"). The Politburo Members approved the dissolution of the Ministry, leaving Laos with just 16 ministries.
The departments and agencies under the Ministry, along with their public servants, works, equipment, and budget and assets will be transferred to the five departments under existing ministries including the Ministry of Education and Sports, Ministry of Posts and Telecommunications, Ministry of Industry and Commerce, Ministry of Agriculture and Forestry, and Ministry of Energy and Mines as appropriate.
The dissolution has been implemented for consolidation and to ensure that each ministry can efficiently deal with science and technology matters pertaining to its core purpose.
Registration of Taxpayer Identification Numbers for Individuals
On 10 February 2021, the Ministry of Finance ("MOF") has issued Notice No.0831/MOF on the registration of Taxpayer Identification Numbers ("TINs") for individuals ("Notice"), including domestic and foreign individuals who have income in the territory of Lao PDR.
Under the Notice, domestic and foreign individuals, including civil servants, officials, soldiers, police, businesspeople, retailers, and online sellers, as well as sportspersons, performers, technicians, experts/specialists, consultants, employers, employees, workers, and labourers must register and obtain a TIN at a local tax office by 30 June 2021.
The required documents and information to be submitted for registration at local tax offices are the following:
- Valid ID Card/passport;
- Family registration book;
- All registered phone numbers;
- Occupation (must clearly specify the place of work, position, etc);
- All bank accounts; and
- Social security card number.
The Notice is issued in accordance with (i) Article 6 of the Law on Income Tax which provides that individuals, legal entities, or organisations that earn income from business operations or professional activities and other sources must pay income tax and must have a TIN; and (ii) Article 21 of the Tax Administration Law, which requires Lao citizens, aliens, foreigners, stateless persons, legal entities, or organisations conducting business activities or other income-generating activities inside or outside Lao PDR to pay taxes and obtain TINs.
The Notice aims to: (i) monitor domestic and foreign individuals who derive income in Lao PDR; (ii) manage the database of income earners to be able to collect revenue for the state budget accurately, completely, transparently, and fairly; and (iii) contribute to the socio-economic development of the nation. Through the Notice, MOF urges individuals to perform their obligations to the state by paying their taxes under the laws. Violations thereof will be dealt with strictly.
Lao Government Issues Decision on Management and Monitoring, Treatment, Disposal of PCBs in the Transformer
On 30 December 2020, the Ministry of Natural Resources and Environment, Lao PDR ("MoNRE") issued Decision No.5925/MONRE on the Management and Monitoring, Treatment, Disposal of Polychlorinated Biphenyls ("PCBs") in the Transformer ("Decision"). The Decision sets out the principles, rules, and measures relating to the management and monitoring, treatment, and disposal of PCBs in the transformer and PCBs-contaminated wastes. The Decision applies to individuals, entities, or both domestic and foreign organisations conducting their business activities in Lao PDR.
MoNRE is in charge of conducting a survey of PCBs in the transformer and registering the same in the database. The Department of Natural Resources and Environment ("DoNRE") at the provincial level, in coordination with the relevant Departments/agencies, perform and carry out the survey and registration of PCBs in the transformer within its own areas, followed by a reporting to the administrative bodies at the province and Vientiane Capital. The Department of Pollution Control and Monitoring collects data across the nation, compiles the data of registered PCBs, and reports the same to MoNRE.
The owner of a transformer with PCBs or PCBs-contaminated wastes shall keep the transformer and associated wastes under the following conditions:
- The storage site must be safe and the warehouse must be designed following the technical standards in order to prevent the leakage of PCBs chemical agents into the environment. The warehouse must be a closed space with concrete floor, with a drainage system and a fence to prevent access of unauthorised individuals and animals.
- The location must have a distance of at least one kilometre from the communities, schools, hospitals, sources of water, and food production sites.
- The storage site shall have warning and prohibition signs at the entrance-exit.
- The container or packaging shall have a label and warning sign (in writing or illustration) indicating the hazard posed by the PCBs. The wording shall be in Lao and English.
In addition, the owner must report the status and conditions of the storage site to DoNRE, the Department of Energy and Mines, and the Department of Industry and Commerce every six months for inspection. In case of chemical leakage, spill, or emergency incident, the owner must take the necessary measures to prevent initial impact and at the same time report the incident to the local and central government.
In transporting transformers with PCBs or PCBs-contaminated wastes, the transporter must ensure the safety of the people, property, environment, and society. A warning sign in red character with words "Danger – Hazardous Substances" and a big red skull symbol must be placed at the front and rear side of the vehicle transporting these transformers with PCBs or PCBs-contaminated wastes.
The treatment and disposal facility of PCBs in the transformer shall be conducted at a place which is distant from communities or water resources. It must be conducted by an authorised service provider. The individuals, entities, or organisations intending to provide the services of treatment and disposal of PCBs and PCBs-contaminated wastes must obtain a business license from the Industry and Commerce Sector to be able to liaise with the Natural Resources and Environment Sector.
First Corporate Liability Charge under the Malaysian Anti-Corruption Commission Act 2009
On 18 March 2021, the Malaysia Anti-Corruption Commission ("MACC") announced that it has charged a company providing ship rental services with an offence under Section 17A of the Malaysian Anti-Corruption Commission Act 2009. This is the first time that MACC has charged a company under this provision, which came into force on 1 June 2020.
For context, Section 17A imposes liability on a company and its officers holding managerial positions if persons associated with the company offer a bribe to a third party for the company's benefit. The maximum penalty for this offence is a fine of up to RM1 million or 10 times the value of the bribe (whichever is higher), or up to 20 years' imprisonment, or both.
For more information, click here to read our Legal Update. This Update provides a brief background of the case and the key issues directors and management should be cognisant of when performing their role in the company. These include: (i) directing attention to the red flags; (ii) the steps to take to afford a defence; (iii) how-tos in navigating differing Board opinions; (iv) allocation of resources to analyse bribery risks to transactions presented to the Board; (v) insurance options; and finally, (vi) a reminder on the statutory duty to report bribery offences.
