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.
Government gazettes legislative amendments to implement new fund re-domiciliation mechanisms
The government has gazetted the Securities and Futures (Amendment) Ordinance 2021 and the Limited Partnership Fund and Business Registration Legislation (Amendment) Ordinance 2021. The amendments will come into operation on 1 November 2021, aiming to introduce mechanisms for the re-domicile of funds set up outside Hong Kong so that such funds may become open-ended fund companies or limited partnership funds in Hong Kong. The Companies Registry has also gazetted various forms relating to such mechanisms that will come into effect on the same date.
2021 Policy Address steps up plans for cross-boundary RMB funds and products
The Chief Executive of Hong Kong delivered her 2021 Policy Address on 6 October 2021, citing the government’s plans to step up its efforts to enhance Hong Kong’s status as an international financial centre. The government plans to expand further the channels for the two‑way flow of cross-boundary RMB funds and develop offshore RMB products and tools, including looking into specific measures to enhance demand for the issue and trade of RMB securities and to allow stocks traded via the southbound trading mechanism under Stock Connect to be denominated in RMB.
HKEX publishes consultation paper on SPAC
The Hong Kong Exchanges and Clearing Limited (HKEX) has published a consultation paper seeking market feedback on proposals to create a listing regime for special purpose acquisition companies (SPACs) in Hong Kong, with a deadline for responses on 31 October 2021. The paper’s key proposals include restricting the subscription for and trading of an SPAC’s securities to professional investors, requiring each SPAC to have at least one SPAC promoter which is a Securities and Futures Commission (SFC) licensed firm holding at least 10% of the promoter’s shares, and capping the promoter shares to 30% of the total number of shares in issue at the initial offering date.
MAS releases Compliance Toolkit for licensed and exempted trust companies and approved CIS trustees
The Monetary Authority of Singapore (MAS) has released a Compliance Toolkit that provides guidance on applications to be submitted for approval from the MAS, and notifications and regulatory submissions to the MAS. This is for use by licensed trust companies, exempt trust companies such as banks, and approved collective investment scheme (CIS) trustees and provides guidance on the various approval and reporting requirements and timelines.
MAS revises notice on recommendations on investment products
The MAS has issued MAS Notice FAA-N16 (Amendment) 2021, with the majority of the amendments taking effect from 9 October 2021. The notice sets out the standards to be maintained by financial advisers and representatives when making recommendations on investment products, including assessing a customer’s knowledge and experience in complex products.
PBOC announces new digital asset controls
The People’s Bank of China (PBOC) imposed new measures against the use of crypto assets, deterring financial institutions from participating in any cryptocurrency transactions and from mining. Participants in such illegal financial activities will be committing a crime and can be prosecuted. Ten agencies, including the PBOC and other financial regulators, will work together to implement this blanket ban.
Shenzhen issues first offshore RMB bonds in Hong Kong
The Shenzhen municipal government has issued 5 billion RMB (US$775 million) of offshore RMB local government bonds for listing in Hong Kong, making it the first domestic local government to have an offshore listing of bonds in Hong Kong. The three- and five-year bonds will be green bonds, the proceeds of which will be used in areas such as water treatment and education.
Chief financial regulator releases strategic priorities
The Japan Financial Services Agency (JFSA) has published “The JFSA Strategic Priorities July 2021-June 2022”, which indicates the strategies it will take to tackle its priorities during the period from July 2021 to June 2022. In particular, viewing changes in economy, society and industry as opportunities for growth, JFSA will promote a shift to vibrant economic structures by achieving a smooth circulation of funds. It will develop a “green international financial centre” and set up a platform for information related to Environmental, Social, and Governance (ESG) bonds. It will also promote the corporate governance reform and comprehensively consider issues involved in auditing.
RBI announces use of alternative reference rate in place of LIBOR for interest payable on export / import transactions
The Reserve Bank of India (RBI) has announced that, in light of the impending cessation of the London Interbank Offered Rate (LIBOR) as a benchmark rate, Authorised Dealer Category – I Banks (AD Banks) are permitted to use any other widely accepted or alternative reference rate in the currency concerned for LIBOR-linked interest payable in respect of export / import transactions.
RBI issues data format for furnishing of credit information to Credit Information Companies
The RBI has issued a notification which sets out a Uniform Credit Reporting Format for reporting credit information to the Credit Information Companies (CICs). The Relationship Segment (RS) captures information on relationship fields of the corporates, such as the information of directors, shareholders, trustees and holding companies related to the borrower. The RBI has also decided that the reporting of the RS details will be mandatory in respect of new loan accounts opened after 1 July 2022.
BNM announces new alternative reference rate
The Bank Negara Malaysia (BNM) has announced the launch of the Malaysia Overnight Rate (MYOR) as the new alternative reference rate, aiming to facilitate usage of benchmark rates that are more robust and based upon transactions in active, liquid markets. The MYOR will run in parallel to the existing Kuala Lumpur Interbank Offered Rate (KLIBOR), with periodic reviews. The BNM has also published the MYOR Policy Document that incorporates key features and governance standards, and will administer and calculate the MYOR as the volume-weighted average rate of unsecured overnight Ringgit interbank transactions.
SET and SGX launches Thailand-Singapore DR Linkage
Following the revision of rules and regulations by the Securities and Exchange Commission of Thailand (SECT), the Stock Exchange of Thailand (SET) and the Singapore Exchange (SGX) has launched the Thailand-Singapore Depository Receipts (DRs) Linkage, under which the DRs representing securities listed on one market will be issued for trading on the other. Investors in both countries can buy and sell securities via a DR through their local broker arrangements and in their domestic currency, trading the DRs in accordance with their respective home market rules and regulations.
SECT warns the public of unlicensed digital asset business operators
On 15 October 2021, the SECT advised the public and digital asset investors to be cautious about using services of unlicensed digital asset operators, including foreign digital asset business operators. This advice follows the earlier circular the SECT distributed on 17 September 2021, which advised listed companies that invest or plan to invest in digital assets to exercise care and attention before making investment decisions.
SECP publishes FAQs on Beneficial Ownership
The Securities and Exchange Commission, Philippines (SECP) has released Frequently Asked Questions (FAQs) on Beneficial Ownership. It serves as a guide for all SECP registered corporations, foreign and domestic stock and non-stock corporations in complying with the requirements of the SECP on beneficial ownership when they submit the General Information Sheet (GIS), which will be used for regulatory purposes.
SECP extends submission deadline of AIRDF
The SECP has extended the deadline for covered persons to submit the AML / CFT Inherent Risk Assessment Data Form (AIRDF) to 30 November 2021. The AIRDF will provide guidance on identifying and assessing the indicators of exposure in relation to money laundering and terrorist financing risks, and on formulating the Institutional Risk Assessment required under the SECP Memorandum Circular No. 26, Series of 2020.
The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.