April 27, 2017

Head of Intellectual Property & Technology Practice Jonathan Kok quoted in The Straits Times on the potential legal liabilities application companies could face

RHTLaw Taylor Wessing Head of Intellectual Property & Technology Practice Jonathan Kok was quoted in The Straits Times on the topic of measures to keep live streaming applications’ content in check. The article was first published in The Sunday Times on 26 April 2017. Measures in place to keep content in check Source: Straits Times © Singapore Press Holdings Ltd. Date: 27 Apr 2017 Author: Lester Hio When Bigo Live launched last year, the app quickly gained notoriety from streamers dressing provocatively and toeing the fine line between performing and explicit content. Now, both Bigo Live and BeLive, aware that people will abuse the adage that sex sells for the prospect of easy money by strutting their stuff in front of a camera, have measures in place to keep content clean. Both apps have age restrictions in place. Streamers who show explicit content are banned, as are users who use profanity or make abusive and derogatory remarks. "Censorship moderators and artificial-intelligence censors are available 24/7 to monitor content, and live streamers who fail to abide by the rules risk a permanent ban," said a Bigo Live spokesman. BeLive takes it one step further by banning the mobile phones of repeat offenders, using the phone's Unique Device Identifier so that banned users can't access the app. BeLive moderators are also alerted each time a new stream is started, and will monitor it for unsavoury content. "It can be quite obvious from the first five minutes of the streamer's opening act what he or she is up to," said BeLive co-founder Lim Kim Hui. Such concerns are potential legal pitfalls that both companies want to avoid in order to sustain the business. "If an app company comes to know about an obscene video but does nothing about it, then the app company could be liable," said lawyer Jonathan Kok, head of intellectual property and technology at RHTLaw Taylor Wessing. "An app company that wants to be a credible social media site would impose rules and regulations to ensure that the user-generated content is kept clean."
April 26, 2017

RHT Subhas Anandan Bursary Award Supports Children of Employees in Meeting Education Expenses

Into its 2nd year, the RHT Subhas Anandan Bursary Award was presented to four of our colleagues’ children today. All of them are students pursuing either their secondary or post-secondary education. The quantum awarded to each student ranges from $400 to $500, with a total of $2400 being awarded in all. Established in 2015, the Bursary Award helps children of the staff of RHTLaw Taylor Wessing and RHT Group of Companies to meet education expenses. Named in honour of the late Subhas Anandan, a Senior Partner at RHTLaw Taylor Wessing, the Bursary Award is a tribute to his legacy of helping others in need.  A man for others, Subhas cared not only for the unprivileged and unrepresented, but for fellow colleagues as well. A bursary scheme was an initiative he had wanted to start. Last year, the RHT Subhas Anandan Bursary Award supported six students with a total awarded amount of $2000.   RHT Subhas Anandan Bursary Award ceremony was featured in The Straits Times Online. The article was first published in The Straits Times Online on 26 April 2017. Five students receive RHT Subhas Anandan Bursary Award in honour of late criminal lawyer Source: Straits Times Online © Singapore Press Holdings Ltd. Date: 26 Apr 2017 Author: Camillia Deborah Dass It was supposed to be one of the biggest days of any mother's life - her daughter's wedding day. However, that morning, Huzaimah Haji Tanon, 53, suffered a stroke and died two weeks later. Since then her family has struggled to manage on a single income, but on Wednesday (April 26), her son Muhammad Irman Abdul Aziz, 18, got help with his educational expenses through the RHT Subhas Anandan Bursary Award. He was one of the five students who received the bursary, which was established in 2015 and launched in 2016. It was named in honour of the late Subhas Anandan, who was a notable criminal lawyer and a senior partner at RHTLaw Taylor Wessing. The award, which is sponsored by RHTLaw Taylor Wessing and RHT Group of Companies, aims to help children of staff meet their educational expenses by awarding deserving recipients with amounts between $200 and $600, depending on their educational level. Students are selected based on both academic as well as extra-curricular performances. Deputy managing partner at RHTLaw TaylorWessing, Mr Azman Jaafar, 52, said at the ceremony: "Subhas was a man for others. He had a heart of gold not just for the underprivileged and underrepresented, but also for the people in our midst - our staff who have worked tirelessly through these years." Irman is currently in his final year at the Institute of Technical Education (ITE) where he is pursuing a career in opticianry. He intends to apply to a polytechnic, after graduating from ITE, and eventually go to a university. "I'm going to use the money for food and transport and things like that so I don't have to keep asking my dad for money," he said. His father, Abdul Aziz Latiff, 49, who is a dispatch clerk at the firm, said: "I want him to be a successful person and I want him to make the family proud."
April 6, 2017

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat discusses how the recent amendments to the Securities and Futures Act will require Reit managers to put unitholder interests first in The Business Times

