SEAChange - Issue 3 FEBRUARY 2022 - DLA Piper
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FEBRUARY 2022 SEAChange – Issue 3
WWW.DLAPIPER.COM Contents 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
WWW.DLAPIPER.COM Introduction 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 • Proposed legislation in Singapore, expected to be tabled of Major Violations in the Field of Market Regulation and what it in 2022, that will give greater bite to existing workplace means for corporates and their compliance systems in China; discrimination guidelines; and • Conditional fee arrangements, and how Singapore’s latest law • Guidelines issued by the Monetary Authority of Singapore that permitting these arrangements will continue to strengthen its will heighten corporate governance standards expected of position as a leading disputes hub; financial institutions.
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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
• The whistleblower reports are substantiated upon investigation,
Synopsis:
and the cases have been closed. Similar to the scheme in other
China’s new Whistleblower Rewards Measures provides up
countries (such as the U.S.), a report and its supporting facts
to RMB 1 million (approx. USD 157,000) in rewards for the
will need to be substantiated by the authorities following their
reporting of major violations of China’s various market conduct
own investigative and enforcement processes.
regulations. The regulations aim to provide greater incentives
to whistleblowers and deter illegal activities in the market more The Interim Measures provide three tiers of whistleblower
effectively, particularly in light of the increased importance rewards. At its highest, monetary awards issued will be capped at
of whistleblowing across different industries in China in RMB 1 million (approx. USD 157,000).
recent years. In light of these new measures, companies with
operations in China should implement or strengthen their As a practical matter, the very technical nature of certain
internal controls and reporting mechanisms. industries, such as food and pharmaceuticals, may make it
easier to conceal illegal activities and misconduct in China.
Article: To address these challenges and encourage whistleblowers
On December 1, 2021, the Interim Measures for Rewards (in these industries and otherwise) to come forward, the Interim
for Whistleblower Reports of Major Violations in the Field of Measures require SAMR to align with the government’s
Market Regulation (“Interim Measures”) issued by the State finance departments and to raise the reward amounts above
Administration for Market Regulation (“SAMR”) and the Ministry the capped amounts if the reports are filed by companies’
of Finance (“MOF”) came into effect. The Interim Measures internal personnel.
establish SAMR’s first set of comprehensive rules surrounding
the reporting of “major violations” of China’s various market The whistleblower rewards provide greater incentives to
conduct regulations. whistleblowers, which the authorities, in turn, anticipate will act
to deter illegal activities in the market more effectively. As we
In short, the Interim Measures provide that a whistleblower will have seen an increase in whistleblower reports across different
be awarded a monetary sum when all of the following conditions industries in China in recent years, the Interim Measures
are satisfied: may lead to increased reporting to local authorities by both
company insiders and external parties, such as competitors and
• The report relates to a “major violation of laws” (defined as disgruntled ex-employees.
a suspected crime or an illegal act for which administrative
punishments such as suspension/shutdown of production and In response to these new measures, companies with operations
business, revocation/cancellation of licenses, and relatively in China should:
large amounts of administrative fines should be imposed, or
• Ensure that their business practices and processes in China
illegal gains confiscated);
are fully compliant;
• There is a clear subject against which a report is filed and
• Review and take steps to secure their data and record-keeping
there are specific facts or clues suggesting violations, and
to avoid unauthorized access and transfer; and
crucial evidence is provided. This specific requirement suggest
that spurious reports will not qualify, and that the authorities • Ensure that their whistleblower policies and programs can
to which a report is made will ultimately assess what facts and function effectively so that employees (and where appropriate,
evidence are provided in support; other third parties) feel confident in reporting matters of concern
internally instead of choosing to report them externally.
