Welcome to Herbert Smith Freehills’ monthly private wealth industry updates in Asia.
Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format. The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.
Law Society makes submission on promoting asset management and revisiting charities regime
The Law Society of Hong Kong has responded to the Public Consultation on the Chief Executive’s 2021 Policy Address. It notes that there are certain challenges that the trust industry needs to overcome, including a comprehensive update of the Trust Ordinance and the trust regime. In its submission, the Law Society suggests, among other things, that the government should promote the use of trusts managed by Hong Kong trustees and clarify the taxation treatment of trust structures and trust parties. A detailed paper on such recommendations as well as another paper on the need to revisit the charities regime will be submitted in due course.
SFC updates FAQs on Code on Unit Trusts and Mutual Funds
The Securities and Futures Commission (SFC) has updated Questions 27B and added Question 27C in its frequently asked questions (FAQs) on the Code on Unit Trusts and Mutual Funds, which concern fund managers’ offering of new share classes in respect of an SFC-authorised fund, and the SFC’s prior approval for fund managers to offer a new share class denominated in Renminbi in respect of an existing SFC-authorised fund.
SGX enables SPACs to list on Mainboard
New rules allowing Special Purpose Acquisition Companies (SPACs) to list on Singapore Exchange (SGX)’s mainboard came into effect on 3 September 2021. An SGX listing under the new framework must satisfy the prescribed requirements, including having a minimum S$150 million (US$112 million) market capitalisation. It also requires de-SPAC (i.e. completing an acquisition of the target company) to take place within 24 months of IPO with an extension of up to 12 months subject to fulfilment of prescribed conditions.
Greater Bay Area launches Wealth Management Connect
On 10 September 2021, the People’s Bank of China, the Hong Kong Monetary Authority (HKMA), and the Monetary Authority of Macao have promulgated the implementation details of the Wealth Management Connect scheme that links Guangdong, Hong Kong and Macau. The scheme has an aggregate quota of RMB150 billion in each direction and an individual investor quota of RMB1 million, enabling residents of Greater Bay Area Mainland cities to invest in certain eligible products distributed by banks in Hong Kong and Macau via designated investment accounts. It is expected that cross-boundary financial products will launch in October or November this year.
FATF released results of evaluation of AML and CTF standards
The Financial Action Task Force (FATF) has announced the results of the Fourth Round Mutual Evaluation Report. Japan has delivered good results in anti-money laundering (AML) and counter-terrorist financing (CFT), such as the collection and use of financial intelligence to prosecute money laundering and terrorist financing. While the terrorist financing risk in Japan is relatively low, FATF stressed that its law enforcement has to focus more on complex large-scale cases such as fraud.
Revised client level position limits for currency derivatives contracts
The Securities and Exchange Board of India (SEBI) has released a circular which sets out revised client level position limits in permitted currency pairs with immediate effect. The currency pairs include US dollar to Indian Rupee (USD-INR), Euro to INR (EUR-INR), Sterling to INR (GBP-INR) and Japanese Yen to INR (JPY-INR). The revised limits shall also apply to Non Resident Indians (NRIs) and Category II Foreign Portfolio Investors (FPIs) that are individuals, family offices, and corporates.
CBDCs tested for international settlements
The Bank Negara Malaysia (BNM) has issued a press release announcing that the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, the Monetary Authority of Singapore, South African Reserve Bank and BNM will collaborate to test the use of central bank digital currencies (CBDCs) for international settlements. Led by the BIS Innovation Hub’s Singapore Centre, Project Dunbar will develop prototype shared platforms for cross-border transactions using multiple CBDCs to improve the speed and cost of cross-border payments.
SECT consults on amendments to debt securities regulations under regulatory guillotine scheme
The Securities and Exchange Commission, Thailand (SECT) is seeking public comments on proposed amendments to the debt securities regulations under the regulatory guillotine scheme to enhance convenience for issuers, underwriters and investors. The amendments concern, among other things, reducing debt securities notifications to promote less complicated rules and more convenience for stakeholders, and reviewing regulations to be updated and consistent with other regulations on other types of securities to prevent excessive burdens on debt issuers.
SECT’s ESG Integration Framework for Investment Analysis
SECT has also issued a press release following its 7 September 2021 webinar, “Overview on ESG Integration Framework for Investment Analysis”, which it partnered with the CFA Institute with support from CFA Society Thailand. The webinar aimed at enhancing enhance the awareness of sustainable finance and promoting fund managers’ and investment analysts’ application of ESG factors in investment analysis.
Follow-up FATF country report launched
The global Financial Action Task Force (FATF) has published its 2nd enhanced expedited follow-up report (FUR) to evaluate the progress of the Philippines in addressing technical compliance deficiencies identified in the mutual evaluation report (MER) published in October 2019. It reported that the Philippines has made significant progress in addressing such technical compliance deficiencies identified, with 6 of the Recommendations re-rated to Largely Compliant, and the Philippines will move from enhanced expedited to enhanced follow-up.