Regional Round-Up

Your Snapshot of Key Legal Developments in Asia

Issue 3 - Jul/Aug/Sep 2021

COVER STORY

    CAMBODIA
    CHINA
    INDONESIA
    LAO PDR
    MALAYSIA
    MYANMAR
    PHILIPPINES
    SINGAPORE
    THAILAND
    VIETNAM

    CAMBODIA

    Phase II of New IT Platform for Business Registration

    On 1 September 2021, the Ministry of Economy and Finance ("MEF") announced in a press release the launch of the Business Registration System on Information Technology Platform or online business registration platform ("OBR") Phase II. This Phase II launch was made following the successful implementation of Phase I which was launched on 15 June 2020. 


    During Phase I of the OBR Portal, the applicant for the registration of a main business can reach out to various main authorities depending on the nature of their business. These main authorities are:


    1. the Ministry of Commerce;
    2. the General Department of Taxation;
    3. the Ministry of Labour and Vocational Training;
    4. the Ministry of Interior;
    5. promote sound market conduct practices; and
    6. MEF.

    OBR Phase II will be available to users from 1 September 2021. It includes four additional authorities from which businesspersons may request for licenses/permits/certificates. The four authorities are (i) the Ministry of Industry, Science, Technology and Innovation, (ii) the Ministry of Tourism, (iii) the Ministry of Post and Telecommunications and (iv) the Real Estate Business & Pawnshop Regulator of the Non-Bank Financial Services Authority.


    For more information, click here to read our Legal Update.

    New Prakas on Procedures for Certification and Recordal of Exclusive Right of Using Mark

    The Ministry of Commerce ("MOC") issued new Prakas No. 0117 of MOC on the "Procedures for Certification and Recordal of Exclusive Right of Using Mark" dated 25 June 2021 ("Prakas"). The Prakas aims to set out new procedures governing the certification of exclusive right on mark registration and the recordal of authorisation letter on exclusive right of using the mark.


    Under the Prakas, the exclusive right to import and distribute goods in Cambodia ("Exclusive Right") is recognised through the application for the certification of exclusive right on mark registration and the recordal of authorisation letter on exclusive right of using the mark with MOC. 


    The Prakas also applies to the recordal of sub-granting of the Exclusive Right. 


    For more information, click here to read our Legal Update.

    MPWT Issues Prakas Requiring Companies to Apply for Licence and Certificate for Digital Hailing Services for Road Transport Operation

    The Ministry of Public Works and Transport ("MPWT") issued Prakas No. 100 Pr.K.PW.RT dated 21 June 2021 on the "Conditions and Procedures of Issuance of Certificate to Companies Conducting Digital Hailing Services for Road Transport Operation in Cambodia" ("Prakas").


    The Prakas aims to regulate companies that provide hailing services through digital platforms for road transport operation ("Services"). It sets out the conditions and procedures to request for the Licence and Certificate of Domestic Digital Hailing Service for Road Transport Operation required in order to operate the Services ("Licence and Certificate").


    Interested companies must apply for the Licence and Certificate through https://lts.mpwt.gov.kh (currently not live but will be activated in due course).


    For more information, click here to read our Legal Update.

    CHINA

    China Releases Regulation on Protecting Security of Critical Information Infrastructure

    On 17 August 2021, the State Council of the People's Republic of China published the Regulation on the Protection of the Security of Critical Information Infrastructure (关键信息基础设施安全保护条例, the "CII Regulation"). The CII Regulation came into force on 1 September 2021, providing more clarity on the CII protection regime which was first introduced in China under the 2017 Cybersecurity Law.


    Critical Information Infrastructure ("CII") is defined under the CII Regulation as important network facilities and information systems in important industries and sectors, and those whose destruction, loss of function or data leakage could seriously harm national security, the national economy, people's livelihoods, and the public interest. The CII Regulation highlights a few "important industries and sectors" where CIIs will be identified, including public communications and information services, energy, transportation, water conservancy, finance, public services, e-government, and the national defence technology industry. For the purpose of identifying CII, the competent regulators of the important industries and sectors are required to develop rules for identifying CII in their industries and sectors ("CII Identification Rules"), determine the CII according to such rules, notify each CII operator of such decisions, and provide a copy of the CII list to the Ministry of Public Security.


    Once an operator is identified as an operator of CII ("CIIO"), it should perform a number of specific obligations, including, amongst others, (i) planning, building and using security protection measures; (ii) establishing a cybersecurity protection system and responsibility system; (iii) setting up a special security management organisation; (iv) conducting cybersecurity inspections and risk assessments of its CII at least once a year; (v) reporting major cyber incidents or threats to the relevant authorities (with the particularly significant ones to be reported to the Cyberspace Administration of China and the Ministry of Public Security); and (vi) performing other obligations regarding the procurement of network products or services. CIIOs violating the CII Regulation may be punished by an order for rectification, a warning, and in serious cases a fine of up to RMB 1 million for entities. The responsible personnel of an errant CIIO will also face a monetary fine of up to RMB 100,000 in addition to other penalties including detention, criminal prosecution, and a prohibition from holding key positions in CIIOs in future.


    It is especially noteworthy that the head of a CIIO (e.g. the CEO or General Manager of a CIIO) shall assume overall responsibility for the CII security protection. According to the press release on the CII Regulation, the purpose of such provision is to ensure that CIIOs will invest necessary personnel, capital, equipment and facilities, and other resources to protect the security of CII. 


    Companies, especially those in the important industries and sectors, should keep a close eye on the CII Identification Rules to be released by the competent industry regulators. It is also advisable for the companies to conduct a self-assessment of the possibility of their network facilities and information system being considered as CII.

    China Publishes Regulations on Management of Automobile Data Security

    On 16 August 2021, Several Regulations on the Management of Automobile Data Security (for Trial Implementation) (汽车数据安全管理若干规定(试行), "Automobile Data Regulations") were jointly promulgated by five departments / ministries of China (including the Cyberspace Administration of China and the PRC Ministry of Industry and Information Technology). The Automobile Data Regulations took effect on 1 October 2021. We list down below the key highlights of the Automobile Data Regulations.


    Key Features of the Automobile Data Regulations


    Definition of Important Data


    Article 3 of the Automobile Data Regulations provides for the definition of Personal Information, Sensitive Personal Information, and Important Data. It is notable that the Automobile Data Regulations explicitly define the scope of important data for the automotive industry ("Important Data") as the "data which once tampered with, damaged, leaked or illegally obtained or utilized, may endanger national security, public interests or the legitimate rights and interests of individuals and organizations". Important Data includes:


    1. Data on the geographic information, flow of people and vehicles in important sensitive areas such as military management zones, national defence science and engineering units and governmental authorities at or above the county level;
    2. Vehicle flow, logistics and other data reflecting economic operating status;
    3. Operating data of vehicle-charging networks;
    4. Audio and video data outside a vehicle, such as face information and licence plate information;
    5. Personal information involving more than 100,000 individuals;
    6. Other data that may endanger national security, public interests or the legitimate rights and interests of individuals or organisations as specified by the State Cyberspace Administration and relevant departments of the State Council, such as development and reform, industry and information technology, public security, and transportation.

