SEAChange Issue 3
Introduction.............................................................................................................................................................................................. 3 Raising the Bar on Blowing the Whistle: China's New Whistleblower Rewards Measures Provide Additional Incentives (and Controls) for Whistleblowing.................................................................................... 4 No Win, No Fee: Singapore Embraces Conditional Fee Arrangements.............................................................................................. 6 Getting Real "Bite" in the Year of the Tiger: The New Singapore Workplace Discrimination Guidelines...................................... 7 A Corporate Governance "Boost" The MAS Revises Guidelines for Financial Institutions and Insurers..................................... 8 Authors.....................................................................................................................................................................................................10
Our third issue focuses on significant developments in Singapore, cutting across corporate governance, dispute resolution and employment issues.
We also look at stronger steps being taken in China to enhance whistleblower frameworks by (amongst other things) incentivizing the reporting of misconduct. These changes are consistent with changes we are seeing in other Asian jurisdictions.
Our articles look at:
China's Interim Measures for Rewards for Whistleblower Reports of Major Violations in the Field of Market Regulation and what it means for corporates and their compliance systems in China;
Conditional fee arrangements, and how Singapore's latest law permitting these arrangements will continue to strengthen its position as a leading disputes hub;
Proposed legislation in Singapore, expected to be tabled in 2022, that will give greater bite to existing workplace discrimination guidelines; and
Guidelines issued by the Monetary Authority of Singapore that will heighten corporate governance standards expected of financial institutions.
Raising the Bar on Blowing the Whistle: China's New Whistleblower Rewards Measures Provide Additional Incentives (and Controls) for Whistleblowing
By Sammy Fang and Ray Xu
China's new Whistleblower Rewards Measures provides up to RMB 1 million (approx. USD 157,000) in rewards for the reporting of major violations of China's various market conduct regulations. The regulations aim to provide greater incentives to whistleblowers and deter illegal activities in the market more effectively, particularly in light of the increased importance of whistleblowing across different industries in China in recent years. In light of these new measures, companies with operations in China should implement or strengthen their internal controls and reporting mechanisms.
On December 1, 2021, the Interim Measures for Rewards for Whistleblower Reports of Major Violations in the Field of Market Regulation ("Interim Measures") issued by the State Administration for Market Regulation ("SAMR") and the Ministry of Finance ("MOF") came into effect. The Interim Measures establish SAMR's first set of comprehensive rules surrounding the reporting of "major violations" of China's various market conduct regulations.
In short, the Interim Measures provide that a whistleblower will be awarded a monetary sum when all of the following conditions are satisfied:
The report relates to a "major violation of laws" (defined as a suspected crime or an illegal act for which administrative punishments such as suspension/shutdown of production and business, revocation/cancellation of licenses, and relatively large amounts of administrative fines should be imposed, or illegal gains confiscated);
There is a clear subject against which a report is filed and there are specific facts or clues suggesting violations, and crucial evidence is provided. This specific requirement suggest that spurious reports will not qualify, and that the authorities to which a report is made will ultimately assess what facts and evidence are provided in support;
SAMR is not already aware of the contents of the report, before the report in question is made; and
The whistleblower reports are substantiated upon investigation, and the cases have been closed. Similar to the scheme in other countries (such as the U.S.), a report and its supporting facts will need to be substantiated by the authorities following their own investigative and enforcement processes.
The Interim Measures provide three tiers of whistleblower rewards. At its highest, monetary awards issued will be capped at RMB 1 million (approx. USD 157,000).
As a practical matter, the very technical nature of certain industries, such as food and pharmaceuticals, may make it easier to conceal illegal activities and misconduct in China. To address these challenges and encourage whistleblowers (in these industries and otherwise) to come forward, the Interim Measures require SAMR to align with the government's finance departments and to raise the reward amounts above the capped amounts if the reports are filed by companies' internal personnel.
The whistleblower rewards provide greater incentives to whistleblowers, which the authorities, in turn, anticipate will act to deter illegal activities in the market more effectively. As we have seen an increase in whistleblower reports across different industries in China in recent years, the Interim Measures may lead to increased reporting to local authorities by both company insiders and external parties, such as competitors and disgruntled ex-employees.
