Singapore: What happened in 2020 and significant events in 2021

Singapore Law: Year in Review 2020 summarises some key developments in Singapore in 2020 and Year to Come 2021 gives an overview of important changes that we anticipate in 2021. There are also links to further reading, where applicable.

Explore our overview of key developments below.

Updates in

23

key areas in 2020 and 2021

Covid-19 raised many interesting legal issues and our core practice areas saw significant legal and regulatory developments in 2020. We expect these developments to continue into 2021 as Singapore maintains its competitiveness as a financial and legal hub. We look forward to navigating our clients through these challenging times.

Christopher Bradley, Managing Partner, Singapore

Chris Bradley

Significant legal and regulatory events in 2020

2020 saw important developments in the areas of corporate governance, company and contract law, fintech, financial regulation, employment and dispute resolution. Covid-19 also prompted legislative intervention, financial support measures and a heightened focus on directors’ duties and electronic signing of documents.

Arbitration and Disputes

Singapore Convention on Mediation Act 2020: The Convention came into force on 12 September 2020 following the deposit of the instruments of ratification or approval by Singapore, Fiji, Qatar, Saudi Arabia, Belarus and Ecuador. With the Convention’s entry into force, the Singapore Convention on Mediation Act 2020 similarly commenced on 12 September 2020.

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Amendments to International Arbitration Act: Following a public consultation exercise in 2019, two key amendments to the International Arbitration Act came into force in December. The amendments relate to (i) powers to enforce confidentiality obligations, and (ii) the introduction of a default mode of appointment of arbitrators in multiparty situations.

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Key dispute resolution cases: In BNA v BNB [2020] 1 SLR 456, the Singapore Court of Appeal held that where a dispute resolution clause is silent as to the governing law of the arbitration agreement, the starting point is generally that the law of the arbitration agreement would follow the main agreement unless displaced by indications to the contrary. 

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In BP Singapore Pte Ltd v Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others and another appeal [2020] 1 SLR 627, the Singapore Court of Appeal held that there is no mutuality and insolvency set-off is not available as between unsecured debts owed by a company to trading partners incurred prior to receivership, and secured debts owed by the same trading partners to the company incurred during the receivership.

In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) [2020] 1 SLR 1158, the Singapore Court of Appeal clarified the position under Singapore law that where there is a disputed debt or a cross-claim that is subject to an arbitration agreement, the courts will apply a prima facie standard of review such that winding-up proceedings should be stayed or dismissed so long as (i) there is a valid arbitration agreement between the parties, and (ii) the dispute falls within the scope of that arbitration agreement, provided that the dispute is not raised by the debtor in abuse of the court’s process.

Banking

New insolvency law: The Insolvency, Restructuring and Dissolution Act passed in 2018 finally came into effect in 2020. The new act consolidates the existing provisions on corporate and personal insolvency laws. New provisions include a restriction on ipso facto clauses in contracts including loans and certain non-vanilla bonds (potentially affecting acceleration/enforcement rights), voluntary judicial management provisions and a new regime for licensing insolvency practitioners.

Corporate

Corporate governance: Changes to the Listing Rules included removing quarterly reporting and the minimum trading price requirement, tightening the rules relating to interested person transactions and significant transactions and clarification of the tests for disclosure under Listing Rule 703(1).

Contract: The Singapore Court of Appeal left open the question regarding whether the restatement of the penalty rule by the English Supreme Court in Cavendish Square Holding BV v El Makdessi and ParkingEye Ltd v Beavis [2015] UKSC 67 has replaced the Dunlop test, and whether both tests continue to apply in Singapore (Ricardo Leiman v Noble Resources Ltd [2020] SGCA 52). In other cases, the Singapore Court of Appeal reaffirmed the doctrine of consideration for variation of contracts (Ma Hongjin v SCP Holdings Pte Ltd [2020] SGCA 106), reiterated the requirement for a seal when an individual executes a deed (Lim Zhipeng v Seow Suat Thin [2020] SGCA 89) and confirmed that a notice of assignment can be given by either the assignor or the assignee (BXH v BXI [2020] SGCA 28). The Singapore High Court confirmed yet again that a contract can be formed by an exchange of emails (Avra Commodities Pte Ltd v China Coal Solution (Singapore) Pte Ltd [2019] SGHC 287).