    Key Principles for Handling Information


    Article 6 of the Automobile Data Regulations provides four key principles for handling personal information and Important Data, comprising the following:


    1. the Principle of processing data inside vehicles (车内处理原则);
    2. the Principle of non-collection by default (默认不收集原则);
    3. the Principle of applying the appropriate range of accuracy (精度范围适用原则); and
    4. the Principle of processing with de-sensitisation (脱敏处理原则).

    Articles 7 through 10 of the Automobile Data Regulations further elaborate on different detailed requirements for handling Personal Information, Sensitive Personal Information, and Important Data.


    Restrictions and Requirements on Cross-Border Transfer and Reporting Obligations on the Operators


    According to Article 11, Important Data shall be stored within the territory of China in accordance with the law, and if it is necessary to transfer the Important Data to a country or place outside PRC due to business needs, such transfer will be subject to security assessment by relevant governmental authorities. The storage and cross-border transfer of Personal Information which is not Important Data shall be handled in accordance with relevant provisions of laws and administrative regulations. You may refer to our Legal Update on the PRC Personal Information Protection Law for more information here.


    Article 12 further provides that automobile data processors shall not transfer the Important Data to a country or place outside the territory of the PRC beyond the purpose, scope, method, data type, and scale specified during the cross-border transfer security assessment.


    According to Article 13, automobile data processors who process Important Data are required to report their annual data security management status to the relevant authorities prior to 15 December of each year. Article 14 further stipulates that automobile data processors who carry out cross-border transfers of Important Data shall report more information regarding such cross-border transfer.


    What Businesses Need to Do


    China has continuously strengthened the legislation and regulation of cybersecurity, data security and protection of personal information protection in recent years. The Automobile Data Regulations are the regulatory responses to the growing concerns regarding data security as smart cars continue to evolve and prosper in China. It is advisable for companies in the automotive industry to conduct a systematic review and assessment of the current status of their internal procedures and policies of collection, processing, localised storage, and cross-border transfer of Personal Information and Important Data.

    China's Personal Information Protection Law Comes Into Effect on 1 November 2021

    On 20 August 2021, the 13th National People's Congress of the People's Republic of China ("PRC") passed the Personal Information Protection Law (中华人民共和国个人信息保护法) ("PIPL"), which will take effect on 1 November 2021. The PIPL is the first dedicated national law on regulation and protection of the personal data in China, introducing several important new rules that will have a significant impact on how personal information processors ("PIPs") may handle and process "Personal Information", defined in the PIPL as all kinds of information related to identified or identifiable natural persons that are electronically or otherwise recorded, but excluding information which has been anonymised. For a detailed analysis on the PIPL, please see our client update here


    Extension of Bases for Data Processing


    In the past, the data subject's consent is the sole basis for collection and processing of the personal data. For the first time, the PIPL extends this to include other lawful bases, such as when it is necessary to:


    1. conclude and perform a contract;
    2. perform lawful duties or obligations;
    3. respond to public health incidents; or
    4. protect the lives, health, and property of natural persons in an emergency.

    Expansion of Extraterritoriality 


    The extraterritorial power of the PIPL has been expanded to be greater than that of the PRC Data Security Law, which targets data processing activities outside China which harms China's national security or public interest or the lawful rights of its citizens and organisations. The PIPL is applicable to Personal Information processing activities outside the territory of the PRC, if such activities relate to (i) the provision of goods or services to natural persons within the territory of the PRC; or (ii) the analysis and evaluation of the behaviour of natural persons within the territory of the PRC. It also contains a catch-all provision that permits the Chinese government to include other situations provided for by other PRC laws or administrative regulations. 


    Requirements for Cross-border Transfer of Personal Information


    The PIPL imposes some conditions on the cross-border transfer of Personal Information. PIPs will need to fulfil at least one of the following conditions before transferring the Personal Information out of China: 


    1. Passing a safety assessment by the national cyberspace authority;
    2. Obtaining personal information protection accreditation from a professional agency appointed by the national cyberspace authority; or
    3. Entering into a contract with the overseas recipient in a standard form formulated by the national cyberspace authority.

    The PIPL contains a catch-all provision to permit the Chinese government to impose other conditions provided for under laws and regulations, or those set by the national cyberspace administration authority. 


    Appointment of a Person in Charge of Personal Information Protection ("DPOs") by Overseas PIPs


    Overseas PIPs who are subject to the PIPL must establish a special institution or appoint representatives within the PRC for handling matters relating to the protection of personal information and report the name and contact details of such institution or representative to the relevant authorities. As the PIPL has not come into effect and this requirement is new, stakeholders await further clarifications from the authority as to the detailed requirements and procedures in this respect.

    INDONESIA

    Leveling the Playing Field, the Government Cuts Income Tax Rate on Bonds for Local Investors

    When the Omnibus Law was enacted, tax rate on interests received by foreign investors from bonds was reduced to 10%. Local investors now enjoy this same reduced tax rate under Government Regulation No. 91 of 2021.


    The reduced tax rate applies on any income received or gained by local investors in the form of interest, ujrah or fee, profit sharing, margin, and any other similar income from bonds issued by government or private institutions. The regulation introduces three possible income tax bases to calculate the 10% tax rate and allows an investor to set-off discount or loss on the securities against the interest income.


    Lastly, the regulation widens the parties that can withhold tax to include pension funds or mutual funds acting as brokers and/or buyers, and custodians or sub-registries that records the transfer of ownership. 


    For more information, click here to read our Legal Update.

    OJK Reaffirms Relaxation to Listing Requirements

    As Indonesia continues to paddle through the pandemic, the Financial Services Authority ("OJK") issued Circular Letter No. 20/SEOJK.04/2021 ("Circular Letter") to reaffirm and introduce relaxations to listing requirements aimed to safeguard the performance and stability of the capital market. 


    Some of the relaxations introduced under the Circular Letter are as follows:


    1. Financial statements for listing purposes, including for initial public offerings (IPOs), rights issue, and material transaction, are now valid for eight months instead of six months;
    2. The book building period in a public offering is extended to 42 business days from 21 business days;
    3. Issuers that have obtained an effective statement from OJK can postpone or cancel their offering with OJK’s approval;
    4. A public company that satisfies the conditions under the Circular Letter can increase their capital without pre-emptive rights; and
    5. Certain reports, including on the ownership and result of acquisition, can be submitted online.

    For more information, click here to read our Legal Update.

    KPPU Introduces Guidelines on Administrative Fines

    Under KPPU Regulation No. 2 of 2021, the Indonesia Competition Commission ("KPPU") details the calculation and payment mechanism for administrative fines imposed under KPPU decisions. The administrative fine itself is capped at either 50% of the company's net profit or 10% of its turnover. Either percentage will be calculated from the relevant market during the violation period. 


    This KPPU regulation also requires a party appealing against a KPPU decision to submit a bank guarantee. The bank guarantee will be liquidated if the Commercial Court, the court responsible to hear appeals of competition cases, upholds the KPPU decision. 


    Lastly, this regulation allows a party to pay fines for violation of the competition law by way of a maximum of 36-month instalments. 