In response to these new measures, companies with operations in China should:
Ensure that their business practices and processes in China are fully compliant;
Review and take steps to secure their data and record-keeping to avoid unauthorized access and transfer; and
Ensure that their whistleblower policies and programs can function effectively so that employees (and where appropriate, other third parties) feel confident in reporting matters of concern internally instead of choosing to report them externally.
Details on Whistleblower Awards
First Level Reward
Second Level Reward
Third Level Reward
The detail facts and direct evidence of violations of any law committed by the party being reported;
The reported content is completely consistent with the facts of violation of the law, and
The reported matter is considered to be a particularly serious illegal act or suspected crime upon verification.
The reward shall be 5% of the fine or the confiscated funds.
If the amount of the reward is less than RMB 5,000 (USD 780), the reward shall be RMB 5,000 (USD 780).
The facts and direct evidence of violations of any law committed by the party being reported, and
The reported content of the violation of the law is completely consistent with the facts of the violation of the law.
The reward shall be 3% of the fine or the confiscated funds.
If the amount of the reward is less than RMB 3,000 (USD 470), the reward shall be RMB 3,000 (USD 470).
The basic facts and relevant evidence of violations of any law committed by the party being reported, and
The reported content is consistent with the facts of the violation of the law.
The reward shall be 1% of the fine or the confiscated funds.
If the amount of the reward is less than RMB 1,000 (USD 150), the reward shall be RMB 1,000 (USD 150).
No Win, No Fee: Singapore Embraces Conditional Fee Arrangements*
By Matthew Shaw and Apoorvaa Paranjpe
Boosting its popularity as a global arbitration seat, Singapore has passed a law that allows conditional fee arrangements ("CFA") in international and domestic arbitration proceedings, certain proceedings of the Singapore International Commercial Court and related court and mediation proceedings. A CFA is an agreement between the client and legal counsel which provides for the whole or part of the lawyer's fees and costs in dispute resolution proceedings to be payable only in specified circumstances, such as where the client succeeds in the claim, or where certain agreed outcomes are achieved. The introduction of the CFA framework aligns Singapore with other jurisdictions, such as England & Wales, Australia, and Canada, each of which have allowed CFAs in various forms for some time.
Boosting its popularity as a global arbitration seat, Singapore has passed a law that allows conditional fee arrangements ("CFA") in international and domestic arbitration proceedings, certain proceedings of the Singapore International Commercial Court and related court and mediation proceedings.
the CFA must comply with any subsidiary legislation made to give effect to the CFA framework, including regulations relating to prescribed information that legal counsel must provide to the client; the form of the CFA; and the terms and conditions that must be included in the CFA.
A CFA does not affect the recovery of costs by a winning party, and nor can `uplift' or `success fees' be recovered from the opposing party as legal costs.
CFAs provide an additional funding option for clients and can have a number of advantages:
parties will be free to determine a mutually agreeable arrangement for the payment of legal counsel's fees, subject to the requirements of the CFA framework;
CFAs will provide parties who have legitimate claims, but who face cash flow concerns, with an alternative method of funding meritorious claims. This may be particularly useful for those who have claims for business interruptions caused by COVID-19; and
A CFA is an agreement between the client and legal counsel which provides for the whole or part of the lawyer's fees and costs in dispute resolution proceedings to be payable only in specified circumstances, such as where the client succeeds in the claim, or where certain agreed outcomes are achieved. These agreements may include payment of an `uplift' or `success fee', which is a higher-than-normal fee payable if the lawyer achieves a specified result for example, a win in the case or a favourable settlement.
CFAs can discourage the pursuit of frivolous claims, because if fees are partly contingent on outcomes then legal counsel will have `skin in the game'.
The introduction of the CFA framework aligns Singapore with other jurisdictions, such as England & Wales, Australia, and Canada, each of which have allowed CFAs in various forms for some time. It also builds on previous funding reforms in Singapore that allowed third-party funding for arbitrations and certain other proceedings.
