Singapore - Q&A On Key FDI Updates And Developments.
Legal News & Analysis - Asia Pacific - Singapore - FDI
1 – What changes have taken place recently or are about to take place that investors/potential investors in your jurisdiction should be aware of?
There has been a slew of changes in the intellectual property law area. On 17 January 2019, the Ministry of Law announced that the Copyright Act will be amended to enhance support for creators. In addition, the Copyright Act will be updated to take into account use of creator’s works in the digital age to better support users’ access and creators’ rights in the digital age.
On 11 March 2019, the Ministry of Law launched a public consultation to seek feedback on improvement to the intellectual property dispute resolution system in Singapore. The draft Intellectual Property (IP) (Dispute Resolution) Bill intend to achieve three outcomes: a) simplify the civil IP disputes; b) enhance the patent regime such that only patents of quality will be protected; and c) to reflect with certainty to parties that IP disputes can be arbitrated in Singapore, with the arbitral award only having an effect on the parties involved in the arbitration.
2 – What key legislations are in place to attract FDI in your jurisdiction?
Singapore moved the Variable Capital Companies Bill in 2018. The new corporate structure, the Variable Capital Company (“VCC”) is tailored for investment funds, and was introduced to further strengthen Singapore’s position as a hub for fund management activities.
Traditionally, fund managers in Singapore had to use unit trust to constitute their funds. An alternative to the unit trusts was constitute the investment funds through investment companies. While an investment company is common internationally, it is difficult for investment funds to be constituted as investment companies in Singapore due to the restrictions under the Companies Act (Cap. 50).
The VCC vehicle will allow greater flexibility in the issuance and redemption of shares without the need to seek shareholders’ approval, and investors can exit their investments as they desire. A VCC can either be a standalone structure or an umbrella structure with multiple sub-funds with each sub-fund holding different assets.
Building on the momentum made from the VCC framework announcement in 2018, the Singapore Minister for Finance Mr Heng Sweet Keat delivered the Budget Statement for 2019, which amongst others, announced tax incentives schemes for funds. For example, the scheme under the Income Tax Act saw an expanded list of designated investments and removed certain restrictions. Unit trusts need not wholly invest in designated investments. These changes will take effect and apply to income derived on or after 19 February 2019.
3 – What are the latest key developments in your jurisdiction?
Singapore is developing a reputation as the go-to place for arbitration, challenging other established arbitration centres in London, Paris, and Stockholm. On 3 June 2016, the Financial Times reported that Singapore International Arbitration Centre (“SIAC”) have increased by more than 300 per cent within the past 15 years. The report further stated that China, South Korea, the US and British Virgin Islands are amongst the top countries which flocked to Singapore for arbitration.
The United Nations General Assembly adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation on 20 December 2018. This new Convention will be named after Singapore, and be named the Singapore Convention on Mediation (“Convention”). This Convention will bring about the enforcement of settlement agreements that arise out of mediations conducted in Singapore and foreign jurisdiction. In time to come, the Convention will encourage parties to come to Singapore as a destination to resolve their disputes amicably.
4 – What sectors are seeing the biggest changes?
There has been a sea of changes in the Securities and Futures Act (Cap. 289) (“SFA”) of which changes took effect on 8 October 2018. The changes were wide ranging and covered rules that encompassed the spectrum from licensing, prospectus requirements, business conduct and market misconduct.
Financial institutions have to update their documentation and process in light of the changes that took place. Take for example, the definition of “accredited investor” (“AIs”) and “institutional investor” (“II”) which have been revised. As a result of the revised definition, an opt in/opt out regime for AIs will be available from 8 April 2019 onwards. After 8 July 2020, if an institution wishes to treat their clients as AI-eligible after this date, the client will specifically need to submit opt-in forms.
Financial institutions who had managed to rely on past licensing exemptions, and were unregulated, will now have to re-examine the rules to ascertain if they still fall under the current SFA exemptions.
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For further information, please contact:
Aloysius Wee, Managing Partner, Aquinas Law Alliance