Financial services edition - executive summary

LAWWATCH 0 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). EXECUTIVE SUMMARY CONSULTATION PAPERS • MAS Proposes Enhanced Disclosure Requirements for ILPs On 26 June 2015, the Monetary Authority of Singapore issued a Consultation Paper on Proposed Enhancements to Disclosure Requirements for Sale of Investment-Linked Policies (“ILPs”). The Consultation Paper proposes a new requirement to disclose all fees and charges for ILPs in a new product level Product Highlight Sheet (“PHS”). This product level PHS is an additional requirement, on top of the existing PHS for ILP sub-funds. 1 CASES • MF Global Singapore Pte Ltd & Ors v Vintage Bullion DMCC [2015] SGHC 162 (Singapore, High Court, 25 June 2015) 2 o The defendant had entered into various leveraged foreign exchange and leveraged commodity transactions with the plaintiff. o Monies provided to the plaintiff as margin were held in segregated customer accounts. o Profits arising out of the transactions were accounted for in these accounts as “unrealised profits” and “forward values” prior to the date on which they were due to be paid to the customer. o The Singapore High Court held that these profits were choses in action held by the defendant against the plaintiff. As such, they were not property capable of being held on trust by the plaintiff for the defendant. o The Court further held that they were contingent and future debts that had not as yet accrued to the account of the defendant, and for this further reason, the funds segregated in the segregated customer accounts were also not held on statutory trust for the defendant under the Securities and Futures (Licensing and Conduct of Business Regulations) and the Commodity Trading Regulations. • Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2015] SGHC 125 (Singapore, High Court, 6 May 2015) 7 o The plaintiff had been an insurance agent for the defendant insurance company. He led a group of insurance agents in his own organisation. o When he left the defendant, he sought employment at two other insurance companies. o As required by the Monetary Authority of Singapore, the two insurance companies conducted reference checks on the plaintiff. o The plaintiff provided both insurance companies with written authorisations to obtain such information. LAWWATCH 0 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). o The plaintiff alleged that the information provided by the defendant to the two insurance companies was defamatory of the plaintiff. o The Singapore High Court held that the defendant could rely on the defence of consent to the publication of two of the three items of information provided. o The defence of consent could not be successfully relied on for one item of information as that item of information was not relevant to the reference checks. LEGISLATION AND REGULATION • Singapore Pulls Back on Involvement in Asia Region Funds Passport At the Asia Pacific Economic Cooperation (Apec) finance ministers meeting in Cebu, the Philippines on 11 September 2015, Singapore chose not to sign a Statement of Understanding on the Asia Funds Region Passport, an initiative for the creation of a regulatory arrangement for the cross-border offer of collective insurance schemes in participating economies, which is due to be launched in 2016. Singapore declined to sign because taxation arrangements that had been committed to previously were not included in the Statement of Understanding. 11 LAWWATCH 1 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). CONSULTATION PAPERS MAS Proposes Enhanced Disclosure Requirements for ILPs On 26 June 2015, the Monetary Authority of Singapore (“MAS”) issued a Consultation Paper on Proposed Enhancements to Disclosure Requirements for Sale of Investment-Linked Policies (“Consultation Paper”). Currently, an insurer offering an investment-linked policy (“ILP”) must provide the information required by MAS Notice 307. The information to be provided is set out in a product summary, policy, and a Product Highlights Sheet (“PHS”) on the ILP sub-fund (but presently not the insurance product itself). The information in the product summary includes information on the fees and charges imposed, and Notice 307 stipulates that these must be broken down into items specified, which includes a premium allocation rate. The Consultation Paper proposes a new requirement to disclose all fees and charges for ILPs in a new product level PHS. This product level PHS is an additional requirement, on top of the existing PHS for ILP sub-funds. The proposed product level PHS will summarise the main features and risks of the ILP at the product level and provide information on valuations and how to withdraw from the policy. The proposed product level PHS will also highlight that an ILP, being essentially a combination of a term life insurance policy and a collective investment scheme, is suitable only for investors seeking both protection and investment. No changes are being proposed to the format or content of the existing PHS for ILP sub-funds. The Consultation Paper commented that currently, the disclosure as to fees and charges are not standardised and policyholders may not be clear as to what such fees and charges relate to. Under the proposal, the fees and charges to be disclosed in the product PHS should be broken down into the following categories: • Entry charge and surrender charge; • Insurance and administration fees; • Fees from the ILP sub-fund’s investments in the underlying collective investment scheme; and • Additional fees charged by the insurer at the ILP sub-fund level. To discuss the possible implications of this for your business, please contact: HUI Choon Yuen d: +65 6416 8204 e: [email protected] wongpartnership.com LAWWATCH 2 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). The MAS also sought views on: • A proposal for insurers to simplify the upfront deductions when a policy is purchased to a single entry charge as well as a single pricing model for the sub-funds based on net asset value; and • Whether the purchase of single premium ILPs with minimal insurance cover should be accompanied by monthly (instead of annual) statements containing the same information since a view can be taken that such policies are purchased more for investment purposes rather than insurance purposes. The information to be sent monthly will therefore include information on the number and value of units held in the ILP subfund, death benefit, and net cash surrender value at the end of the current statement period. CASES Contingent and Future Profits Credited to Segregated Customer Accounts Not Held on Statutory Trust Facts MF Global Singapore Pte Ltd & Ors v Vintage Bullion DMCC [2015] SGHC 162 dealt with the legal treatment of certain forms of profits made under certain leveraged foreign exchange (“LFX transactions”) and leveraged commodity transactions (“Bullion transactions”). The transactions were between MF Global Singapore Pte Ltd (“MFGS”) and Vintage Bullion DMCC (“Vintage”) and 57 other customers of MFGS (collectively, “the LFX and Bullion customers”). In its business, MFGS offered a range of over-the-counter LFX and Bullion products. In respect of the LFX and Bullion transactions, MFGS did not act as its customers’ agent. Instead, the transactions were entered into on a principalto- principal basis. In other words, MFGS was the direct counterparty to any LFX or Bullion transaction entered into by a customer. For the purpose of facilitating trades in LFX or Bullion transactions, customers were required to open and maintain accounts with MFGS. Once the accounts were opened, customers would typically place with MFGS funds necessary to enable trades to be executed and to maintain open positions on the trades by way of “margin”. The margins placed by customers were To discuss the possible implications of this for your business, please contact: Elaine CHAN d: +65 6416 8010 e: [email protected] wongpartnership.com Joy TAN d: +65 6416 8138 e: [email protected] wongpartnership.com LAWWATCH 3 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). deposited into MFGS’ bank accounts which MFGS classified as “Customer Segregated Accounts”. MFGS would send its LFX and Bullion customers daily statements of their accounts (“Daily FX Activity Statements”). In addition to the monies placed with MFGS as margin, the Customer Segregated Accounts also held monies sufficient to cover the Total Account Equity of all the LFX and Bullion customers. The Total Account Equity comprised the aggregate sum of the following types of profits: • Unrealised Profits: This was the notional value of the customer’s open position taken with MFGS determined with reference to the market price of the underlying currency or reference bullion; • Forward Value: This was the value of a closed position on the day of the closure, if the customer had made a profit on the transaction. • Ledger Balance C/F: Amounts in the Forward Value would be carried forward on the Value Date and recorded as the customer’s “Ledger Balance Carried Forward”. The Value Date (usually a couple of days after the closing date) was the date, pursuant to the terms and conditions of the LFX or Bullion accounts, on which the respective obligations of the parties were to be performed. The amounts recorded in the Ledger Balance C/F were available to the customers to be withdrawn as their realised profits. If a customer wished to withdraw his realised profits represented under the Ledger Balance C/F, MFGS would then effect physical payment to the customers from the Customer Segregated Accounts. The question before the Singapore High Court was whether the sums held in the Customer Segregated Accounts and recorded as Unrealised Profits and Forward Value were held on trust for the LFX and Bullion customers upon the provisional liquidation of MFGS on 1 November 2011 or whether they were instead MFGS’ own moneys available for distribution to MFGS’ unsecured creditors. The Unrealised Profits and Forward Value in dispute amounted to about US$13.4m for all the LFX and Bullion customers. The Court had to consider, in particular, whether a statutory trust arose in respect of the Unrealised Profits and Forward Value under either the Commodity Trading Act or the Securities and Futures Act. It held that it did not. Decision in Respect of the Commodity Trading Act and the Commodity Trading Regulations The Court first looked at regulations 21 and 22 of the Commodity Trading Regulations (“CTR”). These provide as follows: LAWWATCH 4 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). Segregation of customer’s funds by brokers 21.