Company: The Accounting and Corporate Regulatory Authority (“ACRA”) made it compulsory for private companies to file their register of controllers with ACRA. However, the register remains unavailable for public inspection.

Covid-19

Covid-19: In April, the Singapore Government enacted legislative measures to moderate the economic fallout from the effects of the Covid-19 pandemic. Key measures included (i) temporary relief to specific businesses and individuals who were unable to fulfil their contractual obligations because of Covid-19, (ii) variation of requirements for mandatory attendance of individuals at meetings and court proceedings, (iii) mandating that benefits from property tax rebates granted by the Government to commercial properties were passed down by landlords to their tenants, and (iv) granting the Government powers to enforce Covid-19 related movement control orders. These measures were initially planned for a period of six months, until 19 October.

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In October and November, the Government announced the extension of the temporary relief to specific businesses and individuals. These measures under the Covid-19 (Temporary Measures) Act were extended to 19 November 2020, 31 December 2020, 31 January 2021 and 31 March 2021, depending on the type of contract. Notably, the measures relating to the increased monetary thresholds and time limits for bankruptcy and insolvency were not extended.

MAS announced various measures, including adjustments of regulatory requirements and supervisory programmes, loan deferments and cashflow support, and loan and swap facilities to enable individuals and financial institutions (“FIs”) to focus on dealing with issues arising as a result of Covid-19.

Covid-19 also brought directors’ duties into focus, particularly for companies in financial difficulties.

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Lockdown and circuit breaker measures also meant significant interest in issues relating to electronic and virtual signings.

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Employment

Retrenchment and cost-saving measures: The Tripartite Partners updated the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in March and October in the context of the severe economic downturn to set guidelines around responsible retrenchments and alternative measures to preserve job continuity. The National Wages Council also issued guidelines on wage adjustment and retrenchments in March and October.

Since April, all employers registered in Singapore with at least 10 employees are required to notify the Ministry of Manpower if they implement cost-cutting measures that result in more than 25% reduction in the monthly salary of their staff.

Read more here and here...

Tightening of requirements to hire foreigners: The MOM announced the tightening of certain work passes for foreign employees via higher qualifying salary criteria, and increased scrutiny on work pass applications.

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Work Injury Compensation Act: The new Work Injury Compensation Act took effect in 2020. The changes expand compulsory insurance coverage to protect more employees and streamline the claims processing regime. 

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Financial Regulation

Regulation of payment token derivatives: MAS commenced the regulation of payment token derivatives that are offered on approved exchanges. The new regime has been implemented under the Securities and Futures Act.

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MAS consultation on environmental risk management guidelines: MAS consulted banks, asset managers and insurers on proposed environmental risk management guidelines to enhance their resilience to and management of environmental risk.

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Streamlining of MAS’ foreign-related corporation framework: MAS announced it will streamline its foreign-related corporation framework (“Para 9/11 arrangements”). Going forward, Para 9/11 arrangements may be implemented without prior MAS approval so long as entities comply with a set of boundary conditions.

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Best Execution regime: MAS finalised its Best Execution regime, requiring holders of a capital markets services licence, banks, merchant banks and finance companies conducting certain regulated activities to implement policies and procedures to execute customers’ orders on the best available terms, and comparable customers’ orders in accordance with the time of receipt. The regime takes effect on 3 March 2022.

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Significant legal and regulatory events in 2021

2021 will see increased focus on financial regulation and benchmark reform. Reforms in the areas of company law, personal data protection, electronic execution of documents and SIAC Rules are also likely.