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat was featured in The Business Times article titled “New hope for Reit unitholders with SFA Amendment?”. The article was first published in The Business Times on 6 April 2017. New hope for Reit unitholders with SFA Amendment? Source: The Business Times © Singapore Press Holdings Ltd. Date: 6 April 2017 Author: Tan Chong Huat, Joseph Lau, Gerald Tham IN the first of this two-part article, we explored some options available to unitholders of a Real Estate Investment Trust (Reit) to hold a Reit manager accountable for its actions. In this second part, we discuss the impact of the Securities and Futures (Amendment) Act 2017, and consider whether recent events in the Reits industry will impact and shape discourse on future development of the Reits regime. Putting unitholder interests first When the 2017 SFA Amendment Act becomes effective, a Reit manager will have a statutory duty to act in the best interests of the unitholders and to give priority to the interests of unitholders over its own interests, or the interests of its shareholders, should there be a conflict of interest. Breach of this duty renders the manager liable to all unitholders for any profit, directly or indirectly made by it or any of its related companies, or for any damage suffered by the unitholders as a whole. This is also a criminal offence, where the Reit manager may be liable to a fine not exceeding S$100,000. The 2017 SFA Amendment Act also imposes duties on the directors of the manager to take all reasonable steps to ensure that the Reit manager discharges its duties and to give priority to the interests of unitholders over the manager's own interests, or the interests of the manager's shareholders, should there be a conflict of interest. Directors who contravene these duties will be liable to all unitholders for any profit, directly or indirectly made by them or the manager or any of the Reit manager's related companies, or for any damage suffered by the unitholders as a whole. This is also a criminal offence, where the directors may be liable to a fine not exceeding S$100,000 or up to two years imprisonment. There are three important qualifiers to these statutory duties. First, the 2017 SFA Amendment Act has not yet taken effect, and thus these provisions are still outside the range of options available to unitholders. Second, proceedings against a director of a Reit manager would only be allowed where the Reit manager has conducted the affairs of the Reit or exercised its powers in a manner that is oppressive or disregards unitholders' interests, or where an act of the Reit manager has been done or is threatened which unfairly discriminates or is prejudicial to unitholders. As examined in the previous article, it is not presently clear how the Singapore courts will interpret or apply these requirements. Finally, the 2017 SFA Amendment Act is not likely to have retrospective effect, which means that it is not clear whether the actions taken by a Reit manager or its directors before the date when the 2017 SFA Amendment Act becomes effective, can be used to support a claim for breach of these new statutory duties. It remains to be seen whether a Reit manager who had placed itself into a position of conflict before the effective date of the 2017 SFA Amendment Act, and continues to be in such a position of conflict thereafter, would be liable for a breach of any statutory duties. What's next for the Reits regime? In light of the above challenges, would further changes need to be implemented in the Reits regulatory regime in the foreseeable future? Here we would point out that the revised Code on Collective Investment Schemes (CIS), which was issued on Jan 1, 2016, and the 2017 SFA Amendment Act, resulted from a wide-ranging consultation on enhancements to the regulatory regime governing Reits and Reit managers, initiated by the Monetary Authority of Singapore (MAS) as recently as 2014. The revised CIS incorporated changes to, among others, align the performance fee structure with the long-term interests of a Reit's unitholders, and enhance disclosures relating to income support payments. In the consultation, MAS requested feedback on whether the current approach of relying on unitholders to initiate a review of the Reit manager's appointment is effective, and if not, the additional possible measures that could be considered. MAS noted that "respondents were of the view that it is currently not difficult for unitholders to convene an extraordinary general meeting to obtain a simple majority that is needed to remove a Reit manager". MAS also noted that there was a general consensus that the current approach is broadly effective, and that no regulatory intervention was needed at that time. However, as examined in the previous article, such recourse may not be feasible for unitholders of a Reit whose units are still substantially held by the Reit's sponsor and related parties. At this juncture, it is not clear what further regulatory change in the Reits regime could be implemented. One possible avenue is to explore targeted requirements to prevent the "clever financial engineering" that a Reit manager may undertake "to disguise inherent blemishes", such as an acquisition by the Reit manager of assets at inflated prices and the leaseback of these assets to the vendor at inflated rents, which Ho Ching cautioned against in her speech marking the listing of MapleTree Logistics Trust on July 28, 2005. Aligning interests Another possible way forward would be for stakeholders to revisit the measures to ensure the interests of all unitholders are aligned with those of the Reit manager, and consider whether the existing suite of measures to promote financial transparency and improve corporate governance are sufficient. These could include examining the compensation structures adopted in the industry and subject the same to tighter parameters including independent approval by unitholders at annual general meetings such that the Reit manager's fee structure is more closely aligned with the long-term interest of the Reit and its unitholders, and adopting best practices with respect to the charging of acquisition and divestment fees by a Reit manager by subjecting the same to a mandatory review and approval process by the audit and/or risk committee(s). These measures were not implemented in the last review of the Reits regime, in light of the varying business models of Reits and practical difficulties in implementation, respectively. In addition to strengthening investor confidence in Reits, these proposed changes would need to be balanced against attracting more Reit listings to Singapore and possibly stymieing the development of S-Reits as an asset class. Mr Tan is managing partner of RHTLaw Taylor Wessing LLP; Mr Lau and Mr Tham are associates of the firm.
April 5, 2017

