Business Law Digest Jan/Feb 2022

Business Law Digest Jan/Feb 2022

Business Law Digest Jan/Feb 2022


JFTC warns against IPO underpricing

The Japan Fair Trade Commission (JFTC) published a report titled “Understanding the reality of the public offering price-setting process in IPOs” on 28 January. The report warned that setting offering prices for startup companies without sufficient explanation or reasonable grounds may raise concerns under the Anti-Monopoly Act. It also addressed a concern that IPOs can be underpriced to increase the chance of share prices jumping on trading debuts to benefit brokerage clients, at the cost of startups. As the authority pays closer attention to such transactions, securities companies involved in IPOs are strongly advised to review their offering price-setting processes to ensure they are not setting prices unilaterally.

Financial regulator focuses on ESG

Japan’s Financial Services Agency (FSA) has appointed a specialised sub-committee on environmental, social and governance (ESG) evaluation and data providers to formalise discussions with ESG rating and data providers concerning data reliability and quality issues. The members include representatives from Nomura Securities, the Japan Credit Rating Agency, the Japan Sustainable Investment Forum, R&I Credit Ratings, MSCI, Sumitomo Mitsui Banking Corporation, Sustainalytics, Manulife Investment, Resona Asset Management, Nissay Asset Management, Daikin Industries, and the Nippon Keidanren Federation. The Ministry of Economy, Trade and Industry and the Ministry of the Environment were named observers.

New JGB clearing system launched

The Japan Securities Clearing Corporation (JSCC) launched a “Next JGB clearing system” for Japanese government bonds (JGBs) along with a new framework for JGB futures. The new system will improve sell-side participation by replacing a legacy system, covering clearing services for repo transactions and straight cash trade on JGBs. The JSCC also introduced a new “JGB Futures Pair-off Netting” framework to ease settlement operations for clearing members. The new framework was implemented on 11 January, along with the launch of the new clearing system.

TSE lists new segments

The Tokyo Stock Exchange (TSE) announced it will restructure its current stock markets into three new segments – the prime market, the standard market and the growth market. Between September and December last year, listed companies have sent applications for the selection of their new market segments, and the TSE published the results on 11 January. The restructuring will take place on 4 April.


Regulator locks it up on IPOs

On 22 February, South Korea’s Financial Services Commission (FSC) announced its plan to introduce an IPO lock-up period for company executives and top shareholders to ban them from selling company shares shortly after a stock market debut. The FSC’s proposed lock-up rules require a minimum six-month lock-up period on all insider holdings, and introduce a staggered lock-up contracts system to protect investors from price volatility that may arise from a large-scale stock sellout, and promote fair price discovery. The new rules will take effect after approval from the Securities and Futures Commission and the FSC in March 2022.

Data handling bodies in the making

South Korea’s FSC announced a plan to create additional data specialising institutions to promote the data industry in both financial and non-financial sectors. Following an inter-ministerial meeting on 28 July last year, an expert taskforce was set up to review diverse issues concerning the designation process, requirements and standards. The authorities accepted applications from January to February, and plan to make additional designations in the first half of this year.

Watchdog scrutinises NFTs, metaverse

The Financial Supervisory Service (FSS) of South Korea plans to strengthen its monitoring of new trade assets and related developments, including non-fungible tokens (NFTs) and the metaverse, it revealed in its annual work plan released on 14 February. The FSS said it would prepare countermeasures against factors that cause damage to consumers in the rapidly growing digital assets market.

Central bank conducts digital currency trials

The Bank of Korea completed its first phase of a central bank digital currency (CBDC) test in January, and is scheduled to finish the second phase in June. The central bank tested the basic functionalities of a CBDC, including manufacturing, issuing and distribution, in a “simulated environment in the cloud”. The second phase will look into more advanced concepts such as offline payments and enhancing personal information protection.


