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The Singapore- Joint Venture: Truly Symbiotic Latham & Watkins reviews the special business relationship.

- HOW DO YOU EXPLAIN cial institutions and private equity funds, allowing INDIA’S INCREASINGLY CLOSE relativelyEast Asian easy hub access for many to capital law firms, raising , and investfinan- BUSINESS RELATIONSHIP WITH ment. SINGAPORE? In 2012, India introduced its general anti-avoid- Singapore has proved to be the destination of ance rules (GAAR) in a bid to tax offshore trans- choice for many Indian corporates doing business action structures, followed by a revised double- overseas, though historically other markets such taxation avoidance agreement (DTAA) between as and New York have also had close ties Singapore and India in late 2016, which provided greater certainty regarding tax treatment of funds - sa. These changes have further helped Singapore toflowing become into a destination India through of choice Singapore for several and vice Indian ver Foreign investors investing multinationals. in India, particularly in the WHAT IS THE EFFECT OF THE SINGAPORE-INDIAN DTAA? technology industry, prefer to The agreement puts Singapore on par with India’s other favourite offshore tax jurisdiction – – invest Singapore holding which has a similar treaty to the tax on fund companies holding Indian In addition to the certainty provided by the tax treaty,flows between Singapore India also and has Mauritius. a top-class regulatory assets. framework and support from managers, service pro- viders and initiatives by the government. To set up in Singapore a business can’t just put up a name plate: there are substantive requires. For example they need to have people on the ground and with India. With its highly developed and success- they need to have the requisite regulatory approvals. ful free economy, low taxation, proximity with respect to how Indian tax authorities may view and sizable Indian population, Singapore’s trade Singapore-centredThis has had the benefit transactions. of creating greater certainty to the Indian subcontinent, numerous direct flights In addition, Singapore has become the South ties with India have flourished.

120 India Unleashed 2017 RAJIV GUPTA SHARON LAU NICK BENSON

WHAT HAS SINGAPORE DONE TO HAVE WHY DOES SINGAPORE WIN AS AN BECOME A PREFERRED HOME FOR ARBITRATION VENUE FOR INDIANS? INVESTMENT FUNDS FOCUSING ON INDIA? The Singapore International Arbitration Centre Two core factors driving the funds industry in (SIAC) has done an excellent job of marketing itself Singapore are: to international companies, particularly in India, 1. Due to the DTAA, Singapore has become an as the forum of choice for arbitrations. increasingly viable, and in some cases more Singapore is perceived as a ‘neutral’ dispute attractive, jurisdiction for funds vehicles investing resolution forum for India – both by Indian com- in India. Singapore is not perceived to be a tax panies as well as foreign investors. Singapore’s cul- haven and investors consider a Singapore tural and geographic proximity to attrac- presence to be able to meet the “substance” test tive to Indian companies and its stellar reputation that is likely to be requiredunder GAAR by the tax as an arbitration centre, on par with locations such authorities in India. as or London, offers foreign investors a 2. Singapore introduced the Limited Partner- “neutral” forum for arbitration to avoid any local ship (‘LP’) business structure in 2009. This struc- bias. ture is based on the Anglo-Saxon limited partner- ship , which is the vehicle of choice for many WHY HAS SINGAPORE BECOME investors and is used in places such as the UK, the INDIA’S START-UP HUB? Channel and the . When companies are looking at forming a holding structure, Singapore has become a juris- amount of M&A into India via Singapore, and ex- diction of choice. Foreign investors investing in In- pandedThese other key relatedfactors ecosystems,have propelled such a assignificant banking, dia, particularly in the technology industry, prefer capital markets and arbitration. It has also helped to invest via Singapore holding companies holding attract a pool of available to various industries, Indian assets. Accordingly, many top companies in advisors, professionals and busi-ness services India have a Singapore holding company structure. in Singapore, further contributing to attracting investment.

