August 30, 2016

RHTLaw Taylor Wessing Deputy Managing Partner and Head of Corporate Practice Azman Jaafar quoted in The Straits Times

RHTLaw Taylor Wessing’s Deputy Managing Partner and Head of Corporate Practice, Azman Jaafar, was quoted in The Straits Times article titled “Insolvency cases running high”. The article was first published in The Straits Times on 30 August 2016. Insolvency cases running high Source: The Straits Times © Singapore Press Holdings Ltd. Date: 30 Aug 2016 Author: Rennie Whang The number of firms in Singapore being wound up after encountering financial trouble is set to be on a par with last year's number, which was the highest in 11 years. These figures may even understate the levels of distress as such a formal procedure is always the last resort, industry observers note. More companies seem to be going under, and the number of these cases could creep up to higher levels than during the global financial crisis, said Mr Chua Beng Chye, partner in the restructuring and insolvency practice at Rajah & Tann. "What we are seeing now is a confluence of factors from various sectors leading up to a perfect storm - including escalating costs, record low oil prices, dampened property market and a slowing Chinese economy," he noted. A total of 118 court winding-up petitions were filed in the first half of this year, compared with 129 in the same period last year, according to Ministry of Law figures. And a total of 85 firms were actually wound up in the first half, compared with 97 previously. In all, 255 court winding-up petitions were filed last year, while 189 firms were wound up. Both were the highest figures since 2004. The continuing high figures come as no surprise amid a slowdown in economic growth. The Singapore economy grew 2 per cent last year, the slowest pace since the global financial crisis, and is tipped to grow just 1 to 2 per cent this year, noted UOB economist Francis Tan. Six applications for judicial management - a less drastic step, leaving open the chance of regrouping - were filed in the first half of this year, compared with five in the same period last year. Five of these orders were granted, up from four previously, according to figures from the Supreme Court. Companies to have been wound up recently include boutique developer C&C Development. California Fitness is in liquidation. Others which have opted for judicial management or are looking to restructure debt include energy sector victim Swiber Holdings, Technics Oil & Gas, interior design firm Serrano, Mercator Lines (Singapore) and Sembawang Engineering and Constructors. Also, locally-listed China Fishery Group and its Hong Kong parent Pacific Andes Resources Development have filed for bankruptcy protection in the United States. The sectors affected include shipping, oil and gas, commodities , construction and retail, said Mr Peter Greaves, restructuring leader at PwC Singapore. Most of these sectors are set to face more heat in the coming months, he added. "Many of the current difficulties are rather unprecedented. Globally, shipping for example, is probably in its worst position since the early 1970s." On a positive note, though, companies and their creditors appear to be more prepared to weather the storm, compared with during the global financial crisis. "Complaints about the challenging global conditions have been on the cards since early last year. Many companies have already been preparing for the worst... (This) has helped both creditors and debtors," said Mr Azman Jaafar, deputy managing partner and head of corporate practice at RHTLaw Taylor Wessing. Still, the number of cases of liquidation and its alternatives may not fully reflect the number of firms under financial pressure, said Mr Thio Shen Yi, senior counsel and joint managing director of TSMP Law. "When times are very bad, companies just don't have the money. If creditors wind them up, and there is nothing, they still incur legal fees. So the creditors may not bother." But in a situation where the economy is a bit better, creditors may make a court winding-up application as it could be an effective way of getting a debtor to pay up. "In this environment, liquidation might be a last resort, or resorted to when there is suspicion of management wrongdoing. Certainly, among the local banks at least, you see greater sensitivity to the different types of restructuring options available," Mr Thio added. So, to get a fuller picture of the levels of distress, we need to consider other negative indicators such as increasing debt levels or falling revenues or profits; and also consider when a firm's debt is maturing, noted Mr Greaves of PwC. "The increasing trend in defaults in Singapore dollar denominated bonds also reflects the pain felt across a number of industries. Companies have to face a new normal of trading conditions, such that they may not be able to service existing debt levels."
