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【中国】Court Confirms a Heightened Need for Disclosure in Disqualification Proceedings Against Directors
In Securities and Futures Commission v Wong Yuen Yee and others
(30/12/2016, HCMP241/2015), the Court of First Instance of the Hong Kong High Court ("CFI") ordered the Securities and Futures Commission ("SFC") to produce relevant documents obtained in its investigations to respondents of disqualification proceedings. In view of the SFC's extensive investigative powers, the CFI ruled that the SFC should disclose all materials available for potential use in trial, including documents which may undermine its case.
Our alert discusses this important development and its implications.
【シンガポール】Legal Advice Privilege: Risks for the Unwary
If a company's lawyers interview the company's employees as part of an internal investigation, can legal advice privilege protect the contents of the interview and any notes taken by the lawyers from later disclosure to a regulator or in subsequent court proceedings?
Following the recent decision of The RBS Rights Issue Litigation  EWHC 3161 (Ch) ("The RBS Rights Issue Litigation"), it appears that legal advice privilege may not protect such interviews under English law in most cases. This legal development will obviously be of concern to parties who are based or do business in the UK, but it could also impact Singapore companies, particularly in situations where they are subject to litigation in the English courts or regulatory investigations by UK authorities. The RBS Rights Issue Litigation could also affect the development of legal advice privilege under Singapore law.
【シンガポール】Data Privacy Enforcement Trends
Since the Personal Data Protection Act (the “Act”) came into force on 2 July 2014, the Personal Data Protection Commission (the “Commission”) has published a number of enforcement decisions taken against twenty two organisations for breaching various obligations under the Act. Enforcement actions have been taken against companies in a range of industries, including the food and beverage sector, insurance companies, societies and IT service providers. The Commission issued warnings and financial penalties ranging from S$500 to S$50,000, the highest of which was imposed on a karaoke chain for failing to implement sufficient security measures to protect the personal data of 317,000 members. This newsletter highlights key enforcement decisions of the Commission in 2016.
【香港】First Market Misconduct Tribunal Decision Against Listed Company and Its Officers for Breaches of Disclosure Obligations
On 29 November 2016, the Market Misconduct Tribunal (“MMT”) issued a report finding that AcrossAsia Limited (“AAL”), its former Chairman and Independent Non-Executive Director (“Cheok”), and its Chief Executive Officer and Executive Director (“Ang”) breached the disclosure obligations under the Securities and Futures Ordinance (the “SFO”) by failing to disclose inside information as soon as reasonably practicable.
This is the first concluded MMT case dealing with breaches of the disclosure obligations since it came into force on 1 January 2013. This alert discusses the implications of the MMT decision and suggests practical tips to listed companies and their officers for managing their disclosure obligations.
【香港】SFC Clarifies Client Identity Verification During Client On-boarding
Hong Kong’s Securities and Futures Commission (“SFC”) has issued
guidance clarifying the approaches available to intermediaries to achieve
effective client identity verification during non-face to face client account
【中国】New Supreme People’s Court Opinion Simplifies the Service of Process in China
On 12 September 2016, the Supreme People’s Court of China (“SPC”) issued
the Several Opinions on Further Promoting the Separation of Complicated
Cases from Simple Ones and Optimizing the Allocation of Judicial Resources
(“Opinion”), which aims to, among other things, streamline and promote
efficiency in the service of process in Chinese civil litigation proceedings. An
important point in the Opinion is that any address agreed upon by parties
in an agreement will be treated by Chinese courts as a valid address for
【香港】Hong Kong Law Reform Commission Recommends Third Party Funding for Arbitration
The Law Reform Commission of Hong Kong ("LRC") published a report on 12 October 2016 ("Report") in which it recommends amendments to the Arbitration Ordinance (Cap. 609) ("AO") to expressly permit third party funding ("TPF") for arbitrations and other proceedings under the AO, provided that appropriate financial and ethical safeguards are put in place.
【中国】China Employment Law Update
Labor Authorities Issue New Measures To Publicize Material Violations of Labor Protection Laws
On September 1, 2016, the Ministry of Human Resources and Social Security issued the Measures for Publicizing Acts in Material Violation of Labor Protection Laws (the “Measures”), which will take effect on January 1, 2017.
【中国】 China Issues New Rules on APA Administration: Signs of Hope or Greater Challenges Ahead?
Many multinational companies (MNCs) have expressed frustration with China’s advance pricing arrangement (APA) program. For a country with the economy size and importance of China, the program has historically been understaffed and has never received the attention and resources that most believe it deserves.
On 18 October 2016, the State Administration of Taxation (SAT) released Bulletin 641, which introduces new rules on the administration of APAs. Bulletin 64 will supersede the current APA administrative rules, which are found in Chapter 6 of Circular 22, starting 1 December 2016. The SAT issued Bulletin 64 in response to the key recommendations under Actions 5 and 14 of the Base Erosion and Profit Shifting (BEPS) Project. Those recommendations were to include unilateral APAs (UAPAs) in the information exchange network and to provide guidance on the APA program. More generally, Bulletin 64 aims to provide comprehensive and practical guidance to enterprises and tax bureaus seeking to reach an APA. Bulletin 64 is the second bulletin released this year as part of the SAT’s ongoing plan to revise parts of Circular 2. The first was Bulletin 423, which was released in July (see our client alert in July 2016).