Arbitration and Disputes

Amendments to the SIAC Rules: The Singapore International Arbitration Centre (“SIAC”) is considering revisions to its arbitration rules (“SIAC Rules”) following a public consultation exercise which started in July. The amendments are expected to deal with the consolidation of claims and joinder, expedited and emergency arbitration procedures and new technology as well as keeping pace with general trends in international arbitration rules. The revised SIAC Rules are likely to be released in the third quarter of 2021.

Capital Markets

Singapore Benchmark Reform: SIBOR and SOR are the two SGD interest rate benchmarks that are widely used in financial contracts. While there has been progress in enhancing the robustness of SIBOR, the industry is undergoing a consultation for SIBOR to be discontinued in three to four years. SORA has been identified as the replacement rate for SOR for derivatives and some cash market products, and key reforms have been implemented to facilitate the transition to SORA. The Steering Committee for SOR Transition to SORA (the “SC-STS”) has published timelines to support this transition and SOR is set to be discontinued alongside LIBOR. One of the SC-STS’ key timelines include that all lenders and borrowers should cease issuance of SOR-linked loans and securities by the end of April 2021.

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Corporate

Company: The Accounting and Corporate Regulatory Authority launched a major consultation on the Companies Act which concluded in August. Reforms proposed include dematerialisation of share certificates for private companies, virtual meetings, clarification of the share capital rules, relaxation of the financial assistance regime, decriminalisation of offences for directors and amendments to the Model Constitution. Consultation conclusions are expected in 2021.

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Contract: The Singapore Apostille Bill was passed in November and may come into force in 2021. It will allow for Singapore’s obligations under the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents to take domestic effect and create a more streamlined approach to the authentication of public documents for recognition across jurisdictions.

The provisions on the electronic execution of documents in the Electronic Transactions Act may be amended in 2021 following consultations which concluded in November 2019.

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Employment

Foreign employees: A work pass programme to be called Tech.Pass to attract foreign employees who are founders, leaders and technical experts with experience in established or fast-growing tech companies is expected to launch in January 2021.

Higher salary requirements for the renewal of certain work passes for foreign employees will take effect on 1 May 2021. 

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Financial Regulation

Guidelines on Individual Accountability and Conduct: The MAS’ Guidelines on Individual Accountability and Conduct (“IAC Guidelines”) will come into effect on 10 September 2021. The IAC Guidelines will apply to all financial institutions regulated by MAS (save for specific exemptions).

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Proposed amendments to the Payment Services Act 2019: The Payment Services (Amendment) Bill was moved for first reading in Parliament in November. It will likely come into force in 2021. Key amendments include: (i) an expanded scope of digital payment token services; (ii) an expanded scope of cross-border money transfer services; and (iii) new MAS powers to impose measures on digital payment token service providers.

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Technology, Media and Telecommunications

Amendments to the personal data protection regime: In November, the Personal Data Protection (Amendment) Bill was passed, making a number of changes to the Personal Data Protection Act (“PDPA”). These include: (i) a relaxation of the requirement to obtain a data subject’s consent to collect, process or disclose personal data by introducing a concept of “legitimate interests” for businesses (following the European GDPR); (ii) an exception to consent to allow organisations to use personal data without consent for business improvement purposes; (iii) expansion of the deemed consent concept; (iv) introduction of a mandatory breach notification requirement - which would require businesses to notify the Personal Data Protection Commission and the affected individuals if there is a data breach that results in “significant harm” or is of a “significant scale”; and (v) data portability provisions. The amendments will also increase the maximum financial penalty for data breaches under the PDPA to up to 10% of an organisation’s annual turnover in Singapore, or SGD 1 million, whichever is higher, and also introduce offences for individuals (who may be employees) who knowingly or recklessly disclose personal data when they are unauthorised to do so.

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Year in Review 2020 and Year to Come 2021 - Singapore law




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