August 26, 2016

RHTLaw Taylor Wessing Head of Capital Markets Ch’ng Li-Ling quoted in The Business Times

RHTLaw Taylor Wessing Head of Capital Markets Ch'ng Li-Ling was quoted in The Business Times article titled “JTC makes early-buyback offer for Jurong Country Club notes”. The article was first published in The Business Times on 26 Aug 2016. JTC makes early-buyback offer for Jurong Country Club notes But it draws noteholders' ire by offering S$35,800 less than par value Source: The Business Times © Singapore Press Holdings Ltd. Date: 26 Aug 2016 Author: Lee Meixian JTC Corporation has agreed to buy back some S$23.5 million worth of debentures from noteholders, who are also Jurong Country Club (JCC) members, 17 years ahead of the maturity date - but at a discount. In an offer letter seen by The Business Times, which was sent out to all 196 JCC debenture holders, JTC said it is offering each person S$84,200. The notes - which are due in September 2033 - were issued at the par value of S$120,000 in 1993, when the club was raising funds to refurbish its facilities. The notes came in a package with a membership, costing S$150,000 altogether - which implicitly suggests that the membership cost S$30,000. The early redemption now stems from the fact that the land on which JCC sits will soon be taken back by the government for the building of the Singapore terminus of the Singapore-Kuala Lumpur High Speed Rail. JTC said that it had arrived at the purchase price of S$84,200 after engaging KPMG Services to determine a range of offer prices for its voluntary buyback. In its letter, JTC also provided details of its methodology, revealing that KPMG had used the discounted cash flow method to estimate the present value of the amount to be received in September 2033. KPMG had used statutory boards' and Singapore government securities' zero-coupon rates as the discount rates. JTC added that noteholders have a choice to monetise their notes now, or continue to hold them until the redemption date in 2033. Nothing in the offer will change the conditions in the notes. But this failed to appease the Debenture Note Working Committee (DNWC). When contacted, DNWC chairman Lim Hung Siang said in an email response: "The Debenture Note Working Committee is deeply disappointed with the JTC repurchase offer, which we feel is unfair and has not addressed the facts in the claim raised by the DNWC. (These claims were also published in a letter to the editor in BT on Aug 4.) The DNWC will be meeting our lawyer to discuss the matter further." In his earlier letter, Mr Lim (who was group business development and special projects officer at ComfortDelGro before he retired) had said: "JTC needs to understand that the 2003 JTC note is an interest-free loan and is not an investment product which generates a yield and can be freely traded like JTC corporate bonds. "The subscription of the JTC notes was conditional upon a subscription of a JCC membership in 1993 and these notes cannot be freely traded in themselves, unless sold together with the JCC membership. The notes are, in substance, debts owed and guaranteed by JTC to the noteholders that must be repaid in full." He added that noteholders are merely asking for the redemption of the notes at par when the club closes this year. "We believe our request is fair and not at all unreasonable." Checks show that JCC memberships were trading in the open market at around S$100,000 in 1993, making a S$30,000 membership a good deal. Even after paying a transfer fee to the club, members would have pocketed a good profit had they sold their membership in the mid-1990s. In response to noteholders' unhappiness, a JTC spokesman said on Thursday evening: "We understand that some noteholders may not want to hold the notes till maturity in 2033 and want to sell the notes before that. As such, we have decided to provide noteholders with an option to do so by making a repurchase offer that is consistent with market practice. "In arriving at the offer price, we have engaged KPMG to advise us on what would be the market practice for such a repurchase. For noteholders who wish to hold on to the notes, we continue to honour our obligation to redeem the notes at their maturity in 2033." The offer expires at 5pm on Sept 23, which is also by when acceptance forms must be submitted. JTC will hold a briefing next Thursday at its Jurong office to address noteholders' questions on the offer. Weighing in on the case, Ch'ng Li-Ling, partner at RHTLaw Taylor Wessing, said: "This is indeed a human interest story, with the funds of members who are retirees being tied up in the notes. Without the benefit of the notes documents, it is futile to speculate on which party is right. If the matter goes to court, the court will review the terms and conditions of the notes." Henry Heng, a partner at Kennedys Legal Solutions, added: "Given that JTC is considering an earlier redemption of the bonds, parties should perhaps consider alternative dispute resolution, such as mediation, to explore an amicable resolution of the matter."
