Launching of the Singapore International commercial court

Posted by on Feb 20, 2015 in Singapore Legal Services

Singapore has launched the Singapore International Commercial Court which seeks to bring foreign commercial cases to be heard in Singapore.  The Kluwer blog has done a good job describing the mechanism of how such litigation would take so I will not deal with those points but will deal with the practical commercial reasons to have your dispute heard in Singapore Courts. Singapore is well known for efficiency and speed in dealing with commercial legal disputes and the setting up of the SICC would further allow parties to have their cases heard in Singapore.  This article will set out some practical reasons why parties would want to commence proceedings in the SICC instead of the country where the business operations of the disputing parties may typically be found: a. Singapore has become the second largest wealth management centre in the world.  Most people say yes I know this, but fail to realise that the implication of this is that a judgement from Singapore can be readily enforced against the tycoon assets which may be sitting in Singapore (if such assets are held in their names).  As most people would realise, you don’t want a paper judgement but you want something that can be enforced against. b. Singapore is well known to be fair in terms of hearing cases and the rule of law is very strong in Singapore with a very strong stance taken against corruption so the possibility of bribing judges to get a favourable verdict is much less possible in Singapore as compared to the rest of Asia. c.  Singapore has taken great strides to impose key performance indicators on the judicial system by introducing a docket system which tracks how fast cases are progressing through the judicial process.  Such tracking helps to speed up the hearing of cases and grant speedy justice to would be applicants. Most businesses in Asia love to deal with their legal battles speedily and focus on making money in their businesses.  We would suggest that the SICC is a great approach in that direction to help the tycoons of Asia deal with their legal battles speedily. Singapore has done well with the Singapore International Arbitration Centre and we predict using its marketing dollars in a similar way will make a success of the SICC. Do you think the SICC will ultimately be...

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An Analysis of Reverse Takeover Transactions (RTO Transaction) in Singapore as an alternative to initial public offering (IPOs)

Posted by on Feb 20, 2015 in SGX-ST Listings, Singapore Business, Singapore Economy, Singapore Legal Services

                   Reverse Takeover Transactions (RTO Transaction) in Singapore Happy Chinese New Year of the Goat to all my readers!  This year looks bad on the economic climate for the second half of the year but this also means assets are getting cheaper valuations which means more RTO transactions may be in the pipeline.  I been getting several calls on this.  Further to my earlier post on Reverse takeover Transactions in Singapore, there have been several new RTO Transactions in Singapore and this write up will analyse some of the commercial considerations when structuring RTO deals. As we write previously, in a IPO transaction, a businessman restructures some assets under a holding company and lists that holding company on the Singapore Stock Exchange. In a RTO transaction, there is an existing listed company (the “Listco”) that has an existing asset (“Existing Business”) and the parties can carry out either one of the following: (a)                The Listco acquires the new business (which is usually unlisted) (“New Business”) and merges it with the existing business so as to achieve strategic synergies;   (b)               The Listco acquires the New Business and the original major shareholder buys his Existing Business using a private company vehicle that he owns;   (c)                Or if the Listco’s original business has been sold prior to the RTO, then the Listco will change name after the acquisition of the New Business to reflect the name of the asset acquired. From the asset perspective Some benefits of a RTO transaction from the perspective of the asset owner: An acquisition via an RTO allows the asset to be sold into a listed company and multiples that of profits as opposed to a mere discounted cash flow valuation that you may expect for a normal merger and acquisition;   An acquisition via an RTO allows the owner of the asset to have liquidity (i.e. he can sell down part of his stake in the asset);   A listed parent allows the company/group to borrow at a lower interest rate.  In some transactions that we have done, the post IPO/listed entity can sometimes borrow at a much lower interest rate;   From a China perspective, this overseas listing allow china business owners to move their money/assets overseas on a more fluid basis rather than having to do the usual 内保外贷 (pledge assets in china as security and then borrow offshore in Singapore);   An overseas listing allows the China entity a reason to invest overseas and expand overseas from a china compliance perspective.  The State Administration of Foreign Exchange (SAFE) (国家外汇管理局). This also grants the China entity a reason to move funds overseas to expand...

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Initial Public Offering Process Singapore

Posted by on Sep 1, 2013 in SGX-ST Listings, Singapore Legal Services

Are you looking for more information on the Initial Public Offering Process Singapore? This article will help highlight in simple terms the listing process in Singapore. As the Global Economy continues to grow in 2013 and the prices of Singapore shares continues to climb, many global macro funds would start to invest their monies into Singapore equity funds which in turn will invest in companies that are listed on the Singapore Stock Exchange (SGX-ST). It is during this period that many companies from Singapore and China will start considering listing their companies on the Singapore Exchange. What are the several reasons that a businessman may have for listing his company in Singapore? Whilst there is a higher valuation based on PE ratios in China and Hong Kong but in China the queue is 800 to 900 companies waiting for approval to list which makes listing in China a feat in itself. While in Hong Kong only large companies are able to receive approval quickly. The smaller ones join the queue.   A public listed company means that the businessman can discharge his personal guarantees for his company. This is quite an important thing for a serial entrepreneur so he can use his own good personal credit for other ventures.   A businessman can make money from his stock price. No we are not talking about insider trading. So a businessman can buy shares in the market when there is no inside news and then release good news (assuming its true) and then sell his shares at a profit. So what is the initial public offering process in Singapore? First a team is assembled to examine if a company can be listed in Singapore. The audit of the company’s last three years of financials are carried out and restructuring of a company (if necessary) is carried out. The due diligence process starts. The relevant documentation is drafted and submitted to the Singapore Exchange for comments and approval. The listing is given the green light and the prospectus is listed on the website of the Monetary Authority of Singapore for main board companies or on Catalodge for Catalist companies for a period of time. After the expiry of the Red Herring Period, the Company is listed on the Singapore Exchange. This process is typically supposed to take anything from 6 months to 9 months (assuming no complications arise) but may take longer.  In the interim, private equity investors will invest monies in these companies to fund the IPO expenses by way of a pre-IPO investment usually in the form of a convertible loan to the company. Do contact us if you are interested in a Singapore...

