August 15, 2017

Head of Regulatory Practice Nizam Ismail shares with Asialaw in an article titled “Asia wades through cryptocurrency regulatory puzzle” on how a robust compliance framework is necessary to mitigate against risks for initial coin offerings creators

RHTLaw Taylor Wessing Head of Regulatory Practice Nizam Ismail was featured in an Asialaw article titled “Asia wades through cryptocurrency regulatory puzzle” on the topic of initial coin offerings (ICOs) and the compliance framework necessary to mitigate against such risks for ICO creators. The article was first published on on 15 August 2017. Asia wades through cryptocurrency regulatory puzzle Source: Copyright © Asialaw 2017 Date: 15 August 2017 Author: Karry Lai Initial coin offerings (ICO) have caught the attention of investors and regulators alike. In July, the US Securities and Exchange Commission issued a statement saying that ICOs can be considered to be a sale of securities and the rules to securities would apply. What’s the situation in Asia? Lawyers in Singapore, Japan and Korea told Asialaw about the deficiencies and ambiguities in existing regulations in their jurisdictions that buyers and sellers should be aware of in the cryptocurrency market. An ICO is a method of raising money, like an IPO, where investors offer cryptocurrencies such as Bitcoin or Ethereum to invest in a new cryptocurrency. The new cryptocurrency can be sold or bought on cryptocurrency exchanges if it is successful. Singapore, Japan and Korea are some of the most active jurisdictions in cryptocurrency trading, prompting regulators to make changes to existing laws. “The pace of change is accelerating,” says Urszula McCormack, partner at King & Wood Mallesons in Hong Kong. “There is a strong focus on cryptocurrency and blockchain-based products, services and platforms throughout APAC. Most jurisdictions are looking at them closely given the potential impacts on economic and financial stability, and risk. Regulation pretty much always follows innovation, but it’s catching up.” Singapore follows SEC closely on regulation On August 1, the Monetary Authority of Singapore (MAS) clarified that issuers will be subject to prospectus requirements if coins or tokens are securities or collective investment schemes. If they are and a platform that acts as an intermediary deals with these coins or tokens, the platform will need a capital markets services licence under the Financial Advisers Act.  “Many ICOs are structured so that they provide both service and investment features, blurring the legal status,” says Nizam Ismail, partner at RHTLaw Taylor Wessing.  He adds that while MAS is looking to set out anti-money laundering (AML)/combatting the financing of terrorism (CFT) guidelines, pending such guidance, issuers are still exposed to the more generic Corruption, Drug Trafficking and Other Serious Offences (Confiscation of Benefits) Act and the Terrorism (Suppression of Financing) Act in Singapore, so a robust AML/CFT compliance framework is necessary to mitigate against such risks for ICO creators. New virtual currency regulation in Japan Japan promulgated the Virtual Currency Act, under the Payment Services Act in April. The creation of the law was largely driven by the collapse of the Mt Gox bitcoin exchange in 2014 which led to the arrest of its chief executive officer and more than 800,000 Bitcoins disappeared. The Act recognises Bitcoin and Ethereum, the two most established cryptocurrencies -, as forms of payment, but not as legally-recognised currencies. Under the law, cryptocurrency exchanges must register with the government and may only obtain a licence after meeting requirements such as undergoing an annual audit by a certified accountant and installing a secure IT system. Cryptocurrency exchanges also have to comply with the Act on Prevention of Transfer of Criminal Proceeds, the Japanese law targeting AML/CFT. “Cryptocurrency exchanges must segregate clients’s assets from their own accounts and there is an obligation for the business to report information to customers,” says Masakazu Masujima, partner at Mori Hamada & Matsumoto. “The basic policy of the FSA is that they do not want to restrict innovation but there isn’t a clear definition of cryptocurrency,” adds Masujima. “This causes ambiguity and it is difficult to enforce regulation when it is unclear whether for example, the lending of bitcoin is regulated under lending business law and when an insurance premium is paid for by bitcoin, if that is regulated under insurance law.” According to So Saito, principal at So Law Office, the fund