—(1) Every commodity broker and spot commodity broker shall — (a) treat and deal with all money, securities or property received by him from a customer to margin, guarantee or secure contracts in commodity trading or spot commodity trading, or accruing to a customer as a result of such trading, as belonging to that customer; and (b) account in a separate trust account, designated or evidenced as such, for all the money, securities or property received from the customer or accruing to the customer pursuant to sub-paragraph (a), and shall not commingle that money, security or property with his own funds or use them to margin, guarantee or to secure the contracts or extend the credit of any other customer or person other than the person for whom they are held. … (4) Notwithstanding paragraph (1), a commodity broker or spot commodity broker may have a residual financial interest in a customer’s trust account and may from time to time advance from his own funds sufficient money to prevent any or all of his customers’ trust accounts from becoming under-margined. … Segregated accounts 22.—(1) All customer’s moneys shall be segregated as belonging to customers and separately accounted for. (2) Any customer’s moneys received shall be paid without delay into a customer’s account unless authorised otherwise by the customer concerned. … The Court took the view that, although regulations 21(1)(a) and 22(1) do not use the term “statutory trust”, insofar as they state that a commodity broker shall treat certain funds as belonging to that customer, the regulations impose a statutory trust over money, securities or property falling within its ambit. This was what the provisions provide for in substance, because the clear implication of the regulations is that a commodity broker will not be able to dispose of the funds falling within the scope of regulations 21(1)(a) and 22(1) for its benefit. In interpreting regulation 21(1)(a) in line with the legislative intention of protecting customers’ funds, the Court also stated that this statutory trust arises on the receipt or accrual of the money, securities or property. LAWWATCH 5 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). The Court also stated that this would be consistent with section 30(3) of the Commodity Trading Act (“CTA”) which prohibits a commodity broker from using money, securities or property held in a separate trust account as required by the CTR for the payment of the commodity broker’s debts. These provisions effectively disallow a commodity broker from using such moneys beneficially in the course of its business, which is the fundamental feature of a trust, viz., that the beneficial ownership of these funds is vested in the customer. However, the Court held that no statutory trust arose over the Unrealised Profits and Forward Value. Firstly, what MFGS represented in Vintage’s Daily FX Activity Statements as Unrealised Profits and Forward Value were choses in action in the nature of contingent debts or certain debts payable at a future date by MFGS to Vintage. These were choses in action that Vintage had against MFGS, and which vested, at all times in Vintage. As the choses always vested in Vintage vis-à-vis MFGS in the principal-to-principal transactions, they did not form property in MFGS’ hands that MFGS was able to hold on trust for Vintage. In addition, as contingent or forward debts owed by MFGS to Vintage, the Unrealised Profits and the Forward Value were not monies that had accrued to Vintage as a result of commodity trading: • The Court was of the view that the Unrealised Profits would not be considered moneys accruing to Vintage as it had not done all that was required to earn the sum (i.e., close-out was still required). • As for the Forward Value, MFGS was not obliged to pay Vintage the Forward Value until the Value Date, when the Forward Value became due and payable. Before the Value Date, Vintage could not have claimed payment of the Forward Value. Insofar as Vintage did not have a right to receive actual money from MFGS prior to the Value Date, it could not be said that money had “accrued” to Vintage at that stage. On the above bases, the Court found that prior to the Value Date, there was no money accruing to Vintage and any money placed by MFGS into the Customer Segregated Accounts to cover the value of the Unrealised Profits and Forward Value did not fall within the scope of the statutory trust under regulation 21(1)(a) of the CTR. Decision in Respect of the Securities and Futures Act and the Securities and Futures (Licensing and Conduct of Business) Regulations The Court next looked at sections 103A and 104 of the Securities and Futures Act (“SFA”), and regulations 15(2) and 16(1) of the Securities and Futures (Licensing and Conduct of Business) Regulations (“SFR”). LAWWATCH 6 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). The Court noted that the obligations imposed by the SFA and SFR do not explicitly refer to a requirement to “segregate”. However, insofar as regulations 16(1)(b) and (c) state that a holder of a capital markets services licence shall deposit “moneys received on account of a customer” into a trust account and shall not commingle those moneys with its own funds or use those moneys for cross-margining purposes, the Court held that the regulations in effect impose segregation obligations on a holder of a capital markets services licence. The effect of regulation 16(1)(a) of the SFR is to create or impose a statutory