MCI (P) 041/02/2020 issn 0219 – 6875 KDN PPS 1867/10/2015(025605)
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培育商事仲裁法律后备人才 托起未来商事仲裁法律之星 18th CIETAC CUP INTERNATIONAL COMMERCIAL ARBITRATION MOOT COMPETITION Invitation of Judges for the CIETAC Cup
Dear Friends and Colleagues in Arbitration,
We are pleased to invite you to act as an arbitrator in the 18th CIETAC Cup International Commercial Arbitration Moot Com- petition (“CIETAC Cup”). This year, the oral hearings will be conducted online during 15th-20th November, 2020.
CIETAC Cup is organized by China International Economic and Trade Arbitration Commission (“CIETAC”), receiving support from Vis Moot, the ICC, the HKIAC and SIAC. Since 2000, CIETAC Cup has been successfully held 17 C
M times. Last year, the 17th CIETAC Cup attracted more than 700 contestants from over 60 prestigious law schools in
Y Mainland China, and over 150 arbitrators, lawyers and experts from over 10 countries and regions to seat as judges.
CM The CIETAC CUP aims at fostering the study of international commercial arbitration and training future leaders in the MY
CY area of alternative dispute resolution by introducing international moot court, improving students’ legal accomplish-
CMY ment, publicizing international arbitration and promoting cooperation and exchanges between domestic and foreign
K arbitration communities. The CIETAC Cup is the first official Pre-Moot of the Willem C. Vis Commercial Arbitration Moot Court, using the same set of case and arbitration rules. The competition is in English.
Those of you who Have interest in international commercial arbitration moot competition;
Have relevant experience in international commercial arbitration, and are able to handle English cases profes- sionally; and
Would like to perform the duty earnestly and diligently as an arbitrator during the competition.
are welcome to be the 18th CIETAC Cup Arbitrator (Judge). Please visit moot.cietac.org to register and find the calendar of events. If you have any inquiry, please feel free to email us at [email protected].
We hereby sincerely invite you to join us this year and look forward to seeing you online this November.
Yours,
China International Economic and Trade Arbitration Commission
Website: moot.cietac.org CONTENTS
8 Biotech IPO surge a shot in the arm for Hong Kong
to the new year’s post-pandemic and comprehensive the latest changes in COVER STORY challenges. start 2021 strongly? updates on latest laws. By Elizabeth Beattie Legal networks like developments from 16 Lex Mundi are here subject matter Plus: State of the Plus: to help. experts in Singapore, - Carey Olsen Market 2020 - Wong & Partners the Philippines and - Harneys As a pandemic year 25 Vietnam. winds to a close, ALB Guide To businesses in Asia FEATURES Employment Law 44 BRIEFS are hopeful that With the COVID-19 COVERAGE: 2021 will be a year 12 pandemic still yet ALB Philippine, 3 of recovery and Dealmakers of to be contained, it’s Korea Law Awards The Briefing possibility. With Asia 2020 been a difficult year The winners, quotes, a vaccine on the In a pandemic- for businesses with photos and more 4 horizon and talk of hit year when retrenchments, and from two of ALB’s Forum borders reopening, dealmaking was in some case office biggest law awards the picture is more of a challenge closures. As staff in the region. 5 remarkably brighter than usual, certain increasingly work Deals than it was just a few lawyers stood out from home, or adapt 52 months ago. Lawyers for their innovation, to more flexible ALB Guide To 6 in jurisdictions determination and working options, The Cayman Islands Appointments like Hong Kong, focus on client needs. the impact of the 2020 has Singapore and ALB spotlights some past year is likely undoubtedly 9 Malaysia have of the standout to be long lasting been a turbulent Q&A shown their ability to dealmakers in the of businesses, and year — but in the adapt and continue year gone by. with this comes Cayman Islands 10 serving clients during new complexities it has also been a League Tables difficult times. But 22 to navigate for year of progress as 2021 rolls around, Network to get work employment and development. Plus: the pressure will be How can law firms hit lawyers. This This guide provides - The Red Flag on law firms to rise the ground running guide includes a handy update to Group
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 1 It’s time to celebrate the resilience. And just HEAD OF LEGAL MEDIA BUSINESS, like that, 2020 is almost over. For many months, it ASIA & EMERGING MARKETS felt like this year would go on forever, but here we Amantha Chia are in December, with the festive season ahead of [email protected]
us and multiple vaccines on the horizon. Suddenly, MANAGING EDITOR it feels like we are able to look forward again, and Ranajit Dam that too with some optimism. [email protected] But when we look back on 2020, it is important that we focus less on the struggles we all underwent JOURNALIST to adapt to the so-called “new normal,” and instead Elizabeth Beattie take heart from the toughness we showed during [email protected] the course of a most unusual year. We should take EDITORIAL ASSISTANT pride in the fact that instead of letting Aparna Sai a pandemic slow us down, we moved [email protected] seamlessly to working from home, COPY & WEB EDITOR adeptly juggled domestic and profes- sional priorities, and kept ourselves Rowena Muniz [email protected] laser focused on helping our clients. The pandemic will pass, but the reali- SENIOR DESIGNER sation that we are far more resilient John Agra than some of us had given ourselves [email protected] credit for will hold us in good stead for TRAFFIC/CIRCULATION MANAGER many years to come. Rozidah Jambari This is pretty much how we feel [email protected] over here at Asian Legal Business. While the year tested our mettle in SALES MANAGERS the face of fast-changing circum- Amy Sim stances, I’m proud to say we rose to Sales Director, SE Asia, India and Japan (65) 6870 3348 the challenge. We demonstrated our [email protected] adaptability in multiple ways – from Felix Cheng launching a series of online events to Sales Manager introducing new ways of delivering (852) 2843 6943 [email protected] editorial content. Our commitment to Krupa Dalal RANAJIT DAM our readership and our clients remained unwavering. Sales Manager Managing Editor, A new year brings new opportunities and new ideas (91) 22 6189 7087 Asian Legal Business – so expect more new initiatives from our end – but [email protected] Thomson Reuters the resilience will stay the same. Romulus Tham Delegate Sales Executive Let me also take this opportunity to wish you (65) 6870 3035 and your loved ones a Merry Christmas and a very [email protected] Happy New Year. May 2021 bring renewed hope and Steven Zhao joy to all. Account Manager (86) 10 6627 1360 [email protected] Yvonne Cheung Sales Director, Key Accounts and South China (852) 2847 2003 [email protected]
SENIOR EVENTS MANAGER Julian Chiew Asian Legal Business is available by subscription. Please visit www.legalbusinessonline.com for details. [email protected] Asian Legal Business has an audited average circulation of 11,402 as of 30 September 2016.Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business AWARDS MANAGER can accept no responsibility for loss.
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2 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM THE BRIEFING: YOUR MONTHLY NEED-TO-KNOW IN THE NEWS LAW FIRM LEADERS GUARDED ON ECONOMY, Clifford Chance has launched a global environmental, social, and BULLISH ON THE FUTURE governance (ESG) board that will consolidate the firm’s ESG work. Thomson Reuters Institute recently The board aims to work together released the 2020 Law Firm with Clifford Chance groups that Business Leaders Report. The report are focused on matters involving found that, among others, economic Percentage of non-lawyer legal sustainability, renewable energy, concerns top the list of identified professionals have reported declining clean hydrogen, climate change, threats to profitability, but law firm mental health due to the pandemic. business and human rights and business leaders are also still keenly This is according to a survey of corporate governance. attentive to how their own staff legal staff conducted by technology members and the attorneys within company Athennian. their firm perform. Also, while firm business leaders are bullish on their future outlooks (over the next three years) but are quite guarded in terms LAWYER WELLBEING IS CRUCIAL Drop in total expenses for U.S. law firms in of future expenditures. And while the first nine months of this year, according controlling costs is a key concern TO LAW FIRM SUSTAINABILITY to the 2021 Citi Hildebrandt Client Advisory, for law firms, they appear hesitant A new report, Lawyer Wellbeing: released by Citi Private Bank Law Firm to consider outsourcing many key An Opportunity to Thrive for Group and Hildebrandt Consulting. functions, preferring to keep most Lawyers and Firms, from Acritas types of legal tasks in-house. finds that more than three- quarters of senior lawyers (77 IN THE NEWS percent) want to make changes QUOTE UNQUOTE in their professional life to reflect better work-life balance — a factor “I’M NOT QUITE that’s at the very heart of lawyer wellbeing. Most importantly, The International Chamber of SURE I KNOW WHAT more than one-fifth of senior Commerce (ICC) International OPACITY MEANS. lawyers (22 percent) said they Court of Arbitration has updated would leave their current firm its arbitration rules for 2021. IT PROBABLY if their new demands were not The new updates include the MEANS YOU CAN accommodated. The report found implementation of a protocol that law firms need to change for remote hearings and the SEE, RIGHT?” their approach to a legal market elimination of the requirement to where talent is increasingly Former New York City mayor Rudy Giuliani, provide the ICC with multiple hard representing outgoing U.S. president Donald mobile, and the need for firms to copies of documents, among other Trump in an election fraud case, trips over attract, engage, and retain top changes. “big words” in a Pennsylvania courtroom talent is even more crucial.
WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 3 BRIEFS
FORUM (such as billable targets, leverage ratio, use of technology and processes); • Developing a mechanism to encourage cross- selling through the sharing of profit from client introductions; and GOING BEYOND THE LAW • Building a culture within the firm that encour- ages lawyers to think outside of their own legal The recent push to compete with multi-disciplinary firms domain (which is already a challenge) to work like the Big Four has resulted in law firms planning their with the non-law services towards a coordi- nated client approach own forays into non-law services, and the pandemic has only accelerated that trend. However, experts feel that RAJESH SREENIVASAN, head of TMT, firms should consider their strategies carefully. Rajah & Tann Singapore Law firms seeking non-law services (such as legal technology service lines) to augment their core areas of expertise should always think of the types of synergy and value that the non-law service can BASED ON YOUR EXPERIENCE SO FAR, bring to the firm and its clients. A law firm special- WHAT KIND OF NON-LAW SERVICES ising in corporate matters may find little value in MAKE THE BEST FIT FOR LAW FIRMS investing in e-discovery and digital forensics solu- LOOKING BEYOND THEIR CORE AREAS tions. The trick is to find the right fit that would create the right synergy. For example, a firm that OF EXPERTISE? has a strong dispute resolution arm may well wish to invest in e-discovery solutions, so that it can both handle a larger volume of complex disputes, while achieving higher cost-efficiency for clients. Another ERIC CHIN, principal, Alpha Creates example would be a firm that is seeking to deepen Some law firms are starting to diversify their its investigations practice — a forensics arm would services outside of the legal industry. There are appear to be a right fit. At the same time, I would two ways firms are thinking about non-law services: urge all lawyers and law firms to bear in mind that (1) Legal service generators, (2) Legal service the adoption of legaltech is not an arms-race. Don’t enhancers. Legal service generators are essen- jump on the bandwagon just because everyone tially upstream services like business consulting, else appears to be doing so – remember always CHIN legal operations consulting, technology consulting, that law firms do not all have a static homogenous corporate advisory, infrastructure consulting, workflow and so your specific legaltech journey defence and commercial advisory and infrastruc- should augment the nature of your practice. I ture consulting services. These are areas of work would urge lawyers to think through their needs, that are the tip of the spear that would generate do their homework (learn about the solutions on potential flow of legal work to the law firm from the market), weigh their options, understand the services provided. Then there are also legal service limitations of new technologies (for example, artifi- enhancers like risk advisory, compliance, corpo- cial intelligence is far from perfect today), consider rate governance, forensic and technology services, their trade-offs in terms of time, cost and effort to SREENIVASAN and tax consulting services that enhance the legal adopt new technologies, so that they can ultimately service provided to clients. It’s the same strategy choose the right technology that will help them that the Big Four accounting firms have mastered augment and amplify their existing legal work- through years of building multidisciplinary prac- flow today and into the future, and bring greater tices. Ultimately, how firms execute their non-law efficiency and value to their firms and their clients. services and cross-sell into their legal practice will be the key determinant of success. Some consid- HANIM HAMZAH, regional managing partner, erations include: ZICO Law Network • Reassessing the key performance indicators At ZICO, we unbundled some of our non-core legal HAMZAH (KPIs) used to manage the non-law services. services and put these in different subsidiaries in Firms have carved out the non-law practices order to list ZICO Holdings a couple of years ago. The as separate entities because the KPIs required driver behind that was really to remain competitive, to manage a legal practice is different to the to be able to continue to provide value to our clients. KPIs required to manage non-law practices We realised there were non-core legal services,
4 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM BRIEFS very closely related to legal, which would perform services, and for the other parts — legal services better under different umbrellas, rather than under that can be commoditised — that can then be done the law firm because we wanted to focus the law in a separate umbrella. Those companies then have firm on providing high-value strategic legal advice. different capital structure and they’re more agile, And with the changing competitive landscape of because law firms typically need a good address, the legal industry there is a need to also change and a comfortable office and meeting rooms. But the way we do business. The client has changed for other types of services, that are not core legal, as well; the in-house budget has changed, not all but are related, those can be done out of alternative of their legal spending is allocated to law firms. premises and with different types of pricing struc- They have different providers and different solu- tures. At the end of the day, what is important is tions for their legal needs, driven mainly by price. staying close to the client and delivering solutions Because of this, as a law firm we had to look at our that best meet the needs of the client. Whichever strategy and concentrate on what we do best. As a structures used, maintaining excellent services law firm, we had to provide core high-value legal without diluting overall brand value is key.
DEALS
$1.67 BLN $1.3 BLN $1.3 BLN $1.3 BLN GDS Holdings’ Gaw Capital Partners- Embassy REIT’s Saudi Arabia PIF’s HK secondary listing led consortium’s acquisition of investment in Reliance Deal Type: ECM acquisition of Embassy TechVillage Retail Ventures Firms: O’Melveny & CityPlaza One Deal Type: M&A Deal Type: M&A Myers; Simpson Thacher Deal Type: M&A Firms: Bombay Firm: Davis Polk & & Bartlett Firm: Baker McKenzie Law Chambers; Wardwell Jurisdictions: China, Jurisdictions: China, Cyril Amarchand Jurisdictions: India, Hong Kong Hong Kong Mangaldas; Saudi Arabia Khaitan & Co; S&R Associates Jurisdictions: India, U.S.
$1.3 BLN $990 MLN $515 MLN $461 MLN New Oriental Education Frasers Centrepoint RemeGen’s HK IPO Simcere’s HK IPO & Technology’s Asset Management’s Deal Type: IPO Deal Type: IPO HK secondary listing acquisition of Firm: O’Melveny & Firms: Herbert Deal Type: ECM Asiaretail Fund Myers Smith Freehills; Firms: Conyers; Deal Type: M&A Jurisdictions: China, Jingtian & Gongcheng; Herbert Smith Freehills; Firms: Allen & Gledhill; Hong Kong O’Melveny & Myers; Jian Yuan Law Offices; Shook Lin & Bok Tian Yuan Law Firm; Skadden Arps Slate Jurisdiction: Singapore William Ji & Co Meagher & Flom; Jurisdictions: China, Tian Yuan Law Firm Hong Kong Jurisdictions: China, Hong Kong
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 5 BRIEFS
N&A FIRST ASIAN FIRM TO APPOINTMENTS INVEST IN REYNEN COURT Nishimura & Asahi, Japan’s largest law firm, has invested in Reynen Court, a curated “app store” allowing access to numerous legal- tech software applications via a secure platform. Following the deal, Nishimura becomes the first Asian law firm to DANIEL ABERCROMBY BABITA AMBEKAR JONATHAN CHAPMAN join the New York-headquartered LEAVING LEAVING LEAVING Weil, Gotshal & Manges DWF King & Wood Mallesons company’s investor consortium, JOINING JOINING JOINING which includes firms like Clifford White & Case CMS Ashurst Chance, Latham & Watkins and PRACTICE PRACTICE PRACTICE Orrick. Finance Corporate Finance Reynen Court’s platform allows LOCATION LOCATION LOCATION Nishimura to run cloud-based appli- Hong Kong Singapore Hong Kong cations in private clouds under the firm’s control, enabling testing and adoption of the latest legal technol- ogies while maintaining security and stability, and also localising global legal-tech products for the Japan and Asia markets.
ALLIOTT GLOBAL ALLIANCE MIKE CHIAM JONATHAN GOACHER CONNIE HENG LEAVING LEAVING POSITION EXPANDS APAC PRESENCE CNP Law DWF Head, Asia-Pacific JOINING JOINING PRACTICE Peter Doraisamy Hill Dickinson Finance Alliott Global Alliance, an PRACTICE PRACTICE FIRM NAME international association of law and Corporate Corporate Clifford Chance accounting firms, has increased its LOCATION LOCATION LOCATION presence to 15 countries in the Asia- Singapore Singapore Hong Kong Pacific region, following the addition of law firm members in Bangladesh, Hong Kong and Thailand. Hong Kong’s H.Y Leung & Co. and Thailand’s GPS Legal were recently admitted to the alliance. In Bangladesh, the alliance added IP and corporate firm Old Bailey Chambers. Alliott has also appointed Ning Zhu, managing partner of Chance Bridge Partners in China, as a member KYLE GABRIEL PETERS ED SHEREMETA KAEDE TOH of its Asia-Pacific Regional Advisory LEAVING LEAVING LEAVING Committee. As a committee member, K&L Gates Ropes & Gray Ropes & Gray Zhu will play a part in helping to JOINING JOINING JOINING develop and monitor the implemen- Peter Doraisamy DLA Piper Latham & Watkins PRACTICE PRACTICE PRACTICE tation of the alliance’s strategic plans Litigation Real Estate White-Collar Crime and will also help to foster innovation LOCATION LOCATION LOCATION in the region. Singapore Hong Kong Tokyo
6 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM BROUGHT TO YOU BY CIETAC
CIETAC/CMAC Hainan Arbitration Center Unveiling Ceremony Successfully held in Haikou
On September 8, 2020, the CIETAC/CMAC Hainan Arbitration Center Unveiling Ceremony, was held in Haikou, Hannan Province. Lu Pengqi, Vice Chairman of CCPIT, and Liu Xingtai, Member of the Standing Committee of the Hainan Provincial Party Committee and Secretary of the Political and Legal Committee, attended the opening ceremony and jointly unveiled the CIETAC Hainan Arbitration Center and CMAC Hainan Arbitration Center. Liu Cheng, Deputy Secretary and Secretary-General of the Political and Legal Committee of the Hainan Provincial Party Committee, Chen Wenping, Deputy Secretary of the Party Leadership Group and Vice President of the Hainan Higher People’s Court, leaders from Hainan Provincial Department of Justice, Hainan Provincial Department of Commerce, Hainan the Provincial Political and Legal authorities The China International Economic and Provincial Department of Tourism, Culture, Radio, have always cared about and supported the Trade Arbitration Commission (CIETAC) Film and Sports, Hainan Provincial Intellectual development of arbitration and mediation, 6/F, CCOIC Building, 2 Huapichang Hutong, Property Office, Hainan Provincial Department Xicheng District, Beijing 100035 and actively promoted the establishment of of Industry and Information Technology, Hainan T: 010 8221 7788, 6464 6688 an alternative commercial dispute resolution Provincial Federation of Industry and Commerce, F: 010 8221 7766, 6464 3500 mechanism. Creating an internationalized Hainan Provincial No. 1 Intermediate People’s E: [email protected] and convenient business environment ruled Court, Hainan Provincial No. 2 Intermediate W: www.cietac.org by law, and building a comprehensive dispute People’s Court, Haikou Municipal People’s resolution mechanism that integrates and Government, Haikou Municipal Intermediate coordinate litigation, arbitration, and mediation People’s Court, Haikou Maritime Court and other and CMAC establish arbitration centers in Hainan is an urgent need for building a high-quality departments, and more than 200 representatives to invest their dispute resolution experience Hainan Free Trade Port. The establishment of from the Hainan Lawyers Association, arbitration and high-quality legal resources in Hainan, to an arbitration center in Hainan by CIETAC and institutions, industrial associations, universities, serve Hainan Free Trade Zone and Free Trade CMAC will help bring the rich domestic and inter- law firms, enterprises, and CCPIT systems along Port’s commercial and maritime activities, and national arbitration resources, mature arbitration the coast and rivers witnessed this important to provide high-quality and efficient arbitration management experiences, and arbitration rules moment. Wang Chengjie, Deputy Director and and related legal services that are proper for and practices that are in line with international Secretary General of CIETAC presided over the the opening economy of Hainan. It is a concrete standards into Hainan, and will help further unveiling ceremony. measure taken by CCPIT, CIETAC and CMAC optimize the alternative dispute resolution to implement the central government’s major mechanism and improve the construction of a Lu Pengqi, Vice Chairman of CCPIT, stated in his strategic deployment on the construction of legal business environment for the Hainan Free speech that as China’s largest special economic Hainan and serve Hainan to build a higher- Trade Port. It is hoped that the CIETAC/CMAC zone, Hainan had a special status and role in the level open economy. Then, on behalf of CCPIT, Hainan Arbitration Center will actively utilize their overall situation of China’s reform and opening Vice Chairman Lu Pengqi put forward several professional advantages and strive to provide up policy and socialist modernization, and suggestions and expectations: the First is to give fair, just, efficient and convenient international had undertaken a major historical mission. We full play to the brand advantage and focus on dispute resolution services for the commercial believe that under the strong leadership of the serving the development of Hainan. The second entities of Hainan Free Trade Port to carry out Party Central Committee and the State Council, is to strengthen cooperation and jointly build an foreign cooperation, and strengthen exchanges with the joint support and participation of all international dispute resolution mechanism. The and cooperation with relevant organizations, to sides across the country, Hainan, through its third is to proactively provide services to enhance work together, and jointly make due contribu- own promotion of open practice and innovative legal risk response and resolution abilities of tions to creating an international and convenient practice, will have a bright and promising future, the entities. The fourth is to actively explore and business environment ruled by law. and will play an increasingly important role in the innovate, and continuously improve service capa- comprehensive deepening of reforms and the bilities and standards. Subsequently, under the chairmanship of new system and new pattern of opening up in Chen Hongliang, Vice Chairman of the Hainan the new era of China. The opening up of Hainan Liu Xingtai, Member of the Standing Committee Provincial Committee of CCPIT, Wang Chengjie, and the construction of a free trade port are of the Hainan Provincial Party Committee and Deputy Director and Secretary General of CIETAC, inseparable from international and professional Secretary of the Political and Legal Committee, and Gu Chao, Deputy Director and Secretary legal services. The construction and improvement congratulated CIETAC and CMAC for the estab- General of CMAC, respectively represented of alternative dispute resolution mechanisms lishments of Hainan Arbitration Center. He their Hainan Arbitration Center, signed the such as arbitration and mediation is an important pointed out that the Hainan Provincial Party cooperation agreements with Hainan Provincial part of the business environment. Today, CIETAC Committee, the Provincial Government, and Lawyer Association.