    For more information, click here to read our Legal Update.

    LAO PDR

    Singapore to Trial Import of Electricity from Laos

    On 15 September 2021, it was announced that Singapore will trial the import of electricity from Laos via Thailand and Malaysia following an agreement between Keppel Electric Pte. Ltd. ("Keppel Electric") and Electricite Du Laos ("EDL").


    The exclusive framework agreement between the two companies is part of the Laos-Thailand-Malaysia-Singapore Power Integration Project (LMTS-PIP) that will see the four governments studying the feasibility of cross-border power trade from Laos to Singapore.


    Under the partnership, Laos' state-run EDL is to export up to 100 megawatts (MW) of power from Laos to Singapore via Thailand and Malaysia using existing interconnections, while Keppel Electric, a subsidiary of Keppel Infrastructure Holdings, will purchase the power from EDL.


    The trial electricity supply is expected to begin once all technical, commercial, legal, and regulatory arrangements have been finalised with the governments of the four ASEAN member countries and following the execution of a binding power purchase agreement between Keppel Electric and EDL which is expected to take place in 2022.

    Digital Government Transformation Study and Lao Font Further Development

    On 20 August 2021, a Memorandum of Understanding on Digital Government Transformation Study and Lao Font Further Development ("MOU") was signed between the Ministry of Technology and Communications ("MTC") and Star Telecom Co., Ltd ("UNITEL"). 


    Under the MOU, the parties agreed to study and research on the digital transformation of the Lao PDR Government and improve the Lao language font to be able to support various services, especially the e-government system. This includes the research and development of software and the programming of standardised systems and applications to provide services to the public sector, business units, and general public.


    In addition, under the MOU, the parties shall also study and research on the development of digital payments and e-commerce (Commerce Platform) and integrate this with the digital government system and the electronic signature system (e-Signature Platform). This is intended to promote efficient administration and modern government services. It is also the objective of this initiative to focus on upgrading the knowledge of civil servants and others in digital technology to support the work of the digital government of Lao PDR in accordance with the current development plan for digital government.

    Bank of Lao PDR Issues Instruction on Converting Foreign Exchange Stores into Commercial Bank Representatives

    On 2 August 2021, the Monetary Policy Department, Bank of Lao PDR ("BOL") issued Instruction No. 878/MPD on the Transferring Foreign Exchange Stores into a Representative of a Commercial Bank ("Instruction"). The Instruction supplements/implements Notice No.758/MPD dated 12 July 2021 on the Converting Foreign Exchange Stores Representative of a Commercial Bank.  To comply with the laws and relevant regulations, BOL has issued various guidelines which cover, among other things, the following: 


    1. Application to be a representative of a commercial bank. A foreign exchange store ("FX Store") shall coordinate with a commercial bank of its choice and apply to be a representative of such commercial bank ("Agent"). An FX Store can apply as an Agent with several commercial banks, but it can only sign a currency exchange agent agreement with one bank.

    2. Determining exchange rates and trading currencies. The exchange rate of the FX Stores shall be in accordance with Decision No.801/BOL dated 5 October 2015 on "Determining the reference exchange rate between the LAK and USD and Determining the exchange rate of commercial banks and FX Stores" and other legislations defined by BOL periodically.

    3. Operation of an FX Store after becoming an Agent. An FX Store has certain obligations after becoming an agent, including (i) putting up a signage bearing clearly the name of the commercial bank it represents; and (ii) complying with continuing obligations pursuant to relevant regulations.

    For more information, click here to read our Legal Update. 

    Decision on the Management of Accounting Software Comes into Operation on 28 July 2021

    On 14 July 2020, the Ministry of Finance ("MOF") issued a Decision on the management of the accounting software No.1835/MOF ("Decision"), which was published in the Lao Official Gazette on 13 July 2021 and came into force on 28 July 2021. This Decision sets out the principles, rules, and measures in relation to the promotion of the use of modern tools in management-accounting activities. The Decision applies to individuals, legal entities, accounting units, and relevant departments/agencies using and developing accounting software in Lao PDR, and replaces the Decision No.0210/MOF dated 1 February 2010. 


    The types of accounting software developed for use in management-financing and accounting activities include the following:


    1. Accounting software used for the unit holding a state account; and
    2. Accounting software used for the unit holding an enterprise account.

    The accounting software used for the unit holding a state account may be used for loans and grants programmes such as foreign loans programmes, foreign grants programmes, and those that relate to social organisations, foundations, non-profit funds, and entities.  The accounting software used for the unit holding an enterprise account or specific account may be permitted by MOF for use by fund providers.


    The accounting software used in budget-treasury work and the accounting software of banks and other financial institutions under the management of the Bank of the Lao PDR must comply with the specific regulations of the Bank of Lao PDR. 


    For more information, click here to read our Legal Update. 

    MALAYSIA

    The Dividing Line between Indemnities and Guarantees

    In GJ Consultancy Sdn Bhd v Gan Teck Lim [2021] MLJU 933, the facts pertained to a contractual dispute of a Fixture Note ("Principal Contract") between GJ Consultancy Sdn Bhd ("GJ Consultancy") and Detik Timur Sdn Bhd ("Detik Timur") where Detik Timur chartered a vessel from GJ Consultancy to transport a cargo shipment from Malaysia to China. Detik Timur failed to perform the Principal Contract and incurred dead freight and demurrage cost. Although the parties reached a settlement on the payment of dead freight and demurrage, Detik Timur failed to keep to the settlement terms. 


    Relying on the Letter of Indemnity and Guarantee ("Letter") signed by the Chairman of Detik Timur ("Promisor") where the Promisor would bear personal liability for any loss or damage suffered by GJ Consultancy, GJ Consultancy initiated a claim against the Promisor in the Kuala Lumpur Admiralty Court.


    The Promisor made an application to strike out GJ Consultancy's claim on the basis that the Letter was a guarantee and not an indemnity and therefore, Detik Timur's liability against GJ Consultancy must first be established before any claim could be made against the Promisor.


    Pursuant to these facts, the Admiralty Court Judge undertook a detailed examination of the Letter by reviewing the scope of indemnities and guarantees as well as identifying the differences between the two. Following this, the Admiralty Court Judge dismissed the Promisor's application by deducing the parties' intentions based on the content and nature of the Letter rather than the heading of the Letter itself. 


    For more information, click here to read our Legal Update.

    BNM Issues Exposure Draft of Policy Document on Bancassurance/Bancatakaful

    On 30 August 2021, Bank Negara Malaysia ("BNM") issued the Bancassurance/Bancatakaful Exposure Draft ("Exposure Draft") for industry feedback. The Exposure Draft outlines the requirements for Bancassurance/Bancatakaful arrangements which will apply to existing and new Bancassurance/Bancatakaful arrangements, including renewals.


    The Exposure Draft aims to:


    1. ensure Bancassurance/Bancatakaful subsists as a viable, widely accessible channel for consumers to purchase insurance and takaful products;
    2. promote sound market conduct practices which safeguard consumers’ interest through needs-based sales, disclosure, and enhanced transparency; and
    3. promote market competitiveness while preserving consumer choice.