trust over certain moneys by effectively stipulating that those moneys belong beneficially to the customer. Further, regulations 16(1)(a) and 15(2) of the SFR, when taken together, provide that the statutory trust arises over any money a capital markets services licence holder receives from or receives for its customer. The Court held that the LFX customers’ Unrealised Profits and Forward Value were not held by MFGS on statutory trust for Vintage for the same reasons as those that applied to the decision in respect of the CTA: • The Unrealised Profits and Forward Value were choses in action against MFGS which vested in the LFX customers at all times. There was no underlying money which MFGS could receive from its customer or for its customer in either instance. • Before a trade was closed-out, a customer only had a contingent claim, and was not entitled to receive any money. MFGS was also not obliged to pay any money, as no obligation to pay had yet arisen. Even after a trade was closed-out and a Forward Value arose, MFGS’ obligation to pay those moneys only materialised on the relevant Value Date. The Court further noted that the fact that MFGS segregated moneys amounting to the value of its obligation to the LFX customers in respect of the Unrealised Profits and Forward Value did not change the above analysis. In the Court’s view, until MFGS’ payment obligation arrived on the Value Date, and MFGS paid the money to the account and credit of its customer, these moneys properly remained MFGS’ own funds to which no LFX customer could have a proprietary interest. These segregated moneys thus did not fall within the scope of the statutory trust imposed by regulation 16(1)(a) of the SFR. LAWWATCH 7 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). Information Provided for Reference Checks Should Be Consistent with Written Authorisation Provided The case of Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2015] SGHC 125 concerned a claim for defamation arising from several reference checks and communications made in respect of the plaintiff, a financial adviser’s representative (“Plaintiff”). These were provided by the defendant, AXA Life Insurance Singapore Pte Ltd (“Defendant”), to the Monetary Authority of Singapore (“MAS”) and potential employers of the Plaintiff, namely, Prudential Assurance Company Singapore Private Limited (“Prudential”) and Tokio Marine Insurance Singapore Limited (“Tokio Marine”). Such reference checks are required by the MAS pursuant to its Guidelines on Fit and Proper Criteria and its Representative Notification Framework. The Singapore High Court found on the facts that there had been no defamation as the statements had been justified. The Plaintiff had also claimed malicious falsehood and negligence on the part of the Defendant in the reference checks that were provided to Prudential and Tokio Marine, and these claims also failed on their facts. The case is noteworthy for the Court’s observations on the defence of consent as the Plaintiff had been required by both Prudential and Tokio Marine to provide a written authorisation permitting them to request information on the Plaintiff from his former employers, and releasing the entities requesting and supplying the requested information from liability. As the defence of consent succeeded in respect of three of the four claims, the case provides useful guidance as to the level of reliance responding financial institutions may place on such written authorisations in furnishing their response to the requesting financial institution. Court’s Decision on Consent as a Defence to a Claim on Defamation The Singapore High Court first noted that the defence of consent is to be narrowly construed. First, the defendant must prove that consent was given or can be adequately inferred with respect to each publication of defamatory material. Second, the defendant must prove that consent was clearly and unequivocally given to the fact of publication and to the content of the publication. This means that where the eventual publication is not substantially the same as that to which the plaintiff consented to, or where the publication is to a wider audience than the plaintiff consented to, the defence would fail. To discuss the possible implications of this for your business, please contact: Elaine CHAN d: +65 6416 8010 e: [email protected] wongpartnership.com Joy TAN d: +65 6416 8138 e: [email protected] wongpartnership.com LAWWATCH 8 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). With respect to the Plaintiff’s consent to the content of the defamatory statements, the Court then went on to consider how broadly or narrowly “content” should be interpreted. In particular, it considered whether it is enough that the Plaintiff consents to the publication of the type of content in the defamatory statements (i.e., content relating to the Plaintiff’s employment history as requested in the reference checks) or whether the Plaintiff has to consent to the specific content of the defamatory statements. The Court examined cases from England and Australia and held that a plaintiff need not have consented to the specific words found in the defamatory statements in order for the defence of consent to be relied on by the defendant against the plaintiff’s claim for defamation. However, courts must still give serious consideration to the scope of the plaintiff’s