ISSUE 10.4
ALB In-house survey 2010 Corporate counsel speak out
Capital markets
Lawyers brace for Asia’s IPO boom
The Allen & Gledhill/Zaid Ibrahim collapse A cautionary tale for ASEAN expansion
Mainland mandate Getting a piece of the PRC action
Evershed’s Nick Seddon Why Asia is a necessity not an option
Lateral moves
Deals Roundup
Region-wide updates
debt & Equity market intelligence
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EDITORial >>
People first IN THE FIRST PERSON
T
here is a Maori proverb that asks: “He aha te mea nui o te ai? He Tangata, He Tanagata, He Tangata. Literally, “What is the most important thing in the world? It is people, it is people, it is people”. The sentiment to which the saying refers continues to be the foundation on which HR practices at most corporations around the globe are built. But the last 18 months were to some extent an exception to this ancient rule – a period in which the central importance of people in any organisation was seemingly forgotten. Some law firms were among the biggest offenders in this regard – only too quick to axe partners, lawyers and support staff to protect their bottom lines. But the issue is not that staff layoffs occurred – attrition of this kind is natural and even expected in the life cycle of most law firms, and even more so in times of recession. It is the way in which legal staff were treated. As the HR head at one law firm noted, “People were dehumanised … they were placed firmly in the ‘L’ column of firms’ P&L sheets, numbers that could easily be cancelled out.” For some law firms, people ceased to be the most important thing in the world. In the context of the last 12 months then, ALB’s recent Employer of Choice survey for 2010 (see ALB 10.3) is ever more prescient. Those firms that were voted as their country’s best law firms to work for are more deserving than ever of the title this year. As the rush for talent starts to pick up across the region, the ‘Employer of Choice’ tag may be just as good as money in the bank. As these firms have demonstrated, recognising the importance of people is not something that should be tied to economic ebbs and flows. Rather, it should be the cornerstone on which a firm, its culture and its practices are built. After all, if a law firm is the sum of its people, what could be more important than recognising and rewarding their importance ... through thick and thin?
Recognising the importance of people is not something that should be tied to economic ebbs and flows. Rather, it should be the cornerstone on which a firm, its culture and its practices are built www.legalbusinessonline.com
“The key for law firms coming
out of this financial crisis is to remember there still remains a need for everyone to support each other. This should not be something that everyone forgets just because deals have started to come regularly again”
Nick Seddon, Eversheds (pg38)
“Companies that used to rest their work in larger, more general practices are moving to seek the value they can derive from specialised practices” Farah Namazie, Namazie & Co (pg44)
“The biggest lesson I learnt was that no two acquisitions are ever identical. You can have deals that go through smoothly and those that don’t, even where the target and the vendor have a good relationship” Jane Niven, Jones Lang LaSalle (pg56)
1
| deals>> CONTENTS News >>
contents
46
32 COVER STORY
ALB In-house Survey Are legal budgets being replenished and hiring freezes lifted? ALB looks at the reality faced by in-house legal departments and how external providers can strive to meet their needs
ANALYSIS
FEATURES
8
CEPA: Further loosening needed Hong Kong firms need the CEPA framework to be kinder before they can forge meaningful alliances with mainland firms
38 ALB Managing Partner series The honeymoon period in Asia may now be over for Eversheds’ Nick Seddon, as he explains the measures that will keep momentum going in 2010
56 In-house Perspective Jane Niven explains how she balances her dual roles as Jones Lang LaSalle’s general counsel and head of compliance for Asia-Pacific
10 Allen & Gledhill/Zaid Ibrahim alliance collapses The collapse of this legal alliance is more than just a failure of strategy: it also highlights some of the challenges facing South-East Asian law firms who are looking towards regional expansion
42 Specialist law firms The financial crisis has allowed specialist firms to gain market share from full-service law firms. Who have been the big winners?
60 2010 legal job market: cleared for takeoff What sectors to look out for and what to expect in the legal recruitment market this year
12 The economics of law reform in South- East Asia: Malaysia Legal overhaul may be political capital in Malaysia, but the cause for law reform is nevertheless gaining momentum. In the first of a series on law reform in the region, ALB looks at the country and the impacts on legal practices
52 European law firms While they are often overlooked in the Asian legal market, the aggressive growth strategies made by European law firms in the past few years warrants growing attention
62 Arbitration New opportunities for law firms have emerged with the growth of the international arbitration market, both in Asia and the Middle East 68 Relocation Expatriate pay packages certainly add to the cost of an international assignment, but they are getting cheaper. ALB takes a look at the effects of the ‘local-plus’ scheme on relocations
Country editors The Regional Updates section of ALB is sponsored by the following firms:
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46 Capital markets Last year saw an IPO boom led by Chinese companies seeking listings in Hong Kong – and confidence is now spreading region-wide
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3
NEWS | deals >>
| KOREA |
deals in brief
►► KOGAS refinancing Value: US$480m
Firm: Kim & Chang Lead lawyers: Hi-Sun Yoon, IH Yoo, Grace KA Nam Client: KOGAS Firm: Morgan & Morgan Client: KOGAS Firm: Lee & Ko Client: Lenders Firm: Watson Farley & Williams Client: Lenders • KOGAS and three major Korean shipping companies – Hanjin Shipping, Hyundai Merchant Marine and SK Shipping – in refinancing to repay ship financing facilities extended to them in 1996 • Deal completed despite deteriorated market conditions, complicating procurement of long-term foreign currency borrowings
| KOREA | ►► LG Household & Health Care–The Face Shop Korea acquisition
| hong kong | ►► Prudential– American International Group Asia acquisition Value: US$35bn Firm: Slaughter and May Lead lawyer: William Underhill Client: Prudentia Firm: Weil Gotshal & Akiko Mikumo Manges Weil Gotshal & Manges Lead lawyers: Matthew Gilroy, Michael Aiello, Akiko Mikumo Client: American International Group Firm: Sullivan & Cromwell Lead lawyers: Robert DeLaMater, Stephen Kotra Client: American International Group
4
Value: US$363m HEADLINE DEAL
Firm: Debevoise & Plimpton Lead lawyer: John Vasily Client: American International Group Firm: Cleary Gottlieb Steen & Hamilton Lead lawyer: Sung Kwan Kang Client: Prudential • American International Group sells its Asian life insurance unit, AIA to Britain’s Prudential plc for US$35.5bn (US$25bn in cash and US$10.5bn in common stock) • Largest asset sale by AIG since September 2008 bailout, proceeds to repay US government • Largest cross-border deal for UK company Prudential – will be biggest Asian insurer
Firm: Bae, Kim & Lee Lead lawyers: Ri Bong Han, Sang Goo Lee, Jun Kul Yoo, Mok Hong Kim Client: Affinity Equity Partners Firm: Kim & Chang Lead lawyer: Han-Woo Park Client: LG Household & Health Care • LG Household & Health Care acquires cosmetics brand The Face Shop Korea for US$363m
| malaysia | ►► JCY International IPO Value: US$207m
Firm: Zaid Ibrahim & Co Client: JCY International Firm: Latham & Watkins Lead lawyers: Michael Sturrock, Lene Malthasen, Jiyeon Lee-Lim Client: JCY International and YKY Investments Firm: Adnan Sundra & Low Client: Underwriters Firm: Shearman & Sterling Client: Underwriters
Michael Sturrock Latham & Watkins
• JCY International completes Regulation S and Rule 144A IPO on the Bursa Malaysia • Latham & Watkins worked with cocounsels, Zaid Ibrahim & Co, splitting international and local legal aspects • Main challenge on IPO was ensuring that teams had everything in place in order to list on schedule • Latham & Watkins was referred to JCY International by investment bankers
“The deal was 100% secondary … This is pretty unique in that most IPOs involve some offering by the subject company” Michael Sturrock, Latham & Watkins
• Affinity a client of Bae, Kim & Lee since 2005 when it sought advice on the mezzanine financing of its 70% stake acquisition of the Face Shop. BKL also scooped role on sale of Affinity’s shares in Himart to Eugene Corporation in 2008 • Kim & Chang advised from negotiations to regulatory approvals
• Weil working alongside Debevoise & Plimpton as co-counsel with five partners across Asia/US offices
Asian Legal Business ISSUE 10.4
NEWS | deals >>
| THAILAND | ►► Thai National Power Project 2 Value: US$150m Firm: Baker & McKenzie Lead lawyers: Sawanee Sethsathira, Vit Vatanayothin, Wittaya Luengsukcharoen, Theerapab Punyasakhon Client: Bank of Ayudhya and Kasikorn Bank Firm: Hunton & Williams Lead lawyers: Stephen Bennett, Richard Savage Client: International Power • Project development and US$150m financing of a new cogeneration power plant in Thailand
Sawanee Sethsathira Baker & McKenzie
• Hunton’s Bangkok Stephen Bennett Hunton & Williams office received mandate from longstanding clients, International Power, who has used Hunton as counsel in Thailand for over ten years • Hunton previously advised TNP on its EPC arrangements for an existing power plant, also on Thai employment laws • Power plant is first to have reached financial close among the 19 others which have been given Thai government approval
►► your month at a glance Firm
Jurisdiction
Deal name
Amarchand & Mangaldas
India
Jubilant Foodworks IPO
Adnan Sundra & Low
Malaysia
JCY International IPO
200 Equity market
Singapore
PT Chandra Asri high yield bonds
230 Bond market
Singapore
Singapore Press S$1bn MTN
715 Debt market
75 Equity market
Singapore
Avago Technologies secondary share offer
500 Equity market
Singapore
Katong Mall financing
400 Finance
Singapore
Singfuel Investment–Chemoil Energy acquisition
457 M&A
Singapore
euNetworks Group bonds issue
60 Debt market
Singapore
Jardine Strategic’ share buyback
250 Equity market
Singapore
Olam International note issue
177 Debt market
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
Allens Arthur Robinson
Australia/China
Rio Tinto–Chinalco iron ore JV
Anderson Mori & Tomotsune
Japan
Nomura Holdings shelf takedown of notes
Appleby
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
Allen & Gledhill
1350 Corporate 3,000 Debt market 425 Energy & resources
Assegaf Hamzah & Partners Indonesia
Star Energy Geothermal notes offering
350 Debt market
ATMD Bird & Bird
Singapore LNG Terminal construction
1,000 Construction
AZB & Partners
Singapore India
ExlService Holdings–American Express India acquisition
30 M&A
India
Housing Development and Finance Corporation loan
75 Debt market
India
D B Realty IPO
India
Goldman Sachs–Max India investment
India
American Tower Corporation–Essar Telecom Infrastructure proposed bid
India
Jubilant Foodworks IPO
India
Hathway Cable & Datacom IPO
320 Equity market 150 Finance Undisc M&A 75 Equity market 140 Equity market
India
American Tower Corporation–Essar Telecom proposed acquisition
450 M&A
Korea
LG Household & Health Care–The Face Shop Korea acquisition
363 M&A
India
Hilton Hotel Riyadh establishment
Thailand
Thai National Power Project 2
150 Finance
Australia/China
Rio Tinto–Chinalco iron ore JV
1,350 Corporate
BLC Law Office
China
Duoyuan Global Water follow-on public offering
105 Equity market
Boies Schiller
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
Cleary Gottlieb
Korea, US
KEXIM debt offering notes due 2015
Indonesia
Star Energy Geothermal notes offering
Malaysia/Japan
YTL–Niseko Village ski resort acquisition
Malaysia
Oji Paper–GS Paper & Packaging acquisition
Commerce & Finance
China
Duoyuan Global Water follow-on public offering
105 Equity market
Conyers Dill & Pearman
Indonesia
Star Energy Geothermal notes offering
350 Debt market
Japan/US
Sumitomo Mitsui Financial Group cash tender offer
3,800 Equity market Undisc Debt market
Bae, Kim & Lee
Baker & McKenzie
Clifford Chance
Davis Polk & Wardwell
www.legalbusinessonline.com
Value Deal type (US$m)
Undisc Property
1,000 Debt market 350 Debt market Undisc Property 200 M&A
Japan
Aiful debt restructuring
Korea, US
KEXIM debt offering notes due 2015
1,000 Debt market
Debevoise & Plimpton
Pan-Asia
Prudential–American International Group Asia acquisition
3,500 M&A
Freshfields
China
Diageo–Chengdu Yingsheng Investment acquisition
925 M&A
General Atlantic
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
General Law Partners
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
Hadiputranto, Hadinoto & Partners
Indonesia
Star Energy Geothermal notes offering
350 Debt market
Herbert Smith
Hong Kong
TCL Communication Technology Holdings rights issue
Hunton & Williams
Thailand
Thai National Power Project 2
Hwang Mok Park
Korea, US
KEXIM debt offering notes due 2015
J Sagar & Associates
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
46 Equity market 150 Finance 1,000 Debt market 425 Energy & resources
5
NEWS | deals >>
| JAPAN | ►► Sumitomo Mitsui Financial Group cash tender offer Value: US$3.8bn Firm: Davis Polk & Wardwell Lead lawyers: John Paton, Theodore Paradise Client: Sumitomo Mitsui Financial Group Firm: Nagashima Ohno & Tsunematsu Client: Sumitomo Mitsui Financial Group Firm: Maples and Calder Client: Sumitomo Mitsui Financial Group Firm: Simpson Thacher & Bartlett Client: Deal managers Firm: Linklaters Client: Deal managers • Cash tender offers by Sumitomo Mitsui Financial Group subsidiaries, for two series of perpetual subordinated bonds and two preferred securities issued by those subsidiaries • DP&W advised on SMFG's US$9.1bn global offering in 2009, has worked with Nagashima on several deals last year
| INDIA | ►► Goldman Sachs–Max India investment Value: US$115m Firm: Amarchand Mangaldas Client: Goldman Sachs Firm: AZB & Partners Lead lawyers: Anil Kasturi, Thomas Phillipe, Neha Sahai Client: Max India • Investment of US$115m by Goldman Sachs' PE group in Max India • AZB structured regulatory advice, reviewing and negotiating transaction documents, liaising with regulatory authorities, including the Foreign Investment Promotion Board
| MALAYSIA | ►► AXA AFFIN General Insurance–BH Insurance proposed acquisition Value: US$135m
• Nomura Holdings shelf takedown of US$1.5bn 5% Senior Notes due 2015 and US$1.5bn 6.70% Senior Notes due 2020 • First SEC-registered debt issuance by Nomura Holdings with Notes listed on Singapore Exchange
Firm: Norton Rose Lead lawyers: Jake Robson , Ken-Hui Khoo Client: AXA
• All three firms advised on Nomura Holdings' US$5bn share offer in December 2009
Firm: Zaid Ibrahim & Co Client: AXA
• Simpson Thacher team worked across Tokyo, New York and London
• AXA SA, through its Malaysian subsidiary, AXA AFFIN General Insurance Berhad, proposed the acquisition of Malaysia's BH Insurance business. • Combined group of AXA-AFFIN and BHI will create sixth-largest general insurer in Malaysia by annual gross written premiums • Norton Rose’s three-lawyer team also advised AXA on the new shareholder arrangements in relation to AXA-AFFIN to take effect from completion • In 2005, firm's UK office hired ex-head of AXA UK’s group legal department, Noolen John as a consultant
| JAPAN | ►► Nomura Holdings shelf takedown of notes Value: US$3bn Firm: Simpson Thacher & Bartlett Lead lawyers: Alan Cannon, Robert Laplante, Sam Porter, Yi Wang Client: Nomura International Securities
| CHINA | ►► Duoyuan Global Water– follow-on public offering Value: US$105m
Firm: O’Melveny & Myers Lead lawyers: Kurt Berney, Larry Sussman, Nathan Bush Client: Piper Jeffrey & Co • Duoyuan Global Water IPO of American Depositary Shares on the New York Stock Exchange (NYSE) • Winston & Strawn, which launched offices in Beijing and Shanghai last year, also advised the issuer, seizing client from Hogan & Hartson, which advised DGW and Duoyuan Printing on their respective US$88m and US$55m IPOs on NASDAQ last year • Deal is one of only three US IPOs by a Chinese company in 2009 to date
| AUSTRALIA/CHINA |
Firm: Commerce & Finance Lead lawyer: Li Hui Client: Duoyuan
►► Rio Tinto–Chinalco iron ore JV
Firm: Winston & Strawn Lead lawyers: Simon Luk, Eric Cohen Client: Duoyuan
Firm: Baker & McKenzie Lead lawyers: Stanley Jia, Andrew Lucas Client: Chinalco
Firm: White & Case Client: Depositary
Simon Luk Winston & Strawn
Firm: BLC Law Office Client: Shareholder Firm: Pillsbury Client: Shareholder Firm: Maples and Calder Client: Duoyuan Global
Value: US$1.35bn
Firm: Allens Arthur Robinson Lead lawyers: Scott Langford, Richard Kriedemann, Nic Tolé Client: Rio Tinto • Rio Tinto and Chinalco have entered into a non-binding memorandum of understanding (MOA) in respect of a JV Stanley Jia to develop and Baker & McKenzie operate the Simandou iron ore project in Guinea
Alan Cannon Simpson Thacher & Bartlett
Firm: Anderson Mori & Tomotsune Lead lawyer: Akiko Kimura Client: Nomura Holdings Izumi Akai Sullivan &
Firm: Sullivan & Cromwell Cromwell Lead lawyer: Izumi Akai Client: Nomura Holdings
6
Asian Legal Business ISSUE 10.4
NEWS | deals >>
• Deal follows rejection of Chinalco’s US$19.5bn bid for Rio Tinto last year • AAR are longstanding clients of Rio Tinto: in the past 18 months the firm has worked with Rio Tinto on matters spanning Asia, Africa, Europe and North and South America, as well as in Australia
| MALAYSIA | ►► Oji Paper–GS Paper & Packaging acquisition Value: US$200m Firm: Clifford Chance Lead lawyer: Andrew Whan Client: Spare Holdings Firm: Zaid Ibrahim Lead lawyers: Robert Liew, Eve Tsen Client: Oji Paper
Andrew Whan Clifford Chance
►► your month at a glance (CONT) Firm
Jurisdiction
Deal name
K&L Gates
Hong Kong
Chu Kong Petroleum & Natural Gas IPO
173 Equity market
Korea
KOGAS refinancing
480 Finance
Kim & Chang
Korea
LG Household & Health Care–The Face Shop Korea acquisition
363 M&A
Latham & Watkins
Malaysia
JCY International IPO
200 Equity market
Lee & Ko
Korea
KOGAS refinancing
480 Finance
Lexygen
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
Linklaters
Japan/US
Sumitomo Mitsui Financial; Group cash tender offer
Linklaters Allen & Gledhill
Indonesia
Star Energy Geothermal notes offering
Japan/US
Sumitomo Mitsui Financial Group cash tender offer
Maples and Calder
• Spare Holdings will dispose its stake in GS Paper acquired back in 2007, which Paul Hastings and Shearn Delamore & Co advised on
www.legalbusinessonline.com
350 Debt market 3,800 Equity market
China
Duoyuan Global Water follow-on public offering
105 Equity market
Korea
KOGAS refinancing
480 Finance
Nagashima Ohno & Tsunematsu
Japan/US
Sumitomo Mitsui Financial Group cash tender offer
3,800 Equity market
Japan
Aiful debt restructuring
Undisc Debt market
Nishith Desai Associates
India
Dichtungstechnik–Deshmukh Rubber JV
Undisc JV/Corporate
Norton Rose
Singapore
AXA AFFIN General Insurance–BH Insurance proposed acquisition
135 M&A
O’Melveny & Myers
China
Duoyuan Global Water follow-on public offering
105 Equity market
Paul Weiss
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
Pillsbury
China
Duoyuan Global Water follow-on public offering
105 Equity market
Malaysia
JCY International IPO
200 Equity market
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
Japan/US
Sumitomo Mitsui Financial Group cash tender offer
3,800 Equity market
Japan
Nomura Holdings shelf takedown of notes
3,000 Debt market
Pan-Asia
Prudential–American International Group Asia acquisition
3,500 M&A
Shearman & Sterling
Slaughter and May Stamford Law Corporation Stephenson Harwood Sullivan & Cromwell
Singapore/China
Info Giant Investments–Hongguo International share acquisition
124 M&A
Ying Li convertible bond offering
142 Debt market
Singapore/UK
PT Wings Abadi aircraft financing
Undisc Aviation
Japan
Nomura Holdings shelf takedown of notes
3,000 Debt market 3,500 M&A
Pan-Asia
Prudential–American International Group Asia acquisition
Korea
KOGAS refinancing
Weil Gotshal & Manges
Pan-Asia
Prudential–American International Group Asia acquisition
Winston & Strawn
WongPartnership
Zaid Ibrahim
425 Energy & resources
Singapore
Watson Farley & Williams
White & Case
“I expect to see more deals of this kind this year, especially within Asia, as regional companies look to make strategic acquisitions and disposals in a more stable economic climate. This deal is indicative of the momentum we’re now seeing in private equity transactions, as buyers and sellers return to the market in earnest” Andrew Whan, Clifford Chance
425 Energy & resources 3,800 Equity market
Morgan & Morgan
Simpson Thacher & Bartlett
• Japan’s Oji Paper to acquire Malaysian paperboard manufacturer, GS Paper & Packaging for an estimated US$200m, to boost Oji’s market share in the South-East Asian paper industry
Value Deal type (US$m)
480 Finance 3,500 M&A
China
Duoyuan Global Water follow-on public offering
India
Jubilant Foodworks IPO
105 Equity market
China
Duoyuan Global Water follow-on public offering
105 Equity market
Singapore
Olam International note issue
177 Debt market
Singapore/China
Info Giant Investments–Hongguo International share acquisition
124 M&A
Singapore
Divestment of Robinson Point
144 Property
Singapore
AM Alpha–Tianchen Rose Plaza acquisition
205 M&A
Singapore
Fortis Healthcare–Parkway Holdings acquisition
658 M&A
Singapore
Golden Concord Asia–OUE Realty acquisition
500 M&A
Singapore
C2O Holdings–Swissco takeover
124 M&A
India/Singapore
Morgan Stanley Infrastructure consortium–Asian Genco investment
425 Energy & resources
Malaysia
Oji Paper-GS Paper & Packaging acquisition
200 M&A
Singapore
AXA AFFIN General Insurance–BH Insurance proposed acquisition
135 M&A
Malaysia
JCY International IPO
200 Equity market
75 Equity market
Does your firm’s deal information appear in this table? Please contact
alb@keymedia.com.au
61 2 8437 4700
7
NEWS | analysis >>
Analysis >>
CEPA: a gate in the Great Wall yet to open
“Most leading Hong Kong firms are more comfortable with setting up a JV or an association in which they can have certain management power to oversee the business operation and control quality” Wilfred Tsui, Gallant YT Ho & Co
CEPA shows that the government is serious about opening its legal market to Hong Kong firms, but liberalisation is seen as ‘too slow’ by many. ALB investigates whether better alternatives exist
S
ix years in the making, the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) has undoubtedly contributed to the closer economic cooperation and integration between the two sides of the Lo Wu Border. It has granted preferential market access spanning over 20 service sectors to Hong Kong businesses, with banking and finance, retail, manufacture and logistics being among the main beneficiaries. Hong Kong and mainland law firms, however, seem reluctant to take advantage of CEPA. Since Hong Kong firms were first allowed to operate in association with their mainland counterparts six years ago, only a small number have tested the new preferential measures and even fewer have achieved meaningful collaboration and commercial success. Chengdu-headquartered Zhonghao Law Firm and Hong Kong’s So Keung Yip & Sin were among the first firms to take the plunge, entering into a formal
8
association under CEPA in 2004. And while the two parties have maintained a close business relationship, they are considering a possible termination of the association as no real benefits have been forthcoming. “The cooperation under the CEPA association arrangement has no real difference from other forms of cooperation – such as a strategic alliance or referral agreement,” said Robin Yuan, the managing partner of Zhonghao. “A lack of follow-on measures and rules to support and allow further meaningful collaboration and integration between the associated firms has led to a decreased interest and very low motivation for firms to apply for an association. “In addition, our clients have developed a stronger riskaware culture, so the association has added more potential liabilities Robin Yuan to both firms. Negligible Zhonghao advantages, together
with added risk, have regrettably resulted in the possibility to terminate the association,” said Yuan. When CEPA was first launched, firms like Zhonghao embraced the partnership arrangement with great enthusiasm, hoping they would be allowed to transform the association into a joint venture or even a merger, similar to the case of accounting firms. Reality, however, has turned out to be far from the expectation. “We saw the opportunities offered by CEPA as a lucrative cake. But after we had a slice of the cake, we found there was hardly anything tangible on the inside,” said Yuan. Aiming to ride the wave of Hong Kong and foreign investment into Western China, Zhonghao is now contemplating opening its own branch office in Hong Kong.
