June 5, 2017

Head of Capital Markets Ch’ng Li-Ling gave her comments to The Straits Times on the addition of 29 companies to SGX watch-list after failing to meet the revised minimum trading price rule

RHTLaw Taylor Wessing Head of Capital Markets Ch'ng Li-Ling was quoted in The Straits Times article titled "29 companies added to SGX watch-list". The article was first published in The Straits Times on 5 June 2017. 29 companies added to SGX watch-list Source: The Straits Times © Singapore Press Holdings Ltd. Date: 5 June 2017 Author: Marissa Lee Twenty-seven companies were added to the Singapore Exchange's (SGX) watch-list on Monday (June 5) for failing to meet the revised minimum trading price (MTP) rule - making it 78 mainboard-listed firms in all on that list. Altogether, 29 companies entered the watch-list on Monday, including two firms that failed to meet financial entry criteria based on profitability requirements. But the revised MTP criteria was also a boon for two companies, which exited the watch-list under the latest assessment. Drilling rig owner Jasper Investments and petroleum exploration and production firm Interra Resources said they had been removed from the watch-list, as each of them had achieved an average daily market cap of more than S$40 million over the last six months. Companies on the watch-list must provide quarterly updates on their financial situation, and have 36 months to meet the MTP or financial criteria. Otherwise, they will face a delisting. The MTP framework, which took effect on March 1 last year, is intended to highlight to investors the issuers that may be more susceptible to excessive speculation and potential manipulation. But it drew fierce criticism from investors and traders, who saw the rules as damaging to stock values because many companies had been forced to conduct share consolidations only to see prices plunge again. In response to feedback last year, the SGX relaxed the entry criteria in December so that a mainboard-listed firm that maintains a six-month average daily market capitalisation of over S$40 million will not be watch-listed even if it misses the 20-cent minimum trading price requirement. But the number of firms on the watch list has not fallen. When the MTP was introduced last March, 57 companies failed to meet the rule. Now, it is 66. (The other 12 making up the total 78 on the watchlist are there for failing to meet the financial criteria.) Mr Leon Yee, a lawyer and independent director of Federal International, which was one of over 100 issuers that previously resorted to share consolidations to meet the MTP, said: "There is a mismatch between financial performance and share price performance in Singapore, because of the low liquidity of our markets. "As the years go buy, more companies will go on the watchlist, because there is only so much liquidity to go around. Until now, the regulator is still stuck on this. The fact of the matter is it is not working out for issuers." Ms Ch'ng Li-Ling, head of the capital markets practice at RHTLaw Taylor Wessing, observed that "the rules are there for a reason." But she noted that the SGX had exercised discretion once, last June, when it gave 13 companies affected by "recent market volatility" more time to meet the MTP so none were added to the Watchlist then. Firms on the watch list have three years to meet the MTP or financial criteria. Otherwise, they face a delisting. Perhaps, more tweaks to the MTP rule are not out of the question. In April, Professor Tan Cheng Han, the new chairman of RegCo, which is taking over all of SGX's regulatory functions, declared that he would not be afraid to reassess sacred cows in the rules framework.
May 29, 2017

RHT Rajan Menon Foundation raises $264,000 for beneficiaries at its third annual Charity Golf event 2017

RHT Rajan Menon Foundation Charity Golf 2017 was featured in The Straits Times article titled “Charity Golf tournament raises $264,000 for beneficiaries”. The article was first published in The Straits Times on 26 May 2017. Charity golf tournament raises $264,000 for beneficiaries Source: The Straits Times © Singapore Press Holdings Ltd. Date: 26 May 2017 Author: Aaron Chan SINGAPORE - Over a quarter of a million dollars was raised on Friday (May 26), at RHT Rajan Menon Foundation's third annual golf charity event held at the Singapore Island Country Club. A total of 40 companies and individuals donated $264,000, which will go towards two primary beneficiaries - The Straits Times School Pocket Money Fund and Singapore Management University Pro Bono Centre - as well as two selected organisations, namely the Singapore Red Cross Society and National Gallery Singapore. Over three years, the foundation has raised more than $600,000. One of its key donors is Qilin World Capital, who has been a supporter since 2015. Qilin's co-managing partner, Mr Raymond Lau, said: "Both the primary beneficiaries were set up to support children and youth from less fortunate circumstances. (Our company) believes that the right financing tools can help cultivate a culture of socially responsible individuals and provide educational development to the next generation." RHT Holdings's chief executive Mr Jayaprakash Jagateesan, who was speaking at the event's gala dinner on Friday said:"As leaders of the corporate world, we have the influence to inculcate the spirit of giving within our organisations, encouraging fellow colleagues and friends to behave in a socially responsible manner." The RHT Rajan Menon Foundation was established in 2015 and supports a variety of causes.
May 2, 2017