    The Exposure Draft, which is more comprehensive relative to the existing Bancassurance Guidelines, sets out, inter alia:


    1. the responsibilities of the Board and senior management about the governance and management of its Bancassurance/Bancatakaful arrangements;
    2. the conditions or appropriate targets tied to the payment of upfront fees, to ensure all parties to the Bancassurance/Bancatakaful arrangement deliver quality sales and prevent misaligned incentives from developing;
    3. the requirements that all upfront fees (including service fees, facilitation fees or any type of fees related to or forming the upfront fees) payable by a licensed person to its Bancassurance/Bancatakaful partner, or any other party on its behalf, shall come from the licensed person’s shareholders fund;
    4. the quality of sales, including formulating robust internal policies, procedures, and controls with respect to its Bancassurance/Bancatakaful persistency rates;
    5. the clear demarcation of responsibilities and accountability between the licensed person and the Bancassurance/Bancatakaful partner;
    6. the transparency and disclosure requirements in marketing; and
    7. the minimum qualifications and training requirements, including minimum eight hours of annual professional development requirement (CPD) for staff of Bancassurance/Bancatakaful partners.

    The deadline for providing feedback on the Exposure Draft was 30 September 2021. BNM is presently contemplating an effective date six months after the issuance of the final policy document.

    Recent Malaysian Court Decision Sheds Light on Proof of Debt Exercise in Schemes of Arrangement and the Test for Granting Leave to Proceed against Restraining Order

    The recent Malaysian High Court decision in Re Top Builders Capital Bhd & Ors [2021] 10 MLJ 327 sets out the procedures to be followed for the proof of debt in a scheme of arrangement ("SOA") and the principles for granting leave for a creditor to proceed with legal proceedings against a company, despite the company having an existing restraining order barring legal proceedings against it.


    Procedures to be Followed for Proof of Debt Exercise


    The creditors must first submit proof of debt to the company or an appointed scheme manager ("decision-maker"). The decision-maker will then evaluate the claims based on the information and documentation provided, which may require the decision-maker to make fair estimates of certain claims. The decisions made, based on the proof of debt, ought to be made known to the creditors before the creditors' meeting(s).

    In practice, the adjudicated list of scheme creditors and their respective quanta will be submitted to Court for the purposes of distribution of payments pursuant to the terms of the scheme as approved by the requisite 75% of the creditors in value who attend and vote at the creditors' meeting(s). While acknowledging that the decisions of the decision-maker are made in a summary fashion, the creditors' interests are protected by way of an appeal to Court, if the parties so choose. The Court will, on appeal, examine the evidence placed before the decision-maker (together with fresh evidence, where appropriate), and decide on a balance of probabilities whether the claim against the company is established and if so, what amount is payable.


    The Principle for Leave to Proceed with Legal Proceedings


    When considering a leave application, the Court will only grant leave where there are 'exceptional circumstances', and the burden is on the applicant to satisfy this threshold. 'Exceptional circumstances' are circumstances or a combination of circumstances that must be of sufficient weight to overcome the strong imperative to have the claims dealt with under the existing machinery of the SOA. Leave will likely be granted where the commencement or continuation of the legal proceedings does not impede the achievement of the SOA, or where it would facilitate or assist the achievement of the SOA. Ultimately, it is the Court that will need to exercise its discretion in balancing the harm to the applicant – if leave is not granted – against the harm to the general body of creditors if leave is granted.


    For more information, click here to read our Legal Update.

    The Enforcement of Accounting Fraud under the Capital Markets and Services Act 2007

    This update underscores the growing global recognition that healthy capital markets require an effective regime of financial reporting. It highlights the enforcement outcomes surrounding false and misleading financial disclosures by public listed companies in Malaysia and the judicial approach in dealing with such breaches.


    This update also highlights several Malaysian judicial decisions arising from the issue of false or misleading financial disclosures by listed companies – both in primary offerings of securities as well as post-listing – in the form of continuous disclosures. A factual analysis of the cases shows that a majority of those who breached the law were company directors who were handed deterrent sentences in the form of imprisonment terms.


    This update also provides some useful pointers to directors to ensure that they can discharge their duties effectively, and tips on how to avoid some of the pitfalls associated with liability under capital market laws.


    For more information, click here to read our Legal Update.

    MYANMAR

    Updates to the State of Emergency in Myanmar

    There have been quite a number of developments regarding the State of Emergency in Myanmar. We set out below these key developments.


    New Caretaker Government Formed 


    A new caretaker government has been formed by the State Administration Council ("SAC") pursuant to Order No. 152/2021 on 1 August 2021, with the declaration of Senior General Min Aung Hlaing as Prime Minister of the caretaker government. The newly formed caretaker government also pledged to hold democratic elections by August 2023. 


    Amendment of the Counter-Terrorism Law


    In the legal sector, the Counter-Terrorism Law has been amended which introduces harsher penalties for partaking in anti-regime activities. The imprisonment term for exhortation, persuasion, propaganda, recruitment of any persons to take part in terrorist activities has been extended from three years to seven years. Furthermore, SAC has declared that publicly supporting the National Union Government (NUG) on social media is deemed to fall under Section 52(a) of the Counter-Terrorism Law, which carries imprisonment penalties ranging from three to seven years.


    Dismissal of Ongoing Cases Unless Exempted


    Separately, Order No. 172/2021 was issued on 11 August 2021. The order prescribes a dismissal of all ongoing cases unless they fall under one of the exemptions. The exemptions include cases for a relevant offence under a specified law, or when a plaintiff has submitted a complaint for continuance of the case.


    We will be monitoring closely the updates to changes pursuant to the State of Emergency in Myanmar due to its rapid development. Please click here for our in-depth update concerning all the developments which has occurred due to the State of Emergency in Myanmar.

    Updates from the Central Bank of Myanmar

    The Central Bank of Myanmar ("CBM") has recently issued several directives and notifications to financial institutions.


    Change of Financial Year


    On 7 September 2021, CBM issued Letter No. MaBaBa/NaPaTa/FIS/134/2021 notifying all financial institutions including mobile financial service providers of the alteration of the financial year for 2022 to 2023 from the usual period of 1 October to 30 September, to 1 April to 31 March. In view of the change of the financial year for 2022 to 2023, CBM has declared a six-month interim financial period starting from 1 October to 31 March.


    Revocation of Maximum Rate


    In order to control the inflation of foreign currency exchange rate, CBM previously issued Directive No. 11/2021 fixing the CBM Reference Rate as the Mid-Rate, and restricting the market range between +0.8% or -0.8%. However, on 10 September 2021, CBM revoked the maximum rate by a new directive (Directive No. 12/2021).


    Exporters to Deposit Income Derived from Exports in Foreign Currency Within Prescribed Time


    As a result of the cash shortage and the inflation in currency exchange rate, on 3 September 2021 CBM passed Notification No. 33/2021 reminding exporters of their obligations under Section 38 (b) of the Foreign Exchange Management Law ("FEML"). Among other things, Section 38 of the FEML   mandates exporters to deposit their income derived from exports in foreign currency within four months after the receipt of the remittance. CBM further expressed that the conversion of foreign currencies must be carried out at authorised dealers within the prescribed period at the current exchange rate. The notification took effect from 3 September 2021. 