Other alternatives
Another inital starter under CEPA was Hong Kong firm Fred Kan & Co, which established a representative office in Tianjin in 1998 and entered into an association with Tianjin firm JD Hands in 2004. The firm’s partner and chief representative of the Tianjin office, Edward Tse, sees the association as ‘two firms working in the same office’. “It’s convenient for us to be able to work together in the same office in Tianjin, but under the CEPA framework the nature of cooperation between the two firms remains on the referral level. Each firm is paid a commission based on the clients and cases it refers to the other,” said Tse. Currently, the two firms are collaborating on representing a PRC company in an arbitration case in Hong Kong. Because Fred Kan only has one mainland representative office and JD Hands is a Tianjin-based local firm, the amount of business generated Asian Legal Business ISSUE 10.4
NEWS | analysis >>
►► Who can operate in association under CEPA?
• In order to operate in association with mainland law firms, Hong Kong firms must have: 1. their own names, premises and articles of association 2. assets of RMB100,000 or more 3. three or more partners 4. a partnership agreement in writing • A Hong Kong law firm that has set up a representative office on the Chinese mainland is allowed to operate in association with one mainland law firm, without being subject to geographical restriction. • For mainland firms to operation in association with Hong Kong law firms, CEPA requires they must have been established for at least three years. There’s no requirement on the number of full-time lawyers employed by the mainland law firms. • From October 2009, a Hong Kong law firm that has set up a mainland representative office can operate in association with one mainland law firm in Guandgong that has been established for one year or more; at least one of the persons who established the firm must have been in legal practice for five years or more. • Note: for a full list of liberalisation measures for the legal services sector under CEPA, see the website of the Trade and Industry Department of Hong Kong (http://www.tid.gov.hk/english/cepa/tradeservices/leg_liberalization.html)
under the association is limited due to geographical coverage. The firm has had to cooperate with other mainland counterparts in different locations to better serve clients’ needs across the country and gain more referral work. It is also a member of ADVOC Asia, an international network of independent law firms. Through ADVOC membership, the firm has established close relationships with other China members, including Shandong Qingdao and Beijing Jincheng Tongda & Neal. “The cost of running a representative office and maintaining the association is quite high, so not many Hong Kong law firms, most of whom are small in size, are willing to pay the price – especially when the return is not equal to the cost,” said Tse. Several other Hong Kong firms have also expanded their business in the mainland through joining international and national legal networks. PC Woo & Co, for example, is a founding member of the Perfectus Alliance, comprised of ten members from different cities, and Ng & Shun is a member of both LAWorld and the Yangtzejiang Legal Network.
international business in Hong Kong and collaborate with Hong Kong and international firms there.” Over the past three years, more than ten PRC firms have set up in Hong Kong and nearly half have formed an association with a local firm, with the prospect of fully merging the businesses under Hong Kong law. King & Wood’s three-year association with Arculli Fong & Ng, which led to the full merger of the two firms last year, is a prime example. While PRC firms are enjoying the free and open market environment in Hong Kong that facilitates the expansion of their international business, the majority of Hong Kong firms are calling for further liberalisation of the mainland market under CEPA. This will allow them to seize more business opportunities in the vast and fast-growing PRC market.
Hong Kong firm wish list
“CEPA opens a door for Hong Kong law firms to expand mainland business. It has helped us a little bit, but it could have been much more useful. The door is not open wide enough to allow more exchange of business or create real benefits for the legal sectors in Hong Kong and China,” said Wilfred Tsui, partner of Gallant YT Ho & Co, who also serves as the vice chairman of the Mainland Legal Affairs Committee of The Law Society of Hong Kong. “Compared to other sectors, the legal sector is the one that offers the least market access under CEPA.”
Currently, a reverse liberalisation trend is emerging at a faster pace and with more noticeable effect than CEPA associations. “The preferred route of larger PRC firms to cooperate with Hong Kong firms is to set up their own firms in Hong Kong and form an association with a local firm,” said Keith Brandt, senior partner of Hammonds Hong Kong. “With the determination to assist their clients who are seeking access to Hong Kong and other international markets, ambitious PRC firms have decided to grow their www.legalbusinessonline.com
Like Arculli Fong & Ng, some Hong Kong firms are now prepared to become part of a mega-sized PRC firm, so they can continue to grow and at the same time use the PRC partner’s resources in the mainland to back up their cross-border business. However, Tsui said most large and mid-sized Hong Kong firms would not take that route. “Most leading Hong Kong firms are more comfortable with setting up a JV or an association in which they can have certain management power to oversee the business operation and control quality. Liability issues are the biggest concerns for them,” said Tsui. In a recent wishlist submitted to the Secretary for Justice of Hong Kong on behalf of the Hong Kong legal profession, requests for extension of liberalisation have been made. Suggestions included moving beyond “association” to joint ventures, and allowing the China offices of Hong Kong firms to employ PRC lawyers who can retain their PRC qualification and issue PRC legal opinions.
Critical issues
Growing cross-border activity and strengthening cooperation between the legal sectors of both sides are inevitable. But whether it is through forging an association in the mainland under CEPA or forming an association complying with Hong Kong law, the harmonisation of Hong Kong and PRC firms is far from easy. There are
“It remains very challenging for a Hong Kong firm to find a mainland partner who matches its medium and long-term vision or strategies” Franki Cheung, Deacons real issues that senior partners of all firms have to consider before choosing which arrangement to go ahead with. “It’s critical to identify whether or not tying up with a PRC firm will help a Hong Kong firm achieve real competitive advantage, and whether the benefits of the greater access through an association will outweigh the administrative burdens and risks a tie-up imposes,” said Brandt. “International and Hong Kong law firms like us are looking for closer collaboration with firms throughout China, and we’ll want to maintain 9
NEWS | analysis >>
►► Associations between Hong Kong and mainland firms under CEPA
Analysis >>
Fred Kan & Co and Tianjin JD HANDS 香港简家骢律师行与天津嘉德恒时律师事 务所联营 David YY Fung & Co and Guangdong Zhong Yuan 香港冯元钺律师行与广东中元律师事务所联营 Philip K H Wong, Kennedy Y H Wong & Co and Beijing W&H 香港黄乾亨律师事务所与北京市炜衡律师事 务所联营 Woo Kwan Lee & Lo and Grandall 香港胡关李罗律师事务与国浩律师集团联营 So Keung Yip & Sin and Zhonghao 香港苏姜叶冼律师行与中豪律师事务所联营 Bird & Bird Hong Kong and Xiang Kun 香港鸿鹄律师事务所与翔鲲律师事务所联营
our option of being able to work with a number of firms and being fleet of foot. We don’t want to lose the referral network of clients that’s important to drive our China business.” In addition to the fear that forming an association with just one firm cuts off opportunities for referral work, finding the perfect match for an association presents another major challenge. “Even though the cultural gap between Hong Kong firms and mainland firms is generally narrower, it remains very challenging for a Hong Kong firm to find a mainland partner who matches its medium Franki Cheung Deacons and long-term vision or strategies, in addition to other considerations,” said Franki Cheung, the head of Deacons’ China practice group. Difficulties and challenges apart, Hong Kong practitioners are definite that CEPA remains alive. “I’m certain that many Hong Kong firms are eager to exploit opportunities offered by liberalisation under CEPA. But it takes time for law firms to assimilate what CEPA measures mean for them in reality and to figure out how to comply with the rules,” said Brandt. “There is a trend towards firming up on associations. Firms that are going to succeed in the new world will be these who take the lead identifying and teaming up with firms of likeminded skills, expertise, size and views on collaboration. We’ll see a growing number of associations being forged over the next two to three years.” ALB 10
Allen & Gledhill-Zaid Ibrahim:
mis-reaction to regional imperative?
The collapse of the Allen & Gledhill-Zaid Ibrahim alliance is more than just a failure of strategy: it highlights some of the challenges facing South-East Asian law firms looking for regional expansion
O
n New Year’s Eve last year, while lawyers across the region were reflecting on the year that had been and were preparing to usher in a new one, lawyers at two of South-East Asia’s largest law firms – Singapore’s Allen & Gledhill and Malaysia’s Zaid Ibrahim & Co – were terminating the strategic alliance that they had formed only 18 months earlier. The alliance was thought to be ‘symptomatic of a new force in SouthEast Asia’ and was expected both to
dominate the legal services arena in the region and provide the catalyst for a host of similar moves. But none of this eventuated. Few law firms followed the lead set by these two firms and the alliance was never the force it
“Zaid wanted to push ahead aggressively with new offices in the region but A&D were dragging their heels” Asian Legal Business ISSUE 10.4
NEWS | analysis >>
heavyweight as the rationale behind the move. “This alliance creates a premier legal powerhouse for the ASEAN region, able to deliver panASEAN solutions and advice,” the firms both said in a press release in late 2007. “Globalisation is reinforcing the trend for competitive alliances in the legal marketplace to better serve increased cross-border trade flow and M&As… this agreement marks the next phase in our regional expansion plans, offering our clients a level of service and regional capability the market has not seen before.” Farid Hussein But the rhetoric was Zaid Ibrahim & Co far from the reality. “The biggest achievement of the alliance was probably getting a few dozen people to turn out for the opening press conference,” said one lawyer who has been following the move since late 2007. “If you look at what has happened since, it has been a bit of an anti-climax.” Indeed, it is hard to pinpoint what the strategic alliance achieved in the short space of time it was operational. “The merger claimed to offer both firms a ticket into ASEAN … it was expected that they would claim the
partner,” said another lawyer who has worked with both law firms. “Remember that it was A&G who first wanted to expand into Malaysia, and they first approached an older and longer-established firm – Shearn Delomore. [Some partners] could see good long-term prospects for a Malaysian firm to link with Singapore’s number-one firm but Shearn Delamore partners by a majority were not interested. A&G then approached Zaid, a younger law firm, more closely linked to Malays and the Malaysian government.” The misfit between the two firms was apparent from day one; perfectly evidenced when it came to things like strategic expansion. “Zaid wanted to push ahead aggressively with new offices in the region but A&G were dragging their heels,” the lawyer continued. “This is not that surprising … A&G are in reality the Slaughter and May of Singapore – they want to be big in their own backyard, but have little real interest in expanding overseas.” In addition, A&G’s Singapore jointlaw venture (JLV) with Linklaters was widely understood to have further frustrated the strategic alliance’s ability to expand. It is believed that under the JLV, A&G cannot open
“The merger claimed to offer both firms a ticket into ASEAN ... it was expected that they would claim the lion’s share of work being transacted and be in the best position to expand as a result of it ... this just did not happen” was predicted to be. According to many in the region, the entente was dead long before it was silently killed off by both firms late last year. And while the story behind the fall of the A&G/Zaid empire is a riveting read on its own – containing as it does everything from frustrated ambitions to a legal ‘love triangle’ – the fact that it also serves as a cautionary tale on ASEAN expansion makes it even more interesting.
An unsuccessful adventure
When the strategic alliance was announced in early 2008 both firms cited the forces of globalisation and the desire to create a regional www.legalbusinessonline.com
lion’s share of work being transacted and be in the best position to expand as a result of it … this just did not happen,” said one lawyer close to both firms. “The only thing to come out of the alliance was a joint venture office in Vietnam and whether this can be termed successful is still very much up for debate.”
The odd couple
The consensus, then, is that the A&G/ Zaid strategic alliance was a failure, but the reasons for its collapse are less clear. One of the more popular explanations is that the two firms were not as compatible as it may have seemed. “A&G chose the wrong
offices in countries where Linklaters already has an office, ruling out places like Hong Kong, China and Thailand. “If you are running this strategic Lucien Wong alliance, you would Allen & Gledhill naturally feel crowded out by having a Magic Circle firm in the back of the room… it created something like a love triangle and someone was always going to lose out. In law, perhaps as in life, it was the smallest guy.” It should be noted though that since parting ways, both firms seem to have pushed ahead with their own expansion plans. Zaid has announced that it intends to open offices in 11
NEWS | analysis >>
Sydney and Melbourne to service the nascent commercial and consumer Islamic finance markets there, while A&G is believed to have set up its own associated firm in Kuala Lumpur. The firm now enjoys an association with Ramhat Lim & Partners – formed on 1 January 2010 – and is incidentally the new home to a number of former Zaid partners.