LSS4 or LSS@MEnTARI: Results and Analysis
The Energy Commission of Malaysia ("EC") had, on 12 March 2021, announced a shortlist of winning bidders for its fourth competitive bidding programme on the development of large scale solar power plants in Peninsular Malaysia (dubbed the LSS@MEnTARI and generally referred to by the industry as "LSS4"). The LSS4, launched in May 2020 in the midst of the COVID-19 pandemic, has the stated aim of stimulating the recovery of the economy and is largely seen as an opportunity for those who were unsuccessful in the previous bidding programme ("LSS3") to repurpose their submission packages. This is also perceived as a move to placate local players' claims that the outcome of the LSS3 programme did not result in enough jobs for local contractors, and that the LSS3 programme was not favourable to local players.
The LSS4 has not been without its own set of issues. For instance, there has been confusion about whether foreign participation would be allowed as EC had issued conflicting views on this. Eyebrows were also raised when the LSS4 results were not released by the end of 2020, as expected, in order to allow shortlisted bidders sufficient time to achieve EC-prescribed project milestones.
The LSS4 results, issued by EC on 12 March 2021, shortlisted 30 out of 137 bids received and awarded projects of an aggregate of 823.06MWa.c. (out of the 1,000MWa.c. offered during the bid submission stage). Closer inspection of the results highlight that there are several listed companies that are new entrants to the solar power generation industry. Some of these are primarily involved in "brown" industries, and their involvement would indicate a shift to adopt a more environmental, social and governance (ESG)-conscious approach in their business or activities.
We note that there has also been a shortfall in the aggregate capacity won by the shortlisted bidders, as only an aggregate capacity of 823.06MWa.c. was taken out of the initial plan to develop 1,000MWa.c. of LSS plants. The shortfall could have seen an additional three to six projects being awarded. The P2 Package (30MWa.c. - 50MWa.c) offered under LSS4 had generally attracted more competitive bid prices compared to the P1 Package (10MWa.c. - 29.999MWa.c.). Further, the targeted amount of 500MWa.c. under the P2 Package was met with all awards made to projects of 50MWa.c., being the maximum capacity on offer.
Overall, EC appears to have met its aim of parcelling out LSS4 awards on a more "equitable" basis to local players, with the consequent result being more jobs for local contractors. However, it may have come at a price as EC's actions in prohibiting foreign participation has been widely viewed as a protectionist move which may not augur well for the economy. For future programmes, it would be encouraging to select the winners from a pool of both local and international bidders competing on a level playing field.
The Malaysiakini Decision: Apex Court’s Ruling on Liability of Online Intermediary Platforms for Third-Party Content
On 19 February 2021, the Federal Court in the case of Peguam Negara Malaysia v Mkini Dotcom Sdn Bhd & Another  2 MLJ 652 found Mkini Dot Com Sdn. Bhd., the owner and operator of the Malaysian online news portal 'Malaysiakini' ("Malaysiakini"), liable for contempt of court in relation to third-party comments that were posted on Malaysiakini’s website. The Federal Court had imposed a fine of RM500,000 on Malaysiakini because the court found that the contempt committed, which involved baseless allegations of corruption regarding the Chief Justice of Malaysia, was severe and undermined public confidence in the Judiciary.
Malaysiakini was held liable based on Section 114A of the Evidence Act 1950 (Act 56) ("Section 114A") which presumes Malaysiakini to be the publisher of the impugned comments based on the fact that: (i) Malaysiakini depicted itself as the host of the comments; and (ii) Malaysiakini facilitated the publication of the comments. Notwithstanding Malaysiakini's contention that it had adhered to the "flag and take down" approach in compliance with the Malaysian Communications and Multimedia Content Code, this was held to be insufficient for online intermediary platforms like Malaysiakini to rebut the presumption under Section 114A and avoid liability for third-party content. The Federal Court's decision has therefore placed a very high standard of care on online intermediary platforms that exercise control over third-party content.
Amendments to the Industrial Relations Act 1967
By way of the Industrial Relations (Amendment) Act 2020 which came into force on 1 January 2021, the Industrial Relations Act 1967 (IRA) was amended, amongst others, to include:
- A representation by a workman regarding unfair dismissal will be referred directly to the Industrial Court unless there is a settlement between the workman and the employer. Previously, the Minister of Human Resources was empowered to decide whether the representation raised serious questions of fact or law that ought to be referred to the Industrial Court, before such reference was made.
- The Industrial Court is now empowered to continue with the hearing of the matter notwithstanding the death of the workman. Previously, upon the death of the workman, the Industrial Court proceedings would be disposed of.
- The application of interest on Industrial Court awards at the rate of 8% per annum or such lesser rate as the Industrial Court may direct. Previously, the Industrial Court had no power to make an award for interest.
- An unsatisfied party can now appeal directly to the High Court against an Industrial Court award. Previously, there was no avenue to appeal against an Industrial Court award, and an unsatisfied party only had recourse to judicial review proceedings.
Licensing Framework for Digital Banks
On 31 December 2020, Bank Negara Malaysia ("BNM") issued the Licensing Framework for Digital Banks policy document ("Licensing Framework"), together with a set of Frequently Asked Questions. The Licensing Framework has been developed for digital banks to provide banking products and services to the underserved or unserved market, wholly or almost wholly through digital or electronic means.
The Licensing Framework sets out, amongst others, (i) the eligibility requirements and application procedures for applicants; and (ii) the business limitations, regulatory requirements, and business activities that must be undertaken by digital banks. To enable the admission of digital banks with strong value propositions without compromising the integrity and stability of the financial system and depositors' interests, BNM has imposed certain safeguards on the initial operations of digital banks such as requiring licensed digital banks to operate with an asset limit for the first three to five years of operations.
The Licensing Framework came into effect immediately upon issuance, and interested applicants have until 30 June 2021 to submit the licence applications. BNM targets to notify successful applicants (limited to five licences in the initial rollout) in the first quarter of 2022.
Military Takeover 1 February 2021
On 1 February 2021, the Tatmadaw (the formal name of the armed forces of Myanmar) under the administration of Senior General Min Aung Hlaing staged a takeover, citing the alleged electoral frauds committed by the National League for Democracy ("NLD") in the 2020 November Elections. A year-long state of emergency was called under Article 417 of the 2008 Constitution of Myanmar ("Constitution"), and all legislative, executive, and judicial powers were transferred to Sen. Gen. Min Aung Hlaing under Article 418 of the Constitution. Shortly thereafter, the State Administration Council ("SAC") comprising members of the Tatmadaw led by Sen. Gen. Min Aung Hlaing himself was formed. State Counsellor Daw Aung San Suu Kyi, President U Win Myint, and an array of Members of Parliament, political activists, and NLD party members were straightaway detained.