August 25, 2016

RHTLaw Taylor Wessing Partner Jonathan Kok quoted in The Straits Times

RHTLaw Taylor Wessing’s Intellectual Property & Technology Partner Jonathan Kok was quoted in The Straits Times article titled “VPN tech being reviewed under Copyright Act”. The article was first published in The Straits Times on 24 Aug 2016. VPN tech being reviewed under Copyright Act Source: The Straits Times © Singapore Press Holdings Ltd. Date: 24 Aug 2016 Author: Irene Tham The legality of virtual private network (VPN) technology, which allows unauthorised content from overseas to be accessed, is being reviewed. The review is part of over a dozen wide-ranging revisions the Ministry of Law (MinLaw) is suggesting to be made to the Copyright Act, which was last majorly updated in 2004. MinLaw did not recommend an outcome on the use of VPN in the consultation papers released yesterday. But it called for public feedback on whether current rules governing the circumvention of digital locks on copyrighted work need to be updated. These locks restrict access to or use of the content. The Intellectual Property Office of Singapore (Ipos), which had a part in putting together the consultation paper, recognises that there are "some complications" surrounding the use of VPN. "There are some concerns that bypassing geographical blocks could infringe copyright," said Mr Daren Tang, chief executive of Ipos. Nevertheless, Singapore remains a strong supporter of parallel import, which is essentially what VPN allows in the digital world, he added. The law generally does not allow digital locks on copyrighted works to be circumvented. But there are a few exceptions. For instance, tertiary educational institutions can unlock short clips of films to critique them, and libraries are allowed to unlock old software to preserve it in an operational state. The law is silent on the use of VPN technology for accessing blocked content. Consumers in Singapore have been using it to stream content meant for other markets from legitimate video-streaming sites. But there is pressure from content publishers to change that. The International Federation of the Phonographic Industry, which represents more than 1,000 producers and distributors of sound recordings, believes VPN users should not be allowed to circumvent geographical blocks. "This idea of parallel import is based on pricing alone," said Mr Ang Kwee Tiang, its regional director for Asia. "It is effectively a race to the bottom, forcing Singapore to become an importer of content instead of a producer or distributor of content domestically." Experts say it is impossible to outlaw VPN, which also has legitimate uses - for instance, securing corporate access to information over the Web. "But the law can clarify that VPNs cannot be used to access certain types of restricted content," said intellectual property (IP) and technology lawyer Jonathan Kok of RHTLaw Taylor Wessing. IP lawyer Cyril Chua of Robinson LLC said that if the law were to be amended to regulate the source of content, shops selling Android media boxes preloaded with apps for movie streaming could be hit. Other revisions proposed include legalising data collation for data mining even as analytics becomes increasingly important to economic growth, and allowing public schools to reproduce and share content on websites for teaching purposes. The consultation will end on Oct 24. "These reviews will further strengthen our regime and allow it to keep current with technological advances, business needs and societal developments," said Senior Minister of State for Law and Finance Indranee Rajah, speaking at the opening of the fifth annual IPWeek@SG 2016 event at Marina Bay Sands yesterday."IP is not just about law. IP is also about business and innovation."
