The Year to Come and Year in Review summarise a selection of major developments you should be aware of from 2021, and a selection of key developments expected in 2022.
Updates in
13
key areas in 2021 and 2022
We expect significant legal and regulatory developments in 2022 as Singapore seeks to strengthen its status as a global business hub and ensure a sustainable recovery from the Covid-19 pandemic. We look forward to steering our clients through these developments.
Christopher Bradley, Managing Partner, Singapore
Company law: The Companies and Limited Partnerships Acts will be reformed following consultation by the Accounting and Corporate Regulatory Authority (ACRA). The reforms will likely focus on the dematerialisation of share certificates for private companies, enhancements to Singapore’s regime on transparency and beneficial ownership of legal persons, and the designation of limited partnerships which meet prescribed criteria as fund limited partnerships.
Whistleblowing: The Listing Rules requirements on whistleblowing come into force in January 2022.
Board diversity: The Listing Rules will likely be amended to mandate all listed companies to have a board diversity policy as opposed to the current “comply or explain approach”.
We expect further amendments to the Electronic Transactions Act to facilitate electronic execution of documents.
Proposed amendments to the International Arbitration Act: The Ministry of Law continues to consider proposals to: (i) introduce a limited "opt-in" right of appeal on a point of law arising from an international arbitral award (where no right of appeal currently exists in respect of international awards); and (ii) permit parties to limit or waive certain grounds upon which an award may be challenged, such as for breach of natural justice or where the award exceeds the scope of the arbitration agreement.
Conditional fee agreements in arbitration and selected court proceedings: The Ministry of Law has proposed a bill to legalise the use of conditional fee agreements by lawyers with clients in arbitration and other proceedings before the Singapore International Commercial Court (SICC). Such arrangements are currently prohibited under Singapore law. The bill is expected to be passed in early 2022.
Amendments to the Rules of Court: The amendments, which will come into force in April 2022, aim to streamline the civil justice process significantly. Key changes will include the consolidation of the majority of interlocutory applications into a single application, the narrowing of the scope of document production, and active case management by the courts through case management conferences throughout the life cycle of the case.
Vaccination at the workplace: From 1 January 2022, only employees who have been fully vaccinated, or have recovered from Covid-19 within the past 270 days, can return to their workplace. Employees who have not been vaccinated will not be permitted to return to the workplace unless they are medically ineligible to have a vaccine or have had a negative Covid-19 test. The test will need to be paid for by the employee.
Pension contributions: From 1 January 2022, Central Provident Fund contributions will be increased for employees aged 55 to 70 years who earn more than SGD 750 per month.
Retirement and re-employment: From 1 July 2022, the statutory retirement age and maximum re-employment age will be raised to 63 and 68, respectively.
Protection of local employees: From 1 September 2022, organisations who employ foreign workers will be required to pay all their local employees a minimum local qualifying salary of SGD 1,400 per month.
Workplace discrimination: The Government is expected to enact legislation to enshrine the Tripartite Guidelines on Fair Employment Practices into law and intends to establish a new tribunal to address workplace discrimination claims.
Payment Services (Amendment) Act: The Act, which aligns the Payment Services Act 2019 with recommendations of the Financial Action Task Force, was passed in Parliament after its second reading on 4 January 2021. The amendments to the Payment Services Act, which include the expansion of the scope of cross-border money transfer services and digital payment token services, have yet to come into force and take effect.
Environmental Risk Management Guidelines: Banks, asset managers and insurers have until June 2022 to implement the Environmental Risk Management Guidelines. This entails establishing a clear allocation of responsibilities for managing environmental risk and engaging higher-risk customers to improve their environmental risk profile, amongst other requirements.
Monetary Authority of Singapore (MAS) to issue new outsourcing notice for banks following consultation: MAS has consulted on their proposed Notice to Banks on Management of Outsourced Relevant Services. This would impose requirements on banks where they obtain or receive Outsourced Relevant Services. MAS also intends to mirror requirements of this notice for merchant banks through a Notice to Merchant Banks on Management of Outsourced Relevant Services.
MAS is assessing whether a regulatory framework is necessary to guide the evolution of Buy Now Pay Later (BNPL) schemes: MAS has been engaging with BNPL providers, and reviewing the experience of other jurisdictions where such schemes are more prevalent, to assess whether a regulatory framework is necessary to guide the evolution of BNPL schemes as they become more widely used in Singapore. This could include the adoption of fair dealing practices by BNPL schemes, such as clear disclosure at the point of account opening to ensure that consumers are fully aware of the late fees that are chargeable if they do not pay on time.