Analysis >>
A cautionary tale for ASEAN expansion
One question that must be asked is whether South-East Asia is ready to sustain a heavyweight law firm. If the A&G/Zaid experience is used as a test case then the answer is surely a resounding ‘no.’ The rationale that the firms built their relationship on two years ago was the potential for the growth of investment flows between countries in the ASEAN region – in hindsight, perhaps a questionable assumption. Due to a confluence of factors, levels of investment between these countries never reached the heights that A&G/ Zaid (and many others) predicted. In this period, the largest investors in South-East Asia were either North-East Asian countries (Korea, Japan); China; or the more developed economies of Europe. That having been said, the financial crisis, law reform, economic liberalisation and a number of other factors in a short period of time have reshaped the ASEAN region into one of the most economically lucrative in the world, not only to the US and EU markets but also to countries within the region. Singapore, Malaysia, Vietnam, Thailand and the Philippines are all investing in each other in a process that many predict will only increase in the years ahead. Meanwhile, two firms from SouthEast Asia, DFDL Mekong and McEvily & Collins, merged to form a combined firm still relatively modest in size (90 lawyers) but having a footprint that few others do (in five countries – Vietnam, Thailand, Laos, Cambodia and Myanmar). In this case, these firms cited the work already flowing into and between the countries in the region as impetus for the move. Perhaps their merger is a more measured reaction to that same regional imperative. ALB 12
The economics of law reform in South-East Asia: Malaysia Economies in this region may be among the most dynamic in the world, but serious law reform is needed if they are to keep FDI flowing to their shores. This month we look at the law reform efforts of Malaysia
I
n the aftermath of the Asian financial crisis that dealt a body-blow to South-East Asia at the turn of this century, the region’s economies struggled with the problem of finding correct legal answers for their economic problems. At the time, many countries sought refuge in remedial measures to stem the economic damage, rather than addressing the root legal causes of their economic ills. Longer term reform, it was argued, could only occur after extensive dialogue occurred with key economic, political and legal stakeholders. This isn’t to say that meaningful law reform in South-East Asia was completely put on the backburner – it remained very much in the raison d’etat of most countries in the region that had already seen far too much FDI transferred elsewhere in search of clear and transparent legal frameworks. Singapore was viewed as the paragon of effective law reform at the end of the last financial crisis, ostensibly due to its measured deregulation of its
financial sector and the establishment of tax incentives to encourage growth in fund management, bond markets and unit trusts, and the building up of reserves at that time other countries in the region were seeking to increase regulation; this time around, they are leading the way. Malaysia and Indonesia are prime examples. In both places, legal reform may be a tool of political capital, but support for it is nevertheless gaining momentum.
Malaysia
Earlier this year, the Malaysian Law Reform Commission (MLRC) was charged with conducting an extensive overhaul of the country’s Datuk Liew Vui outdated laws relating Keong to business, in an effort Deputy Minister to further spur economic growth. Deputy Minister in the Prime Minister’s Department, Datuk Liew Vui Keong, said that the MLRC would be looking at all laws that, due to their archaic nature, impede business growth and development. “Archaic business laws will soon become history, especially those laws that have not inspired healthy growth and economic prosperity for the country,” he said. Up for review are not only the country’s commercial and development laws, but also those laws relating to trade and commerce. Asian Legal Business ISSUE 10.4
NEWS | analysis >>
the legal community has been involved years,” said one lawyer ALB spoke One of the most challenging tasks in the discussion process at some to. “But while it has come up with a confronting regulators in the country stage during this time. In areas like number of recommendations, very no doubt lies with the overhauling competition law and data protection, few of those have found their way into of the Companies Act. Since it was Malaysia has definitely been behind implementation. The challenge will enacted in 1965, no meaningful review the curve – it is one of only a few be to fit these recommendations into a of this legislation has been conducted countries in South-East Asia that does workable legislative frame.” – although by the end of 2004 the not have across-the-board competition It seems the other challenge Act itself had been amended some laws, but these should bring us up to confronting legislators in Malaysia is 30 times. “The Companies Act 1965 speed.” finding a space for these changes in an comprises 374 numbing sections lost While these changes should create already crowded legislative agenda. in a wilderness of obscure subsections new areas of advisory work for lawyers In addition to the introduction of a and nine accompanying schedules,” in the country, navigating clients broad-based consumer tax in the form said Dato’ KC Vohrah, chairman of the through them is shaping up as quite of a GST, a Competition Act and a Corporate Law Reform Committee. a challenge. “Some of the changes, for Data and Privacy Protection law will “Even lawyers get lost in the example the competition law, will affect be introduced over the next few years. wilderness, what’s more [so do] the men how future transactions are done and This all comes amidst a dilution of the and women who run the companies.” may have an impact on deals that have country’s affirmative action policy, The Corporate Law Reform already gone through,” said another which has been a mainstay of Malaysia Committee (CLRC) is a working Malaysian lawyer. “At the moment, since independence. group set up under the auspices of there is talk of including some form of “Malaysia is at legislative crossroads the statutory body known as the grandfathering provisions… the key at the moment,” said one lawyer ALB Companies Commission of Malaysia. is to be able to provide clients with interviewed. “The legislative changes The working group had been studying commercial solutions, not just legal that are in the works are expected to the Act for a number of years and advice.” ALB fundamentally change things here, and had already provided a number of will have an impact on the way lawyers recommendations. Boston Chicago Houston Angeles Newsome York Palo Alto Sanoperate. Francisco Washington, D.C. Wilmington Beijing Brussels Frankfurt Kong Londonof Moscow The three Acts have been In theHong next issue ALB:Munich Paris São Paulo Shangh “The CLRC hasLos been doing Singapore Sydney Tokyo Toronto Vienna Boston Chicago Houston Los Angeles New York Palo Alto San Francisco Washington, D.C. Wilmington Beijing Brussels Frankfurt Hong Kong London talked about for ten years now, and law reform in Indonesia. good work over the past couple of
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AN EXCEPTIONAL OPPORTUNITY TO JOIN SKADDEN
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REGION >>
uk report
Bonuses back for Addleshaw Goddard Associates and support staff at Addleshaw Goddard can again look forward to a bonus this year, after an effective freeze on non-partner bonuses last year. Associates and support staff currently receive bonuses on the basis of four criteria: financial targets, individual performance, productivity and “value” measures, inclusivity and the principle of “One Firm”. Last year no non-partner bonuses were paid because the profit trigger, set at 32% for 2008-09, was not reached. This year, the bonus has a profit trigger of a 26% margin, but if this is not met then Addleshaws has
pledged to still reward “exceptional performance”. The firm said the adjustment was to ‘recognise and reward individual contributions during a difficult time’. UK firms move to merit-based pay Recent reports suggest several UK firms are reviewing the way they reward their associates. Stephenson Harwood has become the latest firm to move away from the lockstep model for associate pay and take on a new merit-based system. The firm’s new system, dubbed the ‘Associate Career Development Framework’, has been in development for a year and will be active as of the next round of appraisals in May. The scheme means that pay will be more closely linked to performance. Eversheds recently announced that it would be overhauling its associate bonus structure to move towards a broader system that recognises team performance and client skills. Set to come into effect on 1 May in the UK offices to start with, the system will be a move away from the current model based purely on chargeable hours. Instead it will see fee-earners other than partners eligible to receive the bonus, based not only on chargeable hours but also individual performance and the financial performance of their own team within each practice group. SJ Berwin has also put associate development at the centre of its strategy for the next financial year, with the firm rubber-stamping plans to recognise work undertaken outside of billable hours.
ROUNDUP • Herbert Smith recently created the position of general counsel, with dispute resolution partner Martin Bakes stepping into the role. CFO John Mullins will take over from Norman Green as COO at the end of March • Linklaters may soon find itself embroiled in litigation from creditors of Lehman Brothers after it emerged a report into the bank’s demise found that Lehman had misused an advice letter written by the firm to keep up to US$50bn (£33.24bn) of debt off its US balance sheet, before its collapse in September 2008 • Clifford Chance has unveiled its slimmed-down partnership council, following efforts by managing partner David Childs to streamline management. The new council is down to seven members from the previous 12, and most members will serve for three-year terms • Simmons & Simmons is set to make the MBA a permanent option within its graduate recruitment process. The firm already has 25 of its future trainees signed up onto the MBA program with BPP this September • Carl-Peter Feick is set to take over from Michael Lappe on 1 May as Linklaters new senior partner in Germany • German law firm Noerr is set to open up an office in London at the end of 2010. The office, which will act as a base for advising international clients and will cover M&A, banking, restructuring, media, insurance and international litigation work, is expected to launch in the last quarter and will be staffed with five lawyers
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CHINA
Changes at Freshfields Freshfields Bruckhaus Deringer recently became the first UK firm to lift its associate salary freeze for the next financial year. The Magic Circle firm reversed its salary bands in February last year, dropping newly qualified (NQ) salaries from £66,000 to £59,000, but decided to lift the freeze following a partnership committee meeting this February. NQ pay will stay at £59,000 with a one-year PQE lawyer taking home £66,000 and May associates will now move through the salary bands as before, but will not make up the difference by skipping a band. Freshfields also recently announced that Bertrand Pellet – who has been based in Paris for the past seven years – will succeed corporate partner David Higgins as head of the firm’s Middle East and North Africa (MENA) corporate practice.
Embattled White & Case rebuilds partnership, appoints China specialist
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n the latest of a string of patch-up jobs on its beleagured partnership, White & Case has brought in Francis Zou from Allen & Overy’s US China group to rebuild its global banking practice. It has also promoted five lawyers internally following the loss of 13 partners across its UK, US and Middle East offices earlier this year. Zou, who joined Allen & Overy’s New York office in 2007, takes up the partnership position working under global banking head Eric Berg. The firm is counting on Zou’s experience with Chinese clients for generating new work. “He has significant background working with top Chinese commercial banks and corporations that will greatly increase our crossborder opportunities for serving these companies, especially as they ramp up their activities in the US and other key markets, including Asia and Latin America,” said Berg. Zou’s appointment is also expected to help bridge the firm’s US and Asia banking practices: “With Chinese banks and corporations increasingly looking at overseas acquisitions, Francis will help cement the connections between our Asia and Americas bank finance practices …” Asian Legal Business ISSUE 10.4
NEWS >>
ABU DHABI
SINGAPORE
news in brief >>
said partner and head of Asia, Barrye Wall. In addition, the firm has promoted three banking & finance lawyers to partner in its London, Moscow and Prague offices respectively, and two M&A lawyers to partner in Abu Dhabi (Zeeshan Ahmedani and Philip Power). The Middle East promotions will be the firm’s second effort to rebuild its regional practice after losing all of its partners in the region in February. The departure of Doha-based M&A partner Andrew Macklin in late January left the firm without any partners in the Middle East. Macklin followed fellow regional partners Villiers Terblanche, Nick Collins, Christopher Langdon, and Mohammed ►► White & Case: losses Partner Chris Kandel Sam Hamilton Brian Conway Jayanthi Sadanandan Craig Nethercott
Al-Sheikh to Latham & Watkins. White & Case’s first response to the crisis was to transfer Singapore-based partner Doug Peel to Abu Dhabi and US-based executive partner Kenneth Ellis consequently to Doha. White & Case now has four partners in the Middle East, although none of the partners are stationed in the firm’s Riyadh office. A spokesperson did not clarify at the time whether the firm is replacing its former Saudi sponsor, Al-Sheikh. “At this stage, we are not in a position to discuss our longer-term plan for the rebuilding of our capabilities in the Middle East other than to reiterate our commitment to our Middle East practice,” said the spokesperson. ALB Office London London London London London
Glen Ireland Villiers Terblanche Nick Collins Christopher Langdon Mohammed Al-Sheikh Andrew Macklin Christopher Cross Clement Fondufe
Practice Banking & finance Banking & finance Banking & finance Banking & finance Energy, infrastructure, project and asset finance Global mining and metals Corporate Energy and infrastructure Projects Corporate M&A Corporate Energy
Partner Zeeshan Ahmedani Philip Power Jonathan Weinberg Jeremy Duffy Irina Nesvetova
Practice M&A M&A Global banking Global banking Global banking
Office Abu Dhabi Abu Dhabi Prague London Moscow
►► White & Case: promotions
www.legalbusinessonline.com
London Abu Dhabi Abu Dhabi Riyadh Riyadh Doha New York New York
Legal sector enters modern world • 75% of partners say that the current balance of power in the client-lawyer relationship is now with clients • 46% of managing partners said that changes to the premium legal work available would have an impact on their firm’s shape and size • 88% of law firm partners say they often – or sometimes – use value billing Source: Eversheds: Law firm of the 21st century: the clients’ revolution
More responsibility for DIFC court committee lawyers Dubai-based lawyers from firms including Clifford Chance, Clyde & Co and Al Tamimi who sit on the DIFC Court’s Users Committee will see their responsibilities broadened as part of a revised charter. The group of ten representatives on the committee act as representatives on behalf of the DIFC courts and its users, and discuss ways to improve the court system during quarterly meetings. Although they do not have any decision-making powers, one recent initiative was to make official the first pro-bono program in the Gulf last year. According to the DIFC, committee members should now keep a close eye on developments happening in other judicial systems which can be adopted locally, and advise on whether the courts should add subcommittees and more representative lawyers from local and international law firms. “The additional scope added into the charter has been driven by the committee members who identified the initiative as something that will help the courts to maximise input from the very constituents that the courts serve,” said a spokesperson from the DIFC Courts.
►► Lawyers on the DIFC Court Users committee
Firm Clifford Chance Clyde & Co Al Tamimi & Co Hadef & Partners DLA Piper Global Advocates Chris Kandel
Lawyer Graham Lovett Alec Emmerson Mark Hoyle Richard Briggs James Delkousis Ali Al Hashimi
Brian Conway
Kuwaiti firm takes on US$90m aviation M&A
Jayanthi Sadanandan
Villiers Terblanche
Nick Collins
Christopher Langdon
Kuwaiti firm Al Sarraf & Al Ruwayeh (ASAR) has advised local airline Jazeera Airways on its US$89m acquisition of Sahaab Aircraft Leasing. The firm acted as lead counsel on the deal, negotiating the share purchase agreement, structuring documents and conducting legal due diligence. Sahaab is Jazeera Airways’ private aircraft leasing arm, which it established in 2008. The acquisition will allow the Kuwaiti airline to access the global leasing market and acquire further aircraft, in line with its broader goal to gain a market share in the Middle East’s lucrative airline industry. ASAR has a second office in Bahrain, and has a formal association with Stephenson Harwood.
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us report White & Case forced into lateral hires As departures at White & Case continue, the US firm has responded by making up five new partners. London-based Jeremy Duffy has been named a partner in the global banking practice. The firm also recently boosted the London financial restructuring & insolvency team with the hire of senior Skadden lawyer Christian Pilkington and relocated New York-based partner Jake Mincemoyer to London to assist with its local finance practice. The move to bolster its global network follows a string of defections across the firm’s international offices since the beginning of the year, the most recent being the chair of the firm’s global IT practice group, Steve Betensky, who has since joined Latham & Watkins. US firms fight salary battle in the UK The Magic Circle may be in danger of losing the UK’s top students to US firms after a survey highlighted the massive earning potential for junior lawyers in US firms in London. It identified US firm Bingham as a chart-topper, paying its newly qualified lawyers £100,000. Some US firms have recently reduced salaries (including Weil Gotshal & Manges), but Latham & Watkins and Debevoise & Plimpton now pay their UK NQs £96,000 and £94,250 respectively. These top-of-the-market offers are in stark contrast to Magic Circle NQ salaries, which range
from £59,000-£61,000. Sharp to take charge at Dewey & LeBoeuf Dewey & LeBoeuf recently appointed litigation and restructuring specialist Peter Sharp as its first London managing partner since the 2007 merger of Dewey Ballantine and LeBoeuf Lamb Greene & MacRae. Sharp was formerly the London managing partner of LeBoeuf and will now also chair Dewey’s London policy committee – a ninepartner group the US firm launched last year to advise on strategy and oversee the UK office’s development as an international hub. Splitsville for Hogan & Hartson in Europe The bulk of Hogan & Hartson’s Berlin office have set out to launch independent firm Raue in response to the firm’s merger with Lovells. The 18 Hogan & Hartson Raue partners identified potential conflicts as the driver behind the split and will create a new firm when the merger creates Hogan Lovells on 1 May. K&L Gates also recently took over Hogan & Hartson’s entire Warsaw office and is now set to launch in Poland with the newly acquired base of 38 lawyers – comprising six partners, five counsel and 27 associates. The move marks the third international launch for K&L Gates this year, following January openings in both Tokyo and Moscow.
Sydney’s new arbitration centre: a threat to Asia?
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ustralia will have its first international arbitration centre in Sydney later this year after the Australian government announced it will put A$600,000 towards the centre, which is planned for launch as early as May this year. The government hopes to lure some of the ADR market from Asia. “The fact is that international arbitration is emerging as the preferred choice for resolving commercial disputes, particularly by Asian business,” said a state AttorneyGeneral, John Hatzistergos. Holman Fenwick Willan’s Sydneybased partner Alex Baykitch was involved in establishing the centre along with Clayton Utz partner Doug Jones. Baykitch said that law firms in Asia should not be worried about losing work to Sydney. “I think competition is a good thing but … I don’t think you’ll see a flood of work coming to Australia away from Singapore. With Maxwell Chambers and the promotion by its government, Singapore will always be the premiere choice because it is the hub between East and West,” he said. Baykitch added that Sydney will attract dispute resolution matters not only from Asia but also from the US, as new airline routes bridged distance. China >>
ROUNDUP • Chadbourne & Parke recently poached a team of four disputes lawyers from Howrey’s London office including former international arbitration group head Melanie Willems • Hogan & Hartson and Lovells have established an 18 member committee to oversee the integration of the two firms. The implementation planning committee (IC) is co-chaired by the managing partner of Hogan’s Houston office, Thad Dameris, and the head of Lovells’ commercial and retail banking team, Emily Reed • A possibly self-serving recent research report commissioned by Eversheds has revealed that over half of all clients think that the Magic Circle designation is redundant, with 94% arguing that the profession should reclassify its peer groups • Howrey is set to cut up to 10% of its partnership following a review of its business carried out towards the end of last year. The review identified a 35% drop in profits per equity partner (PEP) during 2009 • DLA Piper is set to launch an office in Brazil, pending approval from the Brazilian authorities and following an alliance with local firm Campos Mello Pontes Vinci & Schiller. Campos Mello will remain an independent firm, but will work closely with DLA Piper, advising international companies on business in Brazil, as well as domestic companies looking to expand or do business in the country
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Steptoe marches U
S firm Steptoe & Johnson has opened an office in Beijing, its ninth office worldwide and its first in Asia. The firm is an advisor to the Chinese government Eric Emerson on World Trade Steptoe & Johnson Organisation matters. “China’s emergence onto the world stage has had a profound impact on the global economy,” said Susan Esserman, Asian Legal Business ISSUE 10.4
NEWS >>
news in brief >>
“It’s often stated that Sydney isn’t as attractive as Singapore or Hong Kong because of the distance, and whilst that might be true in disputes involving parties in Europe, it’s certainly not the case with parties in the US,” he said. “There are companies who may be a little uncomfortable about doing business in Asia and they’re the sort of companies who would be attracted to Sydney. I think if Sydney can attract up to 50 cases a year, we’ll be doing well.” David Bateson, a dispute resolution partner at Australian firm Mallesons Stephen Jaques’ Hong Kong office, said the Sydney centre isn’t likely to be a major threat to firms in Asia. “Australia
has a well developed judiciary but it is geographically remote so the arbitration centre will not compete effectively with Hong Kong and Singapore. They also need to make the tax regime more competitive,” he said. Nick Gall, joint founder of Hong Kong dispute resolution firm Gall & Lane, agreed, adding that Hong Kong will maintain its niche in the market. “There’ll be enough work in the market to sustain all three centres. We’re not concerned that the market will be lost to Sydney because each centre has a distinct market to successfully operate independently,” he said. See ALB’s special feature on arbitration on page 62. ALB
►► International Arbitration centres AAA CIETAC HKIAC ICC JCAA KCAB KLRCA LCIA SIAC SCC BCICAC AFEC
American Arbitration Association China International Economic and Trade Arbitration Commission Hong Kong International Arbitration Centre International Chamber of Commerce Japan Commercial Arbitration Association The Korean Commercial Arbitration Board Kuala Lumpur Regional Centre for Arbitration London Court of International Arbitration Singapore International Arbitration centre Arbitration Institute of the Stockholm Chamber of Commerce British Columbia International Commercial Arbitration Centre International Arbitral Centre of the Austrian Federal Economic Chamber
Alex Baykitch, Australian Centre for International Commercial Arbitration vice president Source: ACIC
into Beijing head of Steptoe’s international department. “The complex trade and regulatory changes underway in China affect companies investing in the market and can have implications in other key regulatory markets. With Chinese companies now actively expanding into US and European markets, they are encountering opportunities as well as trade and regulatory challenges.” The Beijing office will work on www.legalbusinessonline.com
international trade, market access, export control, antitrust, anticorruption practice and compliance with US and European environmental, product safety, and other regulations. International trade partner Eric Emerson has been appointed to head the office as managing partner. He is accompanied by two other fee-earners – former O’Melveny & Myers Shanghai office partner Susan Munro and foreign consultant Ying Huang. ALB
MoFo moves into the digital age US firm Morrison & Foerster recently launched an iPhone application to enable potential clients to search for partner biographies, Morrison & Foerster office locations and nearby attractions. MoFo2Go, which will be divided into four function areas, is available as a free download, and is one of the first of its kind to be developed by a corporate law firm. According to the firm, the idea came after noticing that lawyers at the firm used their phones and handheld devices as “portable offices.” Rajah & Tann MP named Singapore’s new A-G The managing partner of Singapore firm Rajah & Tann, Sundaresh Menon will leave the post after only a year to become the city-state’s new AttorneyGeneral. He will leave the firm to serve a two-year post as the government’s chief legal advisor. Rajah & Tann deputy managing partner Lee Eng Beng will assume the managerial role once Menon leaves in October. Rajah & Tann has a history of its lawyers taking up public postings – Menon’s predecessor in the MP role Steven Chong left last year to serve in the judiciary. Menon’s 20 years in arbitration Sundaresh Menon SC and litigation makes his Rajah & Tann appointment timely, given the government’s recent push to promote Singapore as a regional arbitration hub. In an exclusive interview with ALB earlier this year, Menon had outlined his vision to promote Rajah & Tann’s position in the arbitration and litigation field after being appointed as managing partner. Clifford Chance Hong Kong lawyer on partnership council Clifford Chance has appointed Hong Kong partner Martin Rogers as a member of its revamped partnership council, the board which supervises the firm’s executive management. The revamped council has been reduced by five partners from last year’s 12-partner team. Rogers will serve a three-year term on the council, alongside six other London, New York and Frankfurtbased partners. Two partners – Jeroen Koster and Thomas Schulte – have had their terms extended by another two years. According to the firm, Rogers’ role on the council will involve monitoring “the performance of the management committee and its members, to ensure that the firm is managed in a way that is fair to all partners; to safeguard the reputation of the firm and to organise votes and elections required under the partnership agreement.”