SAC has restricted the usage of internet since 21 February 2021. A nightly scheduled internet blackout from 1am to 6:30am on weekdays and from 1am to 9am on weekends was imposed without any valid cause. Furthermore, Mobile Data Internet and Publicly Accessible Wi-Fi was suspended indefinitely in March with no indication as to when it will be made available again. The situation in Myanmar continues to develop rapidly.
Amendments to the Ward and Village Tract Administration Law and the Law Protecting the Privacy and Security of Citizens
Pursuant to the State Administration Council ("SAC") Law Number 03/2021, some provisions of the Ward and Village Tract Administration Law were amended. The amended provisions require all residents to inform their township or ward administrators if they have overnight guests from other wards or townships, and if there are people in their residence who are not listed in the household documents. They also need to inform their township or ward administrators when such guests depart from the ward or township. This had long been practiced under the previous military administrations, which was only recently abolished under the NLD-led government.
Furthermore, SAC has enacted Law Number 04/2021, which effectively suspended Sections 5, 7, and 8 of the Law Protecting the Privacy and Security of Citizens ("Privacy Law"). These provisions of the Privacy Law are set out below.
Section 5 – The relevant authorities shall (i) ensure that there is no damage to the privacy and security of citizens except when being done so in accordance with the law, and (ii) only enter a person’s residence or premises, accompanied by a minimum of two witnesses comprising ward or village administrators, for the purposes of search, seizure, or arrest.
Section 7 – No one shall be detained for more than 24 hours without permission from court.
Section 8 – In the absence of an order, permission, or warrant issued in accordance with the existing law, or permission from the Union President or the Union Cabinet, a responsible authority shall not do the following:
- enter a person's residence or premises for the purposes of search, seizure, or arrest;
- surveil, spy upon, or investigate in any way which could disturb their privacy and security or affect their dignity;
- intercept or disturb any citizen's communications;
- demand or obtain telephonic and electronic communication data from telecommunication operators;
- open, search, seize, or destroy another person's correspondence, envelope, package, or parcel;
- unlawfully interfere with a citizen's personal or family matters or act in any way to slander or harm their reputation; and
- unlawfully seize the lawfully owned movable or immovable property of a citizen, or intentionally destroy either by direct or indirect means.
The suspension of the above-mentioned provisions has given the authorities broad powers to act in a way which breaches the privacy and security of citizens. Due to the suspension of Section 5, the presence of two witnesses is no longer required when authorities enter a person's premises. The suspension of Section 7 has given the authorities the right to detain persons indefinitely without cause. Lastly, the suspension of Section 8 allows the authorities to act freely to interfere with the private life of a citizen, such as arresting without warrants, intercepting communications, or seizing and destroying a person’s private property.
Amendments to the Penal Code
On 14 February 2021, the State Administration Council ("SAC") enacted Law Number 05/2021 or the Law Amending the Penal Code ("Amendment Law") pursuant to the powers conferred upon it under Section 419 of the Constitution of Myanmar. The Amendment Law has introduced new provisions and amended existing ones. These provisions are as follows:
Section 121 – Section 121 has inserted an "unconstitutional means" clause, allowing for a broader interpretation of high treason. It is specifically being used against the Committee Representing the Pyidaungsu Hluttaw (the de jure national level bicameral legislature of Myanmar), which, pursuant to this provision, has been declared by SAC as unlawful and unconstitutional. Section 212 imposes a penalty of a death sentence, or imprisonment for a term of up to 20 years.
Section 124-A – The Amendment Law has inserted the terms "Defence Services" and "Defence Services Personnel" into the existing provision, providing for a charge against anyone who brings or attempts to bring hatred or contempt, or excites or attempts to excite disaffection towards the military by words, signs, visible representation, or otherwise. Section 124-A imposes a penalty of imprisonment for a term of up to 20 years, or a fine, or both.
Section 124-C – The new Section 124-C A prohibits the sabotage or hindrance in carrying out the performance of the Defence Services or law enforcement organisations. Section 124-C imposes a penalty of imprisonment for a term of up to 20 years, or a fine, or both.
Section 124-D – The new Section 124-D A prohibits the disruption or hindrance of the Defence Service or Government Employees while carrying out their duties. Section 124-D imposes a penalty of imprisonment for a term of up to seven years, or a fine, or both.
Section 505(a) – The Amendment Law has revised Section 505(a) to include the terms "member of the Defence Services" and "Government Employees" in the previous provision. It prohibits anyone from making, publishing, or circulating any reports, statement, or rumour which would bring about disobedience, hatred, or disloyalty to the authorities.
Section 505-A – Section 505-A is a new provision that prohibits anyone from causing fear, spreading false news, or agitating directly or indirectly criminal offences against Government Employees. Section 505-A imposes a penalty of imprisonment for a term of up to three years, or a fine, or both.
The newly enacted provisions have been frequently used to bring charges against arrested personnel amidst the unrest after the takeover. Many protesters, politically active personnel and other dissidents have been charged with violating Section 505(a) of the Penal Code owing to the fact that it provides for a broad interpretation of what constitutes a breach of the relevant law.
Amendments to the Electronic Transactions Law
On 15 February 2021, the State Administration Council ("SAC") enacted Law Number 07/2021, which introduced new provisions into the existing Electronic Transactions Law (ETL) ("Amended Law"). Among other things, the Amended Law has introduced the concept of Personal Data and provided protections for it. However, it has also included broad scenarios where the governing authority may breach such protections. The Amended Law also introduced offences relating to cyber-crime and cyber-terrorism. The new provisions are as follows:
Section 27-A – Section 27-A sets out the responsibilities and duties of a Personal Data Management Officer when processing Personal Data.
Section 27-B – Section 27-B stipulates that an Investigative Team, which will be designated as such by a relevant authority, has the responsibility to retain Personal Data and keep them confidential, unless their disclosure is required in accordance with the law.
Section 27-C – Section 27-C sets out scenarios where the protection of Personal Data may not apply, as follows:
- Where a governmental organisation designated by the Central Committee, the Investigative Team, or other Governmental Organisations requires the disclosure of Personal Data for the prevention, investigation, undertaking discovery, or provision of evidence in court in relation to cybersecurity, cyber attacks, cyber terrorism, cyber misuse, and other accidents.