MAS expected to respond to consultation on e-money and digital payment tokens: MAS is expected to issue its response to feedback on its consultation paper published in 2019 on the scope of e-money and digital payment tokens, which sought views on whether MAS’ current approach to regulating e-money and digital payment tokens under the Payment Services Act remains appropriate in light of industry developments.
MAS considering changes to Guidelines on Business Continuity Management: MAS has issued a second consultation on proposed revisions to its Guidelines on Business Continuity Management, which includes revisions to address feedback received from the first consultation published in 2019 and incorporates key learnings from the Covid-19 pandemic. It builds on the first consultation to further emphasise the need for financial institutions to take an end-to-end view in ensuring the continuous delivery of critical business services, and introduces principles and practices that financial institutions can implement to strengthen operational resilience.
MAS consults on proposed anti-money laundering and countering the financing of terrorism (AML/CFT) notices: MAS is seeking views on its proposals to issue an AML/CFT Notice for financial institutions in the conduct of their operations and business activities in precious stones, precious metals and precious products. It is also consulting on updates to existing AML/CFT Notices for financial institutions and variable capital companies (VCCs) to ensure AML/CFT requirements for all financial institutions and VCCs continue to be effective in mitigating and managing the evolving money laundering and terrorist financing risks in Singapore’s financial sector.
The transition to risk-free rates has been one of the hottest topics in the loan markets in 2021. It has been no different in Singapore. In its July 2021 report and its November 2021 update to the Market Compendium, the SC-STS provided an overview of developments with updated timelines and recommendations across the range of financial products to facilitate the industry-wide transition of financial contracts to SORA. In these publications, SC-STS strongly urged market participants to take active steps to transition from SOR contracts by 31 December 2021. As SOR tends to be higher than SORA, it also recommended that participants use SOR-SORA basis swap mid-rate pricing as the starting point for their negotiations to address this difference when transitioning from SOR. In the context of corporate loans, the recommended approach depends on the maturity of the loan and parties are urged to consider a variety of factors including any ongoing hedging requirements and the issues of relying on contractual fallback rates.
In July and November 2021, the Steering Committee for Singapore Swap Offer Rate (SOR) & Singapore Interbank Offered Rate Transition to Singapore Overnight Rate Average (SORA) (SC-STS) published a report setting out the updated timeline and key recommendations for the transition of financial contracts away from SOR and an update to the Market Compendium, respectively. The recommendations cover a wide spectrum of financial products across wholesale and retail markets and aim to facilitate a smooth transition from the use of SOR in contracts. For example, in the bond market, these publications stated that it is essential for issuers of (i) resettable fixed rate securities that reference to SOR interest rate swap rates after 31 December 2021 and (ii) floating rate notes that mature after 30 June 2023, to immediately explore options for the remediation of such securities. Where necessary, consent solicitation processes should commence as soon as practicable and before 31 December 2021, as they can take several months to complete.
Non-oral modification clauses:The Singapore Court of Appeal declined to follow English law on the effect of non-oral modification clauses. Therefore, it is possible to amend a written agreement by an oral agreement between the parties notwithstanding the existing of a non-oral modification clause.
Penalty clauses: The Singapore Court of Appeal also reiterated the genuine pre-estimate of loss test for the enforceability of clauses subject to the penalty rule.
Apostille Act: In September 2021, the Singapore Apostille Act came into force creating a streamlined approach to the authentication of public documents for recognition across jurisdictions.
Execution of documents: The Electronic Transactions Act was amended in March 2021 to remove documents such as bills of exchange, documents of title and negotiable instruments from the list of excluded documents in the First Schedule.
SPACs: The Singapore Stock Exchange (SGX) introduced a special purpose acquisition company or SPAC listing framework in September 2021.
Enhanced enforcement powers for SGX: SGX announced enhanced enforcement powers from August 2021. These powers include the ability to issue a public reprimand and to deny an issuer the use of the facilities of the market.