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india >>
Intellectual Property Distinctiveness a factor in determining similarity of trade mark and sign
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nder sec 8(2)(b) of the Trade Marks Act (Cap 322), a mark may not be registered if “it is similar to an earlier trade mark and is to be registered for goods or services identical with or similar to those for which the earlier trade mark is protected, there exists a likelihood of confusion on the part of the public”. Whether a mark is similar to an earlier trade mark is decided by the court. The court will decide if a mark is aurally, visually, and/or conceptually alike in deciding if the marks are similar. In the recent case of Ozone Community Corp v Advance Magazine Publishers Inc (“Ozone”) [2010] SGHC 16, the Honourable Justice Woo Bih Li held that the more distinctive the mark, the higher the likelihood that another mark would be found similar to that mark. In Ozone, the plaintiff, a Japanese company, applied to register the word mark “Hysteric Glamour”. The defendant, a New York company, is the owner of the registered trade mark “Glamour”. Therefore, the court had to decide whether the marks “Hysteric Glamour” and “Glamour” were similar. Woo J adopted the High Court’s decision in Polo/Lauren Co, LP v Shop In Department Store Pte Ltd (HC) [2005] 4 SLR 816, where it was held that “the differences between the plaintiff’s mark and the defendant’s sign are sufficient so that the latter does not capture the distinctiveness of the registered mark and is therefore not similar to the defendant’s mark”. The distinctiveness of the mark is therefore a factor in both the finding of similarity as well as the finding of a likelihood of confusion. The Court of Appeal’s decision in The Polo/Lauren Co, LP v Shop In Department Store Pte Ltd (CA) [2006] 2 SLR 690, found that the word “Polo” was a common English word and the sign “Polo Pacific” was not similar to the mark “Polo”, given that the word “Polo” did not have any inherent distinctiveness. J Woo applied this reasoning in Ozone and found that the word “Glamour” was not distinctive, and that it did not have any acquired distinctiveness. The court then took into account all the factors such as visual, aural, conceptual similarity as well as distinctiveness and found that the marks “Glamour” and “Hysteric Glamour” were not similar. The court has therefore made it explicit that distinctiveness of the trade mark is a factor in determining similarity. The less distinctive the trade mark, the less likely that a sign will be found similar to that mark. Nathanael Chua, associate intellectual property and technology group ATMD Bird & Bird LLP Phone +65 6428 9889 Email: Nathanael.Chua@twobirds.com
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Nathanael Chua
Indian lawyers under fire A
group of Indian lawyers are being investigated and could have their licences revoked by the Calcutta Bar Council for allegedly advertising their expertise in helping clients declare bankruptcy. Four major banks in India filed petitions to the Calcutta High Court claiming that the lawyers were helping people declare bankruptcy to evade repaying debts owed to them. Lawyers are barred from advertising in India. “Under the insolvency laws here, once a person is declared insolvent, no civil proceedings can be brought against him for recovering the amount, and they also have the right to apply to suspend any criminal proceedings against them,” said lawyer Paritosh Sinha, who is representing the banks. “These people would borrow and accumulate a huge amount of money – often from more than one bank – and then go to a lawyer who would guarantee an order of adjudication, for a fixed fee. This was so rampant that it was being advertised in local papers where the lawyers would charge around 3-5% of the loan amount, around 25,000 rupees (US$500).” The court heard that there was around an 80% increase in the number of insolvencies filed in Calcutta between 20082009, a trend which “gives credence to the … apprehension that there was a veritable industry behind these insolvency matters,” the court heard. “The matter calls for a thorough investigation.” Sinha said that there was a noticeable correlation between the rise in insolvency declarations and the “unusually” quick turnaround granted for approvals. “Some of those insolvency australia >>
Blake Dawson partner appointed chief legal counsel of BHP Billiton B
lake Dawson partner David Williamson must have made an impression on client BHP Billiton because the mining giant has just announced his appointment as chief legal counsel. Williamson has worked closely with BHP Billiton in the past. He was the lead advisor on the company’s bid for Rio Tinto and also advised on its US$100bn iron ore production joint venture with Rio Tinto. During his time with Blake Dawson, Williamson held a number of leadership positions, including practice leader of corporate, practice head for M&A, board David Williamson member and client relationship partner for BHP Billiton BHP Billiton. Williamson replaces Mike Ferraro, who joined BHP Billiton from Freehills. ALB Asian Legal Business ISSUE 10.4
NEWS >>
Update >>
in insolvency probe
International Tax Highlights from the Hong Kong Budget 2010/11 (Part 2) The Honourable Mr John Tsang, Financial Secretary announced the Budget measures on 24th February 2010.
A summary of the current Hong Kong tax rates is set out below:
Profits Tax
The tax rates in 2010/11 will remain unchanged as follows: 2008/09, 2009/10 & 2010/11 Persons other than corporations Corporations
15.0% 16.5%
Property Tax
orders were granted in two or three days which is extremely unlikely because the procedure laid down in the statute takes much longer than that,” he said. The courts are investigating whether the lawyers had been working with officials who approve the insolvencies. “It’s a police matter and they’re looking into the role of the officials who’ve been asked to file affidavits explaining their conduct,” he said. “The police are investigating whether there were middlemen basically arranging work for these lawyers.” The state Bar Council has been asked to investigate whether the lawyers breached the restrictions on advertising. ALB middle east >>
The Property Tax rate will remain at 15%. It is charged on the owner of land or property situated in Hong Kong at the standard rate on the rent receivable less 20% and is payable in addition to rates. Corporations carrying on business in Hong Kong can elect to be exempt from Property Tax and be subject to Profits Tax instead.
Salaries Tax
Salaries Tax rates and charges Salaries Tax is charged at the lower of: • Net assessable income less charitable donations at the standard rate or • Net assessable income less charitable donations and personal allowances, charged at progressive rates as follows: 2008/09, 2009/10 & 2010/11 Standard Rate Progressive Rates First HK$40,000 Next HK$40,000 Next HK$40,000 Balance
15% 2.0% 7.0% 12.0% 17.0%
Deductible items
King & Spalding advises fund on Saudi hotel project
A deduction for fees for training courses at approved institutions remains unchanged at HK$60,000 in 2009/10. The deduction for home mortgage interest payments of up to HK$100,000 per year for ten years remains unchanged.
K
Applicable to progressive rate taxpayers:
ing & Spalding has advised a private equity fund owned by the Saudi Arabian firm SHUAA Capital on its acquisition of land to be used to develop a 140m-tall luxury hotel in Jeddah, at a cost of US$133m. Partner Nabil Issa led a cross-office legal team of three, with assistance from Abu Dhabi-based counsel Timothy Tucker, Riyadh-based associate Fahad AlMalki and Dubaibased associate James Stull. The transaction was the first land acquisition by a hospitality fund in Saudi Arabia. The firm originally helped SHUAA set up the US$533m shariahcompliant fund in 2008 and will remain its counsel on future acquisitions and JVs to develop properties under the Rotana Hotel brand in Saudi Arabia. Issa also expects private equity activity to pick up this year. “We’re finding tremendous interest in investments by PE groups in the real estate, hospitality, food & beverage, health-care and education industries in Saudi Arabia,” he said. “There is also strong interest in creating funds domiciled in the GCC to benefit from local ownership rules and lower taxes.” ALB
www.legalbusinessonline.com
Personal allowances
2008/09, 2009/10 & 2010/11 Personal allowance: Single Married Single parent allowance Child allowances: 1st to 9th child Year of birth Other years
HK$ 108,000 216,000 108,000 100,000 50,000
By Debbie Annells, managing director, AzureTax Ltd, Chartered Tax Advisers Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong www.azuretax.com, a member of AzureTax Group (Tel) +852 2123 9339 (direct line), (Main Line) +852 2123 9370, (Fax) +852 2122 9209 Registered with the Chartered Institute of Taxation for purposes of anti money laundering legislation.
Debbie Annells
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IT column
TM
In-House legal counsel and corporate IT
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t has long been recognized, the importance of corporate IT services, to the success of the in house corporate legal function, and the criticality for timeliness, and accuracy to in-house legal departments, and indeed external corporate legal requests. Requests for information, evidence and data audit results, have typically been a reactive, urgent matter, for internal IT resources “as we need the information yesterday”, and possible litigation and corporate risk are imminent. IT professionals, network specialists, digital investigators are continually being asked to provide information, urgently, and typically, involving the acquisition and collection of information from near ancient IT infrastructures, where a myriad of independent information silos, operating systems, access rights, ensure the task is arduous at best. Many corporations, however, are taking a much more proactive position, and in fact are deploying an investigative infrastructure that, with minimal cost, or maintenance, can address up to 90% of in house legal requests in less than half the time, while dramatically reducing existing legal corporate costs. The key component to an investigative infrastructure is a scalable, network-enabled technology which is purpose built, specifically for evidence and data collection functions. The very same infrastructure can also drive network data audits, data leakage identification and the remediation or erasure of unauthorized data. In reality, Asian corporations are not faced with the same degree of litigious actions as counterparts in, say the US, or Europe, but nonetheless still require equivalent levels of defensible, accurate, and timely information collection. Multinational corporations are also required to adhere to there corporate head office requests, such as eDiscovery. IT professionals, together with security administrators, are fast deploying infrastructures whereby investigations and evidence collection can be done network wide from a single end point, or computer, to a regional multi machine search and evidence collection process that does not cause disruption, or downtime to computers or servers. This infrastructure can be pushed out to existing IT networks, and do not require IT overhauls, nor significant capital expenditures. Everything from fraud investigations, or digital forensics, to legal discovery or “eDiscovery” can be performed across entire networks, at lightning speed, freeing in house counsels to concentrate on the legal review process.
Carl Kimball, general manager, Asia Pacific Guidance Software, Inc Phone: +65 6248 4527 Email: apac.sales@guidancesoftware.com
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Carl Kimball
Malaysian lawyers vote to keep no-discounting rule M
alaysian lawyers have voted down a proposal to abolish scale fees in preference for a free-market system at the Malaysian Bar Council’s annual general meeting held in March, with an overwhelming 121 votes against 10. Malaysian lawyers abide by the Solicitors Remuneration Order (SRO), which came into effect in 2006 to regulate the cost of non-contentious legal work. Lawyer Lee Swee Seng, who proposed the motion, said he was disappointed at the outcome but remains hopeful for change. “Lawyers by and large would like to tell the world that the SRO is being followed, while at the same time knowing that there is no way to enforce it,” he said. “They have the liberty and the luxury to give discounts while there is no fire [on them], and they want to have the best of both worlds.” The motion argued that the SRO was difficult to enforce because the pressure on firms to discount was too widespread; lawyers that don’t cut fees for clients are also likely to lose work to those that do; and clients will continue to demand discounts as they are not held accountable by the SRO. It suggested that instead, scale fees should be used only as a guideline, and that lawyers should not be accused of “unprofessional and improper conduct” by a disciplinary board for discounting by market demand. According to a representative from the Malaysian Bar, the motion was voted down because lawyers feel that scale fees
korea >>
Foreign lawyers in Korea to
T
hirty foreign lawyers in Korea have been signed up to help the Korean Bar Association improve and update the country’s judicial reporting, publishing and technological systems to international standards. The 30 lawyers – who come from a “wide cross-section of Korean law firms and foreign jurisdictions,” according to the KBA – were invited to form the new Foreign Lawyers Judicial Reform Advisory Committee, which had its first meeting Asian Legal Business ISSUE 10.4
NEWS >>
Update >> are necessary for sufficient compensation. Lee, however, said that the meeting was over-represented by litigation lawyers who aren’t affected by the SRO as much as others, such as conveyancing lawyers. “Conveyancing lawyers aren’t likely to attend these meetings,” he said. Former bar council president Ambiga Sreenevasan said that there is no way to monitor lawyers that undercut scale fees. “It’s down to the individual lawyer and some of them are spoiling [the system] for others [by discounting], so we should have a whistle-blowing system to report on those that do,” she said. “There is a public interest element here – if lawyers are prepared to undercut we’re concerned that the quality of legal services will suffer.”
“Lawyers by and large would like to tell the world that the SRO is being followed, while at the same time knowing that there is no way to enforce it” lee swee send, lawyer Discounting is not an issue exclusive to the Malaysian experience: Asian firms are widely known for their competitive fees. Lee said that it should be the market that dictates how much lawyers are paid, since overcharging isn’t as widespread. “I think in all fairness that it’s the public that needs protection from overcharging. If there is undercharging then I think it’s the public consumer that benefits,” he said. ALB
help improve legal system on 12 March. Members will report on the systems employed by foreign countries and suggest ways that Korea can adopt new systems for court recording, fast-tracking publication of judgements, and use of technology in the courts. Currently Korean courts publish a select number of decisions – often a week after they were issued, and neither the parties or the public have access to recordings of court proceedings. “The KBA wishes to gain a greater understanding of how other international jurisdictions approach these complex topics,” said a spokesman from the Korean Bar. “For this reason, the KBA established an advisory committee of foreign lawyers to assist with its review.” The group does not have any decision-making powers, but the KBA expects that the committee may also advise on other unspecified projects in the future. Yulchon lawyer David Linton, a committee member, said that while the outcome from establishing the committee is yet to be seen, it is another step for the KBA towards increasing international engagement. “As the practice of law becomes increasingly global, this kind of dialogue and engagement will be increasingly important for all law firms involved in the Korean market,” he said. ALB www.legalbusinessonline.com
Financial Services IFA’s exposed!
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hen I relocated to Hong Kong from the UK in 1993 the financial services industry here was effectively running 10-15 years behind the UK. You could literally be serving drinks in Lan Kwai Fong this week and working as a financial adviser the next week! Times have now changed, mostly for the better. Financial advisers, generically referred to as “IFA’s”, are regulated either by the Securities and Futures Commission (SFC), the Confederation of Insurance Brokers (CIB) / Professional Insurance Brokers Association (PIBA) and/ or the Mandatory Provident Funds Authority (MPFA) – or a combination of these bodies depending on the IFA’s activities. The SFC regulates investment advice; the CIB/PIBA insurance products and the MPFA Mandatory Provident Schemes. In August last year the SFC issued a circular which confirmed that insurance intermediaries who provide advice or make recommendations on the choice of investment funds underlying insurance-linked policies would not have to be licensed (as an investment adviser) by the SFC – which frankly is amazing! Needless to say, many IFA’s have exploited this thereby avoiding the costs of licensing and onerous responsibilities of being a licensed investment adviser. If you’re in the market for investment advice I recommend you should – at the very least – ensure your adviser is licensed by the SFC, whether the underlying product is an insurance-linked policy or not. That being said, a license does not guarantee quality, necessarily. In an industry that is dominated by commission– driven sales one has to question whether advice is truly independent or simply aimed at filling a quota or paying this month’s rent! At Horwath Financial Services we offer clients a range of payment options including fee-for-time, which I believe sets us apart from the herd. We have been in business since 1996 and, if I may say so myself, have an excellent reputation with our clients and our regulators. The proof of the pudding is in the eating though – so rather than harping on about how good we are, we prefer to introduce potential clients to our existing clients, many of whom are happy to write glowing client testimonials! And when it comes to investment advice, my personal approach is to invest in exactly the same investments that I recommend to my clients. That way we’re in it together – our interests are aligned. Feel free to contact me for an exploratory chat. David Bojan, managing director Horwath Financial Services Ltd. Tel: (852) 2511 8337 Fax: (852) 2802 7613 Email: drb@hfs.com.hk Website: www.hfs.com.hk
David Bojan
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DLA to push ahead with Mid East growth despite disappointing last year
►► DLA Piper’s figures in the Middle East Office Abu Dhabi Dubai Doha Kuwait (JV) Muscat Riyadh (affiliation) Bahrain
Partners 7 23 2 1 1 1 (non-partner) N/A
Opened 2008 2006 2008 2008 2009 2009 2009
Figures as at Dec 2009
D
LA Piper has cited increased demand for its lobbying and governmental relations services as the rationale behind its impending opening in Turkey, according to its co-chairman, Lord Clement-Jones. The often opaque regulatory systems in emerging markets coupled with governments and regulators looking to play a more active role in their economies presented a window of opportunity for law firms, he said. “Conventional lobbying doesn’t really take place in most emerging markets,” Clement-Jones said.