- Where a governmental organisation designated by the Central Committee, the Investigative Team, or other Governmental Organisations requires Personal Data for the prevention, investigation, undertaking discovery, or provision of evidence in court in relation to a criminal matter.
- Where an investigation, undertaking discovery, or gathering or sharing information is undertaken in connection with cybersecurity and cybercrimes which threatens the sovereignty, peace, and stability or national security.
- Any other instances where a matter is undertaken by a department or an organisation authorised by the Central Committee, or the Central Committee in relation to sub-section (c).
Section 38-A – Section 38-A provides for the offence where a Personal Data Management Officer breaches his duties. The penalty imposed under this provision is an imprisonment term between one to three years, or a fine not exceeding 10 million MMK, or both.
Section 38-B – Section 38-B provides for the offence when one breaches the provision prohibiting interference with Personal Data. Interference includes, but is not limited to, obtaining, disclosing, altering, or disseminating Personal Data without the consent of the relevant person. Section 38-B imposes a penalty of an imprisonment term between one to three years, or a fine not exceeding 5 million MMK, or both.
Section 38-C – Section 38-C provides for the offence when one breaches the provision prohibiting the creation of fake or false information on the Cyber Space with the intent to cause fear, lose trust or respect, or disunity among the public. This provision imposes a penalty of an imprisonment term between one to three years, or a fine not exceeding 5 million MMK, or both.
Section 38-D – Section 38-D provides for the offence when one breaches the provision prohibiting unlawful interference with Cyber Resources, and obtaining access to restricted information including installing malware and committing Cyber Attacks. Section 38-D imposes a penalty of an imprisonment term between two to five years, or a fine not exceeding 30 million MMK, or both.
Section 38-E – Section 38-E provides for the offence when one breaches the provision prohibiting the commission of Cyber Attacks to obtain access to confidential Cyber Resources between Myanmar and another country, with the intent to cause disruption in diplomatic relations. Section 38-E imposes a penalty of an imprisonment term between three to seven years, or a fine not exceeding 50 million MMK, or both.
Major Revisions Made to the Tax Code to Provide Relief to Businesses and Boost Investments in the Philippines Especially for Knowledge-Based Industries
On 26 March 2021, President Rodrigo R. Duterte signed Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act ("CREATE") into law. CREATE aims to provide fiscal relief and serve as a recovery measure for Filipino businesses which are still reeling from the impact of the COVID-19 pandemic. The law has reduced corporate income tax rates in the Philippines, which have been considered as one of the highest in the Association of Southeast Asian Nations ("ASEAN") region.
Domestic and foreign corporations will now pay an income tax rate of 25% of their net taxable income, compared to the previous 30% rate. However, for domestic corporations whose net taxable income does not exceed PHP 5 million and whose total assets do not exceed PHP 100 million, the income tax rate is 20%. Beginning 1 July 2020 until 30 June 2023, proprietary educational institutions shall pay at a rate of 1% of their net taxable income. For those opting to pay the Minimum Corporate Income Tax ("MCIT"), the MCIT rate shall be 1% from 1 July 2020 until 30 June 2023.
Another focal point of the law is to increase the competitiveness of the Philippines in knowledge-based industries to recover from the country's slumping innovation performance. Section 294 (C)(3) of CREATE provides an incentive by way of an additional 100% deduction on research and development expenses incurred within the taxable year. Through this incentive, the government hopes to attain breakthroughs in science and health, create high-paying jobs, usher in a generation of new knowledge and intellectual property registered and/or licensed in the Philippines, as well as a commercialisation of patents, industrial designs, copyrights, and utility models owned or co-owned by a registered business enterprise.
With CREATE, the Philippine government will be able to strengthen its partnership with India to put up science and technology joint ventures following the signing of three Memoranda of Understanding between Batangas State University and several Indian companies. Through this partnership, the government sees the possibility of the Philippines becoming India's ASEAN startup regional base.
However, President Duterte exercised his line-item veto power over nine provisions of the CREATE bill. The President disallowed the move to increase the threshold for value-added tax-exempt sales of real property from PHP 2.5 million to PHP 4.2 million. Another vetoed provision was on granting the Chief Executive the power to exempt any Investment Promotion Agency from complying with the provisions of the new law as this could become a highly political tool. President Duterte likewise vetoed the automatic approval of applications for incentives to ensure that the applications would be based on merit and presentation of empirical evidence. The President noted that it would be fiscally irresponsible to enact redundant incentives and to allow existing registered activities to apply for new incentives for the same activity.
Anti-Red Tape Authority Issues Guidelines for the Mandatory Onboarding to the TradeNet platform
On 6 March 2021, the Anti-Red Tape Authority released Memorandum Circular No. 2021-01 providing guidelines for the mandatory onboarding of all Trade Regulatory Government Agencies ("TRGAs") to the TradeNet platform. TradeNet is an inter-operable online platform developed by the Department of Finance and the Department of Information and Communications Technology in 2017, aimed at reducing processing time and harmonising the permitting and licensing processes concerning imports and exports. Its implementation is in line with Republic Act No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, as well as Administrative Order No. 23 issued in February 2020 directing all agencies to eliminate overregulation for efficient delivery of services. TradeNet is also envisioned to serve as the Philippines' link to the Association of Southeast Asian Nations ("ASEAN") Single Window to advance interconnectivity within the region and facilitate ease of trade among ASEAN member nations.
Memorandum Circular No. 2021-01 has enumerated TRGAs per cluster, which are included in the coverage of the mandate such as:
- the Logistics and Port Operations Sector;
- the Agriculture and Food Cluster;
- the Chemical, Oils Minerals, Environment Cluster;
- the General Merchandise and Retail Cluster;
- the Tax and Duty Exempt Cluster;
- the Relief Consignment and Foreign Donations Cluster;
- the Monitoring and Oversight Cluster; and
- the Ecozones and Freeport Zones Cluster, including a list of Priority Agencies which still use the old National Single Window.
IPOPHL Expands Enforcement Powers Against Online Counterfeiting and Piracy through its Revised Rules of Procedure
The Intellectual Property Office of the Philippines ("IPOPHL") has issued Memorandum Circular 2020-049 or the Revised Rules of Procedure on Administrative Enforcement of Intellectual Property Rights ("Revised Rules") which came into effect on 3 March 2021. The Revised Rules intend to expand the power of the Intellectual Property Rights Enforcement Office ("IEO") in curbing online counterfeiting and piracy, the rates of which have surged significantly in 2020 since the COVID-19 lockdown compelled a massive shift to online transactions.