regulations under the Financial Instrument Exchange Act (FIEA) only apply to ICOs if they constitute collective investment schemes, but this is a broad and diverse concept. “Specifically, where an ICO is used to collect money from others, to invest in a business and pay dividends to holders, such structures most likely invite the application of the FIEA fund regulations” explains Saito. “Where ICOs are in exchange for payment in Bitcoin or Ether, the FIEA regulations are unlikely to come into play because neither are money under Japanese law.” “When cryptocurrencies start having securities features such as dividends and voting rights, they should be regulated as securities,” says Masujima. “The FSA is closely monitoring cryptocurrencies but it doesn’t move quickly.” “You need to consider yet another regulation if virtual currencies collected by way of an ICO is invested in a certain asset class,” explains Saito. “For example, some ICOs which invest in real estate might be regulated under the Act on Specific Joint Real Estate Ventures in Japan, which does not distinguish virtual currencies from money.” Work in progress in Korea In Korea, the National Assembly of Korea is introducing changes to the Electronic Financial Transactions Act to begin regulating cryptocurrencies. This follows on the heels of the hacking of Bithumb, one the largest Bitcoin exchanges. “The major proposals in these amendments provide the definition of cryptocurrency, approval requirements for cryptocurrency businesses and protection of cryptocurrency investors,” explains Joon Young, senior attorney at Kim & Chang. “Cryptocurrency businesses will be required to deposit cryptocurrencies in a depository institution or sign a damage compensation agreement and provide investors with disclosure on description of the cryptocurrency and the risks involved in trading. There will be measures to prohibit money laundering and imposition of limitations on trading methods.” John Saeyon Ra, CEO at Bitcoin Centre Korea, a hub that connects those in the Bitcoin industry in Korea, indicates that “if the regulation favours Bitcoin trading with no capital gains or VAT, then exchanges would benefit, but without proper categorisation of cryptocurrencies, there may be conflict even among different branches of the Korean government, such as the Bank of Korea and Financial Services Commission and the industry experiences set back overall”. Many investors are jumping on the ICO bandwagon because the short-term gain is deceivingly attractive, but they must understand the risks to reap the rewards. Regulators in Asia and around the world are working on clarifications and new regulations to ensure this area of the capital markets is transparent, but investors and issuers are faced with uncertainties as they figure out whether their projects might bring them into the orbit of different securities regulations.
August 15, 2017

RHTLaw Taylor Wessing receives prestigious “Friends of School Award” by Tanjong Katong Girls’ School

RHTLaw Taylor Wessing was presented the prestigious “Friends of School Award” by Tanjong Katong Girls’ School (TKGS) in view of the Firm’s significant contributions to the school. Deputy Managing Partner Azman Jaafar was also given a special mention by the school. The award is given to partners of TKGS who have made outstanding contributions to the school and its programmes for at least four years in one or more of the following areas – student learning, student well-being, leadership, character development, research and development in teaching and learning, staff well-being and/or school learning environment. RHTLaw Taylor Wessing has been TKGS’ partner since 2012. Ms Nur Ashikin bte Sapri, teacher in-charge of TKGS’ Work Attachment Programme for Secondary 3 students, highlighted how RHTLaw Taylor Wessing has been instrumental in providing opportunities for students such as being attached to legal aids and lawyers, administration and attending court hearings, where they get to learn beyond the classrooms. She further commented, “Through this partnership, our girls are given exposure on how a legal firm is run efficiently to offer the best legal services. We also give special thanks to Mr Azman, who has worked closely with our staff and students on an attachment programme that is meaningful for students. We value his feedback and continuous effort to work closely with the school in making the work attachment at RHTLaw Taylor Wessing a great learning experience about careers, aspirations and working life in the legal sector.” The award ceremony took place at TKGS on 8 August 2017.