Discussion paper on stablecoins

The Hong Kong Monetary Authority (HKMA) published its discussion paper on crypto-assets and stablecoins on 12 January, inviting views from the industry and public on the relevant regulatory approach, particularly payment-related stablecoins. The paper considers the adequacy of the existing regulatory framework in light of the growing use of stablecoins and other types of crypto assets in financial markets, and the challenges posed by this increase in their prevalence. The HKMA has requested responses to the paper by 31 March and intends to introduce the new stablecoin regulatory regime by 2023-2024.

New governance rules for Hong Kong listed companies

In December, the Stock Exchange of Hong Kong (SEHK) published conclusions to its consultation on enhancing listed companies’ corporate governance practices and reporting. Since 1 January, the SEHK’s amended listing rules have taken effect, emphasising the importance of good corporate governance as part of any environmental, social and governance (ESG) programme, and highlighting the issuers’ requirement to establish and maintain appropriate governance, and effective risk management and internal control systems. Listed issuers are also required to establish a whistleblowing policy under the new corporate governance code, which was previously a recommended best practice only.

FRC launches climate action taskforce

Hong Kong’s independent auditor regulator, the Financial Reporting Council (FRC), has established the sustainability and climate action taskforce (SCATF) to provide recommendations to the FRC board on strategic actions in developing financial and sustainability reporting.

The members of the SCATF include: Christine Chow, global head of stewardship at HSBC Asset Management; Nancy Tse, independent non-executive director of Link Asset Management and DBS Bank (Hong Kong); Grace Hui, former chief operating officer of the listing division at the Hong Kong Exchanges and Clearing; Melissa Brown, partner at private investment advisory firm Daobridge Capital; Ashley Khoo, board director of the CFA Society Hong Kong; Fox Chu, partner at McKinsey & Company in Hong Kong; Jamie Allen, the founding secretary-general of the Asian Corporate Governance Association; Sammie Leung, partner of one firm services at PwC Mainland China and Hong Kong; Pat Woo, partner at KPMG China.

Government’s first retail green bond

The government launched the inaugural retail green bond under the Government Green Bond Programme for subscription by Hong Kong residents on 15 February. The target issue size of the retail green bond is HKD6 billion (USD768.8 million) with a tenor of three years. Bond holders will be paid interest once every six months at a rate linked to inflation in Hong Kong, subject to a minimum rate of 2%. The subscription period will start from 1 to 11 March.



3 blank-cheque companies have been listed in Singapore and seven applications have been received in Hong Kong after both cities introduced their special purpose acquisition companies (SPAC) mechanism as of February. See more here

77% is the increase in global foreign direct investment, which showed a strong rebound last year, according to the UN Conference on Trade and Development’s (UNCTAD) “Investment Trends Monitor” report released in January



Crypto trading restricted

The Monetary Authority of Singapore (MAS) has issued guidelines on 17 January to rein in cryptocurrency service providers. The guidelines said that digital payment token (DPT) – more commonly known as cryptocurrency – service providers should not promote their services to the general public, as the prices of DPTs are subject to sharp speculative swings.

Furthermore, the MAS stated that DPT service providers should not engage in marketing or advertising of their services in public areas, or through the engagement of third parties. DPT service providers can only market or advertise on their own corporate websites, mobile applications, or official social media accounts.

ACRA seeks balance on transparency

Singapore’s Accounting and Corporate Regulatory Authority (ACRA) completed its public consultation from 17 December 2021 to 28 January 2022 on proposed legislative amendments relating to data, digitalisation and corporate transparency. The proposed amendments include changes to the Companies Act, Accountants Act, ACRA Act, Business Names Registration Act, Limited Liability Partnerships Act, Limited Partnerships Act and Variable Capital Companies Act 2018, relating to data, digitalisation and corporate transparency. If enacted, the amendments will reduce the amount of data filed with the ACRA and limit publicly available personal data.

Updated CCCS guidelines

The Competition and Consumer Commission of Singapore (CCCS) has revised and published a number of guidelines on the Competition Act, 2004, which took effect on 1 February. Following public consultations in 2020 and 2021, the revised guidelines provide further clarity on how both traditional and newer business models will be assessed under competition law by providing guidance on the analytical and procedural frameworks administered by the CCCS under the act.