RHTLaw Taylor Wessing Deputy Head of Litigation & Dispute Resolution Nandakumar Renganathan interviewed by The Sunday Times on fraudulent investment schemes related to land-banking and gold buy-backs

RHTLaw Taylor Wessing Deputy Head of Litigation & Dispute Resolution Nandakumar Renganathan interviewed by The Sunday Times on fraudulent investment schemes related to land-banking and gold buy-backs The article was first published in The Sunday Times on 30 April 2017. Title: A legal expert's views on investments Source: The Sunday Times © Singapore Press Holdings Ltd Date: 30 April 2017 Here are some FAQs on fraudulent investment schemes posed by The Sunday Times to Mr Nandakumar Renganathan, deputy head of litigation and dispute resolution practice, RHTLaw Taylor Wessing. Q How can retail investors protect themselves when investing in gold and land-banking schemes? A The strongest power that investors have is in deciding whether to invest in a product. People generally associate investments in gold and property as safe investments and, no doubt, companies which sell dubious products take advantage of this. Often, investors are led to the investment by friends. They come into contact with agents of the company selling these products and are enticed to refer other friends to the investment through some benefits. Investors gain confidence when their friends say: "I have put money into this investment and it gives me a 20 per cent return." The focus must be on the investment product, not the anticipated return. In my experience, things just go awry when investors focus on the return rather than what they are investing in.   Q What should investors consider when assessing such investments? What are the typical red flags? A Investors should ask certain critical questions - what am I getting when I buy into this product? For example, if I am informed this is a property in Brazil, the questions to be asked before one invests are: •When was this company that sells this product incorporated? •Who owns this company? •Who are you entering into a contract with? Often, investors are misled into thinking they have invested with a Singapore company when, in actual fact, they have entered into a contract with a company overseas with the same name. •What am I getting for my investment? This is a critical question. If you are getting some share in a property, is that property going to be registered in your name? If it is merely that the company is collecting the money and the property is not vested in your name, you have a right only to receive payment from the company. There is no interest in the property. •Who owns the property? There have been occasions when companies that sell the products do not own the property. •How much debt does the company have? If you are investing into a company, you should know the risks associated with the business. •When you have a "guaranteed return", who is promising it? If the return is promised by the company, then the financial strength of the firm is critical. •Is the intermediary offering the investment product regulated in its home country by a competent regulator? If the investment product is regulated in Singapore, it would need a prospectus registered with the Monetary Authority of Singapore (MAS). If there is no prospectus and someone offers an investment product, that is a criminal offence in itself. •Is there a Singapore-based distributor of the investment product, and is the distributor regulated by the MAS? •Look out for the MAS Investor Alert List for instances of offers of investment products that are unlicensed. After investors have made their inquiries, they should have an idea of risks involved in making the investment.   Q What is the impact of the new regulation on firms offering land-banking schemes? A The MAS has closed a gap in the law by introducing new regulations relating to land-banking here. These products will be dealt with as collective investment schemes. This means that the managers of such schemes will need to be licensed by the MAS. These products need to be accompanied by prospectuses approved by the MAS. These measures seek to ensure that there is robust regulatory oversight on the managers (who have to be fit and proper persons). They also ensure that investors have access to all material facts to help them make informed decisions. In short, these ensure transparency and accountability in relation to the products being offered, as well as on the intermediaries offering the products.   Q Will aggrieved investors have any recourse against the company? A Investors can claim against the company and its officers if there has been fraud involved. They should approach their legal advisers and the authorities as soon as possible. If the investors are quick enough, they may even be able to secure an injunction from the court to freeze the assets of the company. If the company has the money with it, chances of recovery are better. One reality that investors should be aware of is that people who set up companies with a fraudulent purpose in mind plan ahead to move the money out as soon as they receive them. It becomes challenging to trace the money much later.   Q Any other tips? A The final question to be asked is "Is this too good to be true?" Investors should be wary of anyone saying you can double your money in three to four years. If they feel it is too good to be true, they should decline to invest.
April 28, 2017

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and General Counsel Alvin Chen shared with The Straits Times how airlines should be obligated to inform passengers of their rights if a flight is overbooked