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Other than the reasons highlighted above, the WITH INDIA’S BIGGEST START-UPS following reasons have also contributed to Singa- OPERATING VIA SINGAPORE HOLDING pore being the jurisdiction of choice for companies STRUCTURES, ARE THE TWO COUNTRIES in India: COMPETING ON SOME LEVEL, AND COULD SINGAPORE LOSE OUT IF INDIA FIXES - ITS DOMESTIC DISPUTE RESOLUTION ment permitted in Singapore; and OR STREAMLINES ITS CORPORATE 1. The ease of investment and fund flow move REGULATIONS? 2. Indian rules do not permit direct listing of an India and Singapore have developed a mutually ben- Indian company outside India. The ADR scheme In- - dia has proposed has still not been enforced in full, ing, India and Singapore have a symbiotic relation- awaiting further regulatory action. eficial relationship in select areas. Generally speak

ship. India gets significant amount of foreign direct

122 India Unleashed 2017 investment (FDI) from Singapore, which the Indian Singapore Stock Exchange (SGX) does, however, for India, since Singapore is a regulated jurisdiction, percentage of offshore bonds from India. wheregovernment the funds is very are focused subject on. to disclosureIt is also beneficial and regu- still remain the default choice for a very significant lation, offering comfort to the Indian government. While a number of funds are beginning to register themselves as an AIF (alternative investment fund) in India, which gives them access to onshore funding The Singapore Stock Exchange from Indian investors, however, as most funds have a (SGX) still remains the default in India through their Singapore entities. choice for a very significant pan- focus, a significant number of funds invest- ly in the short to medium term. While there have percentage of offshore bonds beenThis a number approach of isreforms unlikely in to India, change many significant aspects in India still remain regulated. In contrast, Singa- from India. controls, making it a favourable environment for doingpore permits business. easier flow of capital and exchange Singapore is also a lower tax jurisdiction than There has been a big push by the Indian gov- India. ernment for companies to consider issuing masala In addition, Singapore has been an attractive bonds, but because of issues such as Rupee con- place for listing of business trusts, such as infra- vertibility and high hedging costs, an alternative structure investment trusts (InvITs) and real es- structure of USD bonds issued by a Singapore or tate investment trusts (REITs). However, India has Mauritius SPV with back-to-back masala bonds now permitted InvITs and REITs to list in India. or non-convertible debentures (see transaction structure chart on previous page) seems to be be- HAVE THERE BEEN ANY CHANGES coming popular. IN SINGAPORE COMPANY LAWS The Singapore government introduced a bond RECENTLY? grant scheme in January 2017, pursuant to which it Singapore is a stable and mature jurisdiction. would provide a grant to an issuer from any ASEAN With respect to its company laws and regulations, country and certain other countries, including In- there have been recent changes, aimed at creating dia, considering listing of their bonds on the SGX, a positive investment environment. None of these and reimburse expenses related to their bond of- have been adverse to Indian companies. fering of up to S$400,000. - From 1 June 2017 onwards, another incentive nies law to permit dual class shares, and this seems will be made available to potential issuers in the to haveSingapore gained has traction also finally with amendedthe Singapore its compa Stock bond market in Singapore. The Monetary Author- Exchange (SGX), which has launched a public con- ity of Singapore (MAS) has announced the imple- sultation to seek feedback on such structures. mentation of the green bonds grant scheme, which

WHAT ABOUT THE FUTURE - offerings that comply with international green OF INDIAN COMPANIES USING bondis applicable standards to offerings– on the Singapore of qualified Stock green Exchange. bonds SINGAPORE TO ACCESS THE First time and repeat issuers will be eligible for a CAPITAL MARKETS? grant of up to S$100,000. - In India, real estate developers could be eligible cant reforms in capital markets in recent years to for green bonds by having green buildings, and persuadeThe Indian more government companies has to raise introduced capital domes signifi- tically in India and not look internationally. The they can qualify for green standards. n many companies could benefit if

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ABOUT THE AUTHORS RAJIV GUPTA NICK BENSON T: +65.6437.5467 T: +44.20.7710.1054 E: [email protected] E: [email protected]