• SAMR is not already aware of the contents of the report,
before the report in question is made; and
4
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Details on Whistleblower Awards
WHISTLEBLOWER REQUIREMENT REWARD VALUE
REWARD
First Level Reward • The detail facts and direct evidence of • The reward shall be 5% of the fine or the
violations of any law committed by the confiscated funds.
party being reported;
• If the amount of the reward is less than RMB 5,000
• The reported content is completely (USD 780), the reward shall be RMB 5,000 (USD 780).
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.
Second Level • The facts and direct evidence of • The reward shall be 3% of the fine or the
Reward violations of any law committed by the confiscated funds.
party being reported, and
• If the amount of the reward is less than RMB 3,000
• The reported content of the violation of (USD 470), the reward shall be RMB 3,000 (USD 470).
the law is completely consistent with the
facts of the violation of the law.
Third Level Reward • The basic facts and relevant evidence of • The reward shall be 1% of the fine or the
violations of any law committed by the confiscated funds.
party being reported, and
• If the amount of the reward is less than RMB 1,000
• The reported content is consistent with (USD 150), the reward shall be RMB 1,000 (USD 150).
the facts of the violation of the law.
WWW.DLAPIPER.COM
No Win, No Fee: Singapore Embraces
Conditional Fee Arrangements*
By Matthew Shaw and Apoorvaa Paranjpe
Synopsis: • the CFA must comply with any subsidiary legislation made
Boosting its popularity as a global arbitration seat, Singapore to give effect to the CFA framework, including regulations
has passed a law that allows conditional fee arrangements relating to prescribed information that legal counsel must
(“CFA”) in international and domestic arbitration proceedings, provide to the client; the form of the CFA; and the terms and
certain proceedings of the Singapore International Commercial conditions that must be included in the CFA.
Court and related court and mediation proceedings. A CFA
is an agreement between the client and legal counsel which A CFA does not affect the recovery of costs by a winning party,
provides for the whole or part of the lawyer’s fees and costs in and nor can ‘uplift’ or ‘success fees’ be recovered from the
dispute resolution proceedings to be payable only in specified opposing party as legal costs.
circumstances, such as where the client succeeds in the claim, or
where certain agreed outcomes are achieved. The introduction CFAs provide an additional funding option for clients and can
of the CFA framework aligns Singapore with other jurisdictions, have a number of advantages:
such as England & Wales, Australia, and Canada, each of which
• parties will be free to determine a mutually agreeable
have allowed CFAs in various forms for some time.
arrangement for the payment of legal counsel’s fees, subject
to the requirements of the CFA framework;
Article:
Boosting its popularity as a global arbitration seat, Singapore • CFAs will provide parties who have legitimate claims, but
has passed a law that allows conditional fee arrangements who face cash flow concerns, with an alternative method of
(“CFA”) in international and domestic arbitration proceedings, funding meritorious claims. This may be particularly useful for
certain proceedings of the Singapore International Commercial those who have claims for business interruptions caused by
Court and related court and mediation proceedings. COVID-19; and
• CFAs can discourage the pursuit of frivolous claims, because if
A CFA is an agreement between the client and legal counsel
fees are partly contingent on outcomes then legal counsel will
which provides for the whole or part of the lawyer’s fees and
have ‘skin in the game’.
costs in dispute resolution proceedings to be payable only in
specified circumstances, such as where the client succeeds
The introduction of the CFA framework aligns Singapore with
in the claim, or where certain agreed outcomes are achieved.
other jurisdictions, such as England & Wales, Australia, and
These agreements may include payment of an ‘uplift’ or
Canada, each of which have allowed CFAs in various forms
‘success fee’, which is a higher-than-normal fee payable if the
for some time. It also builds on previous funding reforms in
lawyer achieves a specified result – for example, a win in the
Singapore that allowed third-party funding for arbitrations and
case or a favourable settlement.
certain other proceedings.
Under the newly enacted law, CFAs must meet certain
Please contact us if you want to explore dispute funding options,
requirements to be valid:
including CFAs and Aldersgate Funding, DLA Piper’s innovative
• the CFA must be in writing and signed by the client; 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.