August 8, 2016

ASEAN Summit 2016 organised by RHTLaw Taylor Wessing and RHT Academy featured in The Straits Times

ASEAN Summit 2016 organised by RHTLaw Taylor Wessing and RHT Academy featured in The Straits Times article titled "Consensus, centrality and relevance: Asean and the South China Sea".  The article was first published in The Straits Times on 6 August 2016. Consensus, centrality and relevance: Asean and the South China Sea This is an excerpt of Ambassador-at-Large Bilahari Kausikan's speech at this week's Asean Summit 2016, organised by RHTLaw Taylor Wessing and RHT Academy. Source: The Straits Times © Singapore Press Holdings Ltd. Date: 6 Aug 2016 Author: Ambassador-at-Large Bilahari Kausikan Is Asean still relevant? This is not just a rhetorical question. Inability to reach consensus on the South China Sea (SCS) has exposed cracks in Asean unity to the glare of public scrutiny. Asean's relevance is being questioned by academic commentators and journalists, by Asean dialogue partners and even - sotto voce - by some Asean member states. Without a minimally credible answer to the question, Asean will be marginalised. Asean will not disappear: Regular meetings of leaders and ministers will still be held with pomp and ceremony; solemn statements will be issued. But will anyone take much notice? As far as the SCS is concerned, this is not to be taken for granted. The SCS is a major international waterway. Vital trade routes pass through it and the skies above the SCS are among the busiest in civil aviation. The SCS occupies a uniquely strategic position connecting the Pacific Ocean with the Indian Ocean and the Persian Gulf. This is an issue of international concern. If Asean cannot take a position on such a crucial matter in its own region, why should anyone take us seriously? WHY CONSENSUS MATTERS There is no evading the fact that on the SCS, Asean is divided. The media has laid primary responsibility for blocking consensus on Cambodia acting at China's behest. Shortly after the 2012 meeting, Prime Minister Hun Sen said that Cambodia had made a "strategic choice" in China's favour. Phnom Penh has not been shy about its position on the SCS. This year, before the Arbitral Tribunal announced its decision, Beijing had repeatedly and in often hectoring terms warned all Asean members against taking a common position on the award and Prime Minister Hun Sen said twice that Cambodia would not agree to a common Asean position. Cambodia is by no means the only Asean country that has been reluctant to incur China's wrath over the SCS. The unusual forthrightness of Cambodia's leaders in 2012 and after has been a convenient cover for the others inclined to duck. Cambodia was acting within the letter of its rights under the Asean Charter which makes clear that decisions will be made by consensus. Asean's disagreements over the SCS have led to the efficacy and relevance of the consensus principle being questioned. Frustration with the consensus principle is understandable, particularly at a time when the East Asian strategic environment is changing rapidly with the United States and China groping towards a new modus vivendi with each other and other countries in the region. Their competition in the SCS has become something of a proxy for the larger strategic adjustments that are under way. It cannot be denied that decision-making by consensus degrades Asean's ability to act on controversial issues. It is sub-optimal. But alternatives to the consensus principle are only theoretical propositions, advocated by those with no responsibility for where they may lead Asean. We are not the European Union and in any case it is now clear that the EU is not the most edifying of models for Asean to emulate. As an interstate organisation with a very diverse membership with different national interests, in practice Asean can only operate by consensus. Any other mode of decision-making could escalate even minor differences into major splits and risks the organisation breaking up entirely. Decision-making by consensus is a fuse that trips when differences of national interests surge to the point where the system becomes so overloaded that it could be torn apart. Prior to 2012, no matter how fiercely we disagreed, Asean members have been punctilious about reaching consensus. Asean's most basic consensus is a consensus on always having a consensus, even if it is only a consensus of form or on words to maintain a facade of unity. We have managed to do so even on sensitive bilateral disputes between members. A consensus on always having a consensus preserves Asean's fundamental and enduring purpose of ensuring civility and order in relations between its members in a region where this is not to be assumed. This is a crucial function. In South-east Asia, sovereignties are relatively new and often still tender; historical enmities not yet forgotten and the region lies at the intersection of major power interests. Asean is intended to allow the small states of South-east Asia - and the biggest of us is small compared to the major powers - to retain some modicum of autonomy through maintaining cohesion. This is one of Asean's under-appreciated successes: Today there are tensions in the SCS but as a whole South-east Asia is at peace with itself and the world and prospering. This is a situation that would not at all have seemed likely in 1967. If the consensus principle is repeatedly abused, the consequences could be unpredictable, not just for Asean but also for the major powers, including China. A repeat of what happened in 2012 could set Asean on a path to a dangerous destination. CONDUCT AT SEA It is not within Asean's competence to resolve the SCS disputes. In so far as the SCS has become a proxy