    Restrictions to the Importation of Motor-Vehicle

    The Ministry of Commerce has announced in a letter dated 27 September 2021 to the State Administration Council (SAC) its intention to restrict the importation of motor-vehicles. The relevant details of its proposed restrictions are as follows:


    1. The issuance of private (individual) import licenses for motor-vehicles from foreign countries shall be suspended from 27 September 2021;

    2. The issuance of show room/retail centre import licenses for motor-vehicles from foreign countries shall be suspended from 1 October 2021. Motor-vehicles that are in transit from a foreign country which have departed the origin country of export before 1 October 2021 shall only be allowed to be imported after the inspection of the original Bills of Lading relating to these motor-vehicles;

    3. New applications for show room/retail centre business licenses and import licenses for purposes of carrying out the business shall not be accepted with effect from 1 October 2021;

    4. Import licenses for motor-vehicles for purposes of swapping old motor-vehicles as per the old/used motor-vehicle regime implemented by the Road Transport Administration Department shall only be issued to persons holding show room/retail centre licenses; and

    5. The import policies for motor-vehicles will only be permitted for new motor-vehicles commencing from 1 January 2022.
    E-Filing System to be Used in Commercial and Special Goods Tax Returns

    In order to avoid in-person tax filings due to the current COVID-19 pandemic, the Internal Revenue Department ("IRD") under the Ministry of Planning and Finance ("MOPF") made an announcement on 3 September 2021 that the filing of quarterly or annual Commercial tax returns, Special Goods tax returns, Capital gains tax, and Income tax returns should be made through the E-filing Management System ("E-filing system") provided on IRD's official website. Taxpayers utilising the E-Filing system must obtain a Taxpayer Identification Number ("TIN") from the relevant tax offices. The E-Filing system will take effect from 1 December 2021.

    Foreign Employee Restrictions Issued by the Central Bank of Myanmar

    The Central Bank of Myanmar ("CBM") issued Letter No. CBM/MP/FIR/Bank Si Sit/1 (4/2021) titled "Instructions to comply for matters related with employing of foreign employees at Banks" ("Instructions") which took effect from 2 August 2021. The relevant details are as follows:


    1. Banks intending to employ foreigners must seek the approval of CBM at least 30 days before engaging such employees. Applicant banks must provide documentation proving that they have scrutinised the prospective employees in relation to their political involvement, criminal records, and insolvency, and they are satisfied that such prospective employees do not have political involvement, no criminal records and are not insolvent;

    2. The Letter also sets out the maximum number of foreign employees that can be employed by a bank depending on its size:

    3.  Type  Market Share  Maximyum number of Foreign Employees
       Large Bank  More than 5%  25
       Medium Bank  Between 1-5%  15
       Small Bank  Less than  1%  8

    4. Banks which are currently employing more than the maximum number of foreign employees must, within 30 days from the issuance of the Instructions, submit proposed measures to make them compliant with the prescribed maximum cap;

    5. Foreign banks are not allowed to employ a foreigner as their Chairman or Deputy Chairman. Where a Chief Executive Officer is a foreigner, the Deputy Chief Executive Officer must be a Myanmar citizen;

    6. Banks with foreigners on their Boards of Directors are required to obtain approval from CBM for these foreigners' continued participation;

    7. Foreigners may be Heads of Departments so long as they do not comprise more than 50% of the Heads of Departments. Furthermore, where a foreigner is a Head of a Department, the Deputy Head of the Department must be a Myanmar citizen.

      • Foreigners employed to be Heads of Departments must serve a probation term of one year, and be duly employed for three years thereafter. This may be extended for an additional period of two more years, after seeking approval with the CBM.


    8. Banks are obligated to have in place a professional training plan for Myanmar citizens with the view that the Myanmar citizens will be able to undertake the roles of the foreign employees;

    9. Banks are obligated to report to CBM their foreign employees' travel history outside of Myanmar. The duration of travel that a foreign employee may have should not exceed three months, in lieu of special permission from CBM;

    10. Non-compliance with the aforementioned instructions may result in a breach of Section 154 of the Financial Institutions Law. A breach of Section 154 of the Financial Institutions Law may result in (i) a warning, (ii) payment of fines, (iii) issuance of orders including those restricting the operations of financial institutions, or (iv) temporary suspension or termination from duties in financial institutions.
    Reformation of the Digital Economic Development Committee

    The Digital Economic Development Committee ("DEDC"), instituted by the previous Union Government under the National League of Democracy administration, was restructured by the State Administration Council ("SAC") under Notification No. 205/2021 dated 7 July 2021. The SAC replaced the former Vice-President with the Vice-Chairman of SAC as an advisor. The Minister of Planning and Finance remains the chairman of DEDC.

    PHILIPPINES

    PCC Resumes Motu Proprio Review of M&As After 1-year Moratorium

    Before the COVID-19 pandemic hit the Philippines, parties to mergers and acquisitions ("M&As") had to notify the Philippine Competition Commission ("PCC") of such M&A when these two thresholds are met: (i) the aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines, of the ultimate parent entity ("UPE") of at least one of the acquiring or acquired entities (including that of all entities that the UPE controls, directly or indirectly) exceed PhP6 billion, and (ii) when the value of the transaction exceeds PhP2.4 billion.  PCC also had the power to review, motu proprio, any M&A – including those that did not meet the foregoing thresholds – having a direct, substantial, and reasonably foreseeable effect on trade, industry, or commerce in the Philippines, based on factors deemed relevant by PCC.


    To promote business continuity and capacity building during the pandemic, Philippine Congress passed the "Bayanihan to Recover as One Act". This increased the thresholds for compulsory merger notification to PhP50 billion for a period of two years from the effectivity of the law on 15 September 2020, and suspended PCC's power to review, motu proprio, any M&A for a period of one year, also from the effectivity of the law.


    With the relaxation of the foregoing rules, merger notifications in 2020 decreased to 26 from the 46 notifications PCC received in 2019.  In 2021, PCC has thus far received only four notifications.


    With the recent expiration of the one-year moratorium on motu proprio merger review on 15 September 2021, PCC is hopeful that parties to M&As will be discouraged to enter into M&As that are potentially anti-competitive.  PCC stressed that regulating M&As in the post-COVID-19 economic environment is critical to ensure that consolidation is not allowed to lead to highly concentrated markets.


    Indeed, PCC's motu proprio review powers (as well as the compulsory notification requirement) allows it to predict and prevent anti-competitive practices before these materialise.  The early determination of the merger's impact provides PCC the opportunity to intervene and remedy or prohibit a merger when anti-competitive effects are determined to occur.


    As of 14 September 2021, PCC has received a total of 225 M&A transactions with a combined transaction value of PhP 4.56 trillion. The top five sectors based on frequency of M&A notifications are manufacturing (50), financial and insurance (37), real estate (33), electricity and gas (27), and transportation and storage (18).

    NPC Issues Advisories on Adoption of International Data Protection Standards on Security Techniques

    In adopting to the fast-changing pace of the development of technology and communication globally, the National Privacy Commission ("NPC") continues to advocate policies that will adopt generally accepted international principles and standards for personal data protection.