6
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Getting Real “Bite” in the Year of the
Tiger: The New Singapore Workplace
Discrimination Guidelines*
By David Smail
Synopsis: In terms of resolving disputes, the Prime Minister confirmed that
During 2022, the Singapore Government looks set to enshrine the approach will be modelled on how employers currently deal
into law some or all of the principles currently contained in the with disputes over salaries and wrongful dismissal. This means
Tripartite Guidelines on Fair Employment Practices in relation to that disputes will first go through a process of conciliation
workplace discrimination. With the introduction of Singapore’s and mediation, and only if these are unsuccessful will they be
first workplace discrimination legislation and a newly formed determined judicially. A new workplace discrimination tribunal
discrimination tribunal, the TGFEP will finally receive their will be established to decide such cases.
missing teeth – find out what it means for your business
operations in Singapore. The Prime Minister also confirmed that the new legislation will
protect employees not only on the ground of nationality or race,
Article: but also on other grounds covered by the TGFEP including sex,
In his 2021 National Day Rally speech, Prime Minister Lee Hsien age, race, religion and disabilities.
Loong announced that the Singapore Government will enshrine
into law some or all of the principles currently contained in the We still do not have all the details of the proposal and a number
Tripartite Guidelines on Fair Employment Practices (the “TGFEP”). of questions still remain including:
A draft bill is expected to be announced in the first half of 2022.
• Will the new law only prohibit discrimination or will it also
extend to harassment?
The TGFEP are a set of best practice guidelines for Singapore
employers to adopt to prevent discrimination at the workplace. • Will the protections extend to grounds not currently
They cover a range of topics including recruitment, HR systems, recognised by the TGFEP such as sexual orientation?
training and reward. At their heart is the principle of hiring and
• How will the new law interact with the wrongful
developing a Singaporean core, which encourages employers
dismissal guidelines?
to make reasonable efforts to attract and consider local
Singaporeans for job positions on merit and for training and • How will the workplace discrimination tribunal be
development purposes. constituted and what remedies can an employee
seek from their employer?
Singapore does not currently have any legislation which
expressly prohibits workplace discrimination per se. While Regardless of the answers to these questions, the introduction of
there is some limited protection in a handful of narrow areas Singapore’s first workplace discrimination legislation will expand
(wrongful dismissal, pregnancy dismissal, retirement and re- the scope of protections for employees in Singapore. Employers
employment, and enlistment discrimination), there are no direct should start preparing for change now by reviewing their existing
remedies available for employees who have been subjected discrimination and harassment policies to ensure they not only
to discrimination on the grounds of attributes which may be meet the minimum requirements under the current Singapore
protected in other countries such as race, nationality, ethnicity, legal framework, but that they actively promote and protect
religion, gender, disability or sexual orientation. attributes prescribed by the TGFEP such as gender, race, nationality,
age, religion and disability. Multinational corporations may already
With the introduction of legislation, the TGFEP will finally receive be doing this in practice as they tend to adopt global standards
their missing teeth. Employees in Singapore will for the first time which go above and beyond the local minimum legal framework.
likely be able to take legal action directly against their employers
for discrimination that happens in the workplace. 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.
7
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A Corporate Governance “Boost” –
The MAS Revises Guidelines for
Financial Institutions and Insurers*
By Andrew Robinson
Synopsis: Compliance with the Guidelines
On 9 November 2021, the Monetary Authority of Singapore • Compliance with the Principles is mandatory for FI’s listed
issued revised Guidelines on Corporate Governance for on the SGX.
Designated Financial Holding Companies, Banks, Direct Insurers,
• For non-listed FIs including banks, Tier 1 insurers and certain
Reinsurers and Captive Insurers which are Incorporated in
other designated FIs, the MAS expects full compliance with the
Singapore. The revised Guidelines will take effect throughout
Principles (save for Principles 11 and 12).