“Here, you just have to make sure that people are meeting the right people, delivering the right messages. A lot of it isn’t even lobbying, it is getting the right information to the right places.” DLA Piper is one of the more wellcredentialed firms in this regard. In the past the firm has lobbied US politicians on behalf of Middle East governments, represented Turkish interests in a debate over recognition of the Armenian genocide, and worked on behalf of the UAE in relation to a vote on a nuclear power accord.
The firm will pair up with Istanbulbased YukselKarkinKucuk. DLA Piper is looking to move on from what was a dismal 2009 in the region – after three rounds of redundancy consultations and high-profile lawyer departures – by investing in its Abu Dhabi, Qatar and Saudi offices. “When you go through a shock, like everybody else you have to retrench at some point,” said Clement-Jones. “We invested heavily and now we have consolidated and had to let some people go. “But where the growth is, we haven’t stopped the pace at all.” ALB
middle east >>
Freshfields seals exclusive Saudi alliance
F
reshfields has made exclusive its previously informal alliance with Saudi Arabian law firm Salah AlHejailan. The two firms originally established an informal arrangement in May 2008, after Freshfields brought on board Fares Al-Hejailan, the son of
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the Saudi firm’s founder, as the co-head of its Saudi practice. Before the tie up with Freshfields, Al-Hejailan had arrangements with Clifford Chance and Hogan & Hartson, and had been cooperating with Freshfields for many years. Maintaining a strong relationship with its Saudi sponsor has been a key part in solidifying Freshfields’ presence in the country. In making this arrangement exclusive, Freshfields may bypass the problems faced by other international firms such as DLA Piper, which lost its Saudi sponsor in 2009, and White & Case, which lost its sponsor in January 2010. Finance partner Tobias Müller-Deku,
“Foreign investment in Saudi Arabia has boomed over the last decade and the private sector now accounts for a considerable share of what used to be a largely oilbased economy” Tobias Muller-Deku, Freshfields who was relocated from Freshfields’ Munich office last October, will be the Saudi practice’s managing partner. He said the two firms can increase their focus on banking & finance work. “Foreign investment in Saudi Arabia has boomed over the last decade and the private sector now accounts for a considerable share of what used to be a largely oil-based economy.” ALB Asian Legal Business ISSUE 10.4
Firm Profile
Paul, Weiss
NEWS >>
China opening up for foreign-invested partnerships
S
ince March, 1, 2010, a new form of foreign-invested enterprise (“FIE”) has been introduced under Chinese law: the foreign-invested partnership (“FIP”). FIPs came into being as a result of the issuance of the Administrative Measures on the Establishment of Partnership Enterprises by Foreign Enterprises or Individuals (the “Measures”), which were promulgated by the State Council on November 25, 2009 and came into effect on March 1, 2010. The Measures are one of the implementing rules of the 2007 Partnership Enterprise Law and enable foreign investors to create the types of partnerships (limited and unlimited) and management arrangements for the partnerships available under the Partnership Enterprise Law. The Measures were further supplemented by the Administrative Rules on the Registration of Foreign-Invested Partnership Enterprises (the “Registration Rules”), which were issued by the State Administration for Industry and Commerce (“SAIC”) on January 29, 2010 and also became effective on March 1, 2010. Under the Measures, two or more foreign investors, or foreign investors together with Chinese individuals, legal persons or other entities, can establish partnerships in China. Moreover, foreign investors can also join an existing domestic partnership by making new contributions or acquiring partnership interests. The Measures also break new ground in another aspect: under the Measures, FIPs are only required to be registered with the local Administration for Industry and Commerce (“AIC”), making FIPs, apart from representative offices, the only foreign-invested entities that can be established without prior approval by the Ministry of Commerce or its local counterparts or any other regulatory authority. If regulatory approval is required for the proposed business of the FIP, this approval must be obtained prior to the AIC registration. The Registration Rules confirm that the local AIC is the authority for registering an FIP, but specifies that for any FIP whose principal business is investment, registration of the FIP should take place at the provincial-level AICs, which include AICs of municipalities and autonomous regions. The registration of FIPs on the whole are more streamlined than those for other types of FIEs. The Registration Rules state that an FIP may be registered on the spot if all the required documents are submitted and the proposed FIP structure complies with the law. However, the Registration Rules also provide that the AIC may decide whether to register an FIP within 20 days after accepting an application for registration. It is unclear from the Registration Rules under
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what circumstances the AIC may do so, but it is reasonable to assume that the AIC may want to take more time to review an application involving a complex structure to determine whether the structure complies with the law. With respect to the capital contributions of an FIP, the Measures provide that contributions may be made in foreign currency, but do not clarify whether and how foreign investors can make contributions in-kind or through services, which is expressly permitted under the Partnership Enterprise Law. The Registration Rules permit capital contribution in the form of in-kind contribution, intellectual property rights, land use rights or other property rights for FIPs. Foreign general partners are permitted to contribute capital in the form of labor services. Although the provisions concerning the registration and capital contributions of FIPs suggest a more relaxed regime for the FIPs, other provisions in the Measures and the Registration Rules do not loosen the restrictions that an FIP may face in China. The Measures state that an FIP is required to comply with China’s foreign investment industrial policies. In addition to the documents required for the registration of all partnerships, the partners applying to register an FIP must also submit a statement confirming such compliance. Such a requirement essentially means that FIPs are subject to the same sectoral requirements as other FIEs. The Registration Rules go further to stipulate that an FIP may not be established in the prohibited category under the Catalogue Guiding Foreign Investment in Industry (“Foreign Investment Catalogue”). In addition, FIPs are not permitted to be set up for projects where foreign investment is permitted only in the form of Chinese-foreign equity or cooperative joint ventures, joint ventures where the Chinese party would retain control or in projects where foreign ownership is limited to a certain percentage under the Foreign Investment Catalogue. Such limitations restrict the range of industrial sectors in which foreign investors may set up FIPs and greatly diminish the advantage that FIPs have over other forms of FIEs. Another significant concern to foreign investors relate to how downstream investments made by FIPs will be treated under the new regime. The Registration Rules stipulate that when an FIP whose principal business is investment makes an investment in China, the laws applicable to foreign investment apply. Two interpretations of such a provision may be made: a more stringent interpretation would require such FIP investments to be made subject to the laws and regulations governing investments made by foreign investors; and
the other, more relaxed interpretation, would provide that the laws and regulations governing re-investment in China by FIEs (which are generally less restrictive than those governing direct investments by foreign investors) would apply to such FIP investments. Until more definitive rules are issued, such an uncertainty may dampen foreign investors’ enthusiasm for the establishment of FIPs in China. Other complex issues such as foreign exchange loans also require further clarification from the government. Under the current regulatory regime for FIEs, Chinese-foreign equity or cooperative joint ventures and wholly foreign-owned enterprises are permitted to borrow foreign exchange loans subject to a ceiling which is the difference between the amounts of their total investment and registered capital. The Measures and the Registration Rules do not stipulate any requirement for the total investment or registered capital for an FIP. While it may give the investors in an FIP flexibility to agree on the amount of capital contribution each party would make, the absence of the relevant stipulation raises the question as whether FIPs would be permitted to borrow foreign exchange loans from overseas, and if so, what the maximum amount would be. Such an issue would be of great concern to private equity and venture capital funds which are usually highly leveraged in their investments and would want to use as much foreign exchange borrowings as possible to fund the investments to be made by a prospective FIP. Additional uncertainties relating to foreign exchange matters for FIPs, such as how the foreign exchange capital contributions may be converted into renminbi in light of Circular 142 issued on August 29, 2008 by the State Administration of Foreign Exchange, which expressly prohibits FIEs from converting their registered capital for equity re-investment, remain to be clarified. In conclusion, although the Measures and the Registration Rules leave a number of key issues relating to FIPs unresolved, the promulgation of these regulations shows that China is keen to promote the establishment of FIPs to encourage the formation of private equity funds in China. We believe clarification of the issues mentioned above will be forthcoming in the near future.
Jeanette Chan, partner Paul, Weiss, Rifkind, Wharton & Garrison Hong Kong Club Building, 12th Floor 3A Chater Road, Central, Hong Kong Email: jchan@paulweiss.com Ph: (8610) 5828-6300 or (852) 2846-0300
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NEWS >>
appointments ►► LATERAL HIRES Name
Leaving
Going to
Practice
Location
Francis Zou Raymond Kwok Iain Sharp
Allen & Overy Blank Rome Reynolds Porter Chamberlain
White & Case Latham & Watkins Kennedys
New York Hong Kong Singapore
Robert Jordan
NA
Baker Botts
Nasreen Bulos Clive Rough
Mars Incorporated Freshfields
Shuaa Capital Retiring
Richard Addlestone
Walkers
Appleby
China group Real-estate Maritime & international trade Middle East managing partner General counsel Managing partner – Hong Kong Funds and investment
Julian Black
Walkers
Appleby
James Gaudin Matthew Stocker
Walkers Maples and Calder
Appleby Appleby
Matthew Feargrieve Dae Dong Park Tae Hak Chung Grace Teo
Mourant Korea Deposit Insurance Corporation Judiciary Orrick, Herrington & Sutcliffe
Appleby Yulchon Yulchon Walkers
►► Relocations Firm
Partner
From
To
Ince & Co King & Spalding Charles Russell Walkers Shearman & Sterling Herbert Smith Freshfields
Iain Anderson Philip Weems Andrew Sharpe David Collins Iain Goalen Nicholle Kingsley Bertrand Pellet
London Dubai London Cayman Islands London London Paris
Singapore Houston Bahrain Singapore Abu Dhabi Dubai Dubai
►► Promotions
Dubai Hong Kong Cayman Islands Cayman Islands Jersey Hong Kong Zurich Seoul Seoul Singapore
Name
Firm
Promotion to
Practice
Location
Zeeshan Ahmedani Philip Power Jonathan Weinberg Jeremy Duffy Irina Nesvetova Kay-Ian Ng
White & Case White & Case White & Case White & Case White & Case Freshfields
M&A M&A Global banking Global banking Global banking Capital markets
Abu Dhabi Abu Dhabi Prague London Moscow Hong Kong
Jawad Ali
King & Spalding
Islamic finance
Dubai
Miriam Daugherty Andrew Webb Paul Branford Jeremy Leese Victoria Myerson Toshiyuki Arai
Appleby Appleby Appleby Appleby Appleby Paul Hastings
Litigation & insolvency Corporate & commercial Corporate & commercial Corporate & commercial Family law M&A
Isle of Man Isle of Man Isle of Man British Virgin Islands Jersey Tokyo
Atsuko Hamaguchi
Mori Hamada & Matsumoto Mori Hamada & Matsumoto Mori Hamada & Matsumoto Mori Hamada & Matsumoto Mori Hamada & Matsumoto Mori Hamada & Matsumoto Mori Hamada & Matsumoto
Partner Partner Partner Partner Partner Hong Kong managing partner Middle East managing partner Counsel Counsel Counsel Counsel Counsel Tokyo managing partner Partner
Hiromi Hayashi Takayuki Kihira Yoshihiro Kojima Atsunori Nobukuni Daisuke Oda Rintaro Shinohara
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Banking and asset finance Corporate Banking and asset finance Funds and investment Corporate Litigation Finance
Dubai
Partner
Corporate governance/ Tokyo litigation M&A/PE Tokyo
Partner
M&A/dispute resolution Tokyo
Partner
M&A/finance
Tokyo
Partner
Bankruptcy/M&A
Tokyo
Partner
Corporate governance/ Tokyo litigation M&A/PE Tokyo
Partner
Blank Rome
Latham & Watkins
Latham appoints Blank Rome real estate partner Latham & Watkins has appointed real estate specialist Raymond Kwok as a partner in its Hong Kong practice. Kwok joins the firm from the local office of US firm Blank Rome, where since March 2009 he has been advising on mainland real estate, M&A, and corporate transactions. Prior to that he headed up real estate Raymond Kwok matters at Fried Frank’s local Hong Kong office. Latham’s joint head of China, Michael Liu, said that Kwok’s addition will allow the firm to specialise in complex issues in the real estate sector. The addition of Kwok means Latham will have 44 lawyers in its Hong Kong office.
Baker Botts
New Gulf head for Baker Botts Robert Jordan will relocate to Baker Botts’ Dubai office later this year to head up the firm’s Middle East operations. Jordan, who served as US Ambassador to Saudi Arabia in the aftermath of the 9/11 attacks (October 2001-October 2003), returned to the firm in Robert Jordan April 2004 as a partner in its Dallas office. Incumbent Middle East managing partner David Emmons, who presided over a period of solid growth for the firm – including the opening of a new office in Abu Dhabi, the relocation of both its Dubai and Riyadh office and increases in lawyer headcount – will return to the firm’s Dallas office in the US summer. Mars
SHUAA Capital
Mars legal counsel becomes GC at SHUAA Capital Gulf financial services firm SHUAA Capital has appointed former Mars Incorporated legal counsel Nasreen Bulos as its new general counsel. Bulos will report directly to the company’s CEO Sameer Al Ansari and replaces outgoing Gary Feulner, Nasreen Bulos who is retiring after nearly 20 years in the position. Bulos has over ten years’ experience in structured Asian Legal Business ISSUE 10.4
NEWS >>
finance, banking, derivatives, investment funds and M&A deals, and has also had stints in-house at Dubai International Capital and in private practice with Allen & Overy.
Freshfields
Freshfields appoints new Hong Kong chief Freshfields has made capital markets lawyer KayIan Ng its new Hong Kong office head, succeeding current managing partner Clive Rough who is retiring from the firm’s partnership. Rough will step down from the role in April after six years spent heading up the Hong Kong office. Joining the firm in 1978, Rough was made partner Kay-Ian Ng in 1987 and was later appointed to head the Asia structured finance group at the Magic Circle firm. He said he is looking at a number of career opportunities going forward. Ng said he will build on the platform set up by Rough over the years.
Freshfields
Paris lawyer moves to Dubai corporate group Freshfields has transferred Paris-based partner Bertrand Pellet to head its Middle East and North Africa (MENA) corporate practice in Dubai. He is expected to develop more cross-border work between Paris and the Middle East. Pellet, who specialises in Bertrand Pellet M&A and PE, will replace David Higgins, who has headed up the corporate practice since late 2008 when he was moved from the London office. Higgins will continue working in the region. The firm’s Paris managing partner, Antoine Colonna d’lstria, said that Pellet’s transfer will help bridge the Paris practice with the Middle East. “[It] will give us the opportunity to develop the flow of business between our Paris office and MENA,” he said.
Ince & Co
Ince & Co transfers another London partner to Singapore Ince & Co has gained its first insurance partner in Singapore after the firm transferred partner Iain Anderson from London. Anderson is expected to develop the firm’s Asia-Pacific insurance and www.legalbusinessonline.com
reinsurance practice from Singapore, bringing on board regional clients he previously advised while in London. The firm said that Anderson’s transfer is expected to meet growth in its global insurance practice. “Our global insurance practice is expanding and the firm is experiencing strong growth in the AsiaPacific region,” said the firm’s head of insurance, Chris Jefferis. King & Spalding
King & Spalding appoints Islamic finance lawyer as new Gulf head King & Spalding has promoted Jawad Ali as the new managing partner of its Middle East operations. Ali, the co-head of Islamic finance, succeeds Philip Weems, the joint head of global energy, who is returning to King & Spalding’s US office in Houston. Both Weems and Ali originally formed part of the firm’s regional launch in 2006. Although the switch from Weems to Islamic finance specialist Ali seems to signal a shift in focus for the firm to Shariah-compliant transactions, Ali said his appointment doesn’t change anything. “My appointment does not change the direction of the firm in the Jawad Ali Middle East, it merely confirms it. Our practice in the Middle East goes back 20 years and was built off Shariahcompliant real estate and PE investments made by Middle East clients in the US, where I started my career at the firm,” he said. Academia
Khaitan & Co
Academic hired as new real estate head Former academic and public officer PK Agrawal joins Indian firm Khaitan & Co as partner-incharge of real estate, and will be responsible for the practice advising on Indian land laws for various real estate transactions. Before joining the firm, PK Agrawal Agrawal served in various positions within local universities, during which he authored key texts on land reform and environmental issues, and in the country’s Environment and Forest departments. Walkers
Appleby
Appleby gains new partners Offshore firm Appleby has boosted its firm-wide partnership with the appointment of five new
partners, three of whom previously worked for its competitor, Walkers. The firm also promoted two associates to partner and five lawyers were also promoted to counsel. Two partners – Richard Addlestone and Julian Black – join the firm’s Cayman Islands office and previously worked for Walkers. Also an ex-Walkers employee is corporate lawyer James Gaudin, who will be stationed in Jersey. In Hong Kong, banking and asset finance lawyer Matthew Stocker will join from Maples and Calder as the office’s fourth partner. Meanwhile in Zurich, the firm has gained funds and investment lawyer Matthew Feargrieve from Mourant du Feu & Jeune, the Channel Islands-based offshore firm which recently merged with Ozannes. With the new additions the number of partners at Appleby will rise to 78, cementing its lead as the largest offshore firm by partner headcount. Mori Hamada & Matsumoto
Mori Hamada promotes seven to partnership Japan ‘Big Four’ firm Mori Hamada & Matsumoto has made up seven associates to partner as part of its latest round of promotions, beefing up its corporate and M&A practices. Five of the new partners specialise in M&A, something which the firm says may help it retain the lead in Japan’s M&A league tables this year. “We believe our new partners who specialise in M&A will certainly help us to continue to build on our reputation in this area,” said joint managing partner and M&A/corporate partner, Satoko Kuwabara. Kuwabara added that while the firm did feel the effect of the financial crisis on M&A activity, there are positive signs of a turnaround in 2010. The firm now has 47 partners in the M&A practice, according to its website. ACCRA
Judiciary
Former ACCRA partner to serve on bench Former ACCRA law partner Norbeto Geraldez has been appointed by Philippines president Gloria Macapagal-Arroyo as presiding justice of the Sandiganbayan, a Philippines court that deals with matters relating to official corruption. Geraldez, who is the incumbent chairman of the court’s First Division, previously served as a partner at ACCRA – the country’s second-largest law firm by headcount. Under the Philippines’ constitution the Sandiganbayan is vested with “jurisdiction over criminal and civil cases involving graft and corrupt practices and such other offences committed by public officers and employees, including those in
25
NEWS >>
28 May 2010, Ritz Carlton, Tokyo
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The most highprofile legal event of the year Join the who’s who of in-house counsel, business and law at the 6th annual ALB Japan Asia Law Awards 2010. Secure your place at the most popular night on the legal industry calendar and enjoy a gourmet dinner, fine wines, world class entertainment as well as invaluable networking opportunities. Celebrate the achievements and successes of the past twelve months as the winners for 2010 are announced.
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government-owned or controlled corporations, in relation to their office as may be determined by law.”