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 7 BRIEFS BIOTECH IPO SURGE A SHOT IN THE ARM FOR HONG KONG
As Hong Kong’s capital markets continue to have a strong year, one trend has been clear: The growing number of listings by Chinese biotech and biopharma companies. The past few weeks have seen a number of IPOs for example the “market cap of U.S. and ening its “market position in the biotech/ raising more than $300 million each, China pharma/healthcare companies healthcare section,” they add. including Antengene Corporation, is around $5.5 trillion and $1.5 trillion, According to both Emsley and Xie, Simcere Pharmaceutical Group, JHBP respectively,” say Emsley and Xie. over time the market can expect to see (CY) Holdings and Everest Medicines. Both factors lead to more “VC/PE more China-based institutional inves- In September, Charles Li, the CEO investing into this industry and then tors growing “more sophisticated,” with of bourse operator HKEX, said the more potential listings/fund raising for other investor groups focusing on phar- exchange will surpass the Nasdaq as these companies,” they say. maceutical and healthcare companies the world’s largest biotechnology stock According to the duo, more interna- in different stages “depending on their trading and fundraising centre within tional pharma and healthcare companies risk appetite.” the next 5 to 10 years. Given the track are viewing China as their next strategic From a regulatory perspective too, record of Hong Kong so far, that will not move, with the size and the needs of the there could be more specific guidances be surprising: In just two years, it has China market proving a hot selling point. targeting companies focusing on some grown its reputation as a global hub “During the evolvement/transfor- types of cutting-edge therapeutic areas for biotech listings, encouraged by the mation process, the industry would be — “cell and gene therapy,” for example. modernisation of stock market rules to able to attract more analysts, which But this isn’t likely to be the only regu- help start-ups raise capital. In particular, in turn facilitate investor education,” latory development likely to be carried industry watches credit the introduction Emsley and Xie say. out in order to ensure optimal market of Chapter 18A in 2018, which allowed HKEX will be the natural “first conditions for investors and businesses. the listing of pre-revenue biotech choice” for pre-IPO Chinese pharma In order to be truly effective, regu- companies in Hong Kong. and healthcare companies when it lations are expected to keep pace with But there are other market factors comes to public fund raising “due to a the transformation and evolution of which contribute to supporting this relatively stable regulatory framework, the sector, say the lawyers noting that development, say Matt Emsley, Herbert i.e. certainty (compared to the U.S.) and timely responses should be provided to Smith Freehills managing partner for more and more sophisticated Chinese the market and business stakeholders China, and Stanley Xie, Herbert Smith investors in this sector over time (who in this industry. Freehills Kewei joint operation partner. are more familiar with the local market),” While there’s certainly more devel- “Government support/favourable poli- say the lawyers. opments likely, it’s hard not to see the cies for Chinese innovative pharma HKEX recently announced that current burst of interest as due, at least in companies to raise their funds,” is one some eligible 18A companies will be part, to the global COVID-19 pandemic — benefit, another is the “remarkable included in the Stock Connect, and particularly given heightened awareness growth potential (size and number of this is likely to only encourage investor around healthcare and medical services. pharma/healthcare companies in China interest going forward, both in terms of Lawyers feel the pandemic has comparing to the overall spending (and facilitating mainland investors to “invest provided a boost to the healthcare fast growing spending potential) on in 18A companies going forward,” while industry. “Non-COVID clinical trials can healthcare by Chinese people,” particu- also serving to attract more companies proceed in a relatively normal way in larly when compared against the U.S., to raise funds in HKEX, and strength- China comparing to the rest of the world, which gives certain Chinese companies an edge against their overseas peers,” they say.
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Q&A ‘LAWYERS PLAY A FUNDAMENTAL ROLE IN CONDUCTING DILIGENCE’ Archana Kotecha is the Hong Kong-based CEO and founder of The Remedy Project, a social enterprise that develops greater protection for vulnerable workers and identifies exploitation risks. She talks to Asian Legal Business about how the project can support companies’ broader human rights due diligence efforts, and the role lawyers should play.
ALB: Tell us a bit about your career, and operationalising R&M; (iii) recognise how you came to set up the Remedy the specific vulnerabilities of migrant Project? workers and be gender sensitive; and KOTECHA: After studying law and (iv) contemplate the remediation mech- qualifying as a barrister in the UK, anism as both a proactive and preven- I practised corporate law for seven tive mechanism that supports a compa- years before transitioning into human ny’s broader human rights due diligence rights. I moved to Hong Kong 11 years efforts of identifying, mitigating and ago, and for seven years I served as the preventing risk. head of legal and Asia region director for Liberty Shared, an innovative not- ALB: What can lawyers do to help their for-profit working to disrupt human clients be vigilant against exploitation? “Having engaged with exploitation. The Remedy project was KOTECHA: Understanding risk is critical formal judicial mechanisms, born out of my work at Liberty Shared and this in particular underscores the I became painfully aware of their and represents a natural progression need for (i) a deep understanding of the limitations and the growing need in my search for optimum and innova- client’s business and potential exposure, to find mechanisms that offer tive methods of making justice more the sector of operation, employee profiles a degree of complementarity to accessible to those being exploited or and any commodities involved; (ii) a judicial pathways.” those who are vulnerable to exploi- human rights due diligence approach tation. Having engaged with formal ARCHANA KOTECHA to identify risks. Next comes the crit- judicial mechanisms, I became pain- ical stages of mitigating the risk and fully aware of their limitations and the taking measures to prevent recurrence growing need to find mechanisms that of these. The risks must be understood offer a degree of complementarity to as potentially legal, financial and repu- judicial pathways. I have decided to tational risks and therefore be addressed focus on the provision of remedial solu- ALB: Can you tell us about the remedial by all relevant business functions; and tions in global supply chains particularly guidelines you offer companies — and (iii) human trafficking, forced labour and within the framework of migrant workers how these are applied across sectors child labour are serious criminal offences rights’ protection and corporate human and jurisdictions? and are criminalized very widely with rights due diligence. With a growing KOTECHA: The Operational Guidelines criminalization extending to aiders and brood of modern slavery compliance for Business on Remediation of Human abettors. With the ever growing regula- legislation and mandatory human rights Rights Grievances are offered in partner- tory web that is becoming more focused due diligence legislation on the cards in ship with the International Organisation on sanctions for non-compliance, it Europe in 2021, The Remedy Project is for Migration (IOM). Whilst broadly appli- would be remiss not to ensure that every proposing remedial solutions that will cable, these guidelines have additional aspect of the company’s business has in allow a diverse group of stakeholders resources on the palm oil and electronics place the right systems and protocols to work together towards achieving a industries in Malaysia – a destination to identify risks and address these in a better ecosystem of work for the vulner- country for migrant labour in Southeast fair and transparent manner. Lawyers able whilst also reforming corporate Asia. The guidelines are designed to: (i) play a fundamental role in ensuring that governance processes that have over primarily help companies and industry their clients conduct the right diligence the years become less efficient at identi- groups to develop voluntary programs processes and understand the human fying and mitigating poor practices that of remediation and monitoring (R&M); rights impacts of the acts and omissions lead to exploitation. (ii) provide practical and clear steps for of their respective companies.
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NORTH ASIA AND SOUTHEAST ASIA/SOUTH ASIA LEAGUE TABLES
North Asia Announced M&A Legal Rankings North Asia Announced M&A Financial Rankings
Value Market Value Market Rank Legal Advisor ($MLN) Deals Share Rank Legal Advisor ($MLN) Deals Share 1 Nishimura & Asahi 92,115.0 125 10.3 1 Morgan Stanley 165,951.3 65 18.5
2 Mori Hamada & Matsumoto 84,482.0 110 9.4 2 Goldman Sachs & Co 151,988.6 53 17.0 3 Freshfields Bruckhaus Deringer 80,594.0 30 9.0 3 China International Capital Co 140,467.6 68 15.7 4 White & Case LLP 66,335.1 26 7.4 4 Nomura 115,608.6 88 12.9 5 Deloitte 63,381.1 104 7.1 5 Sullivan & Cromwell 60,091.8 10 6.7 6 UBS 60,914.1 19 6.8 6 Clifford Chance 56,205.6 44 6.3 7 China Securities Co Ltd 53,760.8 16 6.0 7 Latham & Watkins 52,531.4 37 5.9 8 JP Morgan 50,885.7 34 5.7 8 Nakamura, Tsunoda & Matsumoto 46,648.5 4 5.2 9 Plutus Consulting Co Ltd 49,392.8 40 5.5 9 Fangda Partners 46,618.0 120 5.2 10* The Raine Group LLC 40,000.0 1 4.5 10 Cleary Gottlieb Steen & Hamilton 44,453.5 6 5.0 10* Zaoui & Co 40,000.0 1 4.5
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A) (*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
Any North Asia Involvement Announced M&A Activity - Quarterly Trend*
Series1 Series2 440 404.4 5,000 Transactions of No. 373.7 353.8 324.2 340 4,000 268.4 279.8 280.3 273.7 252.9 243.9 256.1 243.5 255.0 248.5 218.7 229.6 219.4 197.3 3,000 240 200.6 191.5 168.0 173.8 175.8 168.3 185.6 149.7142.8 158.8 138.4 2,000 115.2122.8 140 93.5 1,000
Rank Value US$ Billion 40 0 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20
Southeast Asia / South Asia Announced M&A Legal Rankings Southeast Asia / South Asia Announced M&A Financial Rankings
Value Market Value Market Rank Legal Advisor ($MLN) Deals Share Rank Legal Advisor ($MLN) Deals Share 1 AZB & Partners 21,598.7 90 11.2 1 JP Morgan 30,717.8 20 15.9
2 Freshfields Bruckhaus Deringer 21,547.8 17 11.1 2 Goldman Sachs & Co 21,012.8 18 10.9 3 Cyril Amarchand Mangaldas 20,771.1 98 10.7 3 BofA Securities Inc 20,596.7 19 10.6 4 Allen & Gledhill 15,457.8 33 8.0 4 Morgan Stanley 19,778.7 15 10.2 5 WongPartnership LLP 14,967.4 28 7.7 5 HSBC Holdings PLC 17,270.8 12 8.9 6 Davis Polk & Wardwell 13,812.3 4 7.1 6 Credit Suisse 16,851.4 14 8.7 7 Allen & Overy 13,700.5 22 7.1 7 UBS 16,410.4 16 8.5 8 Linklaters 13,588.4 6 7.0 8 Nomura 13,895.9 17 7.2 9 Nagashima Ohno & Tsunematsu 12,562.6 19 6.5 9 Deloitte 12,658.2 25 6.5 10 Mori Hamada & Matsumoto 12,513.7 12 6.5 10 Barclays 10,859.9 5 5.6
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A) (*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
Any Southeast Asia / South Asia Involvement Announced M&A Activity - Quarterly Trend*
Series1 Series2
210 1,600 of TransactionsNo. 175.7 1,400 160 1,200 118.0 1,000 110 85.5 800 77.3 79.9 74.5 75.2 84.7 84.1 77.0 75.1 64.0 65.9 68.3 73.6 70.1 72.9 73.6 66.3 70.8 600 52.7 53.5 60 39.0 44.0 47.5 42.1 46.7 41.8 48.3 44.6 400 26.0 28.6 200 10 0 Rank Value US$ Billion 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20
*League tables, quarterly trends, and deal lists are based on the nation of either the target, acquiror, target ultimate parent, or acquiror ultimate parent at the time of the transaction. Announced M&A transactions excludes withdrawn deals. Deals with undisclosed dollar values are rank eligible but with no corresponding Rank Value. Non-US dollar denominated transactions are converted to the US dollar equivalent at the time of announcement of terms. NORTH ASIA: China, Hong Kong, Japan, South Korea, Taiwan; SOUTHEAST ASIA: Singapore, Malaysia, Philippines, Thailand, Vietnam, Brunei, Cambodia, Indonesia, Laos, Myanmar, Timor-Leste; SOUTH ASIA: India, Afganistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka. Data accurate as of 7 December 2020.
10 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM BROUGHT TO YOU BY THE RED FLAG GROUP
Top benefits of a good due diligence report
Conducting due diligence on your third parties is an integral part of running a compliance programme, as it helps you uncover risks that might otherwise slip past if third parties simply answered questionnaires or were trusted to self-disclose information.
Here we discuss four things you should get from a good due diligence report.
1. Integrity and compliance risk knowledge First and foremost, at its bare minimum a due diligence report gives findings about a third party’s history of compliance to laws on anti- bribery and anti-corruption (ABAC), fraud and money laundering, and anti-competitive behaviour. The report should provide details about any media reports, investigations, legal proceedings, enforcement actions, sanctions distributor may lie with its compliance primarily Paul Garcia and fines, and any other run-ins that the third to ABAC laws, while those of a supplier may lie Research & Analysis Associate party has had with the authorities. with its compliance to environmental, social [email protected] and governance standards. In other words, In places where laws are poorly enforced, press we need our distributors to engage in ethical The Red Flag Group is severely restricted, illicit dealings are deeply 21/F Cityplaza Three business while our suppliers need to have entrenched in business, or business is run with 14 Taikoo Wan Road, Taikoo, Hong Kong minimal risks related to potential disruptions very limited transparency, this information is T: (852) 3185 0700 to operations. especially important, so it is essential to source F: (852) 3185 0701 information from on-the-ground sources, such E: [email protected] 4. Steps to become an appropriate as former employees, clients, local partners W: www.redflaggroup.com candidate for your distributor or supplier and business journalists. What these sources programme know about the third party and its reputation A good report presents the risks and provides locally and within its sector, including possible 3. Expert insights and onboarding the expert insights. What now? A best practice associations with influential persons or illegal The report needs to prioritise the findings that report will also provide ideas on the possible organisations, can be very beneficial. are valuable to your purpose for conducting due measures that the third party can implement diligence in the first place and present these to ensure they are a suitable candidate for 2. Business and operational risks visibility findings in the context of the location, industry becoming your business partner. A comprehensive due diligence report also gives and laws applicable to the third party. For information about the business and operations example, while a third party might have been For example, if a report revealed that the third of a third party, and the related risks the third listed as having breaches in health and safety party was recently investigated in relation to party may bring into your business if it is regulations, we cannot just reject onboarding an allegedly rigged government bidding, and onboarded. For example, a third party may be this third party – some analysis is required. local expert insight suggests these types of compliant with local and international ABAC The finding must be put into the context of investigations often imply civil and criminal regulations; however, if its financial statements the third party’s industry and location, and liabilities, the action to be taken by the third underline a steady increase in losses in the past whether such breaches result in material risk for party can be as simple as full disclosure of their few years, it might not be wise to onboard this the third party and, potentially, your business. exact involvement and the legal remedies they third party. Such risk prioritisation and insight are things have taken to mitigate the risks to your business. only country and industry experts can provide. This information will help you determine Checking for operational risks also looks at In short, some things might look like a major whether it is worth having this third party in the size of the third party, how long the third risk, but further analysis from local experts may your partner programme. party has been operating, the third party’s suggest otherwise. locations and whether these locations make Essentially, the benefits of a good diligence sense for business, and the third party’s overall Going further, quality reports will contextualise report can be summarised as providing value presence in the market. A good due diligence the identified risks based on the type of to your business by bringing you quality and report not only informs you about a third party’s engagement you will have with the third party. useful information about your third parties. compliance issues but also – and this is equally The nature and severity of the risks of a potential Information is power. That is applicable in many important – about its ability to do business with distributor, for example, are inherently different areas of business, and it is certainly applicable you and fulfil its obligations to you. from those of a supplier: the risks of a potential in compliance.