Thai competition authority rebrand

From 1 January, Thailand’s Office of Trade Competition Commission (OTCC) is now known as the Trade Competition Commission of Thailand (TCCT), mainly to incorporate Thailand into the name for easier reference, especially in the international community. The TCCT logo and website have also been changed to correspond with the new official name.

Authorities restrict digital assets for payment

The Bank of Thailand (BoT) and the Securities and Exchange Commission (SEC) plan to set a regulatory framework to prohibit digital asset business operators from supporting and promoting the usage of digital assets (cryptocurrencies and digital tokens) as a means of payment for goods and services.

The regulation aims to prevent extensive risk to the public and the economic and financial system arising from the usage of digital assets. The BoT and the SEC held a public hearing on the proposed plan from 25 January until 8 February. The feedback will be taken into consideration to set up the appropriate regulatory framework.

Regulator mulls crypto advertising ban

Thailand’s Securities and Exchange Commission (SEC) announced on 14 February a public hearing to collect opinions on its proposal to ban public cryptocurrency advertising and improve all criteria related to such advertising. The SEC said that cryptocurrency advertising must not feature exaggerated, distorted or misleading information, and should specify risks associated with cryptocurrency investment in text and font sizes as prescribed by the commission. The proposal calls for the advertisement of cryptocurrencies to be limited to the official channels of business operators, while ads in public areas will be prohibited. The hearing is set to end on 15 March.


Regulator bans firms from crypto sales

Indonesia’s Financial Services Authority, or Otoritas Jasa Keuangan (OJK) on 25 January warned that financial firms are not allowed to offer and facilitate sales of crypto assets. In a statement, the authority said that the value of crypto assets often fluctuated, and that people buying into digital assets should fully understand the risks.

Green finance guidance for financiers

Indonesia’s Financial Services Authority, or Otoritas Jasa Keuangan (OJK) on 20 January launched a green finance taxonomy, guidelines for financiers wanting to invest in the country’s green economy, as the government seeks to bump up its green credentials. The taxonomy lays out terms to determine how environmentally damaging a business’s operations are in Indonesia. The first version of the taxonomy covered 919 business sectors and subsectors, which would be expanded to 2,733 sectors and subsectors listed under Indonesia’s standard industrial classification.

Central banks enhance cross-border payments

The central banks of Indonesia and Malaysia, Bank Indonesia and Bank Negara Malaysia, have launched a cross-border QR payment linkage that will enable instant, secure and efficient cross-border payments between two countries.

Consumers in both countries will be able to make retail payments by scanning the quick response code Indonesian standard (QRIS) or DuitNow QR codes displayed by offline and online merchants. The linkage will be expanded in the future to support cross-border remittance where users in both countries can make real-time fund transfers.

We don’t put much emphasis on diversity and inclusion itself … [but] diversity and inclusion may increase the expertise and competitiveness of a law firm in the long run

Chae Jooyup
Vice president and general counsel at SK Biopharmaceuticals, and senior vice president of the Korea In-house Counsel Association in Seoul

See more here

Decentralised autonomous organisations [DAOs] are described as autonomous because they operate in accordance with rules that are encoded in smart contracts, rather than in accordance with articles of association, shareholder agreements and written law. To a large extent, the ‘rule of code’ replaces the ‘rule of law’

Andrew Godwin
Co-editor of Technology and Corporate Law – How Innovation Shapes Corporate Activity (Edward Elgar Publishing, August 2021).
Godwin also contributes a regular column called Lexicon to China Business Law Journal

See more here


New regulations on real estate

The government of Vietnam recently released decree No. 02/2022/ND-CP detailing the implementation of a number of articles of the law on real estate business. The decree, which will take effect on 1 March, provides updated legal requirements, particularly concerning the conditions for organisations and individuals conducting real estate business, templates for real estate contracts, transfer of lease-purchase contracts for existing houses and construction work, transfer of sale contracts and lease-purchase contracts for residential houses to be built in the future, and transfer procedures for the whole or part of a real estate project.