Charles Russell
Charles Russell expands Bahrain practice UK firm Charles Russell has transferred corporate partner Andrew Sharpe from its London base to Bahrain, in an effort to build its IT and telecommunications practice. Sharpe, whose clients in the region have included Batelco, Zain and Etisalat, will be joined in the corporate practice by a new Bahraini trainee, Reem Al Mahroos. Bahrain managing partner Clive Hopewell said the firm is looking to develop its presence in Bahrain, where it has based its Middle East practice since August 2007. The firm last year received a major mandate from the Central Bank of Bahrain as the administrators of the troubled Awal Bank, which had defaulted on financial obligations and had assets totalling more than US$5bn. Hopewell and partner James Hyne headed up the assignment, along with Mahroos.
Paul Hastings
Paul Hastings appoints Arai as Tokyo chair Toshiyuki Arai has been appointed as chair of Paul Hastings’ Tokyo office. Arai, who has been with the firm for almost 20 years and practices predominantly in the cross-border and M&A areas, will be charged with overseeing the strategic Toshiyuki Arai development of the firm’s Tokyo operations, which were significantly downsized last year as a result of the financial crisis. The move comes less than six months after Paul Hastings pulled off arguably its most high-profile lateral hire in the Japan market when it snared Matthew Berger, former chair of the technology transactions group at US rival Morrison & Foerster.
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Government
Yulchon
Yulchon bolsters litigation, corporate practices Korean firm Yulchon has appointed former government official Dae Dong Park as a senior advisor, and Tae Hak Chung as a partner in its litigation group. Prior to joining the firm, Park had a long career in government – most recently as the President of the Korea Deposit Insurance Corporation. He was also a standing director of the Financial Services Commission (FSC), and directed a Supervisory and Policy Dae Dong Park Division at the FSC. Chung served as a judge for over 16 years and also headed election commissions in a number of electoral districts around Korea. Orrick, Herrington & Sutcliffe
Walkers
Walkers boosts Singapore office Offshore firm Walkers has expanded its Singapore office after transferring finance partner David Collins from its Cayman Islands office and hiring associate Grace Teo. Collins joined Walkers in 2002 and became a partner in 2008. Teo joins from Orrick, Herrington & Sutcliffe’s London financial markets group, and before that was a senior associate at Allen & Gledhill.
evict tenants when a lease expires – which could result in more real estate disputes. The firm’s head of real estate, Ian Cox, said the transfer is a step towards building an international real estate practice. “[Kingsley’s] relocation will provide valuable support to the real estate practice in the [Middle East] region as well as continuing to support the UK practice.”
Skadden
Sokoloff to share Asia MP role with Schiffman at Skadden Skadden has appointed Audrey Sokoloff as co-head of its Asia-Pacific practice. Tokyo-based Sokoloff currently heads the firm’s Tokyo office and its Asia -Pacific real estate and investment finance practice. She will retain both postings when she joins Alan Schiffman in the top Asia role. Sokoloff says that the “full-coordination of the firm’s Asia-Pacific offices” is high on the agenda and both herself and Schiffman will no doubt be looking to play a large role in expanding the firm’s footprint in the region. Audrey Sokoloff Over the past 12 months the firm launched an Asian arbitration and litigation practice after transferring Paul Mitchard QC from its London office to Hong Kong, and effected a rare lateral hire by hiring Alan Tsang from Pinsent Masons.
Herbert Smith
Herbies transfers London real estate lawyer to Dubai Herbert Smith has relocated real estate lawyer Nicholle Kingsley to the firm’s Dubai office. Kingsley, a London-based planning practice senior associate, will be the firm’s fourth real estate lawyer in the Middle East. The move comes as Abu Dhabi seeks to implement amendments to real estate laws, giving landlords greater powers to
27
Profile NEWS >>
Armani Bar HK
A little touch of the Mediterranean… in Hong Kong: Armani Bar’s Spring creations
A
Wild Italian Seabass in Sea Salt Cup
Non-Alcoholic Frensh Lemonade
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rmani Bar, located in Central Hong Kong, is undoubtedly the place to be this spring. Whether it’s a quick business lunch for the timepoor executive, an all-important business dinner with valued clients, a few romantic cocktail or a casual and relaxed Saturday afternoon meal the Bar’s new spring menu has something that caters to everyone’s tastes- cuisine that will satisfy even the most discerning of palates. Situated in Central Hong Kong, Armani Bar couldn’t be more removed from the fastpaced pulse of the city. Stepping into Armani Bar is like stepping out of Hong Kong and into a relaxed, classy bar in the heart of Milan or Rome. Armani Bar’s haute cuisine is similarly an experience that is out of this world. The Fresh Fruits Summer Cocktails ooze spring. Frensh Lemon is a new creation but one that is sure to become just as renowned as the bar’s many other cocktails. The juice of one whole lemon is combined expertly with just the right amount of sugar and soda water and this timeless recipe is capped off brilliantly and creatively with a sprig of rosemary. That is definitely one of the most refreshing drinks in Hong Kong. The release of the Risotto al asparagi con quaglie is similarly delightful. Armani Bar’s team of chefs ought to be applauded for yet
again marrying contrasting ingredients to produce a dish which is as stimulating to the palate as it is on the eyes. Here the artfully rolled quail is slow-cooked with sage and chardonnay and set upon a bed of asparagus risotto to produce a culinary masterpiece: the quail leaves behind its sometimes gamey feel and is matched well by the risotto. The dish is delicate, light and typifies spring but at the same time is masterly complex. The same can be said of the Branzino in crosta di sale e erbe: Wild Italian seabass in sea salt. Here the succulent sea bass is cooked expertly on a salt bed within a large ravioli-type pouch and with hints of garlic various herbs and the finest Swiss chardonnay. Conspicuous for its lack of saltiness but amazingly complex and deep undertones, the fish is succulent, tender and flavourful. In essence, the dish — and for that matter, Armani Bar’s complete Spring menu — is replete with the earthiness and relaxed tones that one expects of the season and offers the diner a culinary experience that is more reminiscent of Italy than it is of Hong Kong. Armani/Bar HK 2/F, ARMANI/CHATER HOUSE 11 CHATER ROAD, CENTRAL HONG KONG PH.: 852.28050028 FAX: 852.28050025 armanibar@giorgioarmani.com.hk
Asparagus Rissotto with Quail
Asian Legal Business ISSUE 10.4
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News | regional update >>
Regional updates
CHINA
30
CHINA
Paul Weiss
Philippines
SyCip Salazar Hernandez & Gatmaitan
SINGAPORE Loo & Partners
Each month, ALB draws on its panel of country editors to bring readers up to date with regulatory developments across the region
New Rules for Foreign-Invested Partnerships in China The Administrative Rules on the Registration of Foreign-Invested Partnership Enterprises (the “Registration Rules”) issued by the State Administration for Industry and Commerce became effective on March 1, 2010. They are the implementing rules for the Administrative Measures on the Establishment of Partnership Enterprises by Foreign Enterprises or Individuals (the “Measures”) promulgated by the State Council, effective also on March 1, 2010. The Measures and the Registration Rules created the foreign-invested partnership (“FIP”), a new form of foreign-invested enterprises (“FIE”). FIPs are only required to be registered with the local Administration for Industry and Commerce (“AIC”), and for any FIP whose principal business is investment, registration of the FIP should take place at the provincial-level AICs. Furthermore, capital contributions may be made to the FIPs in foreign currency and in the form of in-kind contribution, including intellectual property rights, land use rights or other property rights. Foreign general partners are even permitted to contribute capital in the form of labor services. Although the provisions concerning the registration and capital contributions suggest a more relaxed regime for the FIPs, other provisions impose stricter restrictions on FIPs. Like all FIEs, FIPs may not be established in the prohibited category under the Catalog Guiding Foreign Investment in Industry. However, FIPs are not even permitted to be established for projects where foreign investment is permitted only in the form of joint ventures or joint ventures where the Chinese party is required to retain control. The range of industrial sectors in which foreign investors may
set up FIPs is severely limited and the advantages of FIPs over other forms of FIEs are greatly diminished. The Measures and the Registration Rules are both vague on certain key issues, such as how downstream investments made by FIPs will be treated, but we are hopeful clarification would be forthcoming. Nevertheless, the promulgation of these regulations shows that China is keen to promote the establishment of FIPs to encourage the formation of private equity funds in China. Written by Jeanette Chan, partner Bianca Ip, senior paralegal Paul, Weiss, Rifkind, Wharton & Garrison Hong Kong Club Building, 12th Floor 3A Chater Road, Central Hong Kong Email: jchan@paulweiss.com Ph: (8610) 5828-6300 or (852) 2846-0300
Philippines
Eight Regular Foreign Investment Negative List Promulgated The Eight Regular Foreign Investment Negative List (FINL) setting out the investment areas in the Philippines where foreign (equity) investment is restricted has been recently promulgated. From time to time, a new FINL is issued in accordance with the Foreign Investments Act of 1991, as amended (FIA). List A of the FINL enumerates the investment areas reserved to Philippine nationals by mandate of the Constitution and specific laws. Included in List A are mass media (except recording) and the practice of all professions (such as accountancy and law), wherein no foreign equity is allowed. Also included in List A is ownership of private lands, wherein only Asian Legal Business ISSUE 10.4
News | regional update >>
up to 40% foreign equity is allowed. List A of the Eight Regular FINL adds guidance counseling as a new item under the practice of professions pursuant to a 2004 law professionalizing this activity. List B of the FINL enumerates the investment areas wherein foreign ownership is limited for reasons of security, defense, risk to health and morals, and protection of small- and medium-scale enterprises. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 are among those covered by List B wherein foreign equity is limited up to 40%. Although gambling enterprises are generally subject to the foreign equity limitation of up to 40%, List B of the Eight Regular FINL excludes those that have investment agreements with the Philippine Amusement and Gaming Corporation and are operating within special economic zones administered by the Philippine Economic Zone Authority. This exception is not found in the previous FINL. Investments in areas specified in the FINL should be owned wholly or partly, as the case may be, by Philippine nationals. Under the FIA, a Philippine national includes a citizen of the Philippines, a domestic partnership or association wholly owned by citizens of the Philippines, and a corporation organized under the laws of the Philippines of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines. The FIA provides, however, that where a corporation and its nonFilipino stockholders own stocks in a corporation registered in the Philippines, at least 60% of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least 60% of the members of the Board of Directors of each of both corporations must be citizens of the Philippines, in order that the corporation shall be considered a Philippine national. Compliance with the requirement of Filipino ownership of a corporation engaged in the activities indicated in the FINL is determined on the basis of outstanding capital stock whether fully paid or not, although only such stocks which are generally entitled to vote are considered. Mere legal title is not enough www.legalbusinessonline.com
though. A Philippine national must have full beneficial ownership of the stocks, coupled with appropriate voting rights. Written By Melyjane G. Bertillo SyCip Salazar Hernandez & Gatmaitan 3rd Floor, SSHG Law Center 105 Paseo de Roxas 1226 Makati City, Philippines T (632) 817 9811 to 20; 817 2001 to 09 F (632) 817 3896; 817 3567; 817 3145; 817 3570; 818 7562 E mgbertillo@syciplaw.com W www.syciplaw.com
SINGAPORE
Islamic Finance in Singapore The global economic crisis brought attention to Islamic banking and finance as a more ethical alternative to the western approach of the conventional interest-based finance system. It was perceived that the risk and profit-sharing feature inherent in Islamic finance transactions promotes better financial stability given that such transactions are likely to be less speculative, more prudent and carries less leverage. Singapore joined the race in 2005 to become a centre of Islamic banking and finance in Asia. Despite having a Muslim population which is dwarfed by the likes of Malaysia, Indonesia and even Thailand, Islamic finance continues to thrive in Singapore. The formation of Islamic Bank of Asia in 2007 with Singapore’s largest bank, DBS holding the majority share together with Middle East investors was touted as one of the more significant steps towards the push for Islamic finance in Singapore. In 2009 Monetary Authority of Singapore (MAS) became the first central bank from a non-Muslim country to create a local-currency sukuk (Islamic bond). Since then, other Singapore-based banks have also entered into interbank placements and sale and lease-back financing
that are Shariah-compliant such as the collaboration between Olam International, a Singapore-based trading firm and Islamic Bank of Asia to launch a Commodity Murabaha based on agricultural trade flows; and the establishment of a joint venture asset management company by Singapore’s Keppel T&T and Saudi Arabia’s Al Rajhi Holding Group to manage the world’s first Shariah-compliant data centre fund. Singapore’s first Shariah-compliant Exchange Traded Fund (ETF), the DaiwaETF was launched by Daiwa Asset Management in May 2008 where it tracks the performance of the largest and most liquid listed Shariah-compliant companies in Japan. The recent Dubai debt crisis has however thrown a spanner in the surging growth of Islamic finance in Singapore and across the globe. The issuance of sukuks, in particular, which is one of the main sources of investment assets, has come under intense scrutiny over fears of a debt default in Dubai. Suddenly it appears that Islamic finance is no different from conventional finance that led to the global economic crisis. Mr. Tai Boon Leong, Executive Director of MAS has, in his welcome address at the 5th Asian Takaful Conference held in Singapore on 9 – 10 March 2010, aptly advised vigilance despite growth of the takaful industry and that continued expansion should not be taken for granted. In spite of recent times, it is likely that Singapore may see an upswing in the emergence of more Islamic financial products and services. CIMB Islamic, the world’s top sukuk arranger, announced in February 2010 that it has chosen Singapore to be one of 2 countries in which it shall be offering new Shariah products in line with its expansion of business. Written by Ms Chew Lee Sian and Ms Lee How Fen Ms Chew Lee Sian, Foreign Counsel Legal Associate (Corporate Practice) Ph: (65) 6322-2237 Fax: (65) 6534-0833 E-mail: chewleesian@loopartners.com.sg and Ms Lee How Fen, Foreign Counsel Senior Legal Associate (Corporate Practice) Ph: (65) 6322-2205 Fax: (65) 6534-0833 E-mail: leehowfen@loopartners.com.sg Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907
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Feature | In-house survey 2010 >>
ALB In-house Survey 2010:
Doing more with less ►► ALB in-house survey KEY FINDings: ►► Respondents by jurisdiction
►► Respondents by type of company
►► The percentage of work your in-house team outsources to external counsel is:
Jurisdiction: 25%
50%
23%
50% 48%
20%
40%
40%
44%
16%
15%
32%
30% 11%
10%
10%
8%
7%
5%
4%
20%
a Chi na Ma lay sia Sin ga p o re V ie tna m
Kor e
nd
20%
12%
10%
MNC
Small/medium State/ enterprise government owned entity/ statutory body
0%
10%
1-20%
21-40%
41-60%
60+%
Ma
inla
Ind ia one sia Jap an Ind
ng
s t ra
lia Kon g
0%
Au
20%
10%
0% Ho
31%
12%
7%
5%
30%
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Asian Legal Business ISSUE 10.4
Feature | In-house survey 2010 >>
Leading in-house lawyers reveal their top priorities for the year ahead
A
n increased regulatory burden, continued pressure to control costs, more sophisticated and exacting work: that seems to be the outlook for the in-house profession in 2010. In short, market conditions confirm that in-house lawyers will be continuing their pursuit of that all-important business mantra: to do more with less.
The year in review During the financial crisis, in-house lawyers seemingly all performed to the same tune. Headcounts at most teams across the Asia-Pacific region had been
►► Over the past 12 months the amount of work your in-house team outsources to external counsel has:
►► Which statement best describes your legal team’s use of Legal Process Outsourcing (LPO)?
►► Respondents’ median budget for external legal spend according to jurisdiction
5,500
25%
5,000
35%
4,500
500
1,750,000
1,750,000
Chi na Ma lay sia Sin ga p o re V ie tna m
sia Jap an
one
ia
Ma
Ind
s t ra
lia Kon g
0 Au
us e LPO No t lik t h e el y f o r to u es e s e eab L P O le f u t u in re
n ot Do
cer dis No
Cur re p o s nt l y l o sib oki ility ng o f u in to sin the gL PO Cur re n tl y us e LPO
e han g
% r 50
nab l
ec
%
o ve
2150
by
by
sed
sed re a
re a I nc
% 50
1-2 0%
by
re a
sed
I nc
%
ve r yo
db as e
c re De
I nc
y2 1-5 0
db
db
as e
as e
c re De
350,000
1,000
0% y1 -20 %
0%
c re
2,500,000
1,500
750,000
2,000
5%
Ind
12%
ng
10%
6%
1,250,000
2,500
7%
6%
Ho
7%
1,250,000
3,000
10%
De
3,500
nd
20%
15%
4,000
a
25%
Kor e
30%
20%
inla
30%
21%
5,750,000
6,000
40%
6,250,000
6,500 27%
26%
an increased workload within a fixed budget has not. In a sense, the in-house profession may have become a victim of its own success. Far from having to fight for involvement in the business, in-house teams are now seeing more of the action than ever before – a symptom of the increasing complexity of global commerce. “Companies are not just doing what they did in the past – there are different types of transactions, different funding models, multijurisdictions,” says Fisher & Paykel Appliances general counsel Rebecca Holbrook.
6,050,000
30%
greatly reduced, as were budgets for external legal spend. At the same time, in-house teams were handling more work than ever while fighting a battle to convince their respective companies of their worth. Fast forward 12 months – and despite improving economic conditions little has changed: value is still the mantra. Part of the push towards improved value has been driven by the GFC but an improving economy does not necessarily mean that the issue will disappear from the agenda. While the GFC may have abated, the need for in-house lawyers to manage
Respondents’ median in-house team size: 51-60 staff
www.legalbusinessonline.com
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Feature | In-house survey 2010 >>
“We are seeing an almost historic level of regulatory and legislative change at both the product and the prudential level. For this reason we have made provision for significant external legal spend” John Harrison
GE Capital
In some instances, it may still be difficult to assess how companies have fared through the financial crisis. Peter Siembab, head of transaction legal for non-Japan Asia with Nomura, says in-house teams will need to really ‘drill down’ on the balance sheets of companies in transactions to uncover just how they weathered the crisis. The result is more exhaustive due diligence for in-house teams. GFC or not, cost containment for this rising workload will remain a key issue for in-house lawyers. While some in-house teams have increased their resources, this is by no means a consistent pattern and varies from jurisdiction to jurisdiction. Holbrook’s perception is that in-house lawyers will either maintain or reduce their legal spend in 2010. “This is not a time for firms to decide that the GFC seems to have passed so they can put their fees up by 10%,” she says. John Harrison, general counsel for GE Capital in Australia and New Zealand, says that while the need to reduce external legal spend remains real and pressing for many teams across the region, legislative and regulatory changes on the horizon may force many to rethink blanket freezes
or reduction on external legal spends. “We are seeing an almost historic level of regulatory and legislative change in Australia at both the product and the prudential level,” he says. “For this reason we have made provision for significant external legal spend.” But even where in-house departments have bigger budgets for external advice more and more are reporting that the way they work with external legal advisors is changing. “We want to be working in conjunction with our external legal advisors,” says Jane Niven, general counsel and chief compliance office for Jones Lang LaSalle in Singapore. “We don’t want to be sending matters out for them to go off and work on their own.” Many continue to send the most complex of work – including M&A and cross-border transactions, capital markets work and some litigation – to outside counsel while handling most other matters in-house, if the time and resources permit. Hence, while there may be a compelling cost-minimisation case for in-house teams handling more work, it is becoming clearer that a great number of Asia’s in-house legal departments are reaching a level of self-sufficiency. In itself, this is set to
►► ALB in-house survey: what are your team’s priorities for 2010?