Under the Revised Rules, the exercise of IPOPHL's enforcement powers shall cover even the electronic, digital, or online means of manufacturing, production, importation, exportation, distribution, trading, displaying, broadcasting, streaming, importing of sale and other preparatory steps necessary to carry out the sale of counterfeit and pirated goods or contents to the public. IEO is empowered to monitor establishments, digital platforms, or individuals for the purpose of ensuring compliance with the Intellectual Property Code ("IP Code"). Monitoring can be conducted either at IEO’s initiative, or based on a report, information or complaint received, and through physical, digital, or electronic means.
Furthermore, IEO may now issue an Enforcement Order in response to a report or administrative complaint filed by a rights holder. An Enforcement Order may include:
- an order requesting the removal or blocking of access to counterfeit or pirated goods including advertisements in relation thereto, in coordination with the appropriate agency, body or intermediary service provider;
- a cease and desist order;
- an order to remove counterfeit and pirated goods from physical establishments;
- an endorsement or referral to other government offices for the cancellation of permits and licenses; and
- an other order issued to implement a decision of the IEO.
A Mission Order may then be issued to any IPOPHL personnel or designated law enforcement officer to implement or carry out a specific Enforcement Order. A Visitorial Order may be handed relative to the conduct of visits to establishments, business premises, and/or similar areas which are the subject of a complaint alleging an IP code violation. Lastly, a Compliance Order may also be directed to any person or business entity to comply with the provisions of the IP Code.
Such person or business entity is given a period of 72 hours to comply, unless otherwise stated in such Compliance Order, to avoid being subjected to administrative action.
House Consolidates Bills to Amend and Modernize the Intellectual Property Code
The House of Representatives ("HoR") Committee on Trade and Industry created a technical working group ("TWG") to consolidate House Bill Nos. 8062, 1597 and 8620 which all aim to modernise the Intellectual Property ("IP") Code in accordance with global trends and international standards. The TWG agreed to use House Bill No. 8620 as its working draft which reflects the proposed priority amendments of the Intellectual Property Office of the Philippines ("IPOPHL").
For enforcement and adjudication, salient proposed amendments include:
- the imposition of steeper fines for infringers;
- the power of the IPOPHL to order the takedown of websites with infringing material;
- the removal of the PHP200,000 damage claim threshold so that even claims falling below such amount may be adjudicated by IPOPHL;
- the recognition of alternative dispute resolution mechanisms as official modes for dispute settlement; and
- the institutionalisation of the IP Rights Enforcement Office.
For patents, significant proposed amendments include:
- the establishment of a parallel-protection system, which would allow inventors to file a utility model ("UM") simultaneously with their registration for a patent grant for the same invention;
- the grant of provisional patents which would provide immediate protection for patent applications on the date of filing, even while inventors are making refinements and studying commercial viability;
- the alignment of the definition of "industrial design" with the Trade-Related Aspects of the IP Rights Agreement; and
- the protection for partial designs or designs that make part of a certain product or article. Since the duration for UM applications are shorter compared to an exhaustive patent application, investors will already be able to commercialise their works in the meantime and while waiting for a chance at a patent.
Other priority amendments include:
- the protection for non-visual (i.e., sound) marks and certification marks under the trademark regime;
- the extension of collective licensing and expansion of the limitations for copyright;
- the transfer of the registration and deposit function for copyright works from the National Library and its centralisation in IPOPHL to avoid confusion; and
- the creation of the Bureau of Innovation and Business Development and institutionalisation of the IP Academy to promote innovation, creativity, and research.
SEC Issues Beneficial Ownership Transparency Guidelines
Beginning 29 January 2021, all nominee directors, trustees or shareholders, incorporators or applicants for incorporation, and all concerned corporations subject to the supervision and jurisdiction of the Securities and Exchange Commission ("SEC") shall comply with the guidelines provided in SEC Memorandum Circular No. 1, series of 2021, or the Beneficial Ownership Transparency Guidelines ("Guidelines"). These were issued to promote transparency of beneficial ownership and prevent the misuse of corporations for illicit activities.
Under the Guidelines, a "nominee" is a natural person who acts for and on behalf of another person as an incorporator, director, trustee or stockholder. A nominee director, trustee, or stockholder, as well as an incorporator or applicant for incorporation, will be required to disclose the identities of its principal/s or person/s on whose behalf he or she is acting. As such, a nominee must submit the following disclosure forms: (i) Beneficial Ownership Transparency Declaration Form, and (ii) Consent Agreement Form. These must be uploaded in the online form set up by SEC. Nominees are given until 31 May 2021 to submit the disclosure forms.
The Guidelines prohibit the issuance, sale, or offer for sale or distribution of bearer shares and bearer share warrants. Bearer shares are defined as (i) equity securities owned by the person or entity that holds the physical certificate which enables the transfer of ownership of shares of stock by mere delivery of such certificate, and (ii) instruments that accord ownership in a juridical person to the person or entity who possesses it or is the holder of the bearer share certificate. Bearer share warrants are defined as documents certifying that the bearer is entitled to a certain amount of the fully paid shares of stock of a corporation.
The Guidelines also provide that the alienation, sale, or transfer of shares of stock (except for shares of stock of publicly-listed companies traded over the facilities of the Philippine Stock Exchange), the date thereof, by whom and to whom made, shall be disclosed and recorded in the Stock and Transfer Book of the issuing corporation within 30 days from date of such alienation, sale, or transfer subject to compliance with the requirements for the recording or registration of transfers under applicable regulations.
Violation of these guidelines may result to administrative and criminal sanctions.
Government Launches the Central Business Portal to Modernize Business Registration Process in the Country
On 28 January 2021, the Central Business Portal ("CBP") Phase 1 was launched by the Department of Information and Communications Technology ("DICT") and the Anti-Red Tape Authority ("ARTA"), which is envisioned to be an online one stop shop to access business-related information and transactions, such as securing business permits, licenses, and clearances. Under Republic Act No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, DICT was tasked with establishing, operating and maintaining a CBP for purposes of eliminating bureaucratic red tape, averting graft and corruption, and promoting transparency in business transactions. Additionally, the law mandated local government units ("LGUs") to create a Business One Stop Shop ("BOSS") for the Business Permit and Licensing System of LGUs for the purpose of receiving and processing applications, receiving payments, and for the issuance of approved licenses, clearances, permits, or authorisations.