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 11 DEALMAKERS
SHINICHI ARAKI Partner, Nagashima Ohno & Tsunematsu
Araki, a capital markets expert, has more than two decades of experi- ence. He represents numerous major Japanese financial institutions, manu- facturers, technology companies and retailers. He also has a strong relation- ship with many major investment banks in Japan. Araki has acted on numerous matters including, most recently, advising Nomura, Goldman Sachs and SMBC Nikko on the $3 billion global offering of common stock of ANA Holdings (holding company of the largest airline in Japan) in the midst of the COVID-19 outbreak. He also advised Goldman Sachs and other managers DEALMAKERS on $4.3 billion accelerated book built offering (ABO) of Yahoo Japan’s stock by Altaba in 2018 as well as $2.87 billion block trade sale of Softbank’s stock by Softbank Group in 2020. These inter- national transactions were the biggest- ever ABO or block trade sale of stock of a Japanese issuer, respectively. In OFa pandemic-hit ASIA year when dealmaking 2020 was more of a challenge Other noteworthy matters that Araki than usual, certain lawyers stood out for their innovation, acted on include advising on innova- tive deals in 2020: Japan’s first block- determination and focus on client needs. In this annual feature, chain-digital asset bond deal of Nomura ALB spotlights some of the standout dealmakers in the year gone by. Research Institute as well as Japan’s first The full list of ALB Dealmakers of Asia 2020 can be viewed on www.legalbusinessonline.com tax-qualified “spin-off” IPO transaction of Koshidaka Holdings. Besides this, Araki has advised TEXT BY APARNA SAI Nomura Holding on its first issuance
12 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM DEALMAKERS
of TLAC notes in the global markets for Masa has also recently advised a total offering amount of $3 billion in Ping An on its significant investment 2020. The notes issued in this transac- in Tsumura & Co., a Japanese leading tion were required to meet certain capital listed manufacturer of Chinese medi- criteria provided by the FSA of Japan to cine. He also represented UBIC Inc, ensure the loss absorption mechanism (current company name is Fronteo) on if orderly resolution measures are taken its Nasdaq listing. This is the very first against their issuer under the applicable Nasdaq listing for a Japanese company laws. He also represented Panasonic in the 21st century. on its $2.5 billion 144A/Reg S “debut” In addition, Masa counselled offering of the notes in 2019. Terumo Corporation on its acquisi- MOK H. In addition, Araki has been very tion of Bolton Medical, a leading inno- active in the IPO. In 2020, he advised vator in thoracic and abdominal stent Plaid, a Tokyo-based website analytics graft systems. The deal is a large and KIM company on its global initial public complex multi-jurisdictional deal Partner, Bae, Kim & Lee offering as well as underwriters on the involving over 10 countries. Masa has global initial public offering by Forum a history of acting on some of the Engineering, a leading staffing service large deals in Japan, and as such he Kim, who has 16 years of experience company for engineers in Japan. also recently advised Zensho Holdings, in the legal industry, is a specialist in the largest player in the Japanese food corporate/M&A. Among the matters that industry, on its acquisition of Advanced he advised on, Kim represented Tesco, Fresh Concepts Corp., an in-store sushi a UK-based multinational grocery and chain with more than 4,000 locations general merchandise retailer, on the sale throughout the United States, Canada, of Homeplus, Tesco’s South Korean busi- and Australia. ness worth approximately $6 billion. Masa also led the DLA Piper Besides this, Kim has counselled team in advising Embark Studios AB, Samsung Group on the sale of its a Stockholm-based game production chemical subsidiary (Samsung General company and its founders on its agree- Chemicals) and its defence subsidiary ment to sell a major stake in Embark (Samsung Techwin) to the Hanwha Studios AB to Nexon, a Japan-based Group for nearly $1.6 billion. He coun- MASAHIKO (MASA) listed company mainly engaging in the selled Unilever, the global consumer production, development and delivery goods giant, on the acquisition of Carver of online games. On top of this, Masa Korea, a leading skincare and cosmetics ISHIDA advised two Japanese listed companies, company in Korea well known for its Partner and Head of Corporate – Japan, Marubeni Corporation and Nippon Paper AHC brand for an amount of $2.7 billion DLA Piper Tokyo Partnership Industries Co., Ltd on the sale of the (approximately). shares in their Canadian joint venture, In addition, Kim counselled Delivery Daishowa-Marubeni International Ltd. Hero, a German listed company and a Masahiko (Masa) Ishida’s practice As a result of Masa’s marketing- global food delivery service provider, focuses on corporate M&A as well as leading work, he was appointed a on the acquisition of Woowa Brothers, venture financing, capital markets and member of The Cool Japan Inbound a leading food delivery service provider general corporate matters. He has more Investment Growth Committee organ- in Korea for approximately $4 billion. than 17 years of experience in the legal ised by the Ministry of Economy, Trade Kim and his team played a leading industry and is admitted in Japan and and Industry in Japan. Additionally, he role as a legal advisor to their client in New York. was appointed as an outside general developing the deal structure, negoti- Some of the clients that Masa has counsel by the Tokyo Metropolitan ating the transaction documents with represented include Ping An, General Government for the 2020 Tokyo founders of Woowa Brothers and inves- Electric Company, A.T. Kearney. Marubeni Olympics and the 2019 Rugby World tors and conducting legal due diligence Corporation, Citizen Watch, Japan Bank Cup. Masa is also an outside auditor on Woowa Brothers and its subsidi- for International Cooperation (JBIC), NTT for the Fulbright Alumni Association of aries. This transaction is under review Docomo, and Asahishuzo. Japan. by the Korean antitrust authority and
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 13 DEALMAKERS
is expected to close upon receipt of the some Asian countries, and has a large transactions, M&A, defence against antitrust clearance. user base (LINE group has 82 million shareholder activism, compliance, He also represented Affinity Equity active monthly users in Japan and 104 startups and venture capital, capital Partners (AEP), one of the largest dedi- million active monthly users outside of markets, international taxation, civil and cated Asian private equity firms, on its Japan). This deal combines the busi- commercial disputes, telecommunica- investment in Shinhan Financial Group, nesses of both groups, aiming to become tions/media, corporate crisis manage- Korea’s major financial company for nearly a leading AI technology company that ment, tax counselling, tax disputes. $508 million as well as advised BlueRun leads the world from Japan and Asia, Among his important matters, he Ventures (BRV), a Silicon Valley venture and countering global tech giants from defended TBS Holdings against a hostile capital, on the investment in a newly the U.S. and China such as Google and takeover attempt by Rakuten about a merged company of two Thai companies, Apple. This deal was very complex and decade ago. Here he served as leader of Line Man and Wongnai Media. important from the legal perspective as the team and worked primarily on super- well. vising the case, planning the overall Morita also counselled on the strategy and drafting and reviewing most transfer of the issued share of Sanden of the relevant corporate documents. Retail Systems Corporation, which is a Ota also counselled Takeda publicly listed company. It transferred Pharmaceutical Co. on the acquisi- all of the issued shares of Sanden tion of Shire plc in 2019. This was the Retail Systems Corporation (hereinafter largest acquisition ever conducted by a referred to as SDRS), its consolidated Japanese company, and it was named subsidiary, and the loan receivables that the M&A Deal of the Year (Premium) and it holds against SDRS to SDRS Holdings Debt Market Deal of the Year at the ALB Corporation, formed through contribu- Japan Law Awards 2019. tions from affiliated business entities Other matters that Ota counselled KOHEI operated by Integral Corporation (ITG). on included advising on the merger Additionally, Morita is the head of of UFJ Holdings and Mitsubishi Tokyo MHM’s recruiting committee and also a Financial Group, representing Takeda MORITA member of the committee that oversees Pharmaceutical Co. on the sale of health- Partner, Mori Hamada & Matsumoto all counsels and associates. care business to Blackstone and advising Stripe International on the acquisition of stake in Vietnam’s Global Fashion Morita, who has been a partner at MHM Trading Corp. since 2013, has more than 15 years of He also defended Toshiba Machine experience. His practice focuses on against a hostile takeover attempt by mergers and acquisitions, reorganisa- City Index 11th Co. this year. He served tions, private equity, venture capital/ as the leader of the team and worked start-ups, corporate and commercial primarily on supervising the case, plan- disputes, corporate governance, share- ning the overall strategy, and negoti- holder relations and corporate govern- ating with relevant authorities in Japan. ance – general crisis management. A few of Ota’s clients include Morita advised on the business Mitsubishi Heavy Industries, Takeda integration between Z Holdings Corp. YO Pharmaceutical Co., Yahoo Japan (ZHD) and LINE Corp. (LINE). ZHD and Corporation, Kobe Steel, Ltd., TBS its group, including ZHD’s subsidiary Holdings, Fujitsu Limited, SoftBank Yahoo Japan Corporation, is one of the OTA Group Corp., Tokyu Fudosan Holdings most famous online services companies Partner, Nishimura & Asahi Corporation, Colowide Co., and Tokyo having a large number of users in Japan Dome Corporation. (ZHD group has 67.43 million average Ota was named as Dealmaker of monthly users and 140 million total Ota, who has nearly three decades the Year at the ALB Japan Law Awards active monthly users for all the group’s of experience, has been a partner at 2020. He was also named a Leading apps). LINE operates the most common Nishimura & Asahi since 2003. He individual by Chambers Global 2020 messenger application in Japan and focuses on corporate and commercial for Corporate/M&A and also a Leading
14 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM DEALMAKERS
individual by Chambers Asia-Pacific Besides this, Rau also led on Tata’s He has advised on numerous 2020 for Corporate/M&A and Tax. He $450 million acquisition of the Tetley matters including representing World was also named a Leading Individual Group, India’s first large overseas Rugby on the Rugby World Cup 2019, a for Tax by Legal 500 Asia Pacific 2020. direct investment as well as advised on six-year project, as well as representing Brookfield Asset Management on its JV global broadcasting companies, spon- with the Everstone Group for the acqui- sors and all its related companies in sition of a majority stake in Indostar their legal work in Japan. In addition, Capital Finance Limited, a listed NBFC, Scott continues to advise other sports for $1.4 billion. He counselled PAG federations on their major international Capital on its proposed acquisition of a sporting events in Japan and in other 51 percent stake in the wealth manage- countries around the world. ment business of Edelweiss and repre- Scott was the managing director of sented Qatar Investment Authority on the World Rugby entity for the Rugby its $170 million investment to acquire World Cup 2019, head of legal rights a 25.1 percent stake in Adani Electricity protection for the Rugby World Cup Mumbai. 2019 for World Rugby as well as the legal ASHWATH He led Tiger Global on its invest- counsel for the Rugby World Cup 2019 ment in Dream11 as part of a $225 for World Rugby. million funding round; Tiger Global A few of Scott’s clients include RAU on its investment in Zomato as part of World Rugby, BBC Global News, Iluka, Senior partner, AZB & Partners a $160 million funding round; Tilden Singapore Sportshub and International Park on its 22.5 billion rupees invest- Baseball Federation and other major ment in Yes Bank; and KKR on its 15.54 international sport federations. Rau has over two decades of experience billion rupee investment to acquire five Scott has been a part of the Atsumi in the legal industry. He is well versed in solar assets from the Shapoorji Pallonji & Sakai team that won the Overseas mergers and acquisitions, joint ventures, Group. Practice Law Firm of the Year at the ALB general corporate, private equity, invest- Japan Law Awards 2020 – a title that ment funds, financial regulatory and the firm has received for three consec- securities laws, financial services and utive years. fintech, insurance and private client Besides this, Scott is a member of practice. the Daini Tokyo Bar Association Sports Rau’s noteworthy matters included Law Study Group and the Japan Sports advising Jio Platforms on its $20.6 Law Association and has presented on billion investments from 13 globally governance and integrity in sport to reputed strategic and financial inves- the Japanese government. He is also tors, including Facebook and Google, in currently in the process to complete a India’s largest FDI ever. He also advised book for international major sporting Larsen & Toubro on its $1.5 billion first events and the legal approach. successful hostile bid in India to acquire IAN Scott’s subject-matter expertise a controlling stake in Mindtree, a listed in both corporate mergers and acquisi- IT services consulting company. tions, and sports law has led to formal Furthermore, Rau represented the SCOTT recognition as one of the best lawyers State Bank of India on its merger of six Senior partner, Atsumi & Sakai in Japan for nine consecutive years, and banks to create a global top 50 bank was an executive council committee with an asset base of over $450 billion member for the Australian New and the first ever large–scale consolidation Scott is an accomplished sports, media Zealand Chamber of Commerce Japan. in the Indian banking sector. He also and entertainment, e-sports, intellectual Scott says that his “motivation is advised Holcim on Indian aspects of its property rights, sports rights protection, values-based, and my job satisfaction $41 billion global merger with Lafarge, sports governance and integrity, mergers comes first and foremost from applying to create LafargeHolcim, including and acquisitions, international litigation my skills and knowledge to support the $1.4 billion sale of Lafarge India to and arbitration lawyer with 23 years of others to achieve their goals, in what- Nirma. legal experience. ever form they take.”
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 15 COVER STORY
As a pandemic year winds to a close, businesses in Asia are hopeful that 2021 will be a year of recovery and possibility. With a vaccine on the horizon and talk of borders reopening, the picture is remarkably brighter than it was just a few months ago. Lawyers in Asia’s key hubs of Hong Kong and Singapore have shown their ability to adapt and continue serving clients during difficult times. But as 2021 rolls around, the pressure will be on law firms to rise to the new year’s challenges. BY ELIZABETH BEATTIE
16 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM COVER STORY
Last year, when law firm leaders As lawyers across the globe navi- says Chu, adding that “generally, fee spoke to Asian Legal Business about gate working from home and firms cut levels are lower compared with the pre- the year ahead, they warned that there costs and calculate impact, law firm pandemic period”. would be increased pressure on firms to leaders have continued to focus on But there have also been other adapt, prioritise tech, and meet client meeting client needs. approaches deployed by firms to main- expectations. Heading into the new tain strong client relationships during year, the climate was undeniably chal- RETENTION TACTICS the pandemic. lenging — but not exactly surprising. Increasingly firms have been getting “Our firm, LC Lawyers LLP, is an Then came the COVID-19 pandemic. creative in order to stay competitive independent law firm and is also a Hitting Mainland China first and slowly during the COVID-19 pandemic. Hong Kong law firm member of the spreading throughout the globe, it left Rossana Chu, managing partner global EY network. When we provide businesses reeling, and exposed the of Hong Kong’s LC Lawyers, tells Asian legal services, we may also identify gap between those who could use tech- Legal Business that firms have consid- related issues such as tax, valuation, nology to swiftly adapt, and those who ered different ways of pricing services, business modelling, debt restructuring couldn’t. while also offering reductions in some and talent management. EY is able to Rapidly, working from home cases. provide very wide scope of services in became the norm, and the sounds of those areas so that concerted solutions children’s voices in the background may be presented to clients,” says Chu, on Zoom or Teams calls grew increas- adding that increasingly clients are ingly commonplace. While the past few looking at ways to utilize legal tech- months have been difficult, they have “Competing on price is nologies combined with professional been liberating for some, and a learning legal advice. curve for others. never the enduring or “EY Law has a wealth of experi- But the pandemic hasn’t just hit the most clever strategy. ence and rich track record in providing work culture. For many firms, it’s been I believe that the pandemic legal managed services to those clients a test of every facet of how they operate. in areas such as contract lifecycle Thinking back to some months makes it necessary for management, research and regula- ago, Stephen Kitts, Hong Kong-based law firms to consider tory mapping and managed review managing partner for Eversheds how to come outside their or discovery on large volume of docu- Sutherland in Asia, tells ALB that the ments. Other law firms are now more firm began analysing options to address comfort zone of delivering willing to give free advice to loyal the potential impact of the pandemic in merely the very traditional clients or potential big clients. Some early March. legal services in the very are willing to expand the work scope The firm responded quickly “taking without raising the fixed or capped direct action at a global level” in order traditional manner.” fees, as an attempt to retain clients,” to address the potential impact he says — Rossana Chu, LC Lawyers Chu adds. noting “communication and support But she has a warning. “Competing for our clients and people were, and on price is never the enduring or the remain, the key priorities.” most clever strategy. I believe that the “Equity partner remuneration pandemic makes it necessary for law has been reduced by an average of 25 “For legal work where the workload firms to consider how to come outside percent, driven by the partners’ desire can be estimated, many law firms are their comfort zone of delivering merely to lead the firm’s response and be the much more ready during the COVID-19 the very traditional legal services in the first to feel the impact of any financial pandemic period to perform the work very traditional manner,” Chu says. measures needed to protect the busi- with a capped or fixed fee instead of Eric Chin, principal at Alpha ness and the jobs of our people,” Kitts the traditional way of charging by hours Creates, a consulting firm catering to says, noting that working from home (whether by normal or blended hourly the legal industry, tells Asian Legal and flexible working arrangements were rates) because clients would like to see Business that he has observed a mixture quickly rolled out in Hong Kong, and certainty in the legal fee bills,” she says. of retention measures being deployed have been finetuned along the way. For work where the workload or over the past year. “As part of the move to our new complexity cannot be easily estimated, “Thomson Reuters Peer Monitor’s offices everyone in the office was issued “fee estimates or soft caps are becoming most recent law firm financial bench- with new laptops and was able to more common and clients also want fee marking data revealed partner billings continue working from home. Support breakdowns for different stages so that outnumbered lawyer billings for the first for our clients was not interrupted for they can compare law firms for work of time in years”, while other firms have even one hour,” he says. different nature for the same matter,” provided COVID-19 related advice to
WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 17 COVER STORY strategic clients on pro bono basis, Chin fee levels, while the second and third The takeaway from the pandemic says. types may not,” Chu adds. has been that “trust lies at the heart of Some firms, like Tilleke & Gibbins every successful business relationship,” have initiated “a client listening exer- CLIENTS IN FOCUS he notes. cise to inform how they can guide their For law firms, these testing times have Steven Sieker, managing partner clients through the pandemic,” he notes provided opportunities to support their of Baker McKenzie’s Hong Kong and adding that others have developed clients in new ways, while navigating mainland China offices, reflects on COVID-19 guides and resource hubs unpredictable developments. how the firm supported clients over the for companies. Kitts says COVID has presented difficult year. This required the team “Firms have also created auto- “significant challenges” for the firm’s to keep their finger on the pulse, and mated self-assessment and self-help clients. adjust their response based on market tools with LegalTech providers,” Chin “We took the opportunity to demon- developments, he says. says. strate to these clients that we put them “We recognize that companies are “On the other side of the equation, at the centre of everything we do. Our emerging from the pandemic crisis at there are clients who have also turned different paces, with some sectors facing to their panel firms to extend invoicing sharp declines and business disruptions terms, apply discounts and withhold while others see an increase in demand yearly rate increases,” he adds. and new growth opportunities. As busi- From his perspective, firms that “The ongoing evolving nesses reorganize their operations for have “proactively engaged clients the new normal, we saw this as an through the measures outlined above environment means opportunity to have renewed conver- are benefiting from that strategic clients are looking for sations with our clients about what the investment in their client relationships.” sound information, hard new normal would look like to them,” “The ongoing evolving environment Sieker says. “To guide these conver- means clients are looking for sound data and impartial advice sations, we launched our ‘Resilience, information, hard data and impartial as well as a considered Recovery & Renewal’ framework in April, advice as well as a considered approach approach to help them which has enabled us to better respond to help them navigate a cooling to our clients’ needs with tailored advice economy. A strategic and controlled navigate a cooling and solutions as they journey through approach to one-off discounts and/ economy. A strategic this pandemic,” he adds. or write-offs can be effective ways to and controlled approach The mindset for clients has meet clients’ needs while reinforcing changed, says Sieker noting: “Clients the law firm’s strategic role as well as to one-off discounts are also looking to rationalize their legal positioning firms very well for when the and/or write-offs can spending, and law firms will need to be economy recovers,” Chin says. be effective ways to able to demonstrate their value.” Whether these various approaches “Baker McKenzie is responding will stick around in the new year meet clients’ needs.” to this fundamental shift by making remains to be seen. Chu is hopeful that — Eric Chin, Alpha Creates further investments in shared services, demand for legal services will increase technology and knowledge manage- as economic activities revive after the ment, so that we enhance the value we pandemic. deliver to clients, delivering increased “When the economic activities value at a lower cost,” he says. revive after the pandemic, demand for Asia relationship partners and teams legal services will hopefully increase,” were in regular contact, daily contact in WHAT NEXT FOR HONG KONG? she says. some cases, especially with Asia-based The pandemic has also added sharply “Law firms will have more work to clients in the hardest hit sectors, such as to the turmoil in Hong Kong SAR, which do and may give priority to three types travel, hotels and leisure,” he says. “The saw protests last year, and in 2020 of clients. The first type is the clients strength of our relationships with clients witnessed the enactment of the contro- which are willing to pay more. The meant that many were contacting us versial National Security Law. With the second is the clients which give steady for ad hoc advice on situations that legislature, press and courts currently work to the law firms throughout all were completely unpredictable, often under increasing pressure, businesses times. The third is the clients who give changing from one day to the next. In reportedly appear to be rethinking their a large piece of work which may not be some cases, we were so heavily engaged strategy when it comes to the (so far) very lucrative but has a positive impact that our lawyers were simply treated as semi-autonomous Chinese city. on the law firm’s reputation. The first an extension of their in-house teams,” It hasn’t had a particularly nega- type of clients will drive up the legal Kitts adds. tive impact on foreign law firms though.