    NPC's Data Security and Compliance Office issued the following advisories on the adoption of the following sets of international standards. These international standards are approved for adoption as part of the Philippine National Standards by the Bureau of Philippine Standards.


    1. ISO/IEC 29100 – Privacy framework

    2. This international standard provides a privacy framework which (i) specifies a common privacy terminology; (ii) defines the actors and their roles in processing personally identifiable information; (iii) describes privacy safeguarding considerations; and (iv) provides references to known privacy principles for information technology.

    3. ISO/IEC 29151 – Code of practice for personally identifiable information protection

    4. This establishes objectives and guidelines for implementing controls to meet the requirements identified by a risk and impact assessment related to the protection of Personally Identifiable Information ("PII"). The guidelines take into consideration the requirements for processing PII which may be applicable within the context of an organisation's information security risk environment(s).


    5. ISO/IEC 24760 – A framework for identity management

    6. This International Standard defines the terms and core concepts of identity, identity management and their relationships.  This serves as a guide for organisations to make identity-based decisions, which they may use to grant or deny access to applications or other organisational resources.

    7. ISO/IEC 29134 – Guidelines for privacy impact assessment

    This provides guidelines for the process on privacy impact assessments ("PIA") and the structure and content of a PIA report. This is applicable to all types and sizes of organisations, including public companies, private companies, government entities and not-for-profit organisations.


    According to NPC, the adoption of these international standards involves an organisation's data protection efforts. Personal Information Controllers and Personal Information Processors adopting the international standards must implement these on top of their compliance with the Data Privacy Act of 2021, its implementing rules and regulations, and other issuances of the NPC.

    NPC Highlights Privacy Protection in Anti-fraud Data Sharing Initiatives of Financial Industry

    In response to the initiatives of the financial services industry on cybersecurity that aim to thwart fraud incidents and uphold customers' confidence in digital payments systems, the National Privacy Commission ("NPC") has issued Advisory Opinion 2021-26 to guide personal information controllers in protecting the privacy of shared databases through strict adherence to the basic data privacy principles of transparency, legitimate purpose, proportionality, and the conduct of privacy impact assessments ("PIAs").


    NPC recognises that data sharing for investigation and resolving fraud incidents is allowed under the Data Privacy Act of 2012. While the NPC Privacy Policy Office recognises that having a shared database for know-your-customer, enhanced due diligence, and anti-money laundering purposes may enhance the integrity of the financial system, there is a need to ensure that personal and sensitive personal information (collectively, "personal data") is processed fairly and lawfully. In this particular context, the NPC Privacy Policy Office emphasised that personal data in such database must be accurate, relevant, and kept up to date. Consequently, inaccurate or incomplete data must be rectified, supplemented, destroyed or their further processing restricted. 


    The NPC Privacy Policy also recommends the conduct of a PIA to identify, assess, evaluate, and manage the risks represented by the processing of personal data in the shared database.


    Equally important to the rights of financial services industry are the rights of data subjects. In this regard, the NPC Privacy Policy Office has reminded the financial services industry that data subjects should be provided the mechanism to exercise their rights.

    NPC Issues Advisory Opinion on Adoption of ASEAN Cross-border Tools to Boost Digital Competitiveness

    The National Privacy Commission ("NPC") has the mandate to ensure proper and effective coordination with data privacy regulators in other countries and private accountability agents, and participate in international and regional initiatives for data privacy protection, such as those undertaken by the Association of Southeast Asian Nations ("ASEAN").


    With the approval in January 2021 at the 1st ASEAN Digital Ministers' Meeting of the ASEAN Model Contractual Clauses ("MCCs") and ASEAN Data Management Framework ("DMF"), and in line with its mandate, NPC issued Advisory Opinion 2021-02 on 28 June 2021 ("Advisory Opinion") as its first guidance on the adoption of MCCs and DMF which harmonise data management and cross-border transfer standards across different jurisdictions.


    The MCCs are voluntary contractual terms and conditions that may be included in the binding legal agreements between parties or entities transferring personal information and/or sensitive personal information (collectively, "personal data") across different jurisdictions. These are templates setting out the responsibilities, required personal data protection measures, and related obligations of the parties based on the ASEAN Framework on Personal Data Protection.


    NPC considered the fact that there are different levels of development among ASEAN member states, and thus provided in the Advisory Opinion that companies are allowed to modify the MCCs in a way that does not contradict the clauses, as well as domestic laws on privacy and protection.


    Meanwhile, the DMF is a voluntary and non-binding guidance for ASEAN businesses to establish a data management system and governance structure that appropriately safeguard different kinds of data. Organisations may adopt it to varying business needs in their own systems of managing data. It may serve as basis for sound data governance practices by helping organisations to organise datasets they have, assign it within the appropriate categories, manage their data, and protect it accordingly in compliance with relevant regulations.


    With this initiative, NPC aims to promote the growth of trade and flow of information in the ASEAN internet economy, and promote the Philippines having a slice of the region growth aimed at $240 billion by 2025.

    BIR Suspends Imposition of VAT on Local Purchases of RBEs

    The Bureau of Internal Revenue ("BIR") suspended the implementation of Revenue Regulation ("RR") No. 9-2021, which would have imposed 12% VAT on the local purchases of Philippine Economic Zone Authority ("PEZA")-registered business enterprises ("RBEs"). 


    Previously, the National Internal Revenue Code ("Tax Code") only imposed a 0% VAT on the sale of goods and services to RBEs. However, the Tax Reform for Acceleration and Inclusion ("TRAIN") Law – which amended the Tax Code in 2018 – imposed 12% VAT on the local purchases of RBEs, after fulfillment of certain conditions in the TRAIN Law.


     The Tax Code was again amended through the Corporate Recovery and Tax Incentives for Enterprises ("CREATE") Law, which reintroduced 0% VAT on local purchases of RBEs. To avail themselves of the 0% VAT, these local purchases must be directly and exclusively used in the RBEs' registered projects or activities. 


    Despite the effectivity of the CREATE Law in April 2021, the BIR still issued RR No. 9-2021 in June 2021 that would have implemented the 12% VAT on local purchases of RBEs under the TRAIN Law. 


    PEZA and various RBEs pointed out the apparent conflict between the TRAIN Law and the CREATE Law to the Department of Finance ("DOF"), which oversees BIR. They pleaded with DOF to defer the implementation of RR No. 9-2021 until DOF and BIR finally reconcile the conflicting provisions of the TRAIN Law and the CREATE Law on the VAT on local purchases of RBEs.


    Thus, BIR enacted RR No. 15-2021 to suspend the implementation of RR No. 9-2021 until it enacts another issuance on the matter.

    SINGAPORE

    Singapore Introduces Proposed New Laws to Counteract Foreign Interference

    The Ministry of Home Affairs ("MHA") has introduced the Foreign Interference (Countermeasures) Bill ("Bill") for first reading in Parliament on 13 September 2021. The Bill seeks to reduce the risk of acts of foreign interference by electronic communications activity through the strengthening of Singapore's ability to prevent, detect and disrupt such interference. 