Amendments to the Personal Data Protection Act came into force on 1 February 2021. Additional amendments were made through the Personal Data Protection (Notification of Data Breaches) Regulations 2021 and Personal Data Protection Regulations 2021 which came into force on 1 October 2021. The key changes that are now in effect are mandatory data breach notifications, new grounds for processing data without consent and new offences for individuals. However, the anticipated higher financial penalty for organisations (up to 10% of an organisation’s annual domestic turnover) and data portability obligations (which would allow individuals to request organisations to share personal data with another organisation with a presence in Singapore) have yet to come into effect.
Third-party funding: The third-party funding regime, which previously only covered international arbitration and any related proceedings, has now been expanded to include domestic arbitration proceedings, proceedings commenced in the SICC as well as any related proceedings.
SICC establishes specialist list for technology disputes: SICC has established a new Technology, Infrastructure and Construction List to enable the expeditious resolution of technically complex disputes. Cases placed on the list will benefit from enhanced case management features to expedite resolution, and will be presided over by specialist Judges and Registrars.
Arbitral tribunals’ duty to consider corruption: The Singapore courts have ruled that tribunals must take a proactive role in considering evidence of corruption and that parties cannot preclude the tribunal from doing so by mutual agreement (Lao Holdings NV v Government of the Lao People’s Democratic Republic [2021] SGHC(I) 10).
Foreign employees: A new work pass programme called Tech.Pass was launched in January 2021 to attract founders, leaders and technical experts with experience in established or fast-growing tech companies to Singapore. Higher salary requirements for the renewal of Employment Passes and S Passes took effect on 1 May 2021.
Protection from Harassment Act: On 1 June 2021, the Protection from Harassment Court was established to hear all criminal and civil matters under the Protection from Harassment Act.
Vaccination at the workplace: From 1 October 2021, employers are encouraged to adopt the “Vaccinate or Regular Test” regime that applies to those in high-risk sectors (food and beverage, healthcare, education, fitness studios, etc.) as company policy.
Mandatory redundancy notifications: From 1 November 2021, employers with at least 10 employees are now required to notify the Ministry of Manpower of all redundancies regardless of the number of employees affected.
Removal of Domestic Banking Unit–Asian Currency Unit divide: Among the significant amendments to the Banking Act this year is the removal of the requirement for banks to segregate their accounting books into the Domestic Banking Unit and Asian Currency Unit (DBU-ACU divide). The removal of the DBU-ACU divide necessitates consequential amendments to other regulatory requirements, such as the ranking of specified liabilities in insolvency and asset maintenance requirements.
Introduction of a new licensing framework for merchant banks: Following amendments to the Banking Act this year, the regulation of merchant banks has been consolidated under a new Part VIIB in the Banking Act, which sets out a new licensing framework for merchant banks. This replaces the existing approval regime for merchant banks under the Monetary Authority of Singapore Act.
Guidelines on Individual Accountability and Conduct: MAS’ Guidelines on Individual Accountability and Conduct (IAC Guidelines), which aim to strengthen accountability and standards of conduct across the financial industry, took effect on 10 September 2021. The IAC Guidelines apply to all financial institutions regulated by MAS (save for specific exemptions). We understand that MAS intends to engage with financial institutions on their implementation of the guidelines.
MAS’ foreign related corporation and branch frameworks (Para 9/11 arrangements) and accompanying AML/CFT Notices: Para 9/11 arrangements, along with their accompanying AML/CFT Notices, took effect on 9 October 2021. Para 9/11 arrangements may be implemented without prior MAS approval, as long as entities comply with a set of boundary conditions. Prior to the introduction of the frameworks, Singapore financial institutions were required to seek approval before commencing their business arrangements with their foreign-related corporations, and arrangements involving foreign branches and foreign head offices were not eligible for Para 9/11 approval.
MAS updates Technology Risk Management (TRM) Guidelines: MAS issued updated TRM Guidelines which took effect on 18 January 2021. Key amendments to the TRM Guidelines include enhanced risk mitigation strategies for financial institutions, expectations of financial institutions to oversee third-party arrangements, and additional guidance on the roles and responsibilities of the Board and Senior Management.
MAS grants Payment Services Act licences for digital payment tokens (DPT) licensees: MAS granted several DPT providers, such as DBS Vickers and Independent Reserve, final licences under the Payment Services Act in October 2021. More licences are expected to be issued in the coming months.
Explore our Year to Come 2022 and Year in Review 2021 series across 20+ jurisdictions and a number of legal topics.