18 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM COVER STORY
Tony Williams, principal at Jomati “They are already a significant a once in a generation opportunity to Consultants, says that while competi- presence in the Hong Kong market, and enter or grow in the Hong Kong market tion remains fierce in Hong Kong, major I expect that to increase especially given while valuations are more modest. international firms “appear to be faring the impressive growth that they have With China expected to be among very well despite the pandemic.” achieved in relation to their size and the first economies to rebound from “The legal sector has been remark- revenues in mainland China,” he says. the pandemic, and the GBA initiative ably resilient, and lawyers have been moving ahead in full force, many multi- able to work reasonably effectively GROWTH OPPORTUNITIES nationals and Chinese companies are from home. As a result, depending on What 2021 holds is unknown, but firms eyeing the GBA and Hong Kong as part the practice mix of the firm, they could remain tentatively optimistic that the of the GBA with immense interest, antic- achieve results similar to or a little off new year will provide more stability. At ipating the enormous growth potential, last year. There will be a range of perfor- the same time, they are also gearing up particularly at this time,” Sieker says. mance and the date of a firm’s year end for increased competition as the dust Jonathan Olier, partner and head of could result in different outcomes. begins to settle. Singapore and Hong M&A and private equity for Southeast Some firms will not wish to waste a Asia at White & Case, says that in crisis, so I expect some restructuring Singapore, a busy year of growth is of firms and the closing or downsizing also expected. “Arbitration and restruc- of some offices. We have already been turing, as ‘counter cyclical’ practices, seeing signs of this in relation to the “The legal sector has have been busy areas amid this year’s China and Hong Kong offices of some economic downturn and we expect this international firms,” Williams says. been remarkably resilient, to continue in 2021,” Olier says. He adds that some firms will revisit and lawyers have been Additionally, the city-sate’s steady their approach to Hong Kong “not so able to work reasonably push as a regional arbitration hub is much because of the National Security only growing. “With the Singapore Law Itself but because of what it could effectively from home. International Arbitration Centre now mean in terms of the independence of Depending on the practice being a leader on the world stage, and the Hong Kong courts and the accept- mix of the firm, they could clients experiencing mounting pressure, ability of Hong Kong as a forum for arbitration is becoming increasingly disputes and the role of Hong Kong as achieve results similar to active here in Singapore,” he says. a major business and financial centre.” or a little off last year… “We also foresee a continued uptick “Many international firms have Some firms will not wish in oil and gas-related restructurings, deep and long-established roots in especially within industries most prone Hong Kong and are likely to remain to waste a crisis, so I to the impact of the pandemic and a committed but some may rationalise expect some restructuring fall in oil prices. Thanks to recent and their presence or even leave. Hong Kong of firms and the closing or innovative legislation, in part modelled is a challenging place for international on the U.S. Bankruptcy Code, Singapore firms to make money so inevitably it downsizing of offices.” is quickly emerging as a global restruc- will be closely reviewed from time to — Tony Williams, Jomati Consultants turing hub,” Olier adds. time,” says Williams, noting that if Looking ahead to the new year, Hong Kong becomes “less important Kitts of Eversheds says there is “consid- as a business, financial and disputes erable pent up demand in the markets centre, then inevitably its attraction to across Asia. With signs that a vaccine international firms will reduce.” But at Kong are both remarkably competitive or vaccines for COVID may be available the same time, Williams says the city’s hubs, home to mature legal markets within months, we expect to see strong resilience through crises means “it is and talent, and firms in both jurisdic- deal flow, in particular as we head into far too soon to write Hong Kong off.” tions face fierce competition that is only the second half of 2021.” The next few years will provide likely to increase. “We are already seeing signs of an greater clarity, says Williams, noting Sieker says that the legal market in upturn in M&A activity, driven in partic- that this, combined with “how other Greater China has weathered more than ular by PE-backed deals. Our banking regional cities respond will ultimately just the pandemic, citing “domestic team has been operating at 100 per determine the future significance of unrest, geopolitical tension and rising cent capacity all year and their pipe- Hong Kong.” regulatory scrutiny” as challenges for line for next year is particularly strong. Williams also expects to continue the jurisdiction. Employment has had one of their to see Chinese firms significantly “Despite this we see many busi- strongest years, while the technology increase their presence in Hong Kong nesses, including our own, looking for practice is advising on truly ground- over the next few years. opportunities, realizing that this may be breaking transactions,” he adds.
WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 19 COVER STORY
The COVID-19 pandemic overshadowed some of the year’s biggest events and set well-laid plans into a tailspin. Now, on the brink of a new year, as economies look to open up, the focus is firmly on the future. In Malaysia, as the government eases pandemic-imposed curbs, businesses are hopeful that the year ahead may be one of recovery, but they’re not out of the woods yet. BY ELIZABETH BEATTIE
In November, after a contraction chains that have taken many years to For other businesses, the impact in the third quarter, Malaysia’s central build may be irreparably damaged”, has been mixed, observes Aziz, with bank announced that 2021 would offer says Aziz. affected sectors “in a dire state”, while a healthier outlook, Reuters reported. But there are some positives. The glove makers and electronic manufac- The same month, as the government financial sector remains “largely unaf- turing services companies “have been released a budget focused around fected” by the downturn. well placed and are thriving,” he adds. COVID-19 recovery, it projected that the “If the government is able to get As law firms head into 2021, they do country’s economy would rebound with the budget approved, there will be a so prepared for an uptick in work. growth in the new year. massive further stimulus in the form of “If the economy continues to While these indications are positive, up to 80 billion ringgit [$19.6 billion] recover, we expect all of our practices Munir Abdul Aziz, managing partner at being injected in the economy from the to reap the benefits. The transactional Wong & Partners, a member firm of withdrawals from employee provident practices are already seeing an uptick in Baker McKenzie International, says the fund accounts of affected members (esti- activity as companies and investors have mood in Malaysia is far from jubilant. mated by the government at 8 million, been able to factor in the impact of the “While firms are doing their best each of whom are permitted to withdraw pandemic in their decisions and sensi- to respond, the year has been tough. up to a maximum of 10,000 ringgit from tized their business plans and models Conserving cash, staff layoffs, or placing their accounts),” notes Aziz. to it,” says Aziz. employees on no pay leave are among While from a client perspective, the ways that businesses are responding there has also been a realisation that internally,” Aziz says, noting they are the pandemic affords “not only serious also increasingly focusing on core busi- challenges but also major opportunities” ness “moving to a line of business for he adds, noting there will be a certain which there is demand in the COVID “If the economy continues element of a fear of missing out “if there environment, drawing down on credit to recover, we expect are signs of recovery and competitors facilities and seeking indulgences on all of our practices to make moves in an environment when obligations wherever they can from access to financing remains intact.” lenders and trade creditors” he adds. reap the benefits. The “Our advisory practices are helping In Malaysia, a “pensive and uneasy” transactional practices are clients in an environment where regu- mood has taken grip, he says, noting already seeing an uptick lators are doubling down on enforce- there are concerns that the re-intro- ment across all areas and especially the duction of the Conditional Movement in activity as companies revenue authority,” Aziz says. Control Order (CMCO) is reversing the and investors have been Going forward, client service will “strong bounce back of the economy” able to factor in the remain a priority. “We’re continuing to during the Recovery Movement Control build deep and meaningful relationships Order (RMCO). The real question, he says impact of the pandemic with our clients and investing in our is how much longer SMEs withstand a in their decisions and talent. These priorities will be enabled continued CMCO lockdown. sensitized their business by innovation, a focus on industry knowl- Of course, there are also concerns edge and service lines, and maintaining about the longer term effect of the down- plans and models to it.” and enhancing the profitability of our turn should it be prolonged. “Supply — Munir Abdul Aziz, Wong & Partners practices,” he says.
20 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM BROUGHT TO YOU BY WONG & PARTNERS
Looking ahead to the opportunities and challenges to dealmaking in 2021
The dust has finally settled on the US technology by an ever smaller coterie of elite Presidential elections. While most global tech giants. dealmakers are relieved that a big source of uncertainty has been dealt with, they The bifurcation of technology between China will have to brace themselves for higher and the US will continue to impact trade and corporate tax and detrimental changes investment flows and by extension, deal- to the treatment of carried interest. making activity. Supply chains will adjust Regulatory burdens will also become accordingly and it will be harder for the more onerous under a Biden Presidency, two supply chains to commingle. Business potentially blunting deal making activity. owners will not only find their universe But all things considered, the conditions Munir Abdul Aziz of customers and suppliers becoming necessary for a much improved deal- Managing Partner smaller but also their pool of investors. In making environment in 2021 have E: [email protected] a continuing reaction against globalisation, emerged. participants of one “techno-sphere” will Wong & Partners find themselves increasingly unwelcome The reasons for such optimism are apparent Level 21, The Gardens South Tower in the other. at the tail end of 2020. The prospects of Mid Valley City, Lingkaran Syed Putra a vaccine being available in the first half Kuala Lumpur 59200, Malaysia In the meantime, tech giants will, in 2021, of 2021 are now clear. The only question T: (60) 3 2298 7854 likely face the most significant onslaught that is the efficiency of distribution and the W: www.wongpartners.com/en they have ever experienced from regulators, effectiveness of mass immunization politicians and the general public. Instead programs. A post Brexit trade deal between of being voracious acquirers of competitors, the UK and EU is almost at hand. Financial The effects of an adjusting business they will more likely divest and restructure. conditions remain benign as governments environment in which resilient businesses continue to provide fiscal stimulus and that have more effectively weathered The effect of restructuring and insolvency central banks maintain low interest rates the impact of the pandemic rise above will also be an unknown. The recent defaults and preserve asset purchase programs. pandemic impaired businesses will create of State backed enterprises in China is an opportunities for acquisitions, consolidation omen that certain assumptions may no Businesses with strong balance sheets and re-combinations. Restructuring and longer hold in 2021. The long term effects will seek opportunities for inorganic insolvency will ensue from the gradual of the pandemic on financial institutions growth and private equity sponsors with reduction and cessation of stimulus and financial infrastructure remain to be ample dry powder will intensify their hunt packages, furlough schemes and temporary seen. Asset prices have recovered from for investments. In such an environment, relief from legal action in the immediate the sharpest fall in history in the steepest animal spirits will be fuelled by an aftermath of the pandemic. Businesses ascent ever recorded off the back of massive increasing fear of missing out as businesses reliant on such artificial props for survival fiscal stimulus packages financed by the transform digitally and exploit the potential will undergo restructuring, dispose non-core most rapid expansion of sovereign debt in of the Fourth Industrial Revolution to drive assets, be re-capitalised or liquidated, all economic history. productivity growth. duly lubricated by the continuing availability of competitively priced financing. Meanwhile, central banks have rapidly The need to make supply chains more accumulated the largest haul of financial resilient against shocks will also drive deal But pitfalls will remain. Nationalism and assets since the advent of quantitative making activity as re-shoring and near identity politics will continue to dominate. easing to keep long term interest rates low. shoring become strategic imperatives. The recently tabled national security and Banks now record the thinnest net interest The search for resilience will also drive for investment law in the UK is just the latest margins in their history as interest rates turn sustainability in ways of doing business. in a long list similar laws enacted by many negative and rapidly ageing populations Combined with capital from asset Governments including those in the West struggle to find returns for retirement. managers and pension funds focused on and India, Japan and Australia. Undertaking environmental, social and governance cross border deals will become harder and How long can this last? In many ways the investment principles, businesses with take longer as clearances become more inevitable adjustment to the global economy sustainability embedded in their DNA complex. Not only due to heightened foreign and in turn, the deal-making environment, will be the subject of investor attention as investment scrutiny but also because of have not yet been seen. This uncertainty is governments, investors and the general the efforts of competition authorities to probably what represents the greatest risk public get serious about the green new stem transactions that result in greater to the prospects of a swashbuckling year economy. concentration and domination of data and for deal making activity in 2021.
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 21 LEGAL NETWORKS
lenging for everyone — so we added an AI-based technology to our website which assembles in real-time the latest COVID-19 legal updates from our member firms across 150 jurisdictions,” he adds. “We also launched Equisphere, through which clients can have a bespoke legal team knit together using technology, agile work methodology, and professional account manage- ment. Equisphere gives member firms a compelling and differentiating story to tell their clients.” For those with access to a law firm network, tried and tested reinforcements have remained close at hand throughout the pandemic. “Every firm has ‘friends’ and/or offices — what makes the difference is the quality of those firms/offices and how well they work together to meet the specific needs of clients across multiple jurisdictions,” Vala-Webb says, adding that network member firms are “of the highest quality.” In the case of Lex Mundi, this quality is maintained by regular reviews against a published set of service standards. “With Equisphere, member firms have a way to open an entirely new dialogue with their clients about how these leading firms use technology, NETWORK TO GET WORK agile work methodology, and account How can law firms hit the ground running post-pandemic management to deliver value. In addition, and start 2021 strongly? Legal networks like Lex Mundi are Lex Mundi supports our member firms with a variety of programs to enhance here to help. BY ELIZABETH BEATTIE the firms’ operating excellence such as developing a client feedback capability, training senior associates on cross-border As Asia begins to open up, the “Our member firms — directly transactions, and being made aware of pressure is on for law firms to bounce and through their inter-connections — innovative solutions available in the legal back strongly with a game plan. And have been helping clients deal with the technology marketplace,” he adds. they can count on law firm networks, multiple cross-jurisdiction questions that which have supported their members have arisen as a result of COVID-19. Lex GLOBAL SOLUTIONS in reaching across closed borders and Mundi has worked to accelerate firms’ In Asia, markets are slowly reopening, tapping into technology solutions to pivot to working fully digitally through but every jurisdiction faces a slightly ensure firms can best serve their clients’ sharing experiences and best practices,” different challenge. needs. Vala-Webb says. “With COVID, but also other pres- Gordon Vala-Webb, senior advisor, Part of this involved ensuring firms sures such as geo-political realignment, Technology and Innovation at LexMundi were offered a wealth of tools and infor- clients face a rapidly changing environ- tells Asian Legal Business that during mation, at a time when traditional ways ment with extraordinary complexity. As a the pandemic, law firm networks have of conducting business was fundamen- result, they need both expert local advice stepped up to ensure their clients can tally challenged. combined with efficient co-ordination function smoothly across these tumul- “Getting good information on and delivery of those legal services,” says tuous times. COVID-related legal changes was chal- Vala-Webb.
22 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM LEGAL NETWORKS
“The priorities in a COVID and — hopefully soon-to-be post-COVID world — is really an acceleration of previous trends: leveraging digital technologies to enhance the collaboration and co-ordination of people and work, searching for and applying new models for doing the work itself, and improving the processes for understanding and delivering ‘value’ for clients within their business context.” — Gordon Vala-Webb, Lex Mundi
“Simply being a network of firms is In response to this climate, Lex “The Lex Mundi Horizon Scan Tool not enough,” he says, adding that this Mundi’s focused Technology and allows corporate legal functions to was the motivation behind building Innovative programme is aimed at anticipate and proactively respond to Equisphere as a tool for clients to design accelerating the uptake of innovative regulatory challenges in the jurisdictions their bespoke international legal team. technologies and techniques by member where they operate. It provides a risk “It combines the best lawyers in the firms, says Vala-Webb, explaining that mapping matched to client’s geographic jurisdictions that match their unique this will help firms to build their abilities footprint,” he explains. footprint with collaborative technology, to innovative “and understanding of the Looking ahead to the new year, the lean-agile work methodologies and tech options available to them”. law firm network has ramped up collabo- professional account management,” rative projects — including working with he says, noting that this is backed up IMPROVING RELATIONSHIPS legal services consulting firm Elevate as through “a rigorous selection and The COVID-19 pandemic has undoubt- its strategic advisor. membership review process”, in addition edly rendered the once common “Their multi-disciplinary team of with practice standards which outline in-person meeting almost impossible legal professionals, business profes- how clients can expect member firms in some cases — and in 2020, the term sionals, and technology professionals to work together. “meeting” typically means online, via will be helping us further develop our As businesses head into a new year Zoom or Skype. But while physical market position and innovative service — and one where they still face much meetings and travel are restricted, legal delivery model,” Vala-Webb says. ambiguity — strategy will be a priority. networks are still supporting firms to Within this, Lex Mundi is running 2020 may have been about survival, improve client relationships. a “global ‘strategy jam’ using an online but 2021 will be about rebounding and “The launch of Lex Mundi’s ideation platform — focused on younger moving forward. For firms everywhere Equisphere provides member firms with lawyers and innovators from our member the big question, says Vala-Webb, is a compelling value proposition they can firms — to develop new ideas we can “how can clients be best served?” bring to their clients,” Vala-Webb says, incorporate into our strategic plan and “The priorities in a COVID and — noting that the firm’s Global Markets to being to implement in 2021,” says hopefully soon-to-be post-COVID world team is working with member firms to Vala-Webb. — is really an acceleration of previous ensure clients understand how they can This will involve Lex Mundi using trends: leveraging digital technologies to continue to provide top notch support as the platform to run a series of innovation enhance the collaboration and co-ordi- the world rapidly changes. challenges throughout the year in order nation of people and work, searching for Of course, heightened awareness to “tap into the collective creativity of and applying new models for doing the around digitalisation as a critical capa- our 22,000 lawyers; we plan to identify work itself, and improving the processes bility has been another symptom of the new ways for our firms to work together for understanding and delivering ‘value’ pandemic. Vala-Webb notes that devel- and for new products/services that can for clients within their business context,” oping new online tools which support delivery greater value to clients. Some he explains. clients to understand the risks and legal of these ideas will be incorporated into Vala-Webb says that firms will issues they face around the world has Equisphere 2.0 as we work to expand need to hit the ground running in the been a focus for the firm. and deepen this offering,” he says. new year. “There is a set of Global Practice “And we will be repeating our “Thoughtfully leveraging new Guides that GCs can tailor a report to member-only Innovative Solutions digital technologies and being generally their organization’s footprint across Showcase where member firms are intro- innovative to better meet clients’ needs various legal topics such as anti-corrup- duced to the rising stars of legal tech and will be critical for all firms in 2021,” he tion, ASEAN intellectual property, and share the best of what they are doing,” says. employment law,” says Vala-Webb. Vala-Webb adds.
WWW.LEGALBUSINESSONLINE.COM ASIAN LEGAL BUSINESS – DECEMBER 2020 23
Guide to Employment Law in Asia
With the COVID-19 pandemic still yet to be contained, it’s been a difficult year for businesses with retrenchments, and in some case office closures. As staff increasingly work from home, or adapt to more flexible working options, the impact of the past year is likely to be long lasting of businesses, and with this comes new complexities to navigate for employment lawyers. This guide includes comprehensive updates on latest developments from subject matter experts in Singapore, the Philippines and Vietnam.