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Singapore Subsidiary Company – A Popular Choice For Foreigners

Posted by on Aug 27, 2013 in Singapore Legal Services

By Lawrence R Smith Investors and entrepreneurs have been successfully incorporating Singapore subsidiary companies for years, due to Singapore’s simple, transparent and efficient business and tax laws. A Singapore subsidiary company can be set up in just one day, and is immediately able to benefit from Singapore’s low-tax schemes and robust economy. A subsidiary company setup can be structured in various forms, however, it is essentially a Private Limited Company (Pte Ltd) and so is its own separate legal entity, with a local or foreign corporate entity acting as majority shareholder. Singapore subsidiary company incorporation allows 100% ownership of the business by the foreign parent company and enjoys the low-tax incentives of a Singapore resident company. There are no restrictions on the repatriation of profits and in order to set up the company, a minimum paid-up capital of only S$1 is required. One government incentive that attracts many international companies to set up a Singapore subsidiary company is the tax law for startups. To help startups preserve their cash flow and profits, the first S$100,000 of income is fully tax-exempt for the three years following incorporation. A further 50% tax exemption is given on the next S$200,000 of taxable income, for the same three years, to further inspire profit holdings. These exemptions are applicable to any Singapore private limited company, under the conditions that the company be: i. A Singapore tax resident company; ii. Incorporated in Singapore; iii. Owned by no more than 20 shareholders during the first three consecutive years, and the shareholders must be individuals beneficially holding the shares in their own names. Not only do investors benefit from Singapore’s easy setup structure but also from Singapore’s world-renowned business reputation. Singapore’s economy is one of the top 3 most open economies for international trade and investment and is among the top 3 most competitive countries in the world when it comes to business. Setting up a Singapore Branch Office, or a Singapore Representative Office, are other options for foreign companies. Key differences between these and the subsidiary company are: i) A Branch Office is not its own legal entity and so the parent company is responsible for liabilities. It is essentially an extension of that parent company ii) A Representative Office is not allowed to undertake operations that generate revenue. It can be used by the parent company to assess opportunities in the market. Incorporating a Singapore subsidiary company is quick, with the two basic stages of company name approval and company registration, able to be completed within 1-2 working days. The requirement of having to use a professional services firm to complete the registration process is an advantage as an experienced consultant will ensure the process...

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Singapore Legal Services – A quick Overview

Posted by on Mar 11, 2013 in Singapore Legal Services

Singapore has become a key economy in Asia and many finance houses and banks are coming to Singapore to take advantage of the growth in South East Asia.  The underpinning of every financial centre is a good legal infrastructure and Singapore has been ranked very highly worldwide in terms of its legal standing and as a result Singapore Legal Services have become quite in demand worldwide.   Most people ask me why engage a lawyer in Asia?  They frown on legal services as a cost of goods sold and wonder why they should spend on a cost item when they should be focused on revenue.  If you intend that your business remains a small trading business, then your legal liability and risk would remain small.  However, for larger companies in Asia and in Singapore, legal risk rises as your companies trading activities increase. Thus to ensure that you will be paid when you sign a contract, you need to examine Singapore legal services more seriously.  Engaging a corporate lawyer to review and draft your distributorship contracts, franchise contracts and other commercial contracts early will save you much headache later if you want to be paid by your customers or have recourse not to pay your suppliers for shoddy work. What are some types of Singapore legal services that you may need: If you are trading company, engage a Singapore law firm to review your distribution contracts and consultancy contracts and employment contracts with your existing employees.  Many companies draft contracts which have an earn out structure, where for key employees, the more gross revenue/ profit that a company makes, the better the remuneration for those key employees.   If you intend to enter into a franchising agreement, you should engage a proper corporate lawyer to review your agreement as this contract is intended to govern how your Singapore business operates for a number of years and you want to know the rules of the game so as to speak.   If you are intending to enter into a joint venture or corporate co-operation type of arrangement, engaging a corporate lawyer to draft a proper joint venture agreement is key to minimize legal conflicts later. Having a proper exit mechanism in such agreements is key so that each party knows how he can exit and what valuation such exit would be based on. A properly drafted corporate contract between the contracting parties can save you a lot of heart ache later and would be important if you intend to grow your company/business large.   Do contact us if you wish to engage us for Singapore legal services.  ...

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