Rajiv Gupta is Global Head of Latham & Wat- kins’ India Practice and has extensive experience - - rienceNick structuring Benson is and a leading negotiating legal private advisor capital in the cluding representing issuers and underwriters in investmentfield of investment vehicles funds. on behalf He has of leadingextensive interna expe- bothin a wideUS and range international of corporate securities finance transactions, matters, in tional sponsors and investors, with a particular particularly in initial public offerings, private focus on , Asia and the Middle East. placements, high-yield and investment-grade debt offerings, offerings of convertible debt, equity- alternative assets spectrum, including private eq- uity,Mr. , Benson’s practice real servesestate clientsand hedge across funds. the and exchange offers. His expertise includes: linkedMr. andGupta has also products, been involved structured in variousfinance l mergers and acquisitions, restructuring and mer- l chant banking transactions, spin-offs and joint l Fund Formation ventures. l Bespoke Investment Mandates l Co-Investments Secondaries SHARON LAU l T: +65.6437.5464 Management Team Spin-outs and Start-ups E: [email protected] FIRM Investment PROFILE Advisor Structuring and Operations Latham & Watkins combines deep industry knowl- edge and technical expertise to provide clients with innovative solutions to their most complex Sharon Lau is the Office Managing Partner of legal and business challenges. From a global plat- whereLatham she & represents Watkins’ Singaporeboth issuers office. and underwrit Ms. Lau’s- form, more than 2,400 Latham work as an erspractice in international focuses on corporate securities finance transactions, transactions and integrated partnership focused on providing excel- public and private mergers and acquisitions where lent client service with a collaborative approach. Latham offers clients: investors and corporates. l - she represents private equity sponsors, financial forming transactions and in defending bet-the- Deepcompany experience disputes in successful enterprise-trans l - l Ms. Lau’s corporate finance expertise includes: tive and sound commercial advice l l A solutions-based approach, providing innova- l Initial public offerings and private placements - standing culture geared toward establishing changeHigh-yield offers and investment grade debt offerings Optimallyand nurturing sized long-term teams supportedclient relationships by a long Consent solicitations, tender offers and ex Ms. Lau’s mergers and acquisitions expertise SINGAPORE OFFICE includes: For more than 20 years, Latham have advised clients on complex l l l Joint ventures and other private investments experiencecorporate, financeacross andmany regulatory industries, matters. including: The Buyouts, public takeovers and privatizations Singapore office has developed a breadth of VentureShe also capital advises investments on regulatory compliance and metals, communications, internet and digital issues. media,financial information services, oil technology, and gas, hospitality,power, mining gaming and

124 India Unleashed 2017 and leisure, as well as entertainment, sports and With more than two decades of experience media. Awarded “Most Innovative Firm in Asia- in the country, Latham lawyers have advised on Financial Times, Latham takes pride more than 200 transactions in India, with a com- in providing innovative advice to corporations, bined value of more than US$150 billion. Clients Pacific” by the - financialWith extensive institutions, experience government in South agencies and South and- topbenefit quality from local Latham’s and international longstanding legal history advice work on eastother Asia, significant Latham players. lawyers in Singapore represent manying alongside of the country’s leading lawlandmark firms intransactions. India, delivering Asian, US, European and Middle Eastern compa- Members of Latham’s India Practice routinely nies conducting business across the region, and act handle transactions governed under both English for Asian companies in their direct investment ac- tivities and capital markets transactions globally. Latham’s key practice areas in Singapore Tamiland US and law, Kannada. and the firm includes lawyers who are include: proficient in , Gujarati, , Punjabi, l l l B a n k i n g l Capital Markets l Entertainment, Sports & Media Latham is one of the largest and l Mergers & Acquisitions l Outsourcing most experienced international l Private Equity l Project Development & Finance law firms advising both domestic l Public Company Representation l Restructuring, Insolvency & Workouts and international clients on l Structured Finance Technology Transactions Venture Capital & Investment Funds their transactions in India and INDIA PRACTICE globally. Latham is one of the largest and most experienced and international clients on their transactions in international law firms advising both domestic inIndia Asia, and Europe, globally. the The Middle firm Eastboasts and more the US,than rep 50- India Business Law Journal has named Latham a resentingIndia focused clients lawyers on ground-breaking based in Latham’s transactions offices in India. Latham’s India Practice provides clients Latham’s India Practice is top ranked in Chambers market-leading advice across a number of prac- Asia-Pacific.leading foreign law firm for India transactions and tices, including: l 1 for capital markets in India in Chambers l Asia-PacificPractice 2017,head acknowledgedRajiv Gupta was for named his “experience as a Band l B a n k i n g across a broad range of capital markets transac- l Capital Markets tions” and cited for being “the most prominent US l Litigation Capital Markets lawyer for India work.” Mr. Gupta l Mergers & Acquisitions was also named Capital Markets Lawyer of the l Private Equity Year by The American Lawyer at the ‘Asian Lawyer l Project Development & Finance Emerging Markets Awards’ in 2015. Public Company Representation Technology Transactions

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