CHAPTER I : PHILIPPINES ...... P.26 CHAPTER II : VIETNAM ...... P.32 CHAPTER III : SINGAPORE ...... P.38
ASIAN LEGAL BUSINESS — DEC 2020 25 GUIDE TO EMPLOYMENT LAW IN ASIA BROUGHT TO YOU BY ACCRALAW
CHAPTER I Philippines
Filipino workers are recognized as a primary social nity quarantine, which vary depending on the level of economic force. They are essential in the production of restriction to movement imposed: Enhanced Community goods and services which affect the growth of the economy. Quarantine (“ECQ”); Modified Enhanced Community Undoubtedly, work is a necessity that has economic signifi- Quarantine (“MECQ”); General Community Quarantine cance deserving constitutional and legal protection. The (“GCQ”); and Modified General Community Quarantine labor laws currently in place in the country reflect certain (“MGCQ”). ECQ is the most restrictive, and MGCQ the least basic principles enshrined in the present Constitution aimed restrictive. at protecting the interest of labor, promoting full employ- These classifications were designed to reduce the ment and equal work opportunities irrespective of sex, race likelihood of transmission of COVID-19 among persons in or creed. Under the Constitution, the state guarantees that and outside the affected area while striving to balance the it shall protect the rights of laborers and promote their individual interests and freedoms of citizens and industries. welfare, such as, but not limited to the promotion of full As early as 16 March 2020, the President of the employment and equality of employment opportunities to Philippines declared a state of public health emergency the laborers, guaranteeing their right to self-organization, throughout the country due to the rising cases of COVID-19 their right to peaceful concerted activities, and their right to infections. On the following day, the government placed humane conditions of work and a living wage. Furthermore, Luzon, the biggest island of the Philippines, under ECQ. to ensure that the rights of these workers are protected, any It is essentially a lockdown whereby residents, except for ambiguities present in labor contracts and labor legislations workers in identified vital industries, were confined to their shall be construed and interpreted in favor of the laborers. residences. Barely a month later, the rest of the Philippines This does not mean that employers are left with was placed on lockdown as well. With the entire country on no protection, as their rights are also protected by the lockdown, many restrictions were put in place. Under the Constitution. The State merely endeavors to regulate the ECQ, limited establishments and businesses were allowed relations between workers and employers, recognizing the to operate and as a result, a large number of Filipinos right of labor to its just share in the fruits of production and were deprived of their livelihood and pay, following the the right of enterprises to reasonable returns on investments, “no work-no pay” rule. and to expansion and growth. Last 30 January 2020, the World Health Organization A. The Alternative Work Arrangements declared the outbreak of a new coronavirus disease (“COVID- In response to this, the Department of Labor and 19”) originating in Hubei province, China, as a Public Health Employment (“DOLE”) encouraged employers to adopt Emergency of International Concern. Eventually COVID-19 work-from-home arrangements and allowed the following was declared as a global pandemic. As the COVID-19 alternative arrangements: pandemic upset the economies of almost all countries, and brought about a “new normal” at viewing work, this chapter a. Reduction of Workhours – whereby the normal work shall focus on the various employment-related government hours or days are reduced; issuances that strive to mitigate the damaging effects of b. Rotation of Workers – workers are rotated or alternately COVID-19 in the Philippines, and how such issuances have provided work within the week; impacted the Philippine employment scene. c. Forced leave – where employees are required to go on leave, utilizing their leave credits, if any. I. Philippine Government’s COVID-19-Related Measures in the Workplace Significantly, the DOLE allowed a resort to any of In addressing the issue of the pandemic, the Philippine the above arrangements in the exercise of an employer’s government implemented four (4) classifications of commu- management prerogative without expressly requiring the
ASIAN LEGAL BUSINESS — DEC 2020 26 GUIDE TO EMPLOYMENT LAW IN ASIA agreement of concerned workers, in light of the national However, due to the circumstances of the COVID-19 health emergency, for as long as there was consultation, if pandemic, the DOLE has suspended the probationary period possible, and at least a notice of the arrangement given to of employment during the period of community quarantine. the DOLE Regional Office. Specifically, the period during which the enhanced or general While many employers thought of unilaterally reducing community quarantine is enforced, where the establishment salaries, such is not possible in the Philippine setting in light has temporarily ceased or closed operations and/or the of the prohibitions against deductions from wages and the worker was temporarily not required to report for work on withholding of any amount from the same, without the account thereof, shall not be included in determining the consent of the employee. Moreover, the prohibition against six (6)-month probationary period. the diminution of vested benefits (under Article 100 of the Labor Code) limits the flexibility of employers to reduce D. Deferment or Exemption from Payment of Holiday Pay pay and benefits. The DOLE likewise issued multiple Labor Advisories on the Employers have likewise been encouraged to allow payment of holiday pay covering holidays celebrated during high-risk workers [such as those above sixty (60) years of the period of community quarantine. While the provisions of age, or of any age but with any co-morbidities or pre-existing the Labor Code on the payment of holiday pay continue to illnesses] to render work pursuant to a work-from-home apply, the DOLE has permitted employers to defer payment arrangement. of holiday pay until business operations have normalized. In May 2020, the DOLE suggested that employers Moreover, establishments that have totally closed or ceased consider additional alternative working arrangements operations during the period of enhanced community quar- to avoid outright termination of employees. Other than antine are exempted from the payment of holiday pay. the three (3) earlier identified above, these arrangements include: II. Impact of the Pandemic on Philippine Employment Truly, not all businesses can survive the effects of the a. transfer of employees to another outlet of the same pandemic. In fact, many establishments have already employer; resorted to redundancy or retrenchment programs; some b. work from home arrangements; or have resorted to total closure. Even businesses that have c. partial closures of establishments to mitigate losses. been considered pillars in their respective industries were not spared from the effects of the pandemic. Understandably, In this regard, the DOLE also clarified that such flexible work such drastic measures resulted from the government- arrangements are merely temporary in nature and shall be mandated lockdowns meant to fight COVID-19. adopted only for as long as the public health crisis exists. The figure below (Fig.1) depicts the unemployment rate in the Philippines for the past five (5) years. From January B. Agreements Relating to Wages 2015 until January 2020, the period before the pandemic, Additionally, to aid employers and employees, the DOLE unemployment rates hovered from seven (7) per centum, reminded employers and employees to mutually agree to going down to five (5) per centum in January 2020. However, temporarily adjust employees’ wages and wage-related when the pandemic hit, the rate surged to 17.7% due to benefits that the employees were enjoying prior to the weaker business operations, and various adjustments to imposition of the community quarantine. The adjustment keep businesses afloat. of wages and benefits would remain in place for a maximum During a hearing of the Senate Committee of the Whole of six (6) months, or as may be agreed upon in the Collective held on 20 May 2020, the DOLE Secretary reported that Bargaining Agreement, if any. However, the law does not about 2.6M workers then temporarily lost their jobs, due prohibit the parties from renewing such agreement after to the closure of businesses affected by the pandemic. the period has expired. Secretary Bello then initially estimated that about 4 – 5 Million will be jobless due to the pandemic. C. Suspension of the Probation Period As of 9 June 2020, the DOLE announced that 2000 In the Philippines, it is not uncommon for employers to put establishments across the country have permanently laid a newly hired employee under a probationary period as off 69,022 employees. 193 of these establishments have part and parcel of its power to hire. The probationer has declared permanent closure, while 1875 others have reduced to meet the company’s performance standards for regu- their workforce. The DOLE recorded around 1.9M workers larization during his probation. The probationer’s failure already adversely affected by the Temporary closure of to meet these standards will justify the termination of his companies while about 960,000 got back to their jobs under employing. During the period of probation, the employer flexible work arrangements. observes the skill, competence, and attitude of the proba- Understandably, the effects of the pandemic were tionary employee. The probationary period should not last not confined to the borders of the Philippine archipelago. for more than six (6) months. Filipinos working abroad were also affected by the pandemic.
ASIAN LEGAL BUSINESS — DEC 2020 27 GUIDE TO EMPLOYMENT LAW IN ASIA
(Source: Philippine Statistics Authority)
As a result of many countries experiencing similar business (2) months, to employees of small businesses affected by declines of their own, brought about by their imposition of the pandemic. lockdowns and restrictions related to the pandemic, the demand for Filipino workers abroad also declined. C. The TUPAD Program for the Informal Sector Lastly, aside from financial assistance, the government, III. Government Assistance to Employees and Employers through DOLE, established the Tulong Panghanapbuhay during the ECQ Period sa Ating Displaced/Disadvantaged Workers Program or To alleviate the sudden financial burden brought about by the “TUPAD” Program. This program provides temporary a large number of the labor force not being able to earn wage employment for displaced, underemployed, and self- wages, the government implemented various employment employed workers who have either lost their livelihood or and financial assistance programs. whose earnings were affected due to the pandemic. The workers hired under the program are tasked to disinfect A. The CAMP Program of the DOLE or sanitize their houses and the immediate vicinity of their At the start of the ECQ, the government rolled out the houses. In exchange, these workers are paid one hundred COVID-19 Adjustment Measures Program or “CAMP.” This per centum (100%) of the prevailing highest minimum wage program offered financial support to affected workers in in the region where they are working. private establishments that have adopted flexible work arrangements or have temporarily closed during the IV. Businesses Allowed to Open during Community pandemic. Under this program, a one-time financial assis- Quarantine and Conditions Therefor tance equivalent to five thousand pesos (PhP 5,000.00) was In continuing to curb the spread of COVID-19 while recog- provided to affected workers in lump sum, regardless of the nizing the need for businesses to slowly reopen, guidelines applicant employee’s employment status. Unfortunately, this focused on categorizing specific industries and determining program was suspended on 16 April 2020 due to depleted the gradual increase of operational and venue capacity, as funds. well as operating hours, were implemented. However, since the classifications of community quarantine vary from region B. The Government’s SBWS Program to region, depending on any critical rise or fall of COVID-19 To replace the “CAMP,” the Social Security System, cases in a particular area, businesses that were permitted to Department of Finance, and the Bureau of Internal Revenue, operate still depended on the quarantine level imposed in the through a Joint Memorandum, implemented the Small jurisdictions the establishments were respectively located. Business Wage Subsidy (“SBWS”) Program. This program provides subsidies – both cash and non-cash – of at least A. The Lockdown under ECQ Five Thousand Pesos (PhP 5,000.00) to a maximum of By way of an overview of such categorization of industries, Eight Thousand Pesos (PhP 8,000.00) per month for two under ECQ, only a handful of vital industries are permitted
ASIAN LEGAL BUSINESS — DEC 2020 28 GUIDE TO EMPLOYMENT LAW IN ASIA to operate (and at varying operational capacities). These Notably, personnel with temperature higher than include power, energy, water, and other utilities, agriculture, 37.5°C, even after a five (5)-minute rest, or whose response in fishery, and forestry industries, food manufacturing and the questionnaire needs further evaluation by the clinic staff, food supply chain businesses, including food retail estab- should be isolated in an area identified by the company and lishments such as supermarkets, grocery stores, and food not allowed to enter the premises. Moreover, equipment or preparation establishments insofar as take-out and delivery vehicles entering an establishment’s hub operational area services, food delivery services, health-related establish- must go through a disinfection process. ments, the logistics sector, information technology and telecommunication companies, and the media. B. The DOH Memorandum Circular In addition to the foregoing, the Department of Health B. Gradual Opening under GCQ (“DOH”) issued Department Memorandum No. 2020-0220, On the other hand, under GCQ, industries have been divided providing for guidelines aimed at preventing, controlling, into four (4) categories or sectors with varying levels of and diminishing infection in the workplace. operational capacity. Those previously mentioned as being permitted to operate under ECQ fall under Category I, which C. On Testing and Other Health Safety Measures permits them to operate at full operational capacity. Under the Memorandum, returning employees and workers Under GCQ Category II, businesses, i.e. mining and physically reporting to their place of employment shall be other manufacturing, and electronic commerce compa- screened for symptoms of COVID-19 and/or relevant history nies, as well as other delivery, repair, and maintenance, of travel or exposure. While asymptomatic employees are and housing and office services, are permitted to operate cleared to return to work, symptomatic employees with anywhere between fifty percent (50%) up to full operational history of travel or exposure cannot physically return to work capacity, without prejudice to work-from-home and other until a Certificate of Quarantine Completion issued by a care alternative arrangements. facility or local health office is presented. The Memorandum Meanwhile, Category III industries, including financial also issued guidelines on testing of asymptomatic returning services, legal and accounting, auditing services, profes- employees, including testing of a representative sample, sional, scientific technical, and other non-leisure services, via either Reverse Transcription Polymerase Chain Reaction as well as other non-leisure wholesale and retail estab- (RT-PCR) or rapid antibody-based testing, and which shall lishments may operate at fifty percent (50%) work-on-site be reported to the DOH. arrangement, without prejudice to work-from-home and Although testing of workers for COVID-19 is not manda- other alternative work arrangements. tory on the part of the Company, if the employer decides to Finally, industries classified under Category IV are still test its workers, a company policy on COVID-19 testing must not allowed to operate under GCQ. These include gyms, be formulated and agreed upon between the parties. The sports facilities, most entertainment establishments (such costs of the tests shall be borne by the employers. as cinemas, bars, clubs, etc.), playgrounds and playrooms for Should an employee present in the work premises children, libraries, archives, zoological gardens, art galleries be suspected as having COVID-19, he must immediately and other cultural centers, tourist destinations such as water proceed to the isolation area designated in the workplace. parks, beaches, and resorts, travel agencies, gambling and Should there be a need to transport the worker suspected of betting areas, personal care services, and any other amuse- COVID-19 to the nearest hospital and conduct PCR testing, ment, leisure, gaming, and tourism establishments that company protocols for the same should be in place. promote mass gathering. Meanwhile, the workplace should be decontaminated with appropriate disinfectant (e.g., chlorine bleaching solu- V. Guidelines for Returning to Work tion and 1:100 phenol based disinfectant). Twenty-four (24) hours after decontamination, work can resume. On A. The Joint DOLE/DTI Guidelines the other hand, workers present in the work area with the As quarantine measures continue to ease and industries suspect COVID-19 worker shall go on fourteen (14) days are slowly being permitted to operate, the DOLE and home quarantine with specific instructions from the clinic Department of Trade and Industry (“DTI”) jointly issued staff on monitoring of symptoms and possible next steps. guidelines on the minimum safety and health standards If the suspected worker tests negative for COVID-19, the to be implemented in all workplaces. Prior to entry in the co-workers may be allowed to report back to work. workplace, all employers and workers shall: (a.) Wear face In light of the foregoing requirements, and other poli- masks (which must be provided by employers) at all times; cies and safety measures that the Company may implement, (b.) Accomplish a daily health symptoms questionnaire the DOLE issued Labor Advisory No. 17, series of 2020. that must be submitted prior to entry; and (c.) Have their Under the Advisory, employers must shoulder the cost of temperature checked and recorded in the health symptoms COVID-19 prevention and control measures, such as but questionnaire. not limited to the following: testing, disinfection facili-
ASIAN LEGAL BUSINESS — DEC 2020 29 GUIDE TO EMPLOYMENT LAW IN ASIA ties, hand sanitizers, personal protective equipment (e.g., The full impact and effectiveness of the Philippine face masks), signages, proper orientation and training of Government’s COVID-19 measures and issuances have yet workers including IEC materials on COVID-19 prevention to be properly evaluated. Suffice it to state that as of 29 and control. With respect to contracts for construction June 2020, a University of the Philippines COVID-19 study projects and for security, janitorial and other services, the reported among others, that the COVID-19 r-naught for the cost of COVID-19 prevention and control measures shall infectivity or transmission rate for the country stood at 1.28 be borne by the principals or clients of the construction/ as of 25 June 2020. service contractor. On this note, the DOLE clarified that These figures only mean that the pandemic is yet to be no cost related or incidental to COVID-19 prevention and contained. We can only hope that Philippine authorities will control measures shall be charged directly or indirectly to be able to strike the right balance between caring for the the workers. health of Filipinos and progressing the Philippine Economy.
AUTHORS:
Emerico O. De Guzman, Managing Partner, [email protected] Emerico O. De Guzman is ACCRALAW’s Managing Partner. His practice areas: Appeals, Employment, Labor Standards/Relations, Mergers and Acquisitions, Outsourcing, and Litigation of Employment Claims. He has LL.B. and BS (Psychology) degrees from the University of the Philippines. His special studies include attendance at: the Law Firm Leadership Program, Harvard Law School Executive Education (2018); the Academy of American and International Law, Dallas, USA (2005); and Program on Negotiations, National University of Singapore (1999). He is the Chair, Legal Practice Committee, of the Inter-Pacific Bar Association; previ- ously President of the Philippine Bar Association and People Management Association of the Philippines.
Rhett D. Gaerlan, Associate, [email protected] Rhett D. Gaerlan is an Associate of ACCRALAW’s Labor and Employment Department. He has a J.D. degree from the University of the Philippines, and a degree in BS Management, Major in Legal Management and Minor in Decision Science from the Ateneo de Manila University.
Johanna Celine Mari A. Chan, Associate, [email protected] Johanna Celine Mari A. Chan is currently an Associate at ACCRALAW. Her practice focuses on Labor and Employment issues. Her formative years were spent interning at top law firms and legislative offices. She has a J.D. degree from the University of the Philippines and AB Political Science from the Ateneo de Manila University.
ABOUT ACCRALAW: Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW) is the country’s largest law firm with a cohesive multi-disciplinary team of legal professionals who possess in-depth knowledge in specialized fields of law, backed by extensive experience of over forty-eight years in the practice of law in the Philippines. From a core group of seven lawyers at its inception in 1972, the Firm has grown to a prestigious service organization of more than 170 lawyers and over 170 non-legal personnel. The firm has full service branches in thriving business commercial centers in the Visayas and Mindanao - Cebu City and Davao City. The Firm has an excellent track record in litigation and dispute resolution, labor and employment law, intellectual property, and in handling diverse, significant, and complex business projects and transactions for both local and multinational clients. ACCRALAW’s clientele represents the full spectrum of business and industry, and includes professional organizations and individuals. Servicing the Firm’s clients are seven practice departments and two branches, which offer timely, creative, and strategic legal solutions matched with cost-efficient administration and expert handling of clients’ requirements.
ASIAN LEGAL BUSINESS — DEC 2020 30 GUIDE TO EMPLOYMENT LAW IN ASIA
BROUGHT TO YOU BY INDOCHINE COUNSEL
CHAPTER II Vietnam
I. Key employment trend in major Asia’s market returns to normal. Remote work increases time efficiency, The COVID-19 pandemic deleteriously affected the labor living cost efficiency and decreases budgets for working market and is predicted to continue negatively influencing premises by companies. employment trends across Asia in the upcoming year. At the beginning of 2020, it was predicted that the unemploy- Digital adoption ment rate in Asia-Pacific would remain on the low side, As remote work is increasingly favored, communications, standing at about 4.1%. The situation changed dramatically, performance monitoring and management will occur however, and many experts anticipate a raise in that figure. digitally. Traditional face-to-face interviews will likely be The COVID-19 pandemic also changed the way businesses replaced by online interviews. This presents opportuni- are operating and the way employees work. Social distancing ties for data collection, cloud computing and productivity measures have resulted in a shift in working locations. Many supporting apps. It is also expected that a large workload companies are opting for work-from-home alternatives, will move to cloud computing systems instead of staying allowing their employees to work remotely, as opposed to on traditional hosted servers. traditional work on the company’s premises. Many service- oriented businesses also suffer from a loss of customers and Cyber-security and e-commerce lack of operations, especially in the travel industry. But the Social distancing has changed the way people shop. Many new COVID-19 pandemic has also seen an increased demand categories will join the basket of e-commerce, making every for IT-oriented and e-commerce related jobs. product, or service, available online. The growth will be higher in emerging economies with the rise of internet penetration Increase in remote work and data speeds. Post-COVID-19 the e-commerce growth rate The extensive conversion to remote work has resulted in will outpace earlier levels. E-commerce will expand from B2C many mishaps – but also a viable option for many compa- to B2B for companies to buy products and services for their nies. The continuation of this exploration of remote work will workforces. Digital payment and digital wallets will likely see be a trend in the upcoming year, even when the situation a major increase in use in the upcoming months.