for US-China competition, Asean is only a secondary player; as much arena as actor. Asean may have only a limited role but, potentially at least, again not an inconsequential role. The key word is "potentially". Here too the evidence is mixed. China has agreed to Singapore's proposal for a Code for Unplanned Encounters at Sea or Cues which is intended to reduce the possibility of accidents pending agreement on a Code of Conduct (COC) for the SCS. A draft declaration on an Asean-China Cues is under discussion by Asean and China. But China only agreed to discuss a Cues for its coast guard and not the People's Liberation Army (PLA) Navy. This is a serious limitation. China claims substantial swaths of the SCS as Chinese territory since "ancient times" and has relied primarily on its coast guard to enforce its domestic laws in the SCS, for instance on fishing. But PLA Navy patrols and exercises in the SCS and has deployed assets on the artificial islands China has created. Over time, PLA Navy will certainly qualitatively and quantitatively step up its SCS deployments. What this means for Asean and in particular the Asean claimants whose navies are dwarfed by PLA Navy - in fact overshadowed even by the Chinese coast guard - is unclear. The US 7th Fleet is the only real balancer in the SCS. Still even a limited Cues is better than nothing and could supplement the Cues that the US and China have already agreed for the Pacific Ocean, but which China has apparently also complied with in the SCS where the commander of the US Pacific Command recently acknowledged dangerous incidents have been rare. The most potentially consequential Asean proposal on the table is a COC for the SCS. It has been under discussion for several years. Progress has been glacial. To be of real use, a COC must deal with many substantive issues. Only the surface of the substance of a COC has been skimmed so far. A disinterested observer might be forgiven for wondering whether China, or at least PLA Navy, is really interested in a binding COC which would limit the freedom of action of all parties to it, or whether the process of interminably discussing a COC is a means of constraining Asean. But that would be a churlish thought and let me make it clear that I am not a disinterested observer and so do not entertain such thoughts. At the Vientiane meeting, Foreign Minister Wang Yi said that negotiations should be fast-tracked and that China wants a framework for a COC by 2017. This can be regarded as recognition that progress on the COC has been unsatisfactory, that the SCS disputes have dented China's reputation and if allowed to get out of hand, could seriously damage relations with Asean. Concluding a COC would be a strong positive signal that any foreign ministry would welcome. But we should not expect miracles. Negotiations over the Declaration on the Conduct of Parties in the South China Sea (DOC) and its implementation guidelines took 20 years to conclude. The issues that a COC must engage are more complex than those in the DOC. ECONOMICS MATTER MORE The SCS issue should be seen in context. It is only one aspect of Asean-China relations. On the whole, Asean-China relations are positive. Sovereignty disputes nevertheless cast deep shadows because how a big country deals with small countries on matters of sovereignty is inevitably taken as an indication of the big country's intentions towards its neighbours. As the SCS is the locus around which US-China and Asean-China relations act and interact on each other in South-east Asia, it receives the most international attention and tends to be over-emphasised. But it is not the only issue or necessarily even the most important issue on either the US-China agenda or Asean's own agenda. Economic integration is in my view of greater long-term geopolitical significance to Asean. The root cause of divisions in Asean on the SCS is changes in the way some members now calculate their national interests. China is looming larger in the economic calculations of every country in East Asia, including formal US allies. The infrastructure and other investments now undertaken within the broad framework of "One Belt, One Road" are binding south-west China and mainland South-east Asia into one economic space. This is to be welcomed on economic grounds but undoubtedly also gives China political influence. Beijing cannot be blamed for exercising its influence. No major power in history has ever forsworn any instrument of influence. Asean members differ widely in their levels of economic development and hence in their economic options. For some, in particular the newer and less developed members, China represents the best - and perhaps only - hope of moving up the value chain. We must try to change their calculations of interests. This is the geopolitical significance of the Asean Economic Community (AEC). The bedrock of Asean's relevance and centrality must be economic. The AEC cannot replace China in the economic calculations of Asean members. An AEC that achieves its goals of a common market and common production platform could, however, broaden options, mitigate China's influence and enhance Asean's attractiveness to other dialogue partners, making it easier for them to continue to believe in Asean's centrality and relevance. It will not be easy. The key issues that must be confronted in the next phase of the Asean economic integration - non-tariff barriers, services and some form of labour mobility - are intrinsically difficult. Economic nationalism is running high in some Asean members. Others are experiencing buyer's remorse over the current level of AEC commitment. Some Asean members are undergoing complicated political changes. It will be difficult. But we must try.