    MHA has noted the threat of hostile information campaigns ("HICs"), particularly through social media and communications technologies, and that Singapore is vulnerable to such attacks as a highly digitally-connected and diverse society. To counter this evolving threat, the Bill not only establishes new offences targeting the perpetrators of such attacks, but also sets out obligations on relevant parties such as those providing social media services, email or instant messaging services, internet access services, and running websites. 


    In this regard, the Bill confers a wide range of powers on the Minister for Home Affairs to issue various orders on relevant parties, such as directions to investigate, expose, and counter HICs. These provisions seek to empower the Government to effectively deal with acts of foreign interference by electronic communications activities, including emails, online communications, SMS, and MMS. 


    The Bill also seeks to combat the use of local proxies by foreign entities to push their agenda, imposing various obligations on Politically Significant Persons (PSPs) who are directly involved in Singapore's political processes.


    For more information, click here to read our Legal Update. This Update highlights the key elements of the Bill, and in particular what social media service providers and relevant electronic service providers as well as members of the media and telecommunications industry should be aware of regarding potential obligations and restrictions. 

    Singapore SPACs Listing Framework Takes Effect on 3 September 2021

    With effect from 3 September 2021, Special Purpose Acquisition Companies ("SPACs") are allowed to list on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST Mainboard"), providing companies an attractive alternative capital fund raising route. 


    This follows Singapore Exchange Limited ("SGX") consultation paper released in March 2021. The consultation paper set out key features of the listing framework that are aimed at balancing investors' interests against the capital raising needs of the market. These include the proposed admission criteria, listing requirements and some key safeguards to protect the interests of minority shareholders of SGX SPACs. For background and a discussion on the proposals in the consultation paper, please refer to our 2021 April Client Update titled "SGX Proposes to Permit Listing of SPACs in Singapore", available here


    With significant support from the respondents to the SGX consultation for the introduction of a SPACs listing framework in Singapore, SGX proceeds with its proposal to offer SPACs as an investment product in the Singapore capital market. Taking into account feedback received, SGX has revised some of its initial proposed requirements/measures in the Consultation and we highlight the material items below: 


    1. Lower Minimum Capitalisation Requirement and Minimum IPO Issue Price

    2. Initially, SGX proposed that a SGX SPAC must satisfy a minimum capitalisation requirement of S$300 million. This is generally more stringent than those prescribed by the securities exchanges in the US that allow SPAC listing. Noting that this may reduce the competitiveness of SGX SPACs as against those of other securities exchanges with SPAC regimes and that the target company for business combination is typically three to eight times the initial size of the SPAC, SGX has lowered the minimum capitalisation requirement to S$150 million. Consequently, suitable acquisition targets companies will have a market capitalisation of more than S$450 million, comparatively higher than that for an issuer seeking a primary listing on the SGX-ST Mainboard. The minimum IPO issue price has also been lowered from the proposed S$10 per share to S$5 per share. 


    3. Shorter Permitted Timeframe for SGX SPAC to Complete Business Combination

    4. SGX recalibrated some of its initial proposed measures to address the concerns and dilution risks of SPACs with reference to feedback received pursuant to the consultation exercise. As it is in the interests of shareholders to complete the business combination earlier than later, SGX has shortened the permitted time frame for a SGX SPAC to complete the business combination from 36 months to 24 months, with an extension of time of up to 12 months if a binding agreement for the business combination has been signed before the end of such 24-month period. 


    5. Detachable Warrants or Convertible Securities from SPAC Shares

    6. SGX will not proceed with its original proposal to require warrants or other convertible securities to be non-detachable from the underlying shares of the SPAC as the detachability of warrants is a fundamental feature of a SPAC in other jurisdictions in attracting investors. Instead, SGX requires a SGX SPAC to specify the adopted maximum percentage cap (including bases) on the resultant dilutive impact to shareholders subsequent to a business combination arising specifically from the conversion of issued warrants (or other convertible securities) by the SPAC at IPO.

    Changes to the SGX-ST Mainboard Listing Rules to implement the SPACs listing framework took effect on 3 September 2021. 


    For more information, click here to read our Legal Update.

    Developments in Cross-Border Paperless Trade - Singapore Collaborates with Australia and Trade Partners on Blockchain and Other Trade Initiatives

    There have been a number of recent developments in Singapore in the area of cross-border paperless trade.


    Singapore's Infocomm Media Development Authority ("IMDA") and Singapore Customs began a blockchain trial with the Australian Border Force ("ABF") on 23 November 2020 to simplify cross-border trade between Singapore and Australia. The trial, which aimed to prove that trade documents could be issued and verified digitally across two independent systems, was part of an initiative under the Singapore-Australia Digital Economy Agreement ("SADEA"). The trial successfully concluded on 18 August 2021.


    The trial successfully tested the interoperability of two independent systems – ABF's Intergovernmental Ledger and IMDA's TradeTrust reference implementation – which are digital verification platforms developed with blockchain technology and used to share electronic trade documents. Certificates of Origin, which are typically required by governments to verify the authenticity and provenance of goods, were used as the first test case.


    Besides the SADEA, Singapore has entered into the Digital Economy Partnership Agreement with New Zealand and Chile, which came into force on 7 January 2021. In addition, Singapore is currently in negotiations with South Korea to develop the Korea-Singapore Digital Partnership Agreement (KSDPA), and the United Kingdom to develop the UK-Singapore Digital Economy Agreement (UKSDEA). Other more modern, non-digital only free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the recently signed Regional Comprehensive Economic Partnership (RCEP) also contain provisions and commitments relating to paperless trading under their e-commerce chapters.


    On the local front, to facilitate digital economy, the Electronic Transactions (Amendment) Act 2021 was amended and came into force on 19 March 2021. Among other matters, it allows the use of digital documentation with international ports and reduces the reliance on hard copy trade documents. Another noteworthy development is the launch of the Singapore Trade Data Exchange (SGTraDex) on 17 July 2021, which is a data infrastructure framework that makes use of a common data highway to facilitate data sharing between supply chain ecosystem partners.


    For more information, click here to read our Legal Update.

    Capital Gains, Branch Profits, Royalties: Updates to the Singapore-Indonesia Double Taxation Agreement

    On 23 July 2021, the Agreement between the Government of the Republic of Singapore and the Government of the Republic of Indonesia for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance ("Updated DTA") entered into force, following Indonesia's ratification of the Updated DTA on 11 May 2021.


    In its official statement, Indonesia's Directorate General of Tax stated that the Updated DTA is meant to strengthen efforts to prevent tax evasion, protect and increase Indonesia's tax base, and at the same time encourage increased investment from Singapore. Similarly, Singapore's Ministry of Finance stated in its press release of 23 July 2021 that the Updated DTA would boost bilateral trade and investment flows between the two countries.


    We examine some of the key changes arising from the Updated DTA below, including:


    1. The new Article 13 on capital gains;
    2. A reduction in branch profit tax;
    3. A reduction in royalties tax;
    4. Removal of exemption for interest paid on government bonds or debentures;
    5. Abolishment of articles on income not expressly mentioned and limitation of relief;
    6. Expanded exchange of information provisions; and
    7. Application of the principal purpose test.