August 14, 2017

Head of Regulatory Practice Nizam Ismail advises that if there is no prospectus, the offer of initial coin offerings and digital tokens may be illegal and could give rise to a criminal offence, as quoted in The Straits Times

RHTLaw Taylor Wessing Head of Regulatory Practice Nizam Ismail shares with The Straits Times on initial coin offerings (ICOs) and other investment schemes involving digital tokens. The article was first published in The Straits Times on 13 August 2017. Consumer Checklist Source: The Straits Times © Singapore Press Holdings Ltd Date: 13 August 2017 Author: Lorna Tan Financial experts say it is worthwhile putting in the time to educate ourselves on initial coin (or token) offerings (ICOs) and other investment schemes involving digital tokens. After all, digital is the future - but that does not mean that every digital currency-related investment will make money. Nor is it a suitable asset class for everyone. TSMP Law Corp's joint managing partner, Ms Stefanie Yuen Thio, advised consumers not to be seduced by sexy terms like "cryptocurrency", "ethereum" or "bitcoin" and think that this is a sure-win money-spinner. "Unless you know the arrangers of the transaction to be reputable and regulated, which can be verified against the Monetary Authority of Singapore (MAS) website, investors should proceed with extreme care," she said. "A white paper does not provide the same degree of information as a prospectus. We shouldn't let the new nomenclature make us believe that an ICO has the same protection as an initial public offering." Ms Chung Shaw Bee, head of deposits and wealth management, Singapore and the region, at UOB, cautioned there are a number of uncertainties that could confuse prospective investors. These include the technology which is the medium of the exchange of value, the real value of the virtual currency and the real value of the underlying assets. "The technology of and behind the virtual currency does not necessarily guarantee the substance, quality or even existence of the investment's underlying assets. Neither does it provide for certainty of returns," she said. Mr Nizam Ismail, head of regulatory practice, RHTLaw Taylor Wessing, said that if the coins offer some form of securities (for example, with rights similar to that of shares and bonds) or collective investment schemes, the issuer has to have a prospectus lodged with MAS. "If there is no prospectus, then the offer of securities may be an illegal one and could give rise to a criminal offence. If the coins do not offer securities, it would still be prudent for an investor to find out from the white paper, or from their own due diligence, how the company intends to use the proceeds from the ICO," he said. For those already invested in such schemes, Mr Anson Zeall, chairman of local trade body Access, suggests asking whether the coins issued to you are securities, that is, they give you rights similar to shares (ownership in a company), or debt (promise of return of coupon/interest), or a collective investment scheme. "If they do, the issuer should be regulated and cannot issue coins without a prospectus lodged with MAS. If you suspect that these are securities and there has been no prospectus, you should obtain legal advice or contact MAS," he said. Access represents the Singapore Cryptocurrency and Blockchain Industry Association. Mr Low Kah Keong, a partner at WongPartnership, recommends that an investor also consult his legal adviser to find out available remedies, including the right to cancel the agreement. The Sunday Times compiles a checklist from financial experts: Do you understand what business the ICO issuer is doing? Does the firm have a website that sets out what it does? Does the ICO issuer have a legitimate business presence in Singapore, or is planning to have one? Any track record? Be aware that if it is a foreign firm, there may be practical legal difficulties in suing the firm or enforcing judgment. Who are the persons running the company, the shareholders and what is their track record? How is the issuer planning to use the proceeds of the ICO and has it set out its projected financials? What sort of rights you are entitled to as the holder of a coin? Has the issuer disclosed risks relating to the ICO and are you able to accept those risks? What is your investment risk appetite? Coin or token investments carry risks and may be more volatile than other investment products. Are you prepared to write off the coin investment substantially or completely? Do the coins give you rights similar to shares (ownership in a company) or debt (promise of return of coupon/interest) or a collective investment scheme? If they do, the issuer should be regulated and cannot issue coins without a prospectus lodged with MAS, said Mr Nizam. Do you understand how to exit from your coin investments? Are the coins going to be listed on an exchange to allow you the ability to convert the digital tokens into cash? Is the person or entity regulated by MAS? The laws administered by MAS require disclosure of information on investment products being offered to consumers. They are also subject to conduct rules aiming to ensure they deal fairly with consumers. To find out whether an entity is regulated by MAS, consumers can check the authority's Financial Institutions Directory on the MAS website. Consumers can also look up the MAS' Investor Alert List for a non-exhaustive list of entities that may have been wrongly perceived to be regulated by MAS. Consumer alerts on the MoneySense website also has tips on avoiding scams. Consumers who suspect an investment scheme involving digital tokens could be fraudulent should report such cases to the police.