David Matthews general counsel Fonterra
Team priorities: Our priorities are to develop a long-term capital structure for Fonterra and continuing the work commenced last year to consolidate borrowing programs. We will also review key priorities for our business to ensure that legal services are properly aligned to business priorities – these will be very different in 2010 from 2009 and we must make sure that we quickly identify the new priorities which require focus. Finally, after a year of significant turmoil, we will revisit our core compliance programs to ensure they are as effective as possible
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Francesca Lee
general counsel and company secretary Oz Minerals Team priorities: Balancing the many demands on the team to assist with working on potential acquisitions and alliances, both locally and internationally; managing litigation, keeping abreast with and responding to the many recent changes in the law and foreshadowed changes in the law that could impact the company in areas such as corporate and governance, occupational health and safety, environmental and sustainability-related matters, employment matters and taxation issues in the various jurisdictions that the company carries on business
Asian Legal Business ISSUE 10.4
Feature | In-house survey 2010 >>
augment the dynamics of the in-houseprivate practice-lawyer relationship in the years ahead.
Initiatives Despite a number of in-house lawyers saying that they are likely to have more cash in terms of budget for external legal spend to play with this year, the survey results reveal that for most general counsel the year ahead will be one in which they are asked to do more with less. The question is whether law firms will rise to the challenge. A number of firms have already shown that they are willing to take on more of the risk or to bill on a project management basis. However it is not yet clear whether this will become a long-term trend – in-house counsel may need to take the initiative in this area. Helen Conway, general counsel for Caltex Australia, says the challenge is for companies to “develop specific proposals and push ahead in a determined fashion.” (see box below) Other in-house lawyers share Conway’s concern that calls for alternative billing arrangements will go unheeded, but say that those law firms who are willing to give an
Ted Williams group counsel Thiess
Team priorities: Having had to adjust to radical change and uncertainty in our operating environment, 2010 will be a time for consolidation and applying the lessons of 2009 to systems throughout our business. Credit and counterparty risk will remain a key focus of our work, as will the need for external providers to demonstrate their capacity to add value through a better understanding of our business
www.legalbusinessonline.com
inch when it comes to billing may end up gaining a mile when it comes to attracting and retaining the most lucrative of work. “We want law firms to be creative,” notes Harrison. “We are looking at a number of outcomes and alternative fee arrangements at the moment – fixed-rate transactions, billing based on transaction value and some structures where firms will receive a lift if the transaction is successful. We want the same innovative mindset to be used by external law firms; a sense of shared outcome is important.”
Guiding hand of the regulator The GFC has taken a heavy economic toll, but what have we gained from it? For governments across the region, the answer seems to be a renewed enthusiasm for regulation, although the efficacy of reforms so far has been questioned in some quarters. Nonetheless, it is clear that in-house counsel is contending with an increase in regulatory activity in almost every jurisdiction in the Asia-Pacific. This is a changing regulatory environment that we have been operating in,” said David Cummins, cohead of fixed income legal at Nomura
“There is still a lot of work that needs to be done to erode some of the myths surrounding the in-house profession. This needs to done to ensure that good, young talent continues to come in-house and I feel the best way to achieve this is through in-house counsel associations throughout Asia” Jane Niven
Jones Lang LaSalle
Peter Siembab head of transaction legal (ex-Japan) Nomura
Team priorities: A major issue is diligence. Throughout the market most companies have been affected by the downturn and it’s hard to know how they’ve weathered it. It will be important for bankers to really drill down on due diligence in capital market transactions. Similarly, buyers in M&A transactions will need to do the same for their targets.
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Feature | In-house survey 2010 >>
“There has been a lot of change over the last 18 months but much of this has been ongoing; this creates uncertainty where working out what the regulators in some jurisdictions are demanding is a challenge” David Cummins
Nomura
in Hong Kong. “There has been a lot of change over the past 18 months, some of which is ongoing; this creates challenges when determining what the regulatory requirements are in various jurisdictions.” Harrison notes this is a challenge that may be overcome by having more of a say in the policy process itself. “At the moment, we are doing more policy work than we ever have done in the past,” he says. “We are working closely with ASIC and Treasury to ensure that we are part of the public process – to make sure we are heard in the whole process.” Yet he concedes that it wasn’t always this way. Only ten years ago the role that in-house lawyers played in this area, and many others, was decidedly more defensive and reactive. “Historically, in-house counsel weren’t as involved in the whole process as they are now. For the last five years at GE we have focussed on being involved and making the legitimate concerns of our business known. This is also happening at many other organisations.”
In-house lawyers say no to LPO While Rio Tinto made headlines with its decision to outsource a sizeable portion of its legal work to legal process outsourcing outfit CPA Global last year, few respondents to our in-house survey
said that they were looking to follow the lead set by the Anglo-Australian miner. Respondents contacted by ALB note that while they have extensive experience in using business process outsourcing, many were less inclined to avail themselves of its legal services equivalent – due a number of factors of which risk was mentioned most. “[LPO] may be of benefit to inhouse teams who work in a highvolume, single-service industry. For example, if you are a bank and all you are doing is reviewing mortgage and lending documentation then it might be worthwhile considering,” says Niven. “But even then no two LPOs are the same. Not only are there quality and ethical considerations but there are very few providers, in my experience, who have the capacity to deal with documents and contracts in Japanese and Chinese. Whether LPO takes off for the in-house profession is a question of appetite for risk and what one’s threshold for it is. Until such time that in-house lawyers are comfortable that LPOs will be able to mitigate perceived risks, then we are happy to bide our time.” GE Capital’s Harrison says that while issues such as risk are important, just as important is finding the economic justification for its use. One of the
►► ALB in-house survey: what are your team’s priorities for 2010? (CONT)
john Harrison general counsel Australia & New Zealand GE Capital
Team priorities: We did see some people who chose to leave. We have taken advantage of losses to restructure our in-house legal function and obtain a good mix of junior and senior lawyers Legal spend: We have significant provision for significant legal spend because we are seeing an almost historic level of regulatory and legislative change
36
Jane Niven
general counsel and head of compliance Asia-Pacific Jones Lang LaSalle Team priorities: During the financial crisis, there was more emphasis placed on the role that in-house lawyers play in protecting their companies from risk. There will be those in some companies that look at the improved economic conditions as an opportunity to decrease their dependence on in-house teams, but this temptation should be avoided. In-house legal departments must continue to prove their worth to their companies in the coming months
Asian Legal Business ISSUE 10.4
Feature | In-house survey 2010 >>
difficulties he mentions is that lawyers in some jurisdictions are such good value that establishing a business case for LPO may be difficult. Further, he says that exposing in-house lawyers to the type of work that some companies would normally seek to send to LPOs is only beneficial for their professional development. “There is a lot to be said for making in-house counsel understand their company’s business holistically and this may not be achieved to a desirable level if some of the work, no matter how small, is sent to an LPO.”
Building bridges Increased regulation and more sophisticated work means a heightened sense of pressure to stay up to date. To this end, Jones Lang Lasalle’s Niven encourages in-house lawyers to be active in building professional networks for knowledge sharing, both among their in-house and private-practice colleagues, and to participate as much as possible in seminars and industry associations. She says that despite the need to control costs it is worthwhile to allocate some funds to networking events, because a good base of contacts can ultimately result in more efficient legal spend. Not to mention aiding in the overall development of the still-nascent in-house profession in Asia. “There
is still a lot of work that needs to be done to erode some of the myths surrounding the in-house profession,” she says. “This needs to done to ensure that good, young talent continues to come in-house and I feel the best way to achieve this is through in-house counsel associations throughout Asia.” Law firms too, have a role to play in this process. Niven – and a surprisingly high number of the respondents contacted by ALB – mention that while international law firms are not afraid to invest time and resources in building up relations with in-house counsel outside the office, local law firms across the region have a long way to go. This is an area where those firms will need to improve if they are to continue to compete with international players for the most lucrative legal work. “A dialogue between in-house and law firms of all sizes and types is important. It needn’t necessarily be a lawyer-customer relationship either. The most effective and long-lasting relationships are usually those that are struck outside the office,” says one survey respondent. “This is crucial for the development of the in-house profession in Asia and helps us to stay plugged in to what is happening in the legal market more broadly.” ALB
“Companies are not just doing what they did in the past – there are different types of transactions, different funding models, multi-jurisdictions” Rebecca Holbrook
Fisher & Paykel
Helen Conway
company secretary and general counsel Caltex Australia
Team priorities: The key issue is ensuring we are aligned with the strategic and operational priorities of the business and so doing work which adds the greatest value. As resources are limited with little prospect of increasing headcount, it is important to be focussed on the work that matters. This year, we will be reviewing how the legal team operates to ensure we are as efficient as possible so we are able to do the key work with current headcount. We will be working with our external lawyers to look at putting in place alternative billing methods
www.legalbusinessonline.com
Market comment: There is a growing acceptance among law firms that they need to consider alternative fee arrangements. The challenge is for companies to develop specific proposals and push ahead in a determined fashion. The risk is that law firms, particularly the larger ones, will simply not accept the proposals. This means companies may have to go with other firms which don’t have recognised expertise, capability and capacity. This is less risky in the case of work which is not strategically and operationally critical to the company. Clearly, it is necessary to segment the legal work to be outsourced before structuring fee arrangements 37
profile | managing partner >>
alb/Aderant 2010 managing partner series
Nick Seddon – Eversheds:
Building a superbrand Eversheds’ Hong Kong managing director, Nick Seddon, tells ALB why he is optimistic about making his firm’s brand just as ‘super’ in Asia as it is in the UK
W
hen Nick Seddon was snapped up by Eversheds in late 2008 there was no guessing what the UKbased firm had in mind for him. Seddon came to the firm after stints at DLA Piper and Heller Ehrman, and it was the role he played in raising the former’s profile in Asia that made him just the man to do the same for Eversheds. Since Seddon came on board as managing director in Hong Kong the firm has certainly expanded its footprint in Asia. Adding to the Shanghai office it has had since 2006, it opened in Singapore and Hong Kong last year and substantially increased its partner headcount, all at the height of the global financial crisis. “Opening up during economic uncertainty is in some ways beneficial,” he says. “Not only does it attract interest while the rest of market is navel gazing, but recruiting is made easier because most firms are not looking to hire and importantly, clients have the time to explore new relationships that they wouldn’t normally have had in the boom times.”
38
Not only have a number of high profile lateral hires come on board (Desmond Ong, King Tak Fung , Stephen Mok, Ronald Sum and Ivan Ng, among others) but both offices have also played a part in significantly increasing the firm’s revenues in the region this financial year. “Financially [the new offices] have performed much better than we budgeted for… but there is still a lot of work that needs to be done,” Seddon says. “We want to have Hong Kong up to 50 lawyers by the end of next year and Singapore and Shanghai up to about 20 each.” Seddon realises, however, that the honeymoon period for the firm is well and truly over in Asia, and it must look to a number of innovative measures if it is to keep the momentum it gained in 2009 going beyond 2010
[Law firm] failure on a catastrophic scale like Hellers is only likely when you have an economic crisis to deal with at the same time. I think we are past that point now. Law firm failures in better economic times will likely only occur in the context of mergers.
Eversheds: a superbrand?
Earlier this year Eversheds was ranked as a ‘superbrand’ by a professional services researcher in the UK, outranking Magic Circle firms Linklaters and Clifford Chance to Asian Legal Business ISSUE 10.4
| managingpartner profile profile| managing partner>> >>
www.legalbusinessonline.com
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profile | managing partner >>
“Clients are demanding firms be more flexible in their billing practices and the billable hour has not always been known for its flexibility. The onus is on lawyers to explore alternative avenues” claim top spot in the legal industry category. But just how ‘super’ is this branding in Asia? “The firm’s brand within the legal market and the GC [general counsel] community is strong,” says Seddon. “But further out into the market it is not as strong.” He is quick to point out that what his firm lacks in terms of brand recognition or length of track record in the region can be overcome through a number of other measures. “The question of brand gets down to who you recruit. If you can recruit people with their own brand or following, you can easily get around not having been in the region for 20 years.” And this is exactly what the firm has done over the past 12 months. From the recruitment of Seddon himself and ten other partners (a high number of whom are DLA Piper), Eversheds has either sought out lateral partners or whole practice groups as it brings its new offices up to critical mass. Now the challenge for Seddon and his colleagues is ensuring that the brand of the individual does not exceed that of the firm, but rather, enhances it.
The strategist
Seddon has more experience than most in helping law firms expand their presence in the Asia-Pacific region. During his time as Asia managing director for DLA Piper he presided over a period of immense growth for the firm – Hong Kong, Singapore and South-East Asia. And even though his stay at ill-fated Heller Ehrman was, by comparison, much shorter, the lessons that Seddon took away from his role there prove just as valuable. “My stay at Hellers was short-lived and it was quickly apparent that the firm’s ambitions to merge with a major international firm such as Mayer Brown or Baker & McKenzie didn’t match with my ambitions,” he says. “But it was not only myself, my view is that this aspiration to merge did not match with a significant number of partner at Heller which, in the end, was the 40
reason behind why many chose to leave. “The whole episode is a salutary lesson to any law firm. Hellers had a strong balance sheet and a good reputation but just followed a strategy that, with the benefit of hindsight, was a mistake.” Seddon says that while we are may have seen the last of big firm failures on the scale of Heller Ehrman, the specter of law firm collapse still remains. “If law firms follow a strategy that does not have the broad support of partners there may well be firms that fail,” he says. “But failure on a catastrophic scale like Hellers is only likely when you have an economic crisis to deal with at the same time. I think we are past that point now. Law firm failures in better economic times will likely only occur in the context of mergers; where one firm is taken over by another law firm.”
Death of the billable hour
Eversheds recently released a study entitled ‘Law firms of the 21st century: the clients revolution’ which predicts what the major changes to the legal services market are likely to be in a post-recession 2010. Somewhat unsurprisingly, the report – which is based on surveys with in-house and private practice lawyers – foreshadows immense changes to billing practices, ever-increasing pressure on legal fees and the continuing decline of the billable hour. So, is the death of the billable hour imminent? “[It’s] not dead, but it’s not in the best of health,” Seddon says. “Clients are demanding firms be more flexible in their billing practices and the billable hour has not always been known for its flexibility. The onus is on lawyers to explore alternative avenues.” But just what are these alternative avenues? “There are no magic answers,” Seddon says. “Most sophisticated clients realise that we are selling time and expertise and one way to calculate bills is according to the amount of time we are selling. But it’s clear that this metric is perhaps a little outdated,” he continues. “The key is transparency – as long as clients can see where money is being spent and why, they are more relaxed. The opaqueness of the billing process can be frustrating – and the best alternative for lawyers is to do whatever they can to make it more transparent for clients.” ALB Asian Legal Business ISSUE 10.4
FEATURE | Specialist law firms in Asia >>
Specialist law firms in Asia Once viewed as the underdogs in the world of the big law firms, specialist and independent firms in Asia are benefiting from the post financial crisis-era of tightened legal budgets, writes Rashida Yosufzai
B
eing a boutique or specialist law firm isn’t just about size. While firms like Norton Rose, Hogan Lovells, and Appleby are going through major mergers to become bigger, some firms prefer to stay small and nimble enough to carve out a market niche. Specialist firms have two main advantages: lower overheads and the ability to offer tailored, ‘bespoke’ legal services. And keeping with those core philosophies has paid off for some firms in the financial crisis. Over the last year, they’ve won major clients from bigger firms. Dan Harris co-founded Harris & Moure, a USbased international law practice that focuses on Asia. Although the firm did feel the economic downturn in 2009, it Harris recorded its busiest-ever Dan Harris & Moure January and February this year. “That’s largely due to our getting a number of larger-thannormal clients, many of whom have told us that they’re tired of paying “big firm” prices and like our flat-fee rates,” says Harris. In Korea, competitive rates are also a major factor influencing both foreign and domestic clients. “When the economy is bad, many large and sophisticated MNCs start re-thinking the choice of firms they use, and whether they really needed to hire the biggest firms to handle their IP matters,” says Ik Hyun Seo, a partner at Korean IP specialist firm Cho & Partners. “They start pushing firms
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Asian Legal Business ISSUE 10.4
FEATURE | Specialist law firms in Asia >>
for fee reductions, and search for other options to get the same level of service without paying the highest rates in the country.” In Singapore, IP Farah Namazie & technology firm Namazie & Co Namazie & Co has also gained more work recently from multinationals. “Ironically for us, there has been an increase in work during the economic downturn,” says founder Farah Namazie. “There’s been a migration from companies that used to rest their work in larger, more general practices moving to seek the value they can derive from specialised practices.” Most IP firms in Asia have a diversified portfolio of clients, with the larger companies turning to them for the low-end patent and trademark matters. For Cho & Partners, around 90% of the firm’s work is for foreign MNCs, such as Intel and Louis Vuitton. That diversification has paid off because foreign companies don’t cut back their budget as much as domestic clients when the economy is bad. But where Cho &Partners differs from its local boutique peers is that its rates are closer to the big firms. So how has the firm grown? “We’re more efficient, work gets done a lot more quickly,” says Seo. “The overall charges come out lower because we don’t have as many people working on [a case]. In many other firms you get a team of people working on routine projects, and while our hourly rates are roughly the same, the overall costs are much lower because you don’t have an unnecessarily large team billing on the case.” Being able to tailor a legal service is key behind the boutique firm’s arsenal. In a big law firm, clients can sometimes feel like they’re being shuffled around from partner to associate, without knowing who is looking after their matter, and end up with an inflated legal bill. “In times when money is tight, clients look for a quick service www.legalbusinessonline.com
where they don’t have to explain a lot or spend too much on time-charges. They look for a niche player that guides them in a more direct and focused way,” says Namazie. Even without a financial crisis, specialist firms are able to gain market share by being flexible and building relationships. That has been the experience of Singapore shipping firm Navin & Co. “Clients tell us fairly often that in specialist boutique law firms like ours they have much easier access to senior partners; the relationship is far more informal and there’s greater flexibility in discussing various issues,” says managing partner Navinder Singh, “whereas larger firms they feel are institutionalised and corporatised, and that may distance certain clients.”