【中国】 China Tax Monthly
In this issue of the China Tax Monthly, we will discuss the following tax developments in China:
1. China Issues New Individual Income Tax Rules on Equity Incentives
2. The SAT Clarifies the VAT Treatment of Prepaid Cards
3. Jiangsu State Tax Bureau Proposes A New Transfer Pricing Method
4. New China-Russia Tax Treaty Enters into Force
5. Zhejiang Case: Tax Bureau Applies Beneficial Ownership Test to Treaty Benefits for Capital Gains
6. PRC Tax Authorities Increase Scrutiny on Service PEs
7. China Strengthens Tax Collection on Entertainers’ Income
【中国】 PRC Launches Information Website for Bankrupt Enterprises and Sets Up Bankruptcy Courts
The People’s Republic of China (“PRC”) recently launched two initiatives in relation to enterprise bankruptcies.
On 1 August 2016, the Supreme People’s Court (the “SPC”) launched the Information Website for National Bankrupt Enterprises RecombinationalCases (the “Website”). The Website will be used as a centralised information system through which information and actions relating to enterprise bankruptcy proceedings will be published and undertaken.
On 27 September 2016, Beijing established the first specialised bankruptcy court in PRC under its No. 1 Intermediate People’s Court.
Shanghai, Tianjin, Chongqing. Eleven other provinces are also expected to set up specialised bankruptcy courts under their respective intermediate people’s courts later this year.
【中国】 China: Food Traders to Comply with New Measures Governing Online Food Safety
The China Food and Drug Administration (“CFDA”) has released the new Measures of the Investigation and Punishment of Illegal Conducts Concerning Online Food Safety (“Order 27”), governing online activities by food producers and operators and their third party platform providers. Order 27 came into force on 1 October 2016.
Order 27 is aimed at improving transparency and accountability of online food sales and advertising (“online food trading”).
Order 27 applies to all food producers and operators (including delivery service providers) engaged in online food trading (“food traders”) as well as any third party platform that supports online food trading (“third party platforms”).
Foreign food traders who use information from their home country web pages on their Chinese trading pages must now take special care to ensure that their online information complies with requirements under Chinese law.
【香港】 Hong Kong’s New Forms and Guidance on Automatic Exchange of Information for Tax Purposes
The Hong Kong Inland Revenue Department (“IRD”) published on its website in September 2016 new materials on automatic exchange of information (“AEOI”) in Hong Kong.
The new materials include the following:
1) Sample Self-Certification Forms.
2) Updated Frequently Asked Questions.
3) AEOI Pamphlets.
4) Financial Account Information Return XML Schema and User Guide.
5) Guidance for Hong Kong Financial Institutions (“HK FIs”).
These materials follow the new Hong Kong legislation that adopted the OECD Common Reporting Standard (“CRS”), an amendment to the Inland Revenue Ordinance which was gazetted on 30 June 2016 (“the HK AEOI legislation”). Starting 1 January 2017, all HK FIs will be required to comply with the due diligence and reporting obligations under the HK AEOI legislation.
The new materials published by the IRD will help HK FIs prepare for the implementation of AEOI as they provide more detailed guidance on various questions and issues not covered by the HK AEOI legislation. In addition, the sample self-certification forms, although not mandatory, are likely to be adopted by many HK FIs.
【中国】 New Rules Broaden Definition of Electronic Data and Clarify Procedures for Data Collection and Review in Criminal Cases in China
On 9 September 2016, the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security of the People’s Republic of China (“PRC”) jointly issued the New Rules on Electronic Data Collection, Extraction and Review in Criminal Cases (“New Rules”), which will take effect on 1 October 2016.
Previously, PRC regulations regarding electronic data collection and review were considered scattered and high-level, often causing confusion and uncertainty to the authorities as well as target companies under investigation. Among other things, the New Rules define the scope of electronic data, specify the powers of the investigation authorities and set out detailed requirements on collection, extraction and transfer, including the consequences for failure to observe these requirements. Our alert discusses the implications of the New Rules.
【中国・香港】 Hong Kong Court Paves a Clear Path for the Recognition and Assistance of Foreign Liquidators
The recent decision of the Hong Kong court in Re Rennie Produce (Aust) Pty Ltd (In Liquidation in Australia) (HCMP 1640/2016, 26 August 2016), together with the prior decision in Re Joint Official Liquidators of Centaur Litigation SPC (In Liquidation) (HCMP 3389/2015, 3391/2015 and 3393/2015, 10 March 2016) have confirmed the court’s willingness to accede to letters of request issued by foreign courts for the recognition and assistance of foreign liquidators.