consent. Scope of the Plaintiff’s Consent The Court then examined the written authorisations provided by the Plaintiff. The Plaintiff’s written authorisation provided to Prudential was as follows: “I [Plaintiff] hereby irrevocably and unconditionally authorise you to perform reference checks of my previous employment(s) and release from liability all persons or entities requesting or supplying such information.” The Plaintiff’s written authorisation provided to Tokio Marine was as follows: “I, [Plaintiff] ... , authorise [Tokio Marine] and/or any of its subsidiaries or affiliates, and any persons or organisations acting on its behalf, to verify information presented on my employment application/resume and/or to conduct enquiries and perform reference check of my previous employment(s) as may be necessary. I authorise all persons who may have information relevant to this enquiry to disclose it to [Tokio Marine] and release all persons from liability on account of such disclosure.” The Court observed that the two written authorisations did not expressly consent to the Plaintiff’s ex-employers or principals releasing information about the Plaintiff to future employers pursuant to those reference checks. However, it held that on balance, looking at the written authorisations and the facts as a whole, a reasonable interpretation of the written authorisations is that the Plaintiff did consent to the Defendant publishing information about his employment history to Prudential and Tokio Marine. This was because the authorisation to conduct reference checks must mean that the ex-principals LAWWATCH 9 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). would be permitted to disclose all relevant information pursuant to those reference checks. In other words, granting authorisation to conduct reference checks and granting consent to the Defendant to reveal all relevant information pursuant to those reference checks are inextricably linked. Without the latter, the authorisation to conduct reference checks would become a hollow one. However, the Court further stated that in order for the information published by the Defendant to fall within the scope of the Plaintiff’s consent, such information must at least be reasonably related to the express or implied requests made by Prudential and Tokio Marine in their reference checks. Defendant’s Release of Information to Prudential The Court then examined whether the information provided by the Defendant to Prudential was relevant to the reference check and therefore fell within the ambit of the consent to publish given by the Plaintiff. The statements made by the Defendant to Prudential were as follows: “2. Ramesh s/o Krishnan Organisation Persistency (as of 30 April 2011) 19mth Single Premium persistency = 43% 13mth Regular Premium persistency = 39.6%” (“First Statements on Persistency”) “3. Compliance Issues Between 2008 to 2011, 14 Advisers under Ramesh’s organization were investigated (including Ramesh). • Disciplinary actions were taken against 5 advisers • 3 cases were referred to the Police for further investigation” (“First Statements on Compliance”) The Court held that the First Statements on Persistency made to Prudential were relevant to Prudential’s reference check request. In particular, the section on “Optional Information” in Prudential’s reference check form expressly made provision for the Defendant to state the Plaintiff’s “Persistency Ratio in the last calendar year”. LAWWATCH 10 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). The Court further held that, on balance, the First Statements on Compliance made to Prudential were not relevant to Prudential’s reference check request: • The reference check request contained no mention of compliance issues or internal investigations into the Plaintiff. • In addition, the “Optional Information” section in the Prudential reference check form was not open-ended. It appeared to be concerned only with “production”, “persistency”, and the Plaintiff’s “termination code”. Because of the limited range of optional information expressly referred to in the form, information on compliance was not expressly or impliedly asked for in Prudential’s reference check request. Defendant’s Release of Information to Tokio Marine The Court then examined the following information that was released by the Defendant to Tokio Marine: “Ramesh was investigated in June 2010 for unprofessional conduct (being rude and aggressive) based on a client’s brother‘s complaint. In view of the inconclusive evidence to substantiate the allegation, no action was taken against Ramesh.” “Between 2008 to 2011, there were disciplinary actions taken against 5 advisers under Ramesh Krishnan Organization. During the same period, there were also 3 cases involving 3 advisers under Ramesh Krishnan Organization that were referred to the Police for further investigation.” “We wish to highlight that Ramesh organisation’s 13mth persistency is 11.22% as at end Feb 2012. We recommend that TM Life PO phone AXA PO, [Mr Williams], for more details on this case.” (“Second Statements on Persistency and Compliance”) The Court held that the Second Statements on Persistency and Compliance were relevant to Tokio Marine’s reference check request: • While neither “persistency” nor “compliance” is expressly mentioned in Tokio Marine’s reference check form, the “Optional