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and General Counsel Alvin Chen shared with The Straits Times how airlines should be obligated to inform passengers of their rights if a flight is overbooked The article was first published in The Straits Times on 28 April 2017.   Regulate airlines' discretion in bumping passengers off overbooked flights Source: Straits Times © Singapore Press Holdings Ltd. Date: 28 Apr 2017 Author: Tan Chong Huat and Alvin Chen The recent dramatic eviction of a passenger from a United Airlines flight in the United States has prompted debate in Singapore on the common industry practice of overbooking, and raised concerns whether consumer rights are adequately protected. While the economic benefits of flight overbooking to airlines are obvious - to ensure that the number of vacant seats is kept to a minimum and, thereby, maximise the revenue for each flight - the heart of the matter is how airlines exercise their discretion to "bump off" passengers. Currently, there is no legislative framework in Singapore which governs the exercise of such discretion. In contrast, European Union Regulation 261/2004, enacted in 2004 to protect passenger rights, requires airlines "to reduce the number of passengers denied boarding against their will" by calling for volunteers to surrender their reservations, in exchange for compensation that is prescribed in these regulations. If there are insufficient volunteers, the airline may then proceed to deny boarding to passengers against their will. A similar regime is found in the US Code of Federal Regulations, which requires an airline to request volunteers before denying boarding. A volunteer is defined as someone who "willingly accepts the carrier's offer of compensation, in any amount", in exchange for giving up the seat. If there are insufficient volunteers, the airline can deny boarding to other passengers "in accordance with its particular boarding priority", subject to compensation. An airline's boarding priority rules are, however, no guarantee that a bumped-off passenger has been treated fairly. For example, in a lawsuit brought by the well-known American consumer advocate Ralph Nader against Allegheny Airlines in the early 1970s, the defendant airline had bumped off Mr Nader, who was due to give a speech to a public advocacy group, from one of its flights which had been overbooked. Mr Nader alleged that the defendant had contravened a provision in the US Federal Aviation Act, which prohibited an air carrier from subjecting passengers to unjust discrimination, or undue or unreasonable prejudice or disadvantage. Under the defendant's boarding priority rules, passengers with an "OK" marking on their tickets, or whose names were on a computerised list, had confirmed reservations and were to be boarded. After the flight had been boarded to capacity, Mr Nader, who had a confirmed reservation, arrived late at the boarding gate. He was not permitted to board as he was considered an "oversold" passenger under the boarding priority rules. The US court, however, found that the defendant had failed to comply with its own boarding priority rules, as it had denied Mr Nader's boarding priority by allowing at least one other oversold but lower-priority passenger, to board the flight. Admittedly, notwithstanding the absence of a legislative framework in Singapore, it may well be industry practice for air carriers departing from Singapore to adopt the approach in Europe and the US - ask for volunteers first, then deny boarding. However, such a practice is likely to result in inefficient negotiations, as the passenger cannot be certain about the amount of compensation the airline is willing to offer in exchange for denial of boarding, which would not be the case if clear compensation laws were in place, as in Europe and the US. Moreover, if this practice is applied inconsistently, both the airline and the passenger would be effectively negotiating in the dark about each other's positions. Coupled with the relatively tight timeframe that such negotiations must be completed before take-off and the potential permutations of each airline's boarding priority rules, one would expect that complaints against overbooking would be regularly lodged with the Consumers Association of Singapore (Case). However, following the United Airlines debacle, Case was cited in a media report as stating that no complaints against overbooking had been lodged since January last year. One plausible reason that may explain the apparent gap between theory and reality in Singapore is that because overbooking is a long-established practice, airlines have become adept at resolving the impasse if no volunteers step forward initially. As mentioned in The Sunday Times report on April 16 (No Room On The Plane), airlines may simply increase the incentives for denial of boarding. Also, given the large pool of potential "volunteers" available, it should not be too difficult to find a few passengers who are willing to be bumped off in exchange for adequate compensation. Compensated passengers are unlikely to be motivated to make a complaint to Case even though their negotiations with the airline may have taken more time and effort than necessary. Unless one is forced off the plane involuntarily, as in the United Airlines incident, there would not be clear cause for complaint. Nevertheless, the absence of consumer complaints may not be conclusive evidence that the market is working efficiently and no legislative intervention is required. Where there is poor management of oversold seats, the authorities must step in to achieve a better balance between the interests of passengers and those of airlines, and promote better customer-handling procedures. One area of concern is whether airlines should be permitted to deny boarding to vulnerable passengers, such as the elderly or the illiterate, on the basis that they had agreed to compensation. Such consumers may, however, not have understood the full ramifications of being denied boarding or appreciated the adequacy of the compensation offered. Under the US Code of Federal Regulations, it may be arguable whether they would be considered volunteers if their "willingness" to accept compensation was procured by improper influence. The lack of statutory guidance in Singapore on how airlines should exercise their discretion to bump off passengers may result in arbitrary or, worse, unlawful decisions, which should not be shielded by the "defence" of industry practice. In the interest of consumer protection in Singapore, clear provisions on the procedure for denying boarding and compensation amounts should be set out in statute, so as to address the information gap faced by passengers. Airlines should also be obligated to inform passengers of their rights to compensation and assistance, similar to those set out in Article 14 of EU Regulation 261/2004. Treating passengers fairly would not only be consistent with the position in Europe and the US, but would also reinforce Singapore's reputation as one of the world's top air hubs. Mr Tan Chong Huat is managing partner and Mr Alvin Chen is general counsel, legal and compliance, at RHTLaw Taylor Wessing.