Government lowers value-added tax rate

The National Assembly of Vietnam issued decree No. 15 on 28 January, which reduced the value-added tax (VAT) rate for qualified goods and services from 10% to 8% for several services from February until the end of the year. The VAT reduction applies to all goods involved in import, manufacturing, processing and trade. However, taxpayers are required to issue a separate invoice for goods and services eligible for the reduction.


New licensing requirements for cloud providers

Effective from 1 January, Malaysia has required cloud service providers to apply for an applications service provider class licence from the Malaysian Communications and Multimedia Commission.

The new rule was introduced to develop standard operating procedures surrounding cloud services around the industry’s data protection, security and protection. A grace period until 31 March will be given for relevant providers to submit their applications for a licence before the regulation comes into full force.

Framework issued for digital insurers

The central bank, Bank Negara Malaysia, has issued the licensing framework for the digital insurers and takaful operators discussion paper, which outlines a newly proposed regulatory framework for digital insurers and takaful (an Islamic insurance system) operators.

The document represents the next phase of the central bank’s initiative to encourage digitalisation within the financial sector, and follows its licensing framework for digital banks issued on 31 December 2020. It is anticipated that digital insurers and takaful operators will contribute to the bank’s objective of increasing insurance and takaful penetration in the unserved and underserved market.


Taiwan Constitutional Court act amended

Taiwan’s amended Constitutional Court Procedure Act came into effect on 4 January to revise the Taiwan Constitutional Court’s (TCC) administration. The amendment added a new type of litigation, i.e. constitutional complaint against final court decisions, to the court’s jurisdiction and enabled it to exercise a power of concrete review on top of its abstract review powers.

Following this development, the court’s caseload is expected to increase significantly in the first several years. The amendment will also establish a new chamber system, each consisting of three justices, to dismiss a petition without the deliberation of the full house.

Cabinet approves changes to IP laws

Taiwan’s cabinet, the Executive Yuan, on 20 January approved and passed a draft amendment of the Copyright Act and Trademark Act to the Legislative Yuan for review. The amendment was proposed and drafted by the Taiwan Intellectual Property Office to facilitate Taiwan’s accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) based on differences in regulations found in 2016 between the Trans-Pacific Partnership Agreement (CPTPP’s original incarnation) and those of Taiwan. Once the draft is ratified into law, the amendments will facilitate Taiwan’s international participation and regional competitiveness in economic trade.


SEC drafts umbrella fund rules

The Securities and Exchange Commission (SEC) of the Philippines announced on 21 February its plan to allow investment companies to operate as umbrella funds that can create sub-funds with segregated assets and liabilities, which would provide investment companies and their fund managers with greater operational flexibility and cost savings.

The commission has released the proposed rules on creating and operating umbrella funds for public comment until 4 March. Under the draft rules,
an existing investment company may convert into an umbrella fund by amending its articles of incorporation and registration statement to conform with the requirements set by the
proposed guidelines.

Central bank tightens outsource lending

The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), has banned lenders from outsourcing inherent banking functions, including taking deposits from the public, granting loans, managing risk exposure and general management to avoid disruptions to operations.

The BSP, in circular No. 1137, directed banks to assess whether an outsourcing arrangement is material or non-material to the business. An outsourcing arrangement is material if a business disruption of an outsourced activity, service delivery failure, or data or security breach would significantly impact the bank’s operations, financial condition, reputation, customers, and compliance with laws, rules and regulations.


Cyber security bill updated

The Ministry of Transport and Communications on 13 January issued a revised Cyber Security Bill, 2022, almost a year after the declaration of a state of emergency. The bill restates the repressive provisions of the first draft, released in February 2021, and inserts more serious provisions threatening the safety and security of Myanmar’s digital economy. The bill aims to secure cyber systems, protect critical information infrastructure, protect the privacy of personal data of individuals, and manage cyber attacks. Subscription