The national government agencies who have partnered up with ARTA include DICT, the Securities and Exchange Commission, Bureau of Internal Revenue ("BIR"), Social Security System ("SSS"), Philippine Health Insurance Corporation ("Philhealth"), Home Development Mutual Fund ("Pag-IBIG"), and the Food and Drug Administration ("FDA"). Following a Joint Memorandum Circular among the aforementioned agencies and the Department of Finance, Department of Trade and Industry, Department of Interior and Local Government, and the Cooperative Development Authority, ARTA was directed to oversee the implementation of the CPB and provide support to the participating agencies.
Through CBP Phase 1, a Unified Application Form is provided for all agencies involved in the business registration process, eliminating the input and submission of redundant forms to different agencies. The CBP also facilitates business registration with SEC, generation of BIR tax identification number, and payments of filing and registration fees to BIR. For employers, they may register to obtain the employer’s numbers for SSS, Philhealth, and Pag-IBIG, noting that a Unified Employee Reporting Module for SSS, Philhealth, and Pag-IBIG is provided by the CBP.
Applications for secondary license featuring FDA's License to Operate for Center for Drugs may also be done through the portal.
The CBP is now linked to the online business permitting system of several LGUs including Quezon City, Parañaque City, Baler, and Limay, among others. Developments to the CBP are underway to integrate the online business permitting systems of other LGUs together with additional features.
The CBP is accessible through this link: https://business.gov.ph/home.
Revised Rules and Regulations for the Issuance of Employment Permits to Foreign Nationals
On 6 January 2021, the Department of Labor and Employment ("DOLE") released the new guidelines for the issuance of an Alien Employment Permit ("AEP") and related certifications.
The Revised AEP Rules provide for new guidelines for filing dates, processing time, permit fees, penalties, documentary requirements, and employers' duties, among others. The AEP is one of the permits that must be secured by foreign nationals to legally work in the Philippines. Some of the amendments include:
- employer participation in the labour market test ("LMT");
- reduced grace period to file applications;
- increased processing time of applications with DOLE;
- increased amount of application fees; and
- submission by the employer of a quarterly report on list of foreign nationals employed.
The LMT is the mechanism to determine the non-availability of a Filipino citizen who is competent, able, and willing at the time of application to perform the services for which the foreign national is desired. Under the expanded LMT, employers are now required to cause the publication of the job vacancy being applied for the foreign national in a newspaper of general circulation at least 15 calendar days prior to the application for an AEP.
Applications for an AEP must be filed at the DOLE regional office concerned within 10 working days from the date of signing of the contract or prior to the commencement of employment. Applicants must also pay an increased application fee of PHP10,000.00 for a new AEP with a validity of one year and an additional PHP5,000.00 for every additional year. This is to avoid incurring a fine of PHP10,000.00 for both the foreign national and the employer.
Employers are now required to submit a quarterly report or an updated list of foreign nationals employed within 30 days from the reference period and change of employer’s information such as but not limited to name, address, or contact details.
ASEAN Capital Markets Forum Launches Five-Year Action Plan
The ASEAN Capital Markets Forum ("ACMF") has endorsed the ACMF Action Plan 2021-2025 ("Action Plan") during its 34th ACMF Chairs Meeting, as stated in a media release of 15 March 2021. The Action Plan builds on ACMF Action Plan 2016 – 2020, and was developed with feedback from capital market participants and other stakeholders to ensure that the Action Plan is inclusive and relevant, particularly amid the new normal.
The Action Plan sets out three strategic objectives:
- Fostering growth and recovery with sustainability;
- Promoting and sustaining inclusiveness; and
- Strengthening and maintaining orderliness and resilience.
The five key priorities that support the strategic objectives are: (i) driving higher levels of transparency and disclosure; (ii) continuing with regulatory harmonisation; (iii) intensifying capacity building; (iv) amplifying communication and awareness building; and (v) strengthening co-operation and co-ordination.
The ACMF discussed the progress of the six short-to-medium term focus areas identified in the Roadmap for ASEAN Sustainable Capital Markets. Among other things, the ACMF discussed sustainable finance and the development of sustainable finance, ACMF emphasised the importance of capacity building. In this regard:
The ACMF welcomed continued collaboration with the ASEAN Working Committee – Capital Market Development (WC-CMD) on transition standards, sustainability-linked bond standards and sustainability disclosures.
The ACMF commended progress made on the ASEAN Sustainable Finance Taxonomy.
The meeting noted continuing traction of ACMF’s sustainable finance initiatives earlier launched, namely the ASEAN Green Bond Standards, ASEAN Social Bond Standards and ASEAN Sustainability Bond Standards. Since 2017 until the end of 2020, a total of US$8.35 billion bonds labelled under these ASEAN standards have been issued.
The ACMF also discussed other initiatives including the cross-border offering of ASEAN Collective Investment Schemes (ASEAN CIS) and the endorsement of the 2021 ASEAN Corporate Governance Scorecard Assessment Implementation Plan, which is targeted to commence in early Q3 2021.
Sustainability Financing: Taxonomy Proposed for Singapore-based Financial Institutions to Identify "Green" Activities
Increasing interest in green or sustainable finance calls for a recognisable framework on what green or sustainable finance is, which will help financial market participants and their stakeholders compare and assess green or sustainable products and services based on a common understanding.
Against this background, the Green Finance Industry Taskforce ("GFIT") has been convened by the Monetary Authority of Singapore (MAS) to accelerate the development of green finance through four key initiatives: (i) develop a taxonomy; (ii) enhance environmental risk management practices of financial institutions ("FIs"); (iii) improve disclosures; and (iv) foster green finance solutions.
Under the first focus area, GFIT conducted a public consultation to seek feedback on the appropriate taxonomy, as a classification tool, to help Singapore-based FIs identify economic activities that are considered "green" or are transitioning into "greener" activities in sustainability financing. The proposals were set out in the GFIT consultation paper titled "Identifying a Green Taxonomy and Relevant Standards for Singapore and ASEAN" ("GFIT Taxonomy Consultation Paper") made available on the website of The Association of Banks in Singapore (ABS). The consultation closed on 11 March 2021.