August 10, 2017

Co-Head of Employment Practice Vernon Voon shares with The Straits Times the possibility of the Government imposing a custodial sentence or unlimited fines in relation to the recent spate of worksite accidents

RHTLaw Taylor Wessing Co-Head of Employment Practice Vernon Voon shares with The Straits Times regarding the possibility of the Government imposing a custodial sentence or unlimited fines in relation to the recent spate of worksite accidents. The article was first published in The Straits Times on 10 August 2017.  Workplace safety: The next frontier Source: The Straits Times © Singapore Press Holdings Ltd Date: 10 August 2017 Author: Toh Yong Chuan The record on work safety is mixed. After rapid progress from 2004 to 2014, the numbers slipped in 2015 and 2016, although they improved in the first half of this year. What's needed for Singapore to scale the next level of the workersafety bar? The year 2004 was a pivotal one for workers' safety in Singapore. That was the year the Nicoll Highway collapsed on April 20, killing four workers and injuring three others. Just nine days later, the collapse of a steel structure at the Fusionopolis worksite on April 29 killed two workers and injured 29 others. A month later, a fire on board the ship Almudaina on May 29 at the Keppel Shipyard killed seven workers and injured three. These three accidents triggered a round of soul-searching. It also led to sweeping changes in workplace safety. Workplace safety numbers improved dramatically after that, from 2004 to 2014. But they started dipping in 2015 and last year, although the first six months of this year have seen lower rates of accidents and deaths than last year. One recent accident has put the spotlight on worker safety issues again, raising the question of whether it is time to push for even higher workplace safety standards. On July 14, a section of a Pan-Island Expressway (PIE) viaduct under construction in Upper Changi Road East collapsed. One worker was killed and 10 others injured. What more can be done to make workplaces safer in Singapore? A GOOD DECADE A look back to measures taken after the 2004 accidents is instructive. The Ministry of Manpower (MOM) reviewed the workplace safety framework. Its staff visited Britain, Germany, Sweden and France to study their laws and practices. It announced a new occupational safety and health blueprint in Parliament on March 10, 2005, to cut workplace deaths by one-third in five years and by half in a decade, or 2015. On Oct 17, 2005, the ministry proposed new legislation in Parliament - the Workplace Safety and Health (WSH) Act - to replace the Factories Act to regulate occupational safety and health. When the proposed law was debated in January 2006, then Manpower Minister Ng Eng Hen said the three high-profile accidents had "added new impetus and urgency" to MOM reforming the Factories Act - which it had started studying how to do so five years earlier. The new legislation was passed and enacted that year. In November 2005, the MOM also set up a Workplace Safety and Health Advisory Committee to help industry efforts to raise occupational safety and health standards. The committee became the WSH Council in 2008 and it continues to champion workplace safety and health today. These multiple efforts bore fruit. By 2010, workplace fatalities fell to 2.2 per 100,000 workers, achieving the target to reduce such deaths by half - five years ahead of schedule. A new target to further reduce the deaths to 1.8 per 100,000 workers was set on 2009, and achieved on 2014. Workplace fatality rates have fallen from 4.9 per 100,000 workers in 2004 to a record low of 1.8 in 2014. However, the improvements were not sustained and workplace fatalities crept up in 2015 and last year. In both years, the fatalities crept up to 1.9 per 100,000 workers. The number of workplace injuries also fell gradually from 460 per 100,000 workers in 2007 to 364 in 2015, before creeping up to 382 last year. Singapore's record is mixed compared with other countries'. It fares better than the United States, which had 3.38 deaths per 100,000 workers in 2015. But it lags way behind Britain, which had 0.43 deaths per 100,000 workers from April 2016 to March this year. If Singapore were a member of the European Union, it will roughly be at the lower middle half of the 28 member states in terms of workplace fatalities, coming in behind countries like Britain, Germany, Denmark and Sweden, which had fewer than one death per 100,000 workers. Official statistics released last week showed that 19 workers died on the job between January and June this year, down sharply from 42 in the same period last year. Similarly, the number of injured workers declined from 6,245 to 6,151 in the same period. COMMON CAUSES OF WORKPLACE FATALITIES AND INJURIES If Singapore is to keep up