Graphic on unemployment rates in Asia-Pacific across the year, source: ILO
ASIAN LEGAL BUSINESS — DEC 2020 32 GUIDE TO EMPLOYMENT LAW IN ASIA Digital adoption will result in demand for cyber-security from home. However, it is unlikely that employers services. The development of safe and secure payment gate- can force their employees to work from home if the ways and security walls will drive market growth. employees oppose such measure. (iii) Rights to screen employees and visitors’ temperatures II. COVID-19: Employers’ rights and obligations The 2015 Law on Occupational Safety and Hygiene (the Employers all over the world, including Vietnam, are faced “OSH Law”) provides that annually, or when necessary, with unprecedented challenges after the emergence of employers must conduct inspection and assessment of COVID-19. They need to be able to respond rapidly and deci- dangerous or harmful factors in the workplace and carry sively to actual facts as well as government directions as they out technical measures for elimination or reduction of arise while maintaining compliance with legal obligations. such factors, improvement of working conditions and Under the recommendations for prevention of COVID-19 healthcare for employees. Employers have the right to of the Ministry of Health of Vietnam (the “MoH”), employers request employees to follow internal rules, processes are recommended to perform the following tasks: and measures for occupational safety and hygiene in the workplace. a. To set up places for hand sanitizing with soap or sani- tizer with 60% (or more) of alcohol. In addition, the PFID Law generally recognizes enter- b. To properly sanitize and thoroughly clean the floor and prises’ rights to prepare and implement plans to prevent surface of items that may carry the virus, e.g. doorknobs, and control infectious diseases on a case-by-case basis. elevator buttons, working desks, computer keyboards, etc. This provides a basis for employers to implement c. To ensure good ventilation in the office. temperature screening for employees and visitors entering d. To issue internal regulations and instructions for their workplaces. Many public and private entities in Vietnam employees to prevent contracting COVID-19. The have adopted precautionary measures with regard to visi- MoH also requires workplaces that have employees in tors/customers including a daily check of employees’ body constant contact with numerous individuals to supply temperature and COVID-19 symptoms, requiring visitors/ their employees with health masks and to instruct them customers to declare their travel history, and isolating them on proper wearing methods, and may consider installing should they show symptoms and/or have traveled through glass partitions in transaction counters. epidemic stricken regions. e. To allow employees to work from home in case they have just returned from epidemic regions/are in close contact III. Company’s rights and obligations toward gig workers with those from epidemic regions/show symptoms of under Vietnam’s laws contracting the COVID-19. Under the laws of Vietnam, the term “gig worker” is not defined. The closest concepts here are temporary/seasonal It is also required that employers report any suspected workers and independent contractors. and infected cases to local health agencies within 24 hours of such detection per the Law on Prevention and Fighting Temporary/seasonal workers of Infectious Disease (the “PFID Law”). If the employers a. Labor Agreements for seasonal workers who work on have reason to believe employees are high risk (showing specific jobs symptoms of COVID-19 including cough, fever, sore throat, Companies are permitted to employ seasonal workers shortness of breath, and fatigue), employers must inform who work on specific jobs by a seasonal labor agree- the local health agency. Failure to do so will result in an ment with a duration of less than 12 months. If the administrative fine of VND400,000 to VND1,000,000. duration is less than three months, companies can make a verbal agreement with employees. (i) Right to disclose an employee’s COVID-19 status The 2012 Labor Code dictates that, regardless of Vietnam has launched a public app for health declara- duration of the contract, companies can only re-sign tion. All Vietnamese citizens and foreigners living in seasonal labor agreements one time upon the expiration Vietnam are advised to provide health declaration. It of the first seasonal labor agreement. After the second is not, however, permitted for companies to announce seasonal labor agreement expires, if the company still an employee’s illness without their express consent. wishes to retain the employee, they must negotiate an It is required that all infected individuals be isolated indefinite-term labor contract. Workers employed under and identify individual contacts for checks. Employers a seasonal labor agreement are entitled to the same must disclose positive cases pursuant to Article 8.3 of benefits as definite-term employees and indefinite- the PFID Law, even without consent from the infected term employees, which include participation in statu- employee, to other employees and the authorities. tory health insurance and social insurance for workers (ii) Right to require employees to work from home who enter into labor contracts with a duration of one Employers are permitted to require employees to work month and above, statutory leave and severance or
ASIAN LEGAL BUSINESS — DEC 2020 33 GUIDE TO EMPLOYMENT LAW IN ASIA job-loss allowance upon termination of employment. to carry out specific tasks. The service agreement is governed Companies are not entitled to require a probation period by the Civil Code, no employment relationship between the for seasonal employees. Companies must contribute parties is established and therefore they are not subject 21.5% of the employee’s monthly salary directly, without to labor regulations. Companies which enter into service subtraction to their salary, to the social security fund agreements with independent contractors may not be enti- for employees that work for more than three months. tled to request fixed hours of work, nor full-time devotion. Under the 2019 Labor Code, the concept of a Depending on the agreement between the parties, an inde- seasonal labor agreement will be abolished. There will pendent contractor is also not required to perform their work only be two types of labor agreements: an indefinite- in the company’s premises. term agreement and a definite-term agreement with Companies are also not obliged to grant independent the maximum duration of 36 months. There will be no contractors statutory leave, severance or job-loss allowance minimum threshold for labor agreements. Companies upon termination of the service agreement. An independent that wish to employ temporary/seasonal workers will contractor is not obliged to participate in statutory social then be obliged to enter into definite-term contracts of insurance, health insurance and unemployment insur- up to 36 months. Companies will only be able to verbally ance, which equates to the companies not being obliged employ a worker for employment relationships of up to to contribute to social security funds. one month. The number of times that a definite-term To avoid a potential issue of interpretation of such contract can be renewed will be unchanged, with an agreement as a labor contract, the terms and language exception for foreign employees, elderly employees, and of the service contract should be clear so as to not being officers of employee representative organizations, with interpreted by the contractor and/or a third party or govern- whom companies will be able to renew the definite-term mental authority as an employment contract. employment contracts more than twice. A probation period shall not be applied to workers for employment IV. Preventing discrimination in the workplace: Effective relationships of up to one month. policies b. Termination of Labor Agreement Under both the 2012 and 2019 Labor Code of Vietnam For employment relationships of less than 12 months, (collectively referred to as the “Labor Code”), it is strictly under the 2012 Labor Code, companies can unilaterally prohibited to discriminate on the basis of gender, race, skin terminate labor agreements by giving three day’s notice color, social class, beliefs, religion, HIV, infection, marital on the ground that (i) the employees failed to perform status, pregnancy status, or disability and sexual harass- works specified under the labor agreements on a regular ment. Employers are also obliged to ensure equal pay and basis, or (ii) the employees have been hospitalized for not discriminate on salary due to gender discrimination. more than half of the employment duration and are The 2019 Labor Code clearly defines sexual harass- not fully recovered, or (iii) the companies are forced to ment in the workplace. It is any behavior of a sexual nature reduce operation scale and cut down on vacancies due by any person to another person in the workplace which is to force majeure events, (iv) the employees fail to be considered as unwanted and unacceptable by the recipient. present at the workplace after 15 days from the expiry A workplace is any place where an employee works pursuant date of the temporary suspension of a labor contract, to the agreement with or assignment by the employer. The (v) the employees provided false information during the 2019 Labor Code also provides that an employee may unilat- recruitment process that affected the recruitment results. erally terminate the labor contract immediately without Under the 2019 Labor Code, employers who decide giving prior notice if she/he is being sexually harassed. to terminate labor agreements with their employees, The prevention of sexual harassment in the workplace is will only have to inform their employees three days in a compulsory content in internal labor rules in order to advance of their dismissal in the cases (i), (ii) and (iii) effectively prevent discrimination from occurring in the as stated above, and (iv) if the employee is at retire- workplace. ment age, unless otherwise agreed. Employers will be Even though regulation of internal policies with regard permitted to unilaterally terminate labor agreements to non-discrimination has not yet been specified, except for with immediate effect if (i) the employees are absent sexual harassment, following are our recommendations of without excuse for five or more consecutive working some key issues that should be considered to ensure a non- days, or (ii) the employees fail to be present at the discriminatory working environment: workplace after 15 days from the expiration date of the temporary suspension of a labor contract. a. Employing non-discrimination recruitment schemes. It is of vital importance that employers practice non- Independent Contractors discrimination in recruitment of employees. To gradually Independent contractors are not employees, but rather eliminate discrimination in the workplace, the first step contracted through a service agreement with a company for employers to take is to dismiss all discriminatory
ASIAN LEGAL BUSINESS — DEC 2020 34 GUIDE TO EMPLOYMENT LAW IN ASIA preferences in recruitment practices, including gender Below are some of our recommendations on dealing with bias, race bias, disability bias, HIV bias, etc. whistle-blower complaints. b. Developing written policies that define rules and proce- dures on treatment of discrimination. a. Evaluating the potential impact of a compliant against Identifying discriminatory behaviors and resolving the company them is an important step a company should take. The first step in handling a whistle-blower complaint is An employee handbook which covers a broad range to perform an evaluation on the potential impact of a of potential discriminatory acts and a clear, detailed complaint on the company. At this stage, it is advisable protocol on how discrimination complaints can be filed, that only a few people be involved. This will ensure that handled and resolved should be prepared and issued the subject of the report remains unaware, which helps to all incoming employees. preserve the integrity and credibility of the investigation c. Establishing a competent and consistent process of process. dealing with discrimination. b. Conducting investigation procedures Resolving existing discrimination issues in a quick, fair Generally, the complaint can be handled by either and effective manner will help in maintaining workplace an in-house department or through external coun- dynamics and employee trust. Employers should review sel’s assistance. Where senior personnel or managing each complaint and perform investigation procedures. officers are involved, the company should engage A documented process is highly recommended and all external counsel to avoid a conflict of interest. protocol and disciplinary procedures should be based c. Response to whistle-blower complaint upon the findings of an investigation. It is important By ensuring the whistle-blower complaint is handled for companies to be consistent with the enforcement of with diligence and respect, the company can encourage such policies and continue to work towards a discrimi- the whistle-blower to give more details. It is recom- nation-free workplace. mended that the company puts specific questions to d. Regularly training on equality and non-discrimination help the whistle-blower fully understand and address policies. the complaint. Regular training sessions on equality and non-discrim- d. Informing others at the company ination policies should be mandatory for all staff and The company should protect the anonymity of the management personnel. It provides an opportunity whistle-blower. The disclosure of the identity of the to explain inappropriate language and potential trig- whistle-blower can lead to a claim of reprisal which, gers that can spark a hostile work environment. Team- though not necessarily prohibited by the laws of building activities also help with communication and Vietnam, may contribute to employee causes of action establish an understanding among the staff. against the employer if the whistle-blower feels intimi- e. Maintaining direct communication with employees. dated by colleagues. Another recommended practice to prevent workplace e. Informing third parties discrimination is to communicate with employees It is also necessary to identify to which third party the on a regular basis. It is helpful to gain feedback company is statutorily required to report the complaint. on their experiences and if they have experienced This can help the company avoid significant negative discrimination firsthand or witnessed it on the job. consequences. On-going communication will help employees feel more comfortable relaying their concerns. It also reas- VI. Fostering physical and mental well-being in the work- sures them that the company has their best interest place through policy in mind. Under the OSH Law, employers should rely on the health standards for each type of job when recruiting and assigning V. Employee complaint hotlines and how to deal with work to employees. Employers are obligated to take care whistle-blower complaints of the health and well-being of employees and conduct In January 2019, the Ministry of Labor, Invalids and Social annual health checks for all employees including appren- Affairs (the “MOLISA”) announced the establishment of tices and trainees. Employers are encouraged to organize a hotline for complaints and reports of issues under its annual convalescence and health rehabilitation activities management, including employment issues. Any complaints for employees performing heavy, hazardous or dangerous and reports on employment issues may be made directly occupations or extremely heavy, hazardous or dangerous to the MOLISA. occupations and for employees with poor health condi- Under the laws of Vietnam, the concept of a whistle- tions. In addition, the employer is obligated to formulate blower has yet to be regulated. The entire matter lies in and manage occupational health records of employees and the hands of the employers – whether or not they wish to inform employees of results of health check-ups and medical establish a protocol for internal whistle-blower complaints. examinations for the detection of occupational diseases and
ASIAN LEGAL BUSINESS — DEC 2020 35 GUIDE TO EMPLOYMENT LAW IN ASIA annually report on the management of their employees’ • Providing opportunities for employees to look after health to the competent state agencies. their mental well-being Employers must realize that fostering physical and • Promoting policies and practices that promote mental well-being in the workplace not only fulfills the well-being employer’s obligation to contribute to the socio-economic b. Developing skills for managers and supervisors to: development, but also results in improvement in work quality • Promote the well-being of employees and effect. • Deal with issues around stress and mental health Many companies in Vietnam maintain measures to effectively care for their employees’ physical health by funding yearly c. Providing support to employees through: medical exams, holding sporting events to encourage phys- • providing a work environment that promotes and ical fitness. Yearly trips and team building activities also supports well-being for all employees contribute to employees’ mental well-being. Nevertheless, • offering assistance, advice and support to people there is a lack of a clear well-being policy within workplaces, who experience a health problem while in employ- especially with regard to mental health. ment • support for staff returning to work after a period A well-being policy should highlight the following points: of absence due to mental health problems d. Helping people get back to work after a period of a. Promotion of mental well-being of all staff through: absence due to mental illness through: recruitment • Providing information and raising awareness about practices; making reasonable adjustments; retaining mental well-being staff who develop a mental health problem.
AUTHORS:
Le Nguyen Huy Thuy, Partner, [email protected] Le Nguyen Huy Thuy is one of the founding partners of Indochine Counsel. With 21 years of legal experience in Vietnam, he has major experience in property & construction, mergers & acquisitions, corporate & commercial, labor & employment, inward investment and dispute resolution. He has advised and assisted a number of foreign companies and foreign funds in mergers & acquisitions and large foreign investors in property development projects. He has written extensively about foreign investment, business and property laws in Asian Legal Business and leading business newspapers in Vietnam. He is also a local contributor for “Doing Business Project – Vietnam”, a World Bank publi- cation, since 2006 and is one of the contributors for the “Corporate Governance ROSC Assessment for Vietnam.
Le Thi Khanh Hoan, Senior Associate, [email protected] Le Thi Khanh Hoan joined Indochine Counsel in October 2006. She has advised on foreign investment, corporate & commercial transactions, taxation and employment issues for companies doing business in Vietnam. She has assisted various foreign companies to set up subsidiaries, branch offices and representative offices. She is also experienced in advising corporate clients and foreign contractors in compliance and regulatory issues. After graduating from Hanoi Law University, Hoan practiced law at a major local law firm for six years before she joined Indochine Counsel. She has gained substantial expe- rience in corporate & commercial work, licensing matters, labour and taxation issues. She has acted for a number of foreign companies in labour disputes.
ABOUT INDOCHINE COUNSEL: Established in 2006, Indochine Counsel is one of Vietnam’s leading law firms and is capable of running with both boutique services and large M&A deals. It is a business specialty firm with six partners and thirty lawyers in both Ho Chi Minh City and Hanoi. Indochine Counsel’s objective is to provide quality legal services and add value to clients through effective customized legal solutions that work specifically for the client. The firm represents local, regional and international clients in a broad range of matters including transactional work and cross-border transactions. The firm’s clients are diverse, ranging from multinational corporations, foreign investors, banks and financial institutions, securities firms, funds and asset manage- ment companies, law firms to private companies, SMEs and start-up firms in Vietnam.
ASIAN LEGAL BUSINESS — DEC 2020 36 GUIDE TO EMPLOYMENT LAW IN ASIA
BROUGHT TO YOU BY JACQUE LAW LLC
CHAPTER III Singapore
I. OVERVIEW 8. While, in general, it is for the employer and the employee 1. In Singapore, as with other areas of law, the sources to decide and agree on the terms of the employ- of employment law are legislation, subsidiary legisla- ment contract, the EA mandates that certain terms tion, and the common law. There are several legisla- be subject to a minimum requirement. For example, tions governing employment matters, the key legisla- the EA provides that the notice period to terminate tion being the Employment Act (“EA”). The Ministry an employee who has been employed for more than 5 of Manpower (“MOM”) administers the EA and deals years be at least one month. with employment-related matters such as enforcement of the EA and the formulation and implementation of C. Remuneration employment policies. 9. The employee’s remuneration is a matter of agreement 2. Advisories and guidelines jointly issued by the MOM, between the employer and employee. Employees in Singapore National Employers Federation and National Singapore do not have a minimum wage, and this is Trades Union Congress, collectively known as the the case for both local and foreign employees. “tripartite partners”, supplement the law. The tripartite 10. It is compulsory for both employees and employers partners represent the interests of the government, in Singapore to make monthly contributions to the employers, and employees respectively. While these employee’s Central Provident Fund (“CPF”) account advisories and guidelines are not law, one is encour- if the employee is a Singapore Citizen or Permanent aged to abide by these best practices. Non-compliance Resident. CPF is a compulsory savings scheme in with these advisories will be taken into consideration Singapore and is only applicable for working Singapore in determining if there has been an infringement of the Citizens and Permanent Residents. The purpose of CPF law. is for Singapore Citizens and Permanent Residents to set aside funds for their retirement and healthcare needs. II. THE EMPLOYMENT ACT The monthly rate of CPF contributions can be found in A. Scope of EA the First Schedule of the Central Provident Fund Act 4. The EA applies to the employment of both local and and differs according to income and, if the employee foreign employees, whether they are employed on a is above 55 years of age, the age of the employee. The full-time, part-time, permanent, temporary or contract employee’s contributions will be deducted from his or basis. her monthly salary, whereas the employer’s contribu- 5. There are classes of employees that receive special tions will be an additional component, paid in addition protection or benefits, and there are certain provisions in to the employee’s salary. the EA that cater to them. This is elaborated on below. 11. Employers must pay late payment interest to the CPF 6. Seafarers, domestic workers, and employees of a statu- Board, the government body in charge of administering tory board or civil servants are not covered under the the CPF scheme, if they are late in submitting the contri- EA. butions. 12. Failure to make contributions is also an offence punish- B. Key Employment Terms able with a fine or imprisonment or both. 7. Singapore law requires that the key employment terms 13. In Singapore, employers are also encouraged by the be in writing, such as the employee’s job title and salary, National Wage Council (“NWC”) (another tripartite body and that a written record of these terms be provided to made up of representatives of employers, employees, the employee. The full list of key employment terms can and the government) to adopt a flexible wage system be found in the Employment (Employment Records, Key by including variable components to employee sala- Employment Terms and Pay Slips) Regulations 2016. ries. Employers can adjust employee salaries quickly in
ASIAN LEGAL BUSINESS — DEC 2020 38 GUIDE TO EMPLOYMENT LAW IN ASIA response to changes in the economy and help to keep (ii) Annual Leave: companies afloat and reduce job losses in the event of For the first year of service, employees are enti- a recession. tled to 7 days of paid annual leave. Thereafter, 14. One such component is the monthly variable compo- leave entitlement increases by a day for every nent (“MVC”), which is part of an employee’s basic additional year of service, up to a maximum of 14 wage. In response to the current economic crisis due to days. Employers are of course free to give more. COVID-19, the NWC has recommended that employers (iii) Sick Leave: consider adjusting the MVC downwards, thus reducing Employees are entitled to 14 days of paid sick leave an employee’s overall monthly wage, if the payment of each year. If hospitalisation is required, the entitle- employee salaries at current levels is unsustainable. ment increases to 60 days of paid sick leave. (iv) Maternity, Paternity and Childcare Leave D. Working Hours For employees who have children, the amount 15. In general, Singapore law does not mandate fixed of maternity, paternity, and childcare leave they working hours and employers are free to prescribe the are entitled to depends on whether the child is working hours that they require. The only exception to a Singapore Citizen. If the child is a Singapore this is for employees covered under Part IV of EA (“Part Citizen, the Child Development Co-Savings Act IV Employees”), where there are laws governing the (“CDC Act”) provides for longer periods of leave numbers of hours they are allowed to work. for the parent. A summary of the employee leave 16. Part IV Employees are workmen earning a basic monthly entitlement is in the table below. salary of not more than $4,500 and employees, who are not workmen, managers or executives, who earn a monthly basic salary of not more than $2,600. For Child is a Child is not a these employees, the EA provides that: Type of Leave Singapore Singapore (i) Hours of Work: Citizen Citizen Part IV Employees cannot work more than 6 consecutive hours without a period of leisure. They Maternity Leave 4 months 3 months also cannot work more than 8 hours in one day or No leave more than 44 hours in one week. Paternity Leave 2 weeks For shift workers, this restriction on working entitlement hours does not apply. However, the average Childcare Leave number of hours worked by shift workers over a (if child is below 2 – 6 days* 2 days continuous period of 3 weeks must not exceed 44 7 years of age) hours per week. (ii) Rest day: Childcare Leave Part IV Employees must be given a minimum of (if child is No leave 2 days one rest day a week, unless they need to work between 7–13 entitlement continuously in successive shifts or certain speci- years of age) fied circumstances apply, such as where there is urgent work needed for a machinery or plant or where an accident has occurred. *Depending on employee’s length of service with the employer. The EA specifies the salary payable to a Part For more details, please refer to Section 12B of the CDC Act. Do IV Employee working on a rest day. The amount note that leave entitlement is capped at 6 days regardless of differs depending on whether the employee volun- the number of children under the age of 7 the employee has. teered to work the additional hours, or if this was requested by his employer. F. Termination (iii) Overtime: 18. Both employer and employee can terminate the employ- Overtime is subject to a limit of 12 hours in any one ment contract provided that the requisite notice is given. day, and a limit of 72 hours a month. Unless there is an express agreement to the contrary, the employee must serve the relevant notice period set E. Leave out in the employment contract. 17. Under the EA, employees are entitled to the following 19. If there is no notice period stated in the contract, Section types of paid leave: 10(3) of the EA provides for a default period based on (i) Holiday Leave: the length of service of the employee. An employee is entitled to a paid holiday at his 20. In Singapore, it is an offence to terminate the employ- gross rate of pay on a public holiday. ment of a female employee while she is on maternity
ASIAN LEGAL BUSINESS — DEC 2020 39 GUIDE TO EMPLOYMENT LAW IN ASIA leave, and to terminate on the ground of age for any the contract by manifesting an intention to no longer be employee who is below 62 years of age. bound by the contract, which position is then accepted by the employee.” (i) Paying salary instead of serving notice 27. An example of a case where the Court found that the 21. An employer who does not require his or her employee employer’s actions amounted to constructive dismissal to serve the notice period can do so if the employer pays is Cheah Peng Hock v Luzhou Bio-Chem Technology the employee his or her salary for the specified period Ltd (“Cheah”). In Cheah, the employee in question was of notice. Parties can also agree in writing to abridge the chief executive officer (“CEO”) of the company. The the notice period. company had excluded the CEO from meetings held to discuss his decisions as CEO, reversed decisions that (ii) Separation agreements he had made, appointed a joint-CEO to act together 22. The employer and employee can also terminate the with him, withdrew his entitlement to a company car employment on terms not provided for in the employ- and allowed the joint-CEO to take over his office space. ment contract by entering into a separation agreement. Based on the totality of the company’s actions, the Court The separation agreement can provide for payment of found that the CEO had been constructively dismissed extra monies to the employee and stipulate the employ- even though he had resigned. ee’s notice period or last day of work (which differs from that prescribed in the employment contract). (vi) Retrenchment 28. The Employment Act does not define “retrenchment” or (iii) Placing employees on garden leave “redundancy”. MOM, in its guidelines, define retrench- 23. “Garden leave” is a situation where an employer requires ment as “dismissal on the ground of redundancy or by the employee to serve his or her notice period but not reason of any reorganisation of the employer’s profession, return to the office and to not engage in work although, business, trade or work”. he or she is still employed by the employer during the 29. The Singapore government takes the view that retrench- notice period. In Singapore, employers may only put ment should only be undertaken as a last resort. employees on garden leave if this is expressly provided However, they have recognised that, in the current for in the employment contract. economic crisis due to COVID-19, retrenchment may be inevitable for businesses. The Singapore govern- (iv) Dismissal on grounds of misconduct ment encourages employers to carry out retrenchment 24. The employee also does not need to serve the notice exercises responsibly, applying the guidelines set out in period if he or she is dismissed on grounds of miscon- the Tripartite Guidelines on Managing Excess Manpower duct. An inquiry must be made by the employer before and Responsible Retrenchment, such as by informing dismissing an employee on grounds of misconduct. It employees early that the company intends to retrench is also recommended that there be proper documenta- them so that they can mentally prepare themselves, tion for the reasons for the dismissal and a grievance and by providing a longer notice period where possible. channel (including an appeal process) be set up for 30. In general, unless exceptions apply, employers the employee to raise any issues they have with the must notify MOM if 5 or more of their employees are dismissal. retrenched within any 6-month period. 25. Examples of misconduct include theft, dishonest 31. In June 2020, the Singapore Minister of Manpower, or disorderly conduct at work, insubordination, and Josephine Teo, during a speech in Parliament, also actions bringing the organisation into disrepute. Poor warned employers not to disguise what is in reality a performance does not constitute misconduct, and an retrenchment exercise to avoid paying retrenchment employer cannot dismiss the employee without notice benefits to their employees. Under the EA, employees on this ground. who have worked for the same employer for 2 years or more are entitled to payment of retrenchment benefits. (v) Constructive dismissal The quantum of retrenchment benefit is stipulated in 26. Constructive dismissal was defined in the Singapore the employment contract and varies from 2 weeks’ to Court of Appeal case of Wee Kim San Lawrence Bernard one month’s salary per year of service. Accordingly, v Robinson & Co (Singapore) Pte Ltd (“Wee Kim San”) retrenchment benefits may amount to a substantial as “the situation where the employer’s repudiatory breach expense for businesses in a retrenchment exercise. entities the employee to treat himself as discharged from 32. If employers are found to have disguised retrench- the employment contract; although it is the employee ment, they may face penalties such as having wage himself who terminates the contract, he is considered as support under the Job Support Scheme (“JSS”) removed having been “constructively” dismissed by the employer. and their work pass privileges suspended. JSS will be It is as though the employer had effectively terminated discussed in more detail at Section VI below.