Taxonomies for sustainable finance are meant to support an overarching set of environmental goals, and determine whether the activities are consistent with these environmental goals with reference to a threshold or tolerance. By evaluating and classifying activities as "green", based on tolerance thresholds, a taxonomy would:
- Establish clear criteria for determining activities which are environmentally sustainable;
- Remove uncertainty as to whether certain activities are environmentally sustainable;
- Bring clarity to discussions around green and sustainable products; and
- Alleviate concerns on greenwashing (a process of creating a false or misleading impression that a product is environmentally sustainable).
It is hoped that a taxonomy would provide more certainty and confidence to the market on the classification of green products and services and therefore encourage more capital flows to support sustainable investments.
In the GFIT Taxonomy Consultation Paper, GFIT sought comments on:
- Whether there is a need for Singapore to have its own taxonomy;
- The four environmental objectives for the taxonomy, namely: (i) climate change mitigation; (ii) climate change adaptation; (iii) protection of biodiversity; and (iv) promotion of resource resilience;
- The selection of the economic sectors that are covered by the taxonomy;
- The proposed "traffic light" classification system for activities within the selected economic sectors by grouping them into three classifications, namely, "green" for activities that are clearly aligned with the environmental objectives of the taxonomy, or undertaking a transition consistent with emissions-reduction pathways aligned with meeting the environmental objectives; "yellow" for activities with a quantifiable and time-bound pathway towards either green or significant de-carbonisation that will contribute to the objectives of the taxonomy; and "red" for activities that are inconsistent with the environmental objectives of the taxonomy; and
- The treatment of transition activities in the taxonomy.
For more information, click here to read our Legal Update.
Data Management for Businesses: Launch of ASEAN Data Management Framework and Model Clauses on Data Transfer
Businesses in the region are finding themselves increasingly involved in digital networks and platforms as part of the commercial process. This includes payment applications, big data analytics, artificial intelligence, and cognitive computing, all of which are heavily reliant on data sharing. Issues of digital data governance have thus come to the forefront as businesses seek to balance digital initiatives and data protection.
To assist businesses on this front, the ASEAN Digital Ministers' Meeting has, on 22 January 2021, approved the ASEAN Data Management Framework ("DMF") and Model Contractual Clauses for Cross Border Data Flows ("MCCs"). These initiatives were developed by the Working Group on Digital Data Governance chaired by Singapore.
- The DMF provides a step-by-step guide for businesses to put in place a data management system, which includes data governance structures and safeguards.
- The MCCs are template contractual terms that may be included in agreements between businesses transferring personal data to each other across borders.
Businesses developing their digital operations should be aware of the need to develop an adequate system to handle all their data, and should pay close attention to the guidance provided by the DMF in this regard. Parties transferring personal data across borders should be aware of the data protection requirements they must comply with when conducting such transfers, and consider incorporating the MCCs and adapting them accordingly.
For more information, click here to read our Legal Update.
Multimodal Transport Act: Standardising Framework for Multimodal Transport Operators throughout ASEAN
On 5 January 2021, the Multimodal Transport Bill ("Bill") was passed by the Parliament of Singapore. The Multimodal Modal Transport Act 2021 ("Act") was assented to by the President on 5 February 2021 and will come into operation on a date that the Minister appoints. The Act facilitates Singapore's anticipated ratification of the ASEAN Framework Agreement on Multimodal Transport ("Agreement"), which should take place later this year.
By way of background, the Agreement was signed by Singapore on 17 November 2005, and will provide a single, unified framework for the multimodal transport of goods within the Association of Southeast Asian Nations ("ASEAN") once it has been ratified by all ASEAN member countries. This will facilitate market access for Singapore logistics operators to operate in other ASEAN member countries under a set of regionally aligned standards.
The Act will apply to the carriage of goods via more than one transport mode, whether through air, land, or sea. These goods are carried by a multimodal transport operator registered with the Competent National Body ("CNB") established in each ASEAN member state, under a single multimodal transport contract where the origin or destination of the goods is in an ASEAN member country.
The Act covers five key areas:
- Registration with the Singapore CNB;
- Issuance of multimodal transport documents ("MTDs");
- Liabilities of multimodal transport operators (MTOs);
- Duties and liabilities of consignors; and
- Miscellaneous matters.
Given the new responsibilities and liabilities involved, we urge all multimodal transport operators, consignors, and consignees to review the new provisions carefully, including the time bar and the legal significance of MTDs, among other things.
For more information, click here to read our Legal Update.
Singapore High Court Issues Significant Judgment on Freezing Injunctions in Cross-Border Insolvency and Asset Recovery Claim
In Allenger, Shiona (Trustee-in-bankruptcy of the Estate of Pelletier, Richard Paul Joseph) v Pelletier, Olga and another  SGHC 279, Rajah and Tann Singapore's Fraud, Asset Recovery and Investigations team led by Partners Danny Ong and Yam Wern-Jhien, and assisted by Bethel Chan and Chen Lixin, prevailed in a significant decision examining principles governing the grant of freezing injunctions against foreign defendants in the context of a cross-border insolvency and asset recovery claim. The Court had to consider its subject-matter jurisdiction over a claim founded in Cayman bankruptcy law, as well as its in personam jurisdiction over the defendants.
The team successfully argued that the Singapore High Court has subject-matter jurisdiction to adjudicate claims based on foreign avoidance laws. The High Court held that the Singapore courts do not require enabling legislation in order to have jurisdiction in a specific subject-matter, and that the mere fact that the cause of action here arose under a foreign insolvency legislation (Cayman Bankruptcy Law) was not a bar to its being adjudicated in Singapore.
The Court also accepted the team's submission that the foreign defendants had submitted to the Singapore courts' jurisdiction by failing to promptly raise a jurisdictional challenge and taking various steps in the proceedings that were inconsistent with an intention to challenge the Singapore court's jurisdiction. As a result, the Court found that it had in personam jurisdiction over the defendants.
For more information, click here to read our Legal Update.
Labour-Related Relief Measures to Ease Impact from COVID-19 Outbreak
The Ministry of Labour has introduced new regulations under the Social Security Act B.E. 2533 to help individuals and businesses during the COVID-19 pandemic. Initially, under the regulations, the employer's and the employee's contributions to the Social Security Fund were reduced to 3% of the employee's monthly wages (but not exceeding THB 450 per month) from 1 January 2021 until 31 March 2021. The employee's contribution was further reduced from 3% to 0.5% of the employee's monthly wages (but not exceeding THB 75 per month) for the period from 1 February 2021 until 31 March 2021.