    For more information, click here to read our Regional Tax Update.

    Singapore Court of Appeal Considers Application of UNCITRAL Model Law on Cross-Border Insolvency for the First Time

    As Singapore continues to advance its position as an international hub for restructuring and insolvency, it has implemented a number of changes to its legislative framework. One of the key developments has been the adoption of the UNCITRAL Model Law on Cross-Border Insolvency ("Model Law"), which has been given force of law in Singapore. The Model Law provides procedural mechanisms to facilitate the conduct of cross-border insolvencies.


    The case of United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd [2021] SGCA 78 was the first instance in which the Singapore Court of Appeal has considered the application of the Model Law. The Court of Appeal considered the principles relating to the recognition of foreign proceedings and when local proceedings should be stayed in favour of foreign proceedings.


    In this case, the Singapore Court of Appeal accepted that Malaysian insolvency proceedings constituted the foreign main proceeding, but declined to grant a stay of Singapore proceedings, allowing the Respondent bank to continue with its court application for declarations relating to its security interests. The decision demonstrates that local proceedings will not always give way to foreign main proceedings, highlighting the relevant factors that the court will take into account.


    The Respondent was successfully represented by Lee Eng Beng, SC and Torsten Cheong from the Restructuring & Insolvency Practice and Appeals & Issues Practice.


    For more information, click here to read our Legal Update.

    THAILAND

    Relaxation of Limitations for Foreign Arbitrators or Representatives in Thai Arbitral Proceedings

    Foreigners may now be appointed as arbitrators or representatives in Thailand, but are required to obtain visas or work permits, as the case may be. Pursuant to the Arbitration Act (No.2) B.E. 2562 (A.D. 2019) ("Arbitration Act (No.2)") which came into force on 15 April 2019, a foreign arbitrator or representative in an arbitration conducted by the Thai Arbitral Institute ("TAI") or the Thailand Arbitral Center ("THAC") may obtain a certificate issued by TAI or THAC for the consideration of Thai officials in their issuance of a work permit. After receiving such certificate, the foreign arbitrator or representative may begin to perform his/her duties without having to wait for the issuance of his/her work permit. Another alternative is to apply for Smart Visas for foreign experts working in the alternative dispute resolution ("ADR") sector by producing documents proving his or her expertise in ADR. 


    Nonetheless, foreigners are still prohibited from acting as arbitrators or representatives in arbitration proceedings in Thailand where the dispute is governed by Thai law.


    For more information, click here to read our Legal Update.

    Social Security Fund Contributions Reduced for Further Three Months Due to COVID-19 Outbreak

    On 27 September 2021, the Royal Gazette published "Ministerial Regulation Prescribing the Social Security Fund Contribution Rate B.E. 2564 (2021)" to officially announce that the employers' and the employees' contributions to the Social Security Fund will be reduced from 5% to 2.5% of the employee's monthly wages (with the limit of THB 375 each month) for a further three months from 1 September until 31 November 2021. 

    Foreign E-service Providers Required to Register as VAT Registrants in Thailand

    Since 1 September 2021, foreign E-service platforms and service providers, who (i) provide electronic services to non-VAT registered recipients in Thailand, and (ii) receive revenue from operating E-service platforms exceeding THB 1.8 million in one accounting period, are required to register as VAT registrants and pay VAT to the Thai Revenue Department. This new requirement was set out in the Revenue Code Amendment Act (No.53) B.E.2564 (2021), which was published in the Royal Gazette on 10 February 2021 and Act came into force on 1 September 2021. The relevant VAT registrants shall submit their first tax filing (P.P. 30.9) and remit the VAT to the Revenue Department by 25 October 2021.

    Measures to Alleviate COVID-19 Lockdown Policy for Employers and Employees

    Due to the COVID-19 pandemic situation in Thailand, on 20 July 2021 and 3 August 2021, the cabinet passed a new resolution to relieve and alleviate the affected employees and employers in the "Maximum and Strict Controlled Areas", consisting of 29 provinces, including Bangkok. The COVID-19 relief measures include the following financial support from the Social Security Office ("SSO"):


    Eligibility

     Quantum

     Employees rregistered under Secion 33 of the Social Security     Act ("SSA") working in nine types of businesses:
     1.  construction;
     2.  hotel and food services;
     3.  art, entertainment, and recreation;
     4.  service-based businesses;
     5.  wholesale, retail, and vehicle repair;
     6.  transportation and warehousing;
     7.  management and technical support services;
     8.  professional, science, and academic disciplines, and
     9.  information and communications.

     THB 2,500 per employee for a period of   one month
     Employers of the employees meeting the above criteria            THB 3,000 per employee with a     maxmimum of up to 200 employees
     Former employees registered under Section 39 of the SSA  THB 5,000 per employee
     Self-employed employees registered under Section 40 of the     SSA  THB 5,000 per employee


    VIETNAM

    Amending Decree on E-commerce

    On 25 September 2021, the Government passed Decree 85/2021/ND-CP ("Decree 85") to amend the existing Decree 52/2013/ND-CP on e-commerce ("Decree 52"). As a result of Decree 85, foreign organisations will now be regulated by Vietnam's e-commerce regulations – previously, those regulations were only applicable to entities in Vietnam or foreign entities with a local establishment presence (e.g., a representative office). 


    For foreign companies in particular, Decree 85 specifically targets foreign companies that have websites providing e-commerce services in Vietnam, operating in one of the following forms:


    1. having an e-commerce website operating under Vietnamese domain names;
    2. having an e-commerce website with a Vietnamese language display; or
    3. having an e-commerce website that has more than 100,000 transactions from Vietnam in a year.

    These foreign companies are required to either establish a representative office or appoint an authorised representative in Vietnam to perform certain responsibilities. These include coordinating with the State in preventing transactions that violate the law, performing obligations to protect consumer interests and ensure quality of products and goods, and performing reporting obligations. As Decree 85 now enables foreign companies to be regulated by Decree 52, this means these companies will also be subject to the various obligations set forth under Decree 52, including those concerning personal data protection.


    Decree 85 will come into effect from 1 January 2022. Foreign companies which fall into the above categories have a 12-month period from the effective date to comply with the obligations. 

    New Decree on Cross-Border Advertising Activities

    On 30 July 2021, the Government issued Decree 70/2021/ND-CP ("Decree 70") to amend and supplement certain provisions of Decree 181/2013/ND-CP ("Decree 181"), most notably concerning cross-border advertising activities. The decree came into effect from 15 September 2021.


    Under Decree 181, Vietnamese companies that wished to advertise their goods and services on overseas websites were required to do so through advertising service providers registered in Vietnam. Decree 70 removes this requirement, thereby allowing overseas service providers to directly contract with Vietnamese companies for these services.


    However, foreign companies that wish to provide cross-border advertising services in Vietnam are now required to send a notice containing their contact information to the Ministry of Information and Communications. They are also subject to general requirements to comply with the laws on advertising, cybersecurity management, and the provision and use of Internet services and online information, as well as pay tax in accordance with Vietnam's tax laws.





    Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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