Under the newly enacted law, CFAs must meet certain requirements to be valid:
the CFA must be in writing and signed by the client;
Please contact us if you want to explore dispute funding options, including CFAs and Aldersgate Funding, DLA Piper's innovative arms-length litigation and arbitration funding vehicle.
the CFA must not provide for the remuneration and costs to be payable as a portion of the damages / other amounts recovered by the client in the case. Such arrangements, known as `contingency fee arrangements', remain prohibited in Singapore; and
* DLA Piper is restricted for regulatory reasons from practising local law in Singapore. This article is not intended to constitute the general dispensation of advice on Singapore law.
Getting Real "Bite" in the Year of the
Tiger: The New Singapore Workplace Discrimination Guidelines*
By David Smail
During 2022, the Singapore Government looks set to enshrine into law some or all of the principles currently contained in the Tripartite Guidelines on Fair Employment Practices in relation to workplace discrimination. With the introduction of Singapore's first workplace discrimination legislation and a newly formed discrimination tribunal, the TGFEP will finally receive their missing teeth find out what it means for your business operations in Singapore.
In his 2021 National Day Rally speech, Prime Minister Lee Hsien Loong announced that the Singapore Government will enshrine into law some or all of the principles currently contained in the Tripartite Guidelines on Fair Employment Practices (the "TGFEP"). A draft bill is expected to be announced in the first half of 2022.
The TGFEP are a set of best practice guidelines for Singapore employers to adopt to prevent discrimination at the workplace. They cover a range of topics including recruitment, HR systems, training and reward. At their heart is the principle of hiring and developing a Singaporean core, which encourages employers to make reasonable efforts to attract and consider local Singaporeans for job positions on merit and for training and development purposes.
Singapore does not currently have any legislation which expressly prohibits workplace discrimination per se. While there is some limited protection in a handful of narrow areas (wrongful dismissal, pregnancy dismissal, retirement and reemployment, and enlistment discrimination), there are no direct remedies available for employees who have been subjected to discrimination on the grounds of attributes which may be protected in other countries such as race, nationality, ethnicity, religion, gender, disability or sexual orientation.
With the introduction of legislation, the TGFEP will finally receive their missing teeth. Employees in Singapore will for the first time likely be able to take legal action directly against their employers for discrimination that happens in the workplace.
In terms of resolving disputes, the Prime Minister confirmed that the approach will be modelled on how employers currently deal with disputes over salaries and wrongful dismissal. This means that disputes will first go through a process of conciliation and mediation, and only if these are unsuccessful will they be determined judicially. A new workplace discrimination tribunal will be established to decide such cases.
The Prime Minister also confirmed that the new legislation will protect employees not only on the ground of nationality or race, but also on other grounds covered by the TGFEP including sex, age, race, religion and disabilities.
We still do not have all the details of the proposal and a number of questions still remain including:
Will the new law only prohibit discrimination or will it also extend to harassment?
Will the protections extend to grounds not currently recognised by the TGFEP such as sexual orientation?
How will the new law interact with the wrongful dismissal guidelines?
How will the workplace discrimination tribunal be constituted and what remedies can an employee seek from their employer?
Regardless of the answers to these questions, the introduction of Singapore's first workplace discrimination legislation will expand the scope of protections for employees in Singapore. Employers should start preparing for change now by reviewing their existing discrimination and harassment policies to ensure they not only meet the minimum requirements under the current Singapore legal framework, but that they actively promote and protect attributes prescribed by the TGFEP such as gender, race, nationality, age, religion and disability. Multinational corporations may already be doing this in practice as they tend to adopt global standards which go above and beyond the local minimum legal framework.
For any enquiries on what these guidelines will mean to your business, please contact David Smail.
* DLA Piper is restricted for regulatory reasons from practising local law in Singapore. This article is not intended to constitute the general dispensation of advice on Singapore law.