2022 and are designed to provide Singapore with a further
improved business environment, coupling high governance • For non-listed FIs including Tier 2 insurers and certain other
standards and greater corporate management flexibility. designated FIS, the MAS expects the Principles to be observed
or for an explanation to be provided in the annual reports or
A brief history of the Code of Corporate the FI’s website.
Governance
In addition, the MAS expects every FI to observe the Provisions
Singapore’s Code of Corporate Governance was first issued on
and Additional Guidelines, on the same “comply-or-explain” basis.
21 March 2001. After revisions conducted in 2005 and 2012, in
August 2018 the Monetary Authority of Singapore (the “MAS”)
• For non-listed captive insurers, special purpose reinsurance
accepted the newly-established Corporate Governance Council’s
vehicles, marine mutual insurers and run-off insurers, while
recommendations to announce a new “2018 Code” and
the Guidelines continue to apply, there is no requirement
accompanying Practice Guidance.
to explain any variance from the Principles, Provisions and
Additional Guidelines.
The latest Guidelines on Corporate
Governance for Financial Institutions
Expectations in the Guidelines relating to disclosures in annual
Following a consultation process from May – June 2021, on
reports are effective from 1 January 2002. All other expectations
9 November 2021 the MAS issued its revised “Guidelines
are effective from 1 April 2022, save for the Provision
on Corporate Governance for Designated Financial Holding
(noted below) regarding the independence of an FI’s board and
Companies, Banks, Direct Insurers, Reinsurers and Captive Insurers”
which is effective from 31 December 2022.
(collectively “FIs”). The Guidelines incorporate the Principles
and supporting Provisions of the 2018 Code of Corporate
What does this mean for FIs?
Governance, together with various Additional Guidelines added
• The FI’s board should have a balance of independence and
by the MAS to encourage better association with international
diversity of thought, including the Provision that
standards and industry good practices by expanding on the
non-executive directors make up the majority of a board,
responsibilities of the board of directors of each FI:
and that the board is majority independent where the
chairman is not independent.
“The Board should review the FI’s corporate governance
framework, culture and conduct framework, business objectives • There is a clear division of responsibilities between leadership
and strategies on an annual basis, or more frequently as and management, with the Provision that a chairman and a
appropriate, to ensure they remain relevant and effective” 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.
8WWW.DLAPIPER.COM
• There is a formal and transparent process for appointment Summary
and re-appointment of directors, with the Provision that The revised Guidelines are designed to provide a more flexible
a Nominating Committee may be established by the and less prescriptive environment for corporate governance,
FI for oversight. while bringing improved cohesion and consistency to the
marketplace, and should ensure Singapore business platform
• There is likewise a formal and transparent procedure for
continues to offer further and better performance and
director and executive remuneration, including the Provision
competition, regionally and globally.
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.WWW.DLAPIPER.COM
Authors
Sammy Fang David Smail
Partner Of Counsel
+852 2103 0649 +65 6512 9564
sammy.fang@dlapiper.com david.smail@dlapiper.com
Ray Xu Matthew Shaw
Consultant Of Counsel
+86 21 3852 2082 +65 6512 6062
ray.c.xu@dlapiper.com matthew.c.shaw@dlapiper.com
Apoorvaa Paranjpe Andrew Robinson
Senior Associate Senior Associate
+65 6512 9595 +65 6512 6061
apoorvaa.paranjpe@dlapiper.com andrew.robinson@dlapiper.com
Key contact
Maurice Burke
Partner
+65 6512 9560
maurice.burke@dlapiper.com
Editorial team
Rishikeesh Wijaya
Associate
+65 6512 9515
rishikeesh.wijaya@dlapiper.com
10WWW.DLAPIPER.COM DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at dlapiper.com. This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. Copyright © 2022 DLA Piper. All rights reserved. | 14 February 2022 | A12727-7
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