In addition, the Social Security Office will also pay compensation of 50% of the employee's daily wages (but not exceeding THB 250 per day) to an employee who:
- does not work or is not permitted by the employer to work as a result of being quarantined or in compliance with COVID-19 protective measures; or
- is unable to work due to temporary cessation of the employer's business operations as a result of the government's order for the purpose of preventing the spread of COVID-19.
Tax Relief Measures in Light of COVID-19 Pandemic
The Revenue Department has provided several tax-relief measures in light of the COVID-19 pandemic. In particular, the rate of withholding tax on the payment of certain taxable income from 1 October 2020 to 31 December 2021 has been reduced from 3% to 2%, provided that the payment of assessable income is made through the e-Withholding Tax system only. Further, from January 2021, the deadlines for the filing of personal income tax, corporate income tax, withholding tax, VAT, and specific business tax returns have been extended for eight days from their relevant due dates (provided that the filing of all such tax forms must be submitted through the online system only).
In relation to property transaction fees, the Ministry of Interior has provided additional tax relief to reduce registration fees for real estate transfers from 2% to 0.01% and real estate mortgage registration fees from 1% to 0.01% for certain types of properties. This measure is effective from 3 February 2021 until 31 December 2021.
Guideline on Unfair Trade Practices of Online Food Delivery Platforms
The Trade Competition Commission ("Commission") issued the Notification of the Trade Competition Commission regarding the Guidelines for Considering Unfair Trade Practices between Online Food Delivery Service Providers and Restaurant Operators ("Notification"), which took effect on 23 December 2020. The Notification provides guidelines on unfair trade practices which may be considered as causing damage to restaurant operators. If any Online Food Delivery Platform commits any unfair practice under the Notification, it may be ordered by the Commission to suspend, stop, correct, or change such unfair practice under conditions prescribed by the Commission. It may also be subject to an administrative fine of up to 10% of its revenue for the year that such unfair practice was committed.
Board of Investment's Acceleration Measures for 2021
On 21 December 2020, Thailand's Board of Investment ("BOI") approved a series of investment acceleration measures to stimulate Thailand's economy and encourage businesses to adopt digital technologies in 2021. A large-scale project in certain industries (business activities in groups A1, A2, and A3), with a realised investment of at least THB 1 billion within 12 months from the date on which the BOI promotion certificate is issued, would be entitled to an additional 50% corporate income tax ("CIT") deduction for a period of five years. Eligible applicants may apply for this investment promotion scheme before 30 December 2021.
In relation to investment in the Special Economic Zones ("SEZ") in ten provinces of Thailand, BOI has extended the application period for the special incentive scheme for the SEZ to the last working day of 2022. In addition, BOI is offering an 8-year CIT exemption and an additional 50% CIT deduction for another five years for 14 target industries, which include medical equipment, manufacturing, logistics, and electrical appliances and electronics.
Similarly, BOI has also extended the application period for the special incentive scheme for Thailand's five southernmost provinces until the last working day of 2022. The measures include a low minimum investment requirement of THB 500,000, an 8-year CIT exemption, and an additional 50% CIT deduction for another five years.
Mobile Money Pilot under Decision 316/QD-TTg
On 9 March 2021, the Prime Minister issued Decision 316/QD-TTg to approve the "mobile money" pilot, which allows the use of telecommunications accounts to pay for small value goods and services. This pilot will last for two years.
The pilot will be implemented nationwide, with eligible piloting entities being those licensed to provide electronic wallet payment intermediary services, and licensed established public mobile territorial telecoms networks (or subsidiaries with authorisation from a qualified telecoms company).
The "mobile money" transactions may be used for payment of goods and services in Vietnam, or transfer of funds between mobile money accounts. The maximum transaction limit of an account is VND 10 million per month for all transactions, including withdrawals, transfers, and payments.
Decree 152/2020/ND-CP Regulating Foreign Employees Working in Vietnam and the Recruitment and Management of Vietnamese Employees Working for Foreign Employers in Vietnam
On 15 February 2021, Decree 152/2020/ND-CP ("Decree 152") regulating foreign employees working in Vietnam, as well as the recruitment and management of Vietnamese employees working for foreign employers in Vietnam, came into effect.
Decree 152 introduces and updates cases in which foreigners would be eligible for work permit exemptions. Particularly, exemptions are now available for foreigners who (i) are married to Vietnamese citizens and are living in Vietnam, or (ii) are probationers on Vietnamese ships.
Furthermore, the existing work permit exemption that applies to foreigners who own companies in Vietnam has now been tightened to only apply to foreigners who have contributed a minimum of VND 3 billion in capital to the company. Therefore, under Decree 152, owners of small enterprises with a capital threshold of less than VND 3 billion would no longer be able to receive a work permit exemption.
In addition, under the new decree, foreign organisations and individuals are now allowed to directly recruit Vietnamese citizens by giving prior notice to the labour authority. This is not the case previously, where foreign organisations needed to engage a recruitment organisation to assist in the hiring of Vietnamese citizens.
Decree 145/2020/ND-CP Guiding the Labour Code
On 1 February 2021, Decree 145/2020/ND-CP ("Decree 145"), which provides guidance on the implementation of the Labour Code 2019, came into effect. Compared to prior legislation, Decree 145 has introduced the following changes:
- The introduction of detailed provisions on sexual harassment at the workplace, including defining sexual harassment, setting forth recourse processes in the event of workplace harassment, and mandating regulation of sexual harassment in the employer's workplace policies.
- The revamp of the procedures for organising employee dialogue. Employers are required to facilitate workplace dialogue in certain matters that affect their interests (e.g., implementing policies on criteria for assessing employee performance, bonus regulations, and internal labour regulations). Furthermore, dialogues are not just confined to the workplace trade unions, but can (and in the absence of a trade union, would) include internal organisations established by the employees to represent their interests.
- The imposition of longer minimum notice periods for unilateral termination for certain occupations and business lines. For example, a minimum of 120 days' notice would be required for the unilateral termination of company managers if they are hired on indefinite or fixed term labour contracts.