A Corporate Governance "Boost"
The MAS Revises Guidelines for Financial Institutions and Insurers*
By Andrew Robinson
On 9 November 2021, the Monetary Authority of Singapore issued revised Guidelines on Corporate Governance for Designated Financial Holding Companies, Banks, Direct Insurers, Reinsurers and Captive Insurers which are Incorporated in Singapore. The revised Guidelines will take effect throughout 2022 and are designed to provide Singapore with a further improved business environment, coupling high governance standards and greater corporate management flexibility.
A brief history of the Code of Corporate Governance
Singapore's Code of Corporate Governance was first issued on 21 March 2001. After revisions conducted in 2005 and 2012, in August 2018 the Monetary Authority of Singapore (the "MAS") accepted the newly-established Corporate Governance Council's recommendations to announce a new "2018 Code" and accompanying Practice Guidance.
The latest Guidelines on Corporate Governance for Financial Institutions
Following a consultation process from May June 2021, on 9 November 2021 the MAS issued its revised "Guidelines on Corporate Governance for Designated Financial Holding Companies, Banks, Direct Insurers, Reinsurers and Captive Insurers" (collectively "FIs"). The Guidelines incorporate the Principles and supporting Provisions of the 2018 Code of Corporate Governance, together with various Additional Guidelines added by the MAS to encourage better association with international standards and industry good practices by expanding on the responsibilities of the board of directors of each FI:
"The Board should review the FI's corporate governance framework, culture and conduct framework, business objectives and strategies on an annual basis, or more frequently as appropriate, to ensure they remain relevant and effective"
Compliance with the Guidelines
Compliance with the Principles is mandatory for FI's listed on the SGX.
For non-listed FIs including banks, Tier 1 insurers and certain other designated FIs, the MAS expects full compliance with the Principles (save for Principles 11 and 12).
F or non-listed FIs including Tier 2 insurers and certain other designated FIS, the MAS expects the Principles to be observed or for an explanation to be provided in the annual reports or the FI's website.
In addition, the MAS expects every FI to observe the Provisions and Additional Guidelines, on the same "comply-or-explain" basis.
For non-listed captive insurers, special purpose reinsurance vehicles, marine mutual insurers and run-off insurers, while the Guidelines continue to apply, there is no requirement to explain any variance from the Principles, Provisions and Additional Guidelines.
Expectations in the Guidelines relating to disclosures in annual reports are effective from 1 January 2002. All other expectations are effective from 1 April 2022, save for the Provision (noted below) regarding the independence of an FI's board and which is effective from 31 December 2022.
What does this mean for FIs?
The FI's board should have a balance of independence and diversity of thought, including the Provision that non-executive directors make up the majority of a board, and that the board is majority independent where the chairman is not independent.
There is a clear division of responsibilities between leadership and management, with the Provision that a chairman and a chief executive are separate persons.
* DLA Piper is restricted for regulatory reasons from practising local law in Singapore. The information contained in this article is not intended to constitute the general dispensation of advice on Singapore law.
There is a formal and transparent process for appointment and re-appointment of directors, with the Provision that a Nominating Committee may be established by the FI for oversight.
There is likewise a formal and transparent procedure for director and executive remuneration, including the Provision that a Remuneration Committee may be established to assist.
The board is responsible for the governance of risk and maintains a sound system of risk management and internal controls, including choosing to establish a "Board Risk Committee", if appropriate.
The revised Guidelines are designed to provide a more flexible and less prescriptive environment for corporate governance, while bringing improved cohesion and consistency to the marketplace, and should ensure Singapore business platform continues to offer further and better performance and competition, regionally and globally.
Sammy Fang Partner +852 2103 0649 [email protected]
Ray Xu Consultant +86 21 3852 2082 [email protected]
Apoorvaa Paranjpe Senior Associate +65 6512 9595 [email protected]
Maurice Burke Partner +65 6512 9560 [email protected]
Rishikeesh Wijaya Associate +65 6512 9515 [email protected]
David Smail Of Counsel +65 6512 9564 [email protected]
Matthew Shaw Of Counsel +65 6512 6062 [email protected]
Andrew Robinson Senior Associate +65 6512 6061 [email protected]
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