ASIAN LEGAL BUSINESS — DEC 2020 40 GUIDE TO EMPLOYMENT LAW IN ASIA 33. The Singapore government recognises that employers’ 40. MOM takes a strict position against discriminatory ability to pay retrenchment benefits depends on their employment practices in contravention of the FCF. financial circumstances at that point in time. As such, In August 2020, MOM placed 47 employers, most for employers who have difficulties paying out the of which were from the financial and professional contractually stipulated retrenchment benefit, MOM services sectors, on a watchlist of companies with allows such employers to pay out a lesser sum subject suspected discriminatory hiring practices. One of the to agreement with the employee and such sum being 47 employers was a bank which had almost two-thirds reasonable and fair. Do note that this position taken of its employees as foreigners from the same nationality. by MOM is in response to COVID-19 and the current Moving forward, these employers who have been placed economic situation, and may not extend to the post- on the watchlist would be subject to greater scrutiny COVID-19 economic climate. from MOM when submitting work pass applications. 41. New rules have also been introduced by MOM to prevent III. RESTRAINT OF TRADE CLAUSES discriminatory hiring practices by employment agen- 34. A restraint of trade clause is a common clause in cies. Employment agencies are now required to comply employment contracts, which aims to restrict the with the fair recruitment requirements in the TGFEP employee from engaging in certain activities that may when recruiting for their clients as part of the conditions be detrimental to the employer’s business. Examples to obtain their licence to operate from MOM. of restraint of trade clauses include: 42. Employers should also take note of the recent announce- (a) Non-competition clauses: These clauses aim to ments by MOM to tighten the requirements for applica- prevent the employee from working at a competitor tions of work passes to provide more support for local for a certain period after termination of his or her employment. For example, the minimum qualifying present employment. salary for an employment pass was raised from S$3,900 (b) Non-solicitation clauses: This aims to prevent the to S$4,500 starting from 1 September 2020. employee from soliciting or “poaching” his or her colleagues for a competitor. V. RESOLVING EMPLOYMENT DISPUTES 35. Under Singapore law, restraint of trade clauses are 43. There are various channels for employment disputes prima facie void and unenforceable unless they protect to be heard in Singapore. a legitimate proprietary interest, are reasonable in the 44. The Employment Claims Tribunal (“ECT”) aims to interests of the parties concerned and reasonable in provides a low-cost and speedy resolution of employee the interests of the public. disputes. The ECT only hears certain types of cases, such 36. The Court will only enforce the restraint of trade clause as claims for wrongful dismissal or salary related claims, if it goes no further than necessary to protect the legiti- and the claim amount must not exceed S$20,000. The mate interests. Factors that the Court would consider is full list of claims that can be heard by the ECT can be the duration, geography and scope of activities sought found in the Employment Claims Act. Legal representa- to be restricted in the clause. tion is not allowed for cases heard in the ECT. 45. Before commencing a claim in the ECT, both employer IV. EMPLOYMENT OF FOREIGNERS and employee must first go through mediation at the 37. The Employment of Foreign Manpower Act (“EFMA”) Tripartite Alliance for Dispute Management. If the requires foreign employees to have work passes before dispute can be resolved, this will be recorded in a starting work in Singapore. Employing a foreign employee binding settlement agreement. If the dispute cannot in Singapore without a valid work pass is an offence. be resolved, then the case can proceed to the ECT. 38. The type of work pass that needs to be applied for 46. For claims that are above S$20,000, or do not fall depends on several factors such as whether the within the scope of the ECT, the employee would have foreigner is a professional, skilled or semi-skilled worker. to proceed to the civil courts. More information can be found on MOM’s website and the Employment of Foreign Manpower (Work Passes) VI. IMPACT OF COVID-19 Regulations 2012. 47. Singapore has not been spared from the harsh effects of 39. Before applying for a work pass, employers must also COVID-19 and has entered a recession. The Singapore first advertise the job vacancy on MyCareersFuture. government has put in place measures to save jobs and sg for at least fourteen (14) days. This a government to help to prevent further stagnation of the economy. website for advertising job vacancies. Employers are This section covers some of the developments related required to consider all applicants fairly under the to COVID-19 (as of 5 November 2020). MOM’s Fair Consideration Framework (“FCF”) and the Tripartite Guidelines on Fair Employment Practices A. Job Support Scheme (“TGFEP”). 48. The Singapore government has implemented various
ASIAN LEGAL BUSINESS — DEC 2020 41 GUIDE TO EMPLOYMENT LAW IN ASIA support measures to help save jobs during this economic 52. Employers must also notify MOM of the cost-saving crisis. One of these measures is the JSS. Under the measures or retrenchment exercises undertaken. Failing JSS, the government co-funds 25% to 75% of the first to do so will result in penalties. $4,600 of the salary for each Singapore Citizen and Singapore Permanent Resident employee. Sectors that C. Implementation of Safe Management Measures are more affected by travel restrictions and the safe 53. Employers have a duty under the Workplace Safety and distancing measures due to COVID-19 will receive a Health Act to take such measures as are necessary to ensure higher percentage of co-funding. the safety and health of employees. This would include 49. It was recently announced that JSS, which initially applied adhering to the Safe Management Measures published to employee wages from October 2019 to August 2020, by MOM. Failure to adhere to the measures may result in would be extended to cover employee salaries up to the suspension of operations and fines or imprisonment. month of March 2021. However, the level of government PROTECTINGPROTECTING INTERESTS. support would be reduced to only 10% to 50% of employee VII. CONCLUSION salaries as the economy is projected to recover gradually. 54. Employment law in Singapore is a dynamic area of practice as the Singapore government implements B. Retrenchment and Cost-Saving Measures changes rapidly in response to COVID-19 and the 50. As mentioned above, employers are encouraged to apply economic climate. Practising lawyers, in-house counsel the guidelines in the Tripartite Advisory on Managing and employers are recommended to keep up to date Excess Manpower and Responsible Retrenchment. This on newly-introduced developments and guidelines to YOURS. first involves only undertaking retrenchment as a last ensure compliance with best practices and the law. YOURS. resort. Employers should consider cost-saving measures first, such as deploying employees to other departments Disclaimer: This guide is intended for your general information or reducing work hours. If retrenchment is inevitable, only and does not constitute legal advice. Before taking any employers are encouraged to do so responsibly and fairly. action or omitting to take any action in relation to the matters EMPLOYMENTEMPLOYMENT LAW. LAW. 51. Irresponsible or unfair treatment of employees may set out in the guide above, you should consult a qualified legal result in employers being denied future government advisor for specific advice for your circumstances. This guide COMMERCIALCOMMERCIAL LITIGATION LITIGATION relief, such as under the JSS, and may also result in may not be reproduced, or transmitted in any form or by any the curtailing of work pass privileges. means, in whole or in part, unless with prior written consent. ANDAND ARBITRATION.ARBITRATION. GOVERNMENT,GOVERNMENT, AUTHOR: REGULATORYREGULATORY AND AND Jacqueline Chua, Managing Director, [email protected] Jacqueline is the Founder and Managing Director of Jacque Law LLC. Jacqueline is INVESTIGATIONSINVESTIGATIONS PRACTICE. PRACTICE. experienced in both contentious and non-contentious aspects of employment law, and is particularly focused on resolving employment disputes, including those involving internal investigations, terminations, workplace harassment and contentious team moves. On the non-contentious front, she regularly advises on the interpretation and imple- PRIVATEPRIVATE CLIENTCLIENT AND AND mentation of employment laws and regulatory obligations, and drafts and reviews a wide range of employment documentation, such as employment letters, termination agreements, WEALTHWEALTH MANAGEMENT.MANAGEMENT. staff handbooks and policies, and employee share option scheme rules. Jacqueline also provides training to companies on a variety of topics, including work-place harassment, FAMILYFAMILY ANDAND directors’ fiduciary duties, and general employment law issues. MATRIMONIAL LAW. Jacqueline graduated from the National University of Singapore with an LL.B. (2nd MATRIMONIAL LAW. Upper Hons) degree and is admitted to the Singapore Bar. She is fluent in both English TRUST, SUCCESSION and Mandarin. TRUST, SUCCESSION AND ESTATE PLANNING. ABOUT JACQUE LAW LLC: AND ESTATE PLANNING. Jacque Law LLC is a Singapore based law firm specialising in litigation and disputes resolution. The firm’s main areas of expertise are employment law, commercial law as well as private clients’ matters such as MEDICAL MALPRACTICE. succession planning and family law. Our founder Jacqueline Chua has been a specialist employment lawyer MEDICAL MALPRACTICE. for more than 12 years and has successfully acted on various high stakes employment disputes in her career. Prior to setting up the firm, Jacqueline was a partner with one of the largest law firms in Singapore. The firm was nominated as one of the finalists for Rising Law Firm of the Year by Asian Legal Business in 2020, and recognised as one of the best law firms in Singapore in the inaugural Straits Times Singapore’s best law firms 2021 award.
Advocates & Solicitors Advocates & Solicitors
ASIAN LEGAL BUSINESS — DEC 2020 42 GUIDE TO EMPLOYMENT LAW IN ASIA PROTECTINGPROTECTING INTERESTS. YOURS.YOURS.
EMPLOYMENTEMPLOYMENT LAW. LAW. COMMERCIALCOMMERCIAL LITIGATION LITIGATION ANDAND ARBITRATION.ARBITRATION. GOVERNMENT,GOVERNMENT, REGULATORYREGULATORY AND AND INVESTIGATIONSINVESTIGATIONS PRACTICE. PRACTICE.
PRIVATEPRIVATE CLIENTCLIENT AND AND WEALTHWEALTH MANAGEMENT.MANAGEMENT. FAMILYFAMILY ANDAND MATRIMONIAL LAW. MATRIMONIAL LAW. TRUST, SUCCESSION TRUST, SUCCESSION AND ESTATE PLANNING. AND ESTATE PLANNING. MEDICAL MALPRACTICE. MEDICAL MALPRACTICE.
Advocates & Solicitors Advocates & Solicitors EVENT
5TH ALB PHILIPPINE LAW AWARDS CELEBRATES LEGAL LUMINARIES The fifth edition of the Philippine legal competence. It is a pleasure to which included Dealmaker of the Year Law Awards, a virtual event held on Nov. practice with such a professional and (for Sylvette Y. Tankiang) and Labor 20, showcased the work of the finest highly devoted team; our collective and Employment Law Firm of the Year. lawyers, firms, in-house teams and legal work yielded impressive results in the Tankiang said: “It was a pleasure to work in the country. ALB Philippine Law Awards 2020. ALB is attend the event. The dedication of ACCRALAW claimed five awards one of the most respected award-giving the team at Asian Legal Business was that night, including Arbitration Law bodies with a rigorous selection process. admirable. Thank you for the honour of Firm of the Year, Young Lawyer of the We are deeply honoured and will strive being named as Dealmaker of the Year. Year (for Christopher Louie D. Ocampo) to be worthy of this recognition,” said Asian Legal Business continues to inspire and Philippine Law Firm of the Year. Leland R. Villadolid Jr., senior partner us to reach even greater heights.” Raoul “ACCRALAW proudly upholds the vision and head of the firm’s litigation and R. Angangco, senior partner, added: of our founding partners to establish dispute resolution department. “Thank you Asian Legal Business for a and maintain an institutional law firm Villaraza & Angangco also had truly commendable and well-executed based on the highest standards of a big night, picking up four awards awards ceremony. Your professionalism
44 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM
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and thoroughness in administering the team. This achievement stems from the commitment to our clients.” Aida Araceli event despite the pandemic is praise- group’s collective hard work and collab- G. Roxaz-Rivera, head of the corporate worthy. As we celebrate our Firm’s oration. Our success over the past years and special projects department, added: 40th Anniversary this year, Villaraza is marked by our ability to consistently “Having been twice recognized as & Angangco remains grateful to the provide high-quality services and meet Transportation and Logistics Law Firm legal community for the continuous the increasing demands of our clients. of the Year is a source of much pride recognition and support.” We have exerted efforts to evolve our and inspiration. We hope to do even Tolosa Javier Law Firm was named services to keep abreast of the ongoing better in the future and keep true to our the Boutique Law Firm of the Year and digital revolution. We will continue to do commitment to provide unparalleled Latham & Watkins was awarded Inter- our best to assist clients in monitoring, legal representation in a fast growing national Law Firm of the Year. Benjamin preparing for and complying with, the and dynamic field of practice.” Carale, partner and head of the Latham’s changes in their employment arrange- Mark S. Gorriceta of Gorriceta Philippine practice, said: “A big thank you ments and the government’s processes Africa Cauton & Saavedra was awarded to ALB for recognizing Latham & Watkins brought about by the new normal.” Managing Partner of the Year while the as 2020 International Firm of the Year Meanwhile, Cruz Marcelo & firm also claimed the Construction and in the Philippines! We are extremely Tenefrancia won both the Intellectual Real Estate Law Firm of the Year and grateful to our clients for allowing us Property Law Firm of the Year and Trans- Technology, Media and Telecommuni- to play a role in the trailblazing work portation and Logistics Law Firm of the cations Law Firm of the Year awards. they’ve done and continue to do.” Year titles. Susan D. Villanueva, senior Gorriceta said: “We are very honoured Quisumbing Torres was named partner, commented: “We are delighted and overwhelmed to receive three the Immigration Law Firm of the Year. that Cruz Marcelo & Tenefrancia has been important awards this year. We thank our Miguel Galvez, partner and head of the recognized for the fourth time in five clients, partners, colleagues, and friends immigration practice group, said: “I am years as Intellectual Property Firm of the for all their support and for believing in very grateful for this recognition from my Year. This is a testament to the excellent us. We thank Asian Legal Business for peers. I share this victory with our entire work of our lawyers and our unrelenting recognizing our work. These awards
46 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM About the Firm
Poblador Bautista & Reyes is a professional partnership founded in 1994 by Alexander J. Poblador, Mario Luza Bautista and Gilbert Raymund T. Reyes.
It is a general practice and full-service law firm with lawyers who have extensive experience and expertise, particularly in the fields of litigation and commercial arbitration, corporations, real estate and construction, intellectual property, media and telecommunications, anti-trust and competition, insurance and banking, insolvency and restructuring, family law, taxation and immigration.
The firm currentlycur has 15 partners, 21 associates and 1 consultant. Its lawyers are members of various legal organizations, such as the International Trademark Association (INTA) in New York, the Intellectual Property Association of the Philippines (IPAP), the Inter-Pacific Bar Association and the Tax Management Association of the Philippines (TMAP).
Awards and Recognitions
Litigation Law Firm Alexander J. Poblador Recommended Firm Alexander J. Poblador Dispute Resolution of the Year Dispute Resolution Lawyer Government and Regulatory Mario Luza Bautista Philippines - Band 1 of the Year Gilbert Raymund T. Reyes
Contact Us Telephone No.: (632) 8893 7623 Fax No.: (632) 8893 7622 Email: [email protected] Website: www.pbrlaw.com.ph EVENT
fuel our desire to always deliver beyond Romulo Mabanta Buenaventura Desiderio-Dime) and PMFTC Award results.” Sayoc & De Los Angeles won Philippine Innovative In-House Team of the Year Poblador Bautista & Reyes won the Deal Firm of the Year, and partner Anna awards. Dispute Resolution Lawyer of the Year Cristina Collantes-Garcia claimed the The Data Privacy and Protection (for Alexander J. Poblador) as well as Woman Lawyer of the Year title. In-House Team of the Year was awarded the Litigation Law Firm of the Year. Mario In the in-house categories, Shell to Aboitiz Equity Ventures. The team Luza Bautista, managing partner, said: Companies in the Philippines won said: “We thank ALB for recognizing “We thank ALB, our PBR family and our the Philippine In-House Team of our team’s efforts. This is also a well- clients for this prestigious award. Again, the Year and Energy and Resources deserved recognition for individual it is but an affirmation of our values of In-House Team of the Year awards, team members across all functions excellence and integrity in the practice while Accenture received the In-House whose dedication to excellence and to of law. Maraming salamat po.” Lawyer of the Year (for Millicent Joie hard work made this possible!”