【カンボジア・ラオス・ベトナム】 Indochina Law Quarterly
In this issue, you will find reports on a number of important legal and economic developments in Laos, Cambodia, and Vietnam from January to June 2016. The deluge, not the dearth, of new legal developments lead to this combined Spring and Summer versions of our "Quarterly" for only the second time in its two-decade plus history. We hope you will understand.
In Cambodia, there have been significant adjustments to tax law and administration, as well as a new Law on Telecommunications. In Laos, local language labelling rules has been adopted, as well as a new, comprehensive competition law to deal with unfair trade practices, merger controls and common anti-competitive restraints of trade.
In Vietnam, even while the Government redoubled its efforts to control red tape and streamline the bureaucracy, the Ministry of Industry and Trade issued a draft of new licensing requirements for various steps in the trade and distribution part of the supply chain. Meanwhile, the State Bank issued important new rules overhauling the legal framework for the establishment and operation of non-bank credit institutions, fine tuned the rules on derivatives trading, and clarified the rules governing foreign exchange lending. A long awaited new decree on foreign representative offices and branches was issued, apparently limiting the scope of operation of representative offices with the intention of encouraging foreign traders to move to taxable branches or subsidiaries, but the immediate impact has been muted.
At the same time, the implementing rules for Vietnam's recently amended Investment Law and Enterprise Law continue to dribble out, having gone through extensive stakeholder consultations. Implementing measures for the Korea-Vietnam Free Trade Agreement, which took effect at the end of 2015, are streamlining the import and export activities of the growing Korean invested electronics industry in Vietnam, even while the more general Law on Import and Export Duties strengthened Vietnam's remedies in terms of anti-dumping, countervailing duties and safeguards. Other important new developments in the areas ranging from online information security to insurance regulation, investment incentives to employment matters and a new Law on Treaties intended to pave the way for TPP implementation all left plenty of new legal material for the business community to digest. On the other hand, an amended Penal Code, which generated widespread concern with new crimes such as wrongful dismissals and operating a website without a license was recalled for reconsideration by the National Assembly before it entered into effect.
【中国】 China Further Liberalises Regime for Administration of Foreign-Invested Enterprises
On September 3, 2016, the Standing Committee of the National People’s Congress passed the Decision on the Amendment of Four Laws1 including the Law of the People’s Republic of China on Wholly Foreign Owned Enterprises (the “Decision”), which amendment will become effective on October 1, 2016. Under the Decision, a recordal system (“Recordal System”) for the establishment and administration of corporate changes of foreigninvested enterprises (“FIEs”) in “industries that are not subject to special administration measures for entry” is now implemented on a nationwide basis.
On the same day, the Ministry of Commerce (the “MOFCOM”) released a draft of the Interim Measures for the Administration of the Recordal of the Establishment and Change of Foreign-Invested Enterprises (the “Draft Measures”) for public comment until September 22, 2016. Under the Draft Measures, which will come into effect from October 1, 2016,“industries that are not subject to special administration measures for entry” are basically those which will be listed in a “negative list” for foreign investment (the “Negative List”), similar to the ones that have been adopted in the four pilot free trade zones (“FTZs”) in Shanghai, Guangdong, Tianjin and Fujian.
The Decision and the Draft Measures represent China’s attempts to further relax the regime for the administration of FIEs on a nationwide basis.
【中国】 China Employment Law UpdateLandmark Decision Confirms Voting Rights of Owners of Sub-Divided Flats in Mixed Buildings
In the most recent Court of Appeal decision of Chow Chui Chui & others (including the Incorporated Owners of Ka Wing Building) vs Kafull International Limited & others (CACV 33 & 34 of 2015) (the “CA Decision”), the Hong Kong Court of Appeal (“CA”) confirmed that owners of subdivided units in a multi-storey building are owners under the Building Management Ordinance (“BMO”) and shall be counted when determining the quorum and vote at incorporated owners’ meetings.
This is an important ruling as it clarifies a previously unclear point of law decided by the Lands Tribunal in relation to the status of owners of such units. Our alert will discuss the CA Decision and its implications.
【中国】 China Employment Law Update
• New Measures Increase Company Responsibility for Labor Unrest
• New Salary Payment Regulations in Shanghai
• Employers Face Liability for Unpaid High-Temperature Subsidies
• Occupational Disease Approval Procedures Cancelled for Most Construction Projects
• Shanghai Court Rules Employee Wrongfully Terminated for Refusing Job Reassignment
• Court Rules that Personal Information Form and Confidentiality Agreement Cannot Serve as Written Employment Contract
• Beijing Court Upholds Transferred Employee’s Reinstatement Claim Against Successor Entity
【中国・香港】China Tax Monthly
In this issue of the China Tax Monthly, we will discuss the following tax developments in China:
1. The SAT Issues New Guidelines for HNTE Recognition
2. New Protocol Amends the China-Macau Double Taxation Arrangement
3. New China-Germany Double Tax Treaty Applies to Income Derived on or after 1 January 2017
4. Beijing Case: 15 Non-resident Enterprises Taxed on Indirect Transfers
5. Ningxia Case: Hong Kong Company Denied Treaty Benefits for Dividends
6. Shandong Case: Trustee Escaped Tax on Trust Income