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat shares opinion piece on greater accountability for REIT managers in The Business Times

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat was featured in The Business Times article titled “Pushing for greater accountability of Reit managers in Singapore”. The article was first published in The Business Times on 5 April 2017. Pushing for greater accountability of Reit managers in Singapore Source: The Business Times © Singapore Press Holdings Ltd. Date: 5 April 2017 Author: Tan Chong Huat, Joseph Lau, Gerald Tham WHILE Singapore is now the second largest Reit market in Asia, recent headlines have highlighted possible deficiencies of the Reit industry, including the accountability of Reit managers. This issue has not gone unnoticed by the authorities. While the conduct of Reit managers is currently regulated by the Code on Collective Investment Schemes (CIS) and the common law, Parliament in January 2017 passed the Securities and Futures (Amendment) Act 2017, which introduces statutory protections for unitholders against the failure of Reit managers and their directors to act in the best interests of unitholders. In this first of a two-part article, we explore some options available to the unitholders of a Reit under the current regime to hold a Reit manager accountable for its actions. The Singapore courts have yet to determine whether the manager of a Reit owes fiduciary duties to unitholders. Nevertheless, Lee Chiwi, who authored a book on the legal nature of a unit trust, suggests that such duties are owed for two reasons. First, Reit managers exist not solely for their own benefit, but also for the benefit of unitholders, which is a characteristic common to fiduciaries. Second, a Reit manager's position should be supervised under equitable principles as unitholders are not able to unilaterally amend or determine what powers and duties a manager possesses under the trust deed of a Reit. Unitholders are also vulnerable with limited or no rights to interfere with the management of the Reit, as the manager typically has autonomy to determine how the interests of unitholders are served. The trust deed of a Reit is required to contain provisions which allow the manager to be removed by a simple majority of unitholders present and voting at a general meeting (with no unitholders being disenfranchised), and to allow a general meeting to be convened at the request of at least 50 unitholders or unitholders representing at least 10 per cent of the issued units of the Reit. While convening a general meeting to pass a resolution to remove the manager is theoretically possible, this may prove difficult in practice. In a 2007 article in the Singapore Academy of Law Journal, Adjunct Associate Professor Joseph Chun noted that Reit managers are usually owned by the sponsor of the Reit, which in turn would typically hold the lion's share of units in the Reit and thus a greater proportion of the voting power. Therefore, even if unitholders are able to requisition a general meeting, they may find it difficult to gather the required simple majority to pass the resolution for removal of the manager. The CIS requires a Reit manager to "have arrangements in place to take all reasonable steps to obtain the best possible result for the scheme, taking into account the following execution factors: price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of a trade or transaction". That said, the requirements of the CIS are not statutory obligations, and a breach of the CIS does not itself generate criminal liability. If, however, a breach of the CIS is established, it may support the unitholders' case in civil or criminal proceedings that the manager is liable. Also, the Monetary Authority of Singapore (MAS) may take into account a breach of the CIS in determining whether to revoke or suspend the authorisation of the Reit, or to refuse to authorise new schemes by parties responsible for the breach in question. Nevertheless, it may not be easy or rewarding for unitholders to show that a manager has breached the CIS. For instance, it is unclear whether paying a higher price for a property acquisition from a related party would in itself demonstrate that a Reit manager did not use "all reasonable steps" to obtain the best possible result for the Reit. Moreover, given the possibility of the authorisation of the Reit being revoked or suspended by MAS, unitholders may wish to consider whether establishing such a breach achieves their objectives, as such revocation or suspension of authorisation may negatively impact the value of their investment in the Reit. For instance, if it is clear that, but for the manager's under-performance, the Reit would be performing well, it is more sensible for unitholders to explore other options to preserve the Reit as an investment vehicle whilst addressing the quality of management. The most advantageous option for unitholders will depend on the unique circumstances of each case. Unitholders may apply to the Singapore courts for an order under the Securities and Futures Act where the Reit manager has conducted the affairs of the Reit or exercised its powers in a manner that is oppressive or disregards unitholders' interests. Another ground for such application to the Singapore courts is where an act of the Reit manager has been done or is threatened which unfairly discriminates or is prejudicial to unitholders. The court is empowered to make a wide range of orders, including an order which cancels or varies any transaction or regulates the conduct of the affairs of the Reit manager in the future. However, there are no instances where the Singapore courts have interpreted or applied this provision in the Securities and Futures Act, and it remains to be seen how these grounds would be satisfied. The writers are from RHTLaw Taylor Wessing LLP. Tan Chong Huat is managing partner of the firm; Joseph Lau and Gerald Tham are associates. The second part of this article will discuss the impact which the recent amendments to the Securities and Futures Act are expected to have on the regulatory regime for Reits, and consider whether recent events in the Reits industry will impact and shape discourse on the Reits regime.