the trend of reducing workplace accidents and deaths, it needs to have a clearer picture of the top causes of such injuries and deaths. In Singapore, the top causes were slips, trips and falls, and being struck by moving vehicles. Most fatalities were from the construction sector. A study of overseas trends found similar patterns. Last month, the Health and Safety Executive, the British government body responsible for workplace safety and health, released data which showed that the construction sector was the most deadly in the United Kingdom, from April last year to March this year. The two top causes of death for workers were falls from height and being struck by moving vehicles. The US also has a similar pattern. In 2015, the construction sector had the most number of fatal work injuries, and the two top causes of deaths were transportation incidents, and falls, slips and trips. What is also telling is that no country has been able to cut workplace fatalities to zero on a sustained basis. LOOKING AHEAD To bring worker safety to the next level, Singapore needs to go beyond reducing work falls and accidents. We need to review the regulatory environment too. In the case of the recent PIE viaduct accident, the main contractor for the work was Or Kim Peow Contractors (OKP). It was awarded the contract in November 2015 despite another fatal accident having taken place just two months earlier, at the company's worksite at another flyover. Senior Minister of State for Transport Lam Pin Min said in Parliament last week that the contractor was given "a low safety performance score" when the Land Transport Authority (LTA) evaluated the bids, but its "lowest tender price and good track record in completing many similar infrastructure projects over the past 10 years" outweighed its low safety score. In other words, low price won over safety concerns. The LTA should rethink the balance between price and safety. If it tilts the balance further in favour of contractors without safety lapses, it gives contractors a financial incentive to keep their workers safe. This is not the only area that the authorities ought to review. Another area is the WSH Act itself. UPDATING THE LAW The last major update of the WSH Act was in 2011 when main contractors were made responsible for worksite safety and MOM officers were given more powers to investigate worksite hazards. The MOM started reviewing the law earlier this year. It is looking at enhancing deterrence against worksite accidents, improving the industry's learning from such accidents through the release of accident reports, and raising the maximum administrative fine for offences that result in serious injuries or deaths from $20,000 to $50,000. Labour MP Melvin Yong said the National Trades Union Congress (NTUC) supports tougher punishment. "It acts as a deterrence and sends a strong message that any WSH breaches are not to be taken lightly," said the NTUC director for workplace safety and health. The Government can consider imposing a custodial sentence or unlimited fines as deterrence, said Mr Vernon Voon, employment and labour relations partner at law firm RHTLaw Taylor Wessing. He pointed out that in the UK, "corporate manslaughter" is an offence that can lead to jail time for the company's executives if they are found to be criminally responsible for the deaths, and the courts can impose unlimited fines at 5 to 10 per cent of a company's turnover. "In cases where an industrial death occurs from the gross negligence of the company's officers, the Government could perhaps look into legislating a minimum custodial sentence on the company," he said. Besides updating the law, another approach is to rope in more parties to lower workplace injuries. So far, the WSH Council has focused primarily on the three-way partnership of the Government, unions and employers. Insurers are another player that can help in reducing workplace injuries and fatalities. Insurers monitor workplace accidents and, in particular, companies with poor track records to understand what is going wrong, said Mr Karl Hamann, chief executive of QBE Insurance Singapore. "We also have a role in holding companies to account, making it clear that having insurance should not make safety an afterthought," he added. If the authorities can learn from insurers how they gather information and assess workplace risks, then it can have a more complete picture of risk assessments and, logically, improve risk prevention. Thirteen years ago, the horrifying Nicoll Highway collapse and series of high-profile industrial accidents triggered sweeping action that made the workplace safer for workers. The PIE viaduct collapse last month is an early warning bell. We should not wait until more deaths pile up before we are spurred to do more to prevent more workers from getting injured or dying on the job.