Information” section was left open-ended (unlike Prudential’s form). • Tokio Marine’s reference check form stated that the enquiry was made “[i]n compliance with the MAS’ circular on “Due Diligence Checks and Documentation in respect of the Appointment of Appointed, Provisional and Temporary Representatives” dated 7 February 2011”. The Circular expressly mentions, among other things, “any material adverse record … LAWWATCH 11 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). taken by the previous employer(s)”. This context meant that information on the Plaintiff’s persistency ratios or compliance issues were more likely to be relevant. • The relevance of such information to Tokio Marine was confirmed by witness testimony. LEGISLATION AND REGULATION Singapore pulls back on involvement in Asia Region Funds Passport In 2014, Singapore was one of six countries who released a joint consultation paper on the proposed rules and arrangements that will govern the operation of the Asia Funds Region Passport (“ARFP”), an initiative for the creation of a regulatory arrangement for the cross-border offer of collective insurance schemes in participating economies. Singapore signed a Statement of Intent on the ARPF and has been involved in drafting its framework since 2013. However, at the Asia Pacific Economic Cooperation (Apec) finance ministers meeting in Cebu, the Philippines on 11 September 2015, Singapore chose not to sign a Statement of Understanding on the deal. The ARFP is due to be launched in 2016, and will allow fund managers operating in one member country to offer their funds in another member country under a streamlined authorisation process. The six nations who have signed the Statement of Understanding are Japan, Australia, South Korea, the Philippines, Thailand and New Zealand. However, Singapore declined to sign because taxation arrangements that had been committed to previously were not included in the Statement of Understanding. The Monetary Authority of Singapore (“MAS”) advised that, when the Statement of Intent was signed by Singapore in 2013, the signatories explicitly committed to reduce the potential impact of taxation arrangements that would otherwise impede the success of the ARFP. The MAS stated that “[t]his was consistent with the feedback that the industry gave, where for the ARFP to be successful there needs to be a level playing field. This means that foreign funds offered to investors in a jurisdiction should be subject to similar tax treatments as funds managed locally.” To discuss the possible implications of this for your business, please contact: LOW Kah Keong d: +65 6416 8209 e: [email protected] wongpartnership.com LAWWATCH 12 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). However, the MAS noted that the Statement of Understanding did not provide any commitment to addressing the impediment of unequal tax treatment and accordingly would not now be beneficial to fund managers in Singapore. The MAS has said that it remains open to participating in the ARFP when there is commitment to resolve this tax issue. In the meantime, Singapore will continue to develop and finalise the arrangements for the ARFP, including drafting the regulatory framework. SOME OF OUR OTHER UPDATES … DATE TITLE 5 October 2015 LegisWatch: MAS Issues Consultation Paper on Market Conduct and the Power of Court During Investigations of Market Misconduct Offences 2 October 2015 LegisWatch: New and Upcoming Changes to the Listing Rules from 7 October 2015 17 September 2015 LegisWatch: Recent Legislative and Regulatory Changes to Singapore’s Employment Landscape 4 September 2015 LegisWatch: The New Human Biomedical Research Act: Compliance and Potential Risks LAWWATCH 13 FINANCIAL SERVICES EDITION © WongPartnership LLP This update is intended for your general information only. It is not intended to be nor should it be regarded as legal advice. < Previous Item | Home | Next Item > WongPartnership LLP (UEN: T08LL0003B) is a limited liability law partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). WONGPARTNERSHIP OFFICES SINGAPORE WongPartnership LLP 12 Marina Boulevard Level 28 Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: +65 6416 8000 Fax: +65 6532 5711/5722 CHINA WongPartnership LLP Beijing Representative Office Unit 3111 China World Office 2 1 Jianguomenwai Avenue, Chaoyang District Beijing 100004, PRC Tel: +86 10 6505 6900 Fax: +86 10 6505 2562 WongPartnership LLP Shanghai Representative Office Unit 1015 Corporate Avenue 1 222 Hubin Road Shanghai 200021, PRC Tel: +86 21 6340 3131 Fax: +86 21 6340 3315 INDONESIA Makes & Partners Law Firm (an associate firm) Menara Batavia, 7th Floor Jl. KH. Mas Mansyur Kav. 126 Jakarta 10220, Indonesia Tel: +62 21 574 7181 Fax: +62 21 574 7180 Website: makeslaw.com MALAYSIA Foong & Partners (an associate firm) Advocates & Solicitors 13-1, Menara 1MK, Kompleks 1 Mont’ Kiara No 1 Jalan Kiara, Mont’ Kiara 50480 Kuala Lumpur, Malaysia Tel: +60 3 6419 0822 Fax: +60 3 6419 0823 Website: foongpartners.com MIDDLE EAST WongPartnership LLP Abu Dhabi Branch Al Bateen Towers, Building C3, Office 11-01 (P1) P.O. Box No. 37883 Abu Dhabi, UAE Tel: +971 2 651 0800 Fax: +971 2 635 9706 MYANMAR WongPartnership Myanmar Ltd. No. 1, Kaba Aye Pagoda Road Business Suite #03-02, Yankin Township Yangon, Myanmar Tel: +95 1 544 061 Fax: +95 1 544 069 [email protected] wongpartnership.com