AWARD SPONSOR
PMFTC Inc. is an agriculture and consumer products company that’s leading change across the Philippine tobacco industry. A business combination between LT Group Inc. and Philip Morris International (PMI), PMFTC Inc. is an employer of choice; a major leaf buyer and taxpayer; and a partner to law enforcement. Around the world, we are building a future on a new category of smoke-free products that, while not risk free, are a much better choice than continued smoking due to the elimination of combustion — the primary cause of smoking-related problems. Through multidisciplinary capabilities in science and technology, we aim to ensure that our smoke-free products meet adult consumer preferences and rigorous regulatory requirements. As the market leader, we are committed to offering adult consumers who would otherwise continue to smoke better alternatives and playing an active role in making Philippine society smoke-free. Visit: www.pmi.com
PROUDLY PRESENTED BY
48 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM EVENT 8TH ALB KOREA LAW AWARDS HONOURS LEGAL INDUSTRY’S ACHIEVERS The eighth edition of the ALB Firm of the Year by ALB for eight years Year (for Sungjin Kim) and the Inter- Korea Law Awards, a virtual event held in a row. 2020 was a challenging year national Arbitration Law Firm of the on Nov. 12, honoured the who’s who of for the entire industry and this award Year. “We were very pleased to receive the country’s legal industry, including is both a testament to the dedication several distinguished awards, especially in-house counsel, law firms and private and hard work of our colleagues and a our sixth International Arbitration Law practice lawyers. recognition of the resilience of our clients Firm of the Year award, given the various Kim & Chang picked up six awards who continued to provide cutting edge changes in the arbitration market in on the night, which included the Korea deals during this difficult time.” 2020. Many thanks to ALB for hosting Law Firm of the Year, Young Lawyer of Lee & Ko claimed five awards, the first-ever virtual award event and the Year (Law Firm) (for Byung Min Choi) including the Woman Lawyer of the Year for their continued efforts to strengthen and Korea Intellectual Property Law Firm (for Hyunjoo Oh) and the Litigation Law the legal community in Korea,” said the of the Year. Kye Sung Chung, senior Firm of the Year. firm. partner, said: “We are very humbled and Bae, Kim & Lee won four titles, Cleary Gottlieb Steen & Hamilton honoured to have been named Korea Law including Managing Partner of the was the winner of the International
WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 49 EVENT
Deal Firm of the Year and Technology, “Our entire firm could not be any prouder commented: “It is our honour and Media and Telecommunications Deal to receive this prestigious award as we pleasure to receive two titles this year. of the Year. Jinduk Han, partner, said: enter our fourth year, but we know we We sincerely appreciate ALB and our “We are delighted that Cleary Gottlieb owe all our success to our clients who clients for bestowing these awards to has been recognized as the International have allowed us to be their guiding Yoon & Yang. We will continuously strive Deal Firm of the Year. We are grateful to ‘Light’ as they venture towards their to provide stellar service to our clients.” the judges and ALB for this great honour, ‘D’reams.’ Thank you.” The Energy and Resources Law Firm as well as to our clients for entrusting Gleiss Lutz was awarded the Korea of the Year title was claimed by Herbert us with their most important matters.” Practice Foreign Law Firm of the Year. Smith Freehills. Finnegan, Henderson, Farabow, Michael Burian, M&A partner and head In the individual categories, Shin Garrett & Dunner was named the Interna- of the Asia desk, said: “We are delighted & Kim’s Jae Young Chang and Helen tional Intellectual Property Law Firm of to win the Korea Practice Foreign Law Hyunju Pak were named the Dealmaker the Year. Charles Suh, managing partner Firm of the Year at the ALB Korea Law of the Year and Foreign Lawyer of the of the Seoul office, said: “Finnegan is Awards 2020 for a second time after Year, respectively. And Kevin Kim of honored to be selected as ‘Interna- 2018. It is an honour for our team and Peter & Kim won the Dispute Resolution tional Intellectual Property Law Firm of a confirmation of our commitment and Lawyer of the Year award. the Year for the fourth consecutive year. dedication to Korea. We look forward to In the in-house categories, LG Our commitment to quality for clients further increase our efforts to work for Chem was named the Korea In-House in South Korea and across the world our Korean clients and German clients Team of the Year, while Samsung SDS strengthens the firm’s reputation as a in Korea and hope to be able to prove claimed the Innovative In-House Team leading IP law firm, and we are humbled our appreciation in person very soon.” of the Year and Technology, Media and by the recognition.” Yoon & Yang won the Overseas Telecommunications In-House Team of D’LIGHT Law Group claimed the Practice Law Firm of the Year and the Year awards. The In-House Lawyer Boutique Law Firm of the Year title. Chan Tax and Trusts Law Firm of the Year of the Year title went to Coupang’s Jay Woo Sung, senior foreign attorney, said, awards. Jinsu Jeong, managing partner, Jorgensen, while Eunhwa Jo of Kakao M
50 ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM EVENT was named the Young Lawyer of the Year (In-House). Mirae Asset Daewoo won the Financial Services In-House Team of SUPPORTING PARTNERS the Year title, while McDonald’s Korea was named the Manufacturing and Trade In-House Team of the Year. Churl Kim, general counsel, said: “We are grateful for the recognition and hope to continue SUPPORTING ORGANISATIONS the streak of wins in the coming years! Congratulations to the other winners as well!” KSOE (Hyundai Heavy Industries Group) was awarded the Construction and Heavy Industries In-House Team of the Year. Tae Jeong Kim, senior vice president and general counsel (interna- tional legal team), said: “Given the diffi- culties in the past year, we are very proud PROUDLY PRESENTED BY to receive this prestigious award. I see this award as a testament to the efforts of our HHI team members (lawyers and staff) who have supported each other despite the challenges this year. We wish our peers a positive 2021!”
KOREA’S PREMIER LAW FIRM
Kim & Chang is Korea’s premier law firm. Since our founding in 1973, our proven track record of providing highest quality legal services to our clients and delivering “first-of-its-kind” solutions to complex legal challenges has set us apart.
We are honored to have been named “Korea Law Firm of the Year” for the 8th consecutive year.
www.kimchang.com
WWW.LEGALBUWWW.LEGALBUSINESSONLINE.COMSINESSONLINE.COM ASIANASIAN LEGAL BUSINESSBUSINESS – DECEMBER 2020 51 2020 has undoubtedly been a turbulent year — but in the Cayman Islands it has also been a year of progress and development.
Over the past few years, the jurisdiction, which is already considered a financial hub, boasting judicial and legislative links to the UK and tax neutrality, has worked to refine GUIDE its regulations, and bolster its attraction. In its 2019 report, Carey Olsen calls the Cayman Islands a leading global financial centre with a reputation as one of the world’s “most innovative and business-friendly places to operate.” Last year also saw the jurisdiction pass amendment laws tasked with strength- ening the Cayman's anti-money laundering TO THE and counter financing of terrorism. Businesses in the market have been supported by ongoing regulatory develop- ments. In February this year, the Cayman Islands enacted new and revised legisla- tion around collective investment vehicles, revising Cayman's existing Mutual Funds Law for open-ended funds, and a new Private Funds Law for closed-ended funds. In a June CAYMAN 2020 report, PwC wrote that these laws seek to “strengthen investor confidence in Cayman Islands investment fund vehicles,” while ensuring the market remains a key jurisdiction for investment fund formation, and also addressing suggestions by the EU on investment fund oversight.
The government has further regulatory devel- opments in sight, aimed at drawing busi- ISLANDS ness to the region: A recently announced legislative framework to support virtual asset service providers was announced in November, while Phase Two of the project will begin in June next year. For lawyers oper- ating in the market, 2021 is unlikely to be a 2020 quiet year. ASIAN LEGAL BUSINESS 52 GUIDE TO THE CAYMAN ISLANDS 2020 A UNIFIED APPROACH TO RESTRUCTURING CAYMAN INCORPORATED HONG KONG LISTED COMPANIES
By Jeremy Lightfoot (Partner, Carey Olsen Hong Kong LLP) and Henry Tucker (Counsel, Carey Olsen Hong Kong LLP)
While it had been clear for most of the recent economic restructuring or scheme of arrangement, should be super- downturn that the 24% of Hong Kong Stock Exchange listed vised by the Grand Court of the Cayman Islands as the court companies incorporated in Bermuda may have recourse to of the place of incorporation of the Company. the court in their place of incorporation to secure an adjourn- ment or stay of an actual or anticipated winding up petition This approach closely follows the approach of the Bermuda in Hong Kong, it is now equally clear that Cayman incor- Court in very similar circumstances earlier this year in In the porated companies (which represent another 50% of the Matter of North Mining Shares Company Limited [2020] SC HKSE) will have similar access to restructuring assistance. (Bda) 7 Com (27 January 2020).
Recent decisions have confirmed that the Cayman Islands The Hong Kong Court meanwhile has confirmed in the Grand Court will appoint “soft touch” provisional liquida- decisions of In the Matter of Agritrade Resources Limited tors for restructuring purposes allowing existing manage- (In Provisional Liquidation in Bermuda) [2020] HKCFI 1967, ment of HKSE listed companies to pursue a restructuring Rare Earth Magnesium Technology Group Holdings Limited without the threat of winding up or execution at the hands (In Provisional Liquidation in Bermuda) [2020] HKCFI 2260 of a unsecured creditor in Hong Kong or elsewhere. and Re the Joint and Several Provisional Liquidators of FDG Electric Vehicles Limited (Provisional Liquidators Appointed) In the recent case of In the Matter of Sun Cheong Creative [2020] HKCFI 2931 that it will grant a standard form of order Development Holdings Limited FSD 169 of 2020 (Unreported, for recognition and assistance of offshore appointed soft 20 October 2020) the Grand Court of the Cayman Islands touch provisional liquidators on a written application to the considered an application by the HKSE Listed parent of the Court that includes a case management direction providing Sun Cheong Group (“Company”) for an order appointing for the soft touch JPLs to apply for a stay of proceedings on “soft touch” provisional liquidators in circumstances where foot in Hong Kong, including winding up proceedings. It is the Company was already facing winding up proceedings reasonable to expect that this informal procedure to obtain in Hong Kong. a standard order on written application will extend to the recognition of Cayman Islands Grand Court appointed soft In a reasoned decision, the Grand Court held that it had touch provisional liquidators, to whom the Hong Kong Court discretion to appoint soft touch provisional liquidators held it had the power to grant recognition and assistance notwithstanding the extant winding up proceedings in Hong following a full hearing in Re Joint and Several Provisional Kong. In exercising this discretion the Grand Court held that Liquidators of China Oil Gangran Energy Group Holdings Ltd while there is no prescriptive list of factors, the Court may [2020] HKCFI 825. have regard in particular to (i) the express wishes of credi- tors (ii) whether a refinancing or restructuring is likely to be The effect of the Grand Court’s decision in Sun Cheong, more beneficial than a winding up order (iii) whether there is when taken with the established practice of the Hong Kong a real prospect of such refinancing or restructuring and (iv) Court to spelled out in Agritrade, Rare Earth, China Oil and the considered views of the board as to the best way forward. FDG, is to provide any offshore incorporated HKEX listed company a clear path to securing effective protection from As to issues of comity, the Cayman Islands Grand Court its creditors by way of appointment of a soft touch PL in its accepted that any insolvency proceedings, including any place of incorporation.
CONTACT DETAILS Jeremy Lightfoot: [email protected] / +852 3628 9016 Henry Tucker: [email protected] / +852 3628 9008
GUIDE TO THE CAYMAN ISLANDS 2020 ASIAN LEGAL BUSINESS ARBITRAGE FUNDS – YET FURTHER REASON TO LITIGATE IN CAYMAN?
By Paul Madden (Partner, Cayman Islands) and Paula Kay (Partner, Hong Kong)
Arbitrage funds may have further options available to restraining them from taking action for or on behalf of the maximise the value of their position in companies seeking special committee in connection with a proposed merger to avail themselves of the Cayman Islands merger regime. pending the court’s determination of their application. The In the recent article published by the Association of proceeding does not appear (thus far) to have resulted in Insolvency and Restructuring Advisors the upward trajec- any judgment but we eagerly await the result. tory in share appraisal litigation in Cayman Islands was considered. This momentum is attributable to a number In Ctrip v EHI shareholders with an approximate 21.3 per of factors but certainly fund managers will note that the cent voting stake in the company filed a winding up appli- discounted cash flow (DCF) (and indeed other income- cation on the just and equitable ground seeking alter- based company valuation methodologies) can still prevail native relief under section 95(3), namely an injunction in Cayman. These types of actions have now proved by far permanently restraining the company from acting on the preferred remedy for shareholders who are dissatis- inter alia a resolution passed to approve a consortium fied with a merger or consolidation in the Cayman Islands. bid. The petitioner alleged the board meeting notices However, this is not the only remedy available to minority and agendas were defective and misleading, the resolu- shareholders. The authors of this article are aware of other tion was improperly passed because the directors exer- instances in the Cayman Islands where minority share- cised their powers for an improper purpose, they reck- holders have issued proceedings to seek to prevent a lessly agreed to a termination fee of US$14million which merger from taking place and propose why we are likely served to poison rival bid, the chairman had threatened to see a number of similar challenges in the months and to issue additional shares which would dilute the petition- years to come. er’s voting rights and shareholding, and it was wrong to permit the chairman to make a bid as part of the consor- Shareholders who dissent from a merger or consolidation tium. While the matter ultimately settled and noting that in the Cayman Islands can seek relief pursuant to section the outcome of each case is fact specific, the important 238 of the Companies Law, where the Court is tasked point is that the Court held – prior to the parties settling with determining the fair value of dissenters’ shares. This - that the application was not procedurally incorrect or invariably involves an analysis of complex expert valua- that such relief would not be available in an appropriate tion evidence. To date, there have been over twenty-six case. Minority shareholders may therefore be cognisant such petitions filed in the Cayman Islands, seven have that the option of pursuing alternative remedies is avail- proceeded to trial, two settled during the course of or able to them where they can show that the company has following trial and five trial judgments have been handed visibly departed from the standards of fair dealing and down. fair play which a shareholder is entitled to expect (see for example, Re Washington Special Opportunity Fund, Inc There are two instances in the Cayman Islands where (Unreported, FSD 151 of 2015 (IMJ), 1 March 2016) at para- minority shareholders have issued proceedings to seek to graph 106). Pursuant to section 95(3) of the Companies prevent a merger from taking place: Ctrip v EHI Car Services Law, where the Court determines that it would otherwise [2018 (1) CILR 641] which resulted in a reported decision; be just and equitable to wind up the company on a share- and In the matter of Global Cord Blood Corporation (FSD holders’ petition, the Court has jurisdiction to make orders 122 of 2019, originating summons dated 26 June 2019). as an alternative to a winding up order. It is well settled in Cayman that a company may be wound up on the just and In In the matter of Global Cord Blood Corporation, dissenting equitable ground if it is established that there has been a shareholders sought declarations that certain direc- justifiable loss of confidence in management, for example tors should be disqualified from sitting on the special on account of serious misconduct or serious mismanage- committee to determine whether a proposed merger was in ment of the affairs of the company by the directors or the the best interests of the company, and an interim injunction majority shareholders.
ASIAN LEGAL BUSINESS GUIDE TO THE CAYMAN ISLANDS 2020 The alternatives available are in broad terms an order shareholder, Laster VC issued a temporary restraining regulating the company’s affairs, requiring the company order (TRO) blocking a transformational transaction to take or refrain from taking certain action, authorising entered into in the midst of a proxy contest. The court proceedings to be taken in the name of the company, or granted the TRO finding that the plaintiff stated a colour- an order requiring the purchase of shares by other share- able claim that the directors’ self-interest in prevailing in holders or by the company (section 95(3) of the Companies the proxy contest tainted the transaction. Law). In the context of a merger or consolidation such alternative relief could include: Whilst it undoubtedly the case that in comparison to Delaware the Cayman Islands is a relatively new jurisdic- • An injunction restraining the board from convening tion in the field of merger litigation, the Cayman Courts an extraordinary general meeting to vote on the will not permit improper conduct by company officers merger, restraining the board from taking further which could result in a merger which flaunts fairness to steps in respect of a merger, or restraining the board all stakeholders. There is also an additional feature of from using further shares prior to an extraordinary the Cayman Islands companies law which these authors general meeting at which the merger proposals will suspect will be litigated in due course. Pursuant to the be considered. Cayman Companies Law, a parent may merge with one or more subsidiaries without the requirement of obtaining a • Declarations that board meetings and resolutions special resolution. The issue of whether dissenter rights are passed in relation to the merger or approving a certain available in respect of a ‘short form’ merger has not been bid are invalid. tested in the Cayman Courts. Until such time as it is there will be an ever increasing number of entities seeking to • An appointment of a person by the court to solicit the interpret the Cayman statute as permitting a circumven- highest possible bid, or other orders to ensure that tion of dissenting shareholders rights under section 238. the merger is conducted in the best interest of the company. There are only a few examples in the Cayman Islands where investors have sought to prevent a merger from taking Delaware has thus far seen significantly more shareholder place. Notwithstanding this, the Courts in Cayman will act activism than the Cayman Islands. In In re: Appraisal of on normal principles should there be cogent evidence of Dell Inc. (C.A. No. 9322-VCL, May 31, 2016) Carl Icahn and improper conduct or impropriety. In such circumstances affiliates threatened to use shares they had acquired after it may be possible for investors to seek relief to ensure the announcement of a merger proposal, to prevent the that the merger process is carried out in a fair manner, merger, by running an alternate slate of directions at an or to restrain the taking of steps which would give rise annual meeting which would then jettison the merger. This to the merger. Prospective dissenter activists may not ultimately led the special committee to delay the special be deterred in their consideration of such action in the meeting to vote on the merger and for the buyer group to Cayman Islands. Indeed, the ever changing geo-political, offer additional merger consideration. regulatory and financial landscape could result in greater number of Cayman companies that have Chinese based In VenBio Select Advisor LLC v Goldenberg (C.A. No. 2017- operations seeking to de-list from US based exchanges 0108-JTL (March 9, 2017)) on application by an activist and to use the Cayman merger regime to do so.
CONTACT DETAILS Paul Madden: [email protected] / +1 345 815 2970 Paula Kay: [email protected] / +852 5806 7879
GUIDE TO THE CAYMAN ISLANDS 2020 ASIAN LEGAL BUSINESS THE BACK PAGE
with the organisation’s risk assessment program by playing leadership roles HOW IN-HOUSE COUNSEL CAN UNDERSTAND AND in those assessments, participating in their development and execution, and reviewing, analysing, and publicising SUPPORT COMPANIES’ RISK TOLERANCE their results. In addition, law department BY DAVID O’CONNOR the potential legal consequences of its members can (and should) join the organisation’s decisions and protect the organisation’s risk committee. In this Organisations across the globe organisation through the processes of: role, they can: are increasingly focusing on managing — defining actual and potential legal, — provide legal advice to the risk, especially in today’s risk-heavy envi- regulatory, and other risks and their committee; ronment amid the global pandemic and likelihood of occurring; — educate themselves about the ensuing economic crisis. — determining applicable legal stand- concerns, pressures, and motiva- To succeed, every organisation must ards and obligations; tions of the organisation’s different determine the level of risk it is willing to — identifying and quantifying possible departments and functions; tolerate and base its decision-making legal, financial, and reputational — surface existing and upcoming risks and strategic direction in keeping within consequences; and that the law department may not that tolerance level. If an organisation — providing legal services and advice otherwise learn about; and does not properly manage its risks in accordance with the organisa- — interview business leaders and through effective risk identification, tion’s risk tolerance. colleagues across the organisa- evaluation, prioritisation, and planning, In addition to protecting the organi- tion to identify their current and it may adversely affect its operations, sation through its day-to day legal emerging risks and concerns. finances, growth, and reputation in the services, a law department can manage Once all this insight and information market. risk by using its cross-organisational is gathered, the general counsel should Indeed, the 2020 State of Corporate involvement and insight to provide use this data to design and implement Law Departments report, published holistic advice to the organisation and appropriately aligned departmental risk earlier this year by Thomson Reuters and ensure that an activity that benefits management strategies, standards, and MIDDLE EAST - March 18 Acritas, shed some light on the critical one department or initiative does not practices. In-house counsel should be SE ASIA - March 25 role risk management plays in today’s inadvertently create risks for a different trained on these strategies, standards, business environment, stating: department or initiative. and practices and incorporate them in JAPAN - May 6 “In today’s crisis environment, Law departments can also act as a their day-to-day services and advice. MALAYSIA - June 3 many businesses have become vulner- control mechanism to monitor that the These strategies, standards, and prac- able because of falling revenues. This organisation’s risk tolerance is followed tices should also be incorporated in the INDIA - August 5 makes the corporate law department’s across the company. For example, if a department’s standard agreements and HONG KONG - September 10 role of safeguarding the company and business function or colleague consist- clauses and be consulted during other ensuring it survives this crisis so vital. ently pushes the organisation to assume law department activities. INDONESIA - October 7 Law departments are having to try to contractual responsibilities or liabilities Finally, as the organisation modifies KOREA - October 28 anticipate and mitigate new risks as they outside the organisation’s risk tolerance, its risk tolerance, the general counsel emerge, as well as adapt to regulations the law department can work with the should calibrate the law department’s PHILIPPINE - November 19 as they are brought in by governments organisation’s risk managers to redirect practices against those modifications trying to slow the spread of the disease or retrain the function or colleague. to ensure that the department’s services and the economic fallout that comes and advice remain consistent with with it.” RISK TOLERANCE organisational standards. The general counsel and the legal RISK MANAGEMENT department’s in-house attorneys must David O’Connor is Senior Legal Editor at General counsel and their corporate law align their services and advice with their Thomson Reuters Practical Law. departments are often at the forefront of organisation’s risk tolerance to effectively their organisations’ risk management carry out their risk management respon- A version of this piece was published by the programs. A law department’s primary sibilities. To discharge this duty, a law Thomson Reuters Legal Executive Institute risk management role is to evaluate department should closely coordinate (www.legalexecutiveinstitute.com).
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56 ASIAN LEGAL BUSINESS – DECEMBER 2020 WWW.LEGALBUSINESSONLINE.COM ALB LAW AWARDS 2020 SAVE THE DATE! MIDDLE EAST - March 18 SE ASIASE- ASIAOctober - March15 (Virtual) 25 KOREAJAPAN- November - May 12 6(Virtual) PHILIPPINESMALAYSIA- November - June 20 3(Virtual) HONG KONG -INDIANovember - August 27 (Virtual) 5 HONG KONG - September 10 INDONESIA - October 7 SPONSORSHIPKOREA OPPORTUNITIES - October 28 PHILIPPINENOW AVAILABLE! - November 19
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