“We never envisioned ourselves growing into a general practice firm; and clients have never asked us to change our business model” Ik Hyun Seo
Cho & Partners
For growth’s sake
It may seem ironic that while some firms are bulking up with hundreds or even thousands of lawyers, there are others that are deliberately resisting growth. For specialist firms, certain forms of growth may threaten the business model and ethos on Navinder Singh which the firm was Navin & Co originally established. Harris & Moure, Namazie & Co, Cho & Partners and Navin & Co all claim to have declined offers – often more than once – to be acquired by or merged into bigger firms. Harris says that he was recently approached by two larger firms with the proposition that his firm would earn higher profits and be more stable. Harris & Moure declined both offers. “Their explanation was that we’re missing out on a lot of the bigger work because of our inability to get that work due to our size,” he says. Cho & Partner’s Seo says that in sticking to their guns and focusing on one field, his firm has been able to stand out from the pack. “We like the fact we only do IP because that lends a 43
FEATURE | Specialist law firms in Asia >>
“There’s been a migration from companies that used to rest their work in larger, more general practices moving to seek the value they can derive from specialised practices” Farah Namazie
Namazie & Co
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lot of credibility to existing and future clients because it shows that we’re very specialised,” he says. “We never envisioned ourselves growing into a general practice firm, and this path has served us well so far.” Namazie agrees. Since there’s no pressure from clients, why fix something that’s not broken? “We prefer being independent,” she says. “We’ve been a stable size since we started and our clients are comfortable with the structure and mechanics of our firm.” That’s not to say that these firms are resistant to growth or complacent about market movements. The value of alliances and networks to specialist firms cannot be underestimated, as it allows them to compete with firms who have a presence in the major financial centres around the world. Most of the firms prefer the flexibility of having non-exclusive alliances rather than joining official organisations, which can add overhead expenses to balance sheets and limit the number of network firms. All the firms interviewed operate on an informal reciprocal network of firms around the world. Harris & Moure rejected the offers from the two bigger firms because of flexibility and limitless networking. “We did not do much follow-up with either firm because we believe that the work we are missing out on due to our size is actually less than the work we get from other firms around the world. They would prefer to refer work to us because they know we’re not even capable of poaching their clients,” says Harris. “Over 25% of our work comes from other lawyers – mostly in the US – and I believe we would lose a good portion of that referral work if we were to become a ‘full-service firm.’ ” Being able to pick and choose the firms you want to work with Bazul Ashhab based on their specific TS Oon & Bazul strengths builds up your expertise, according to Bazul Ashhab, the co-founder of Singapore arbitration specialist firm TS Oon & Bazul. “The advantage of being an independent firm is that there are no specific firms that we need to work with,” he says.
“We have good working relationships with many leading law firms around the world and are free to choose the most appropriate one to work with on a particular case.”
Taking up the challenge
Going out and launching your own firm has its merits, but as any small business owner would know it also has its downsides. Resource constraints can mean that sometimes work must be turned away or referred to other firms. Other times, new opportunities may be lost to those with PR and marketing machines. “We don’t have the resources or a whole marketing department that can take care of everything,” explains Seo. “What happens is that a lot of time is spent by very senior members of the firm on management and administration matters.” He adds that specialisation can also be limiting, as other types of work for the same client can’t be passed on to another department. Juggling several functions as both a lawyer and business owner can take its toll outside of work. “We have to do our own marketing, be in court, give seminars,” says Navin & Co’s Singh. “Juggling the time can be quite hard sometimes and it often affects worklife balance.” However, as the success of these specialist firms proves, it can be done. Each firm invests heavily in specific areas – Navin & Co in education and training; Cho & Partners in building client relationships; and Harris & Moure in marketing. For the latter, keeping media savvy has proved particularly successful. Harris pens the popular China Law Blog, which has helped raised the firm’s profile on a global scale, simply by being on the ‘right side’ of controversial. “About a year ago when I was on a panel at a Shanghai conference, someone asked me if I ever worry about offending people with our blog,” relates Harris. “My response was that I don’t; my goal is to be interesting because interesting is what brings people back. The big law firm blogs seem to have the goal of not even slightly offending anyone and a goal like that makes it nearly impossible to be interesting.” ALB Asian Legal Business ISSUE 10.4
FEATURE | Specialist law firms in Asia >>
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Feature | capital markets >>
Capital
markets
rebound
Last year saw an IPO boom led by Chinese companies seeking listings in Hong Kong and now market confidence is spreading across the Asia-Pacific. Here, some leading capital market lawyers share their optimism for the rest of 2010
“You don’t lose the international advantage by doing a Hong Kong listing. It’s almost like getting your cake and eating it too” Mark Lee
Orrick, Herrington & Sutcliffe 46
I
t was a dismal start to 2009 for capital markets: across Asia it was quiet and lawyers shuffled paper while waiting for deals to come through the door. Cue forward to the second-half of 2009, however, and it seemed as though lawyers’ prayers were answered. “Global IPO activities experienced exponential growth in the last quarter of 2009,” says Joe Tsang, assurance leader of China North at Ernst & Young. “The US$49.5bn of funds raised in October and November alone exceeded the amount for the first three quarters combined of US$45.4bn. The Chinese mainland and Hong Kong led the global IPO recovery.”
Hong Kong boom A mini-IPO boom erupted on the HKSE with most of the activity generated by Chinese companies. They captured the headlines as investors rushed to grab a piece of the growing economy. Sinopharm Group, the largest distributor of pharmaceutical and
healthcare products in China, made its debut on the HKSE in September 2009 with a US$1.13bn IPO that was 500 times oversubscribed. Similarly, the US$3bn+ IPO of China Minsheng Bank in November 2009 was 150 times oversubscribed. Although capital markets activity in Hong Kong is being driven by Chinese companies, legal work for international counsel is still being generated as offshore listings have proven popular with Chinese issuers. Of course, there are numerous options for Chinese companies in terms of offshore listings and international law firms with expertise in various jurisdictions are sought to advise on the listing rules of different exchanges. “Chinese companies that want to go public are often very interested in the US or Hong Kong markets,” says David Roberts, partner at O’Melveny & Myers. “We often get questions from private companies or PE- or VC-backed companies about the pros and cons of listing in Hong Kong or the US.” Asian Legal Business ISSUE 10.4
Feature | capital markets >>
The HKSE is obviously a popular choice for Chinese companies – but so are US listing boards. “In the past the US was the preferred jurisdiction. There was a lot of prestige associated [there] in the minds of a lot of entrepreneurs,” says Edwin Luk, partner at Orrick, Herrington & Sutcliffe. “But I think they are much more practical these days.” Hong Kong is a jurisdiction with an active capital market David Roberts O’Melveny & and it has proven Myers to be convenient for Chinese companies. “You don’t lose the international advantage by doing a Hong Kong listing. It’s almost like getting your cake and eating it too because Hong Kong is close to China and people understand your business and the country you are operating in,” says Mark Lee, another Orrick partner.
Offshore counsel Many listed entities are incorporated in offshore jurisdictions such as the Cayman Islands, and this trend appears to be on the rise. Funds raised by companies incorporated in the Cayman Islands and Bermuda accounted for approximately 84% of all IPOs on the Hong Kong Exchange in 2009, up from 66% in 2008. At the end of 2009, the HKSE announced that companies incorporated
in the BVI would be able to apply for a listing. “This significant development offers businesses considering a listing on the HKSE a greater choice of well-regulated and cost-effective offshore jurisdictions as their corporate domicile,” says Christine Chang, joint managing partner of the Hong Kong office of Maples and Calder. This approval also reduces the cost of pre-IPO restructuring to change the jurisdiction of the holding company. Offshore legal counsel works closely with both the issuer’s counsel and the underwriters’ counsel to ensure that the interests of both parties are met. “A lot of the time the perception of the market is that the offshore role is somewhat commoditised and that everything is always standard, therefore it is a very easy rubberstamping type role,” says Chang. “That in fact is not correct, because there will be situations where your expertise and knowledge of the transaction will be called into play.” An example of this is Christine Chang when Maples and Calder Maples and Calder assisted Evergrande Real Estate Group on its pre-IPO restructuring in 2009. This involved pioneering advice from a Cayman Islands and BVI-law perspective on equity and debt restructuring. The restructuring of the security package
“If the market holds up then there will be a lot of deals that will get launched this year” Edwin Luk
Orrick, Herrington & Sutcliffe
►► TOP 10 IPOs HKSE Company
Listing date
Capital raised HK$m
Legal advisors
China Minsheng Banking Corporation
26 November 2009
30,161
Clifford Chance, Freshfields, Grandall, King & Wood
China Pacific Insurance Group
23 December 2009
24,042
King & Wood, Slaughter & May, Commerce & Finance, Sullivan & Cromwell, Freshfields
Sands China
30 November 2009
19,411
Advogados & Notários, Alves’s Law Firm, Davis Polk & Wardwell, Freshfields, MWE China, Sidley Austin, Walkers
Metallurgical Corporation of China
24 September 2009
18,231
Davis Polk & Wardwell, Freshfields, JiaYuan, Shearman & Sterling, Slaughter and May, Tian Yuan
China Longyuan Power Group
10 December 2009
17,486
Clifford Chance, Freshfields, JiaYuan, Jingtian & Gongcheng Clifford Chance, Maples and Calder, Skadden
Wynn Macau
9 October 2009
14,490
Glorious Property Holdings
2 October 2009
10,545
Paul Hastings, Freshfields
Sinopharm Group
23 September 2009
10,041
Baker & McKenzie, Chen & Co, Grandall, Morrison & Foerster
China Zhongwang Holdings
8 May 2009
9,844
Commerce & Finance, Conyers, Latham & Watkins, Richards Butler, Jingtian & Gongcheng, Morrison & Foerster
Longfor Properties
19 November 2009
8,131
Richards Butler, Davis Polk & Wardwell, Paul Hastings
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Feature | capital market markets>> >> FEATURE
Capital Markets Q&A Business continues to look strong in the coming year for ALB: There has been much global focus on the boom in IPO activity on the HKEX and also on the Asian economies driving the global economy out of the recession. Have you noticed an increase in market confidence in Singapore? Loo Choon Chiaw: I am not an expert on Hong Kong IPOs nor a trained economist. However, from what I have read from the financial press, Hong Kong IPO market has indeed been doing rather well. There was a total of 69 IPOs in 2009, which has raised an aggregate sum of HKD240 billion. According to forecasts, the number of IPOs on the HKEX will reach 60, with a total of HKD300 billion to be raised this year. As a matter of causal connection, the Asian (including Hong Kong) IPO markets have been improving because their economies have already seen the light at the end of the tunnel, and not the other way around. Market confidence has certainly returned across the globe, including Singapore. In its World Economic Outlook released in January this year, the IMF has projected world growth to be 3% this year, as compared to a negative 2.1% in 2009. At the peak of the Global Financial Crisis (“GFC”), the worst and most wide-spread recession the world has ever witnessed in over 60 years, Singapore’s GDP contracted by 10%. Barring another unforeseen major financial crisis, Singapore’s economy is expected to grow by around 4.5% to 6.5% this year. The benchmark Straits Times Index has risen to a high of 2,988 points on 7 April 2010 from a low of around 1700 points in 4Q of 2008. These numbers speak for themselves.
Loo Choon Chiaw
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ALB: Did the Singapore Government introduce any new measure to boost the economy and improve market confidence? LCC: On 22 February 2010, Singapore’s Finance Minister, in the course of his Budget speech, unveiled a wide range of tax incentives primarily designed to achieve a sustainable economic growth for Singapore. Those incentives attempt to: (1) induce local business enterprises to raise their productivity, and (2) facilitate the growth of more globally competitive Singapore businesses. Two incentives are germane to our present discussions: (1) a new Merger
and Acquisition (“M&A”) allowance (“M&A allowance”) equals to 5% of the value of acquisition, capped at a maximum sum of SGD5 million in a single year of assessment, to encourage enterprise growth via the M&A route. In connection therewith, the stamp duties otherwise payable on the transfer of unlisted shares for such M&As shall also be waived, and (2) an angel tax deduction (“Angel incentive”) to be made available to an eligible angel investor, who invests a minimum sum of SGD100,000 of equity investment in a qualifying start-up. The angel investor can claim 50% tax deduction on his investment at the end of a two-year holding period, capped at a maximum sum of SGD500,000 of investments in each year of assessment. The M&A allowance will go some way in shortening the growth path of quality and well-managed businesses, when they acquire the technologies, talents and business operations of badly managed businesses via M&As, as opposed to the good old gradual organic growth path. The Angel incentive addresses the funding needs of start-ups at the early (and crucial) stage of their growth. This incentive acknowledges the higher risk which is assumed by angel investors in funding start-ups and will encourage wellknown and experienced investors to fund, mentor and add value to start-ups. Although the whole range of incentives unveiled by the Finance Minister was targeting at achieving a long term economic growth for Singapore, it has nevertheless signaled to the market the Singapore Government’s support for capital markets activity. This surely helps in boosting confidence in the capital markets. ALB: Has there been an increase in capital markets activity in Singapore? LCC: Yes. There has been a notable increase in capital markets activity since 2H 09. Growth in the financial services sector contracted by 8.1% in 4Q 08. In contrast, it grew by 11% in 4Q 09. SGX has been kept busy with listing applications. CapitaMalls Asia was listed on SGX-ST in November 2009, which raised SGD2.8 billion. Tiger Airway was listed in January this year, which raised SGD247.7 million. Minzhong, a PRC vegetable processor has just launched its SGD237 million IPO yesterday, making it the Asian Legal Business ISSUE 10.4
Feature FEATURE| |capital capitalmarkets market >>
Singapore’s specialist corporate finance firm largest PRC-linked IPO in Singapore since the GFC. From January to April this year, there have been a total of 11 companies listed on SGX-ST. In the light of the number of preliminary prospectuses lodged to date, there should be a resurgence of IPO activities this year. ALB: As a specialist corporate finance practice, does your firm experience any influx of new cases? LCC: We are lucky to have been receiving increasing instructions because of the improvement in market sentiments and increase in capital markets activity in general. We are surely not alone on this. I understand that most of my colleagues from the other specialist corporate finance practices have likewise been inundated with new instructions and enquiries. ALB: What kinds of clients are you currently acting for? LCC: Our regular institutional clientele includes MNCs, local listed corporations, SMEs, IPO aspirants, foreign central banks, domestic and international banks and financial institutions, financial intermediaries, Chinese (PRC) and Taiwanese (ROC) government-linked corporations and foreign legal firms. ALB: In a post-GFC climate, what kinds of issues are concerning your clients most with respect to capital markets transactions? LCC: The GFC has permanently altered consumer, investment and regulatory behaviours. There have been a ‘resetting’ of mindsets, business models and practices by all concerned. For those of our clients who have been adversely affected by the GFC, they will need time to recover from their wounds. For others who have not been so affected, it will be the time for them to seize the opportunities presented by the economic recovery. As the GFC is still relatively fresh in the minds of our clients, ‘counter-parties’ risk has been an important issue featured in most cross-border transactions. Most clients insist on settlements being effected via central clearing mechanisms. Unlike previous transactions involving distressed assets, where parties had to work www.legalbusinessonline.com
under extreme time constraint and bear with accelerated due diligence process, recent transactions witness the lengthening of deal preparations. There are more comprehensive financial, operational and legal due diligence. Even clients who used to view due diligence process as a mere box-ticking formality are beginning to be more serious about the due diligence process. Despite the apparent liquidity prevailing in the money market, it will take some time for the financial institutions to be more relaxed on their lending policy and undertake higher credit risks associated with capital markets transactions, as they did during the pre-GFC days. Further, notwithstanding the apparent liquidity in the money market, funding costs for capital market transactions are still kept rather high. On a separate but related note, clients who need external funding to consummate the transactions are finding it difficult, unlike the GFC days, to make transactions conditional upon their successful procurement of the requisite funding. ALB: Has there been a change in the instructions flowing into your practice, and what type of cases are you currently acting for? LCC: There has been a change indeed. During the GFC days, we were advising on transactions involving sale or purchase of distressed assets, credit defaults, restructuring and insolvency. Many of our clients’ IPO cases were then shelved. The situation is very different now. Distressed assets transactions have stopped. Credit defaults, restructuring and insolvency cases have dwindled. In lieu thereof, many of our clients’ IPO cases, which were shelved during the GFC, have been reactivated. We have just lodged a prospectus relating to the IPO of a PRC-linked group, dealing with environmental protection business. We are executing several new Singapore IPO cases, for local, PRC-linked, Russian-linked, Korean-linked and Taiwan-linked groups respectively; a handful of Taiwanese IPOs for local and Malaysian entities; several Taiwan Depository Receipt (TDR) applications for local listed companies; a couple of RTOs and delisting applications in relation to local listed companies; and a handful of energy and resources (“E&R”) acquisitions in innerMongolia, Indonesia and Russia. There has
also been an increase in instructions for PostIPO support work, for instance, corporate governance and compliance matters. ALB 8: I understand that you have been keeping an impossible travel schedule. With such a good head start this year, don’t you think it is time for you to take a breather? LCC: Admittedly, things are looking good at the moment. However, this day and age, nothing is really certain but death and taxes. Who would have expected Dubai World, a government owned conglomerate, to rock the global financial world with its bomb shell on 23 November last year? Or Greece to be in financial crisis prior to the dramatic admission by its Prime Minister in December last year? As a firm, we are always vigilant and on our guard, in good times or bad. All our colleagues and I believe that in maintaining a quality law practice, there is no substitute for hard work. I am constantly reminded of the saying ‘diligence is the mother of good luck’, which my secondary school teacher has drilled into the heads of all his students.
Loo & Partners LLP 88 Amoy Street Level Three Singapore 069907 Tel : (65) 6322-2288 Fax : (65) 6534-0833 Email : ccloo@loopartners.com.sg Website: www.loopartners.com.sg Loo & Partners LLP (Registration No. LL0800566K), registered with liability in Singapore under the Limited Liability Partnerships Act (Chapter 163A), was converted from the firm “Loo & Partners” to a limited liability partnership with effect from 28 May 2008.
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Feature | capital markets >>
“We see an increased interest in Singapore listings – work has resumed on a number of equity IPOs that had previously been put on hold and we expect increased activity on the IPO front” Tan Tze Gay
Allen & Gledhill
50
before the IPO raised novel compliance issues under the listing rules of Hong Kong, which were the subject of a listing decision issued by the HKSE in July 2009.
Singapore and Malaysia Singaporean law firms had a different experience to Hong Kong firms last year. The few big deals that did come to fruition in the market, such as the CapitaMalls Asia IPO, were snapped up by law firms Allen & Gledhill and WongPartnership. “On the equity side, I think last year was a difficult year. That being said, we were involved in numerous secondary offerings as well as three IPOs,” says Raymond Tong, partner at WongPartnership. The debt capital markets in Singapore appeared to offer more Raymond Tong WongPartnership consistent levels of work than the equity capital markets. Even though retail note offerings dried up after the collapse of Lehman Brothers, WongPartnership found a silver lining in the doom and gloom. “Apart from traditional fundraising transactions, we have also assisted in insolvency-related matters. For example, we acted for the trustee and the receivers in the Lehman Minibond program in taking enforcement action as a result of the bond defaults under that program,” says Hui Choon Yuen, a partner at WongPartnership. Hui Choon Yuen Regulatory change WongPartnership also had an effect on the volume of work. “PostGFC, the biggest change has been in the area of retail structured notes, where offers have ceased in large part due to the ongoing MAS review of the regulatory regime governing both listed and unlisted investment products,” says Tan Tze Gay, partner and head of equity capital markets at Allen & Gledhill. “The focus of the review has primarily been on strengthening fair dealing by distributors in the sale and advisory process of investment products to retail investors, and to promote more effective disclosure such as the introduction of the product highlights sheet.” However,
Singapore transactions already have a strong focus on governance and due diligence. Gay doesn’t anticipate any major changes in the way they will actually be conducted. It was definitely quiet on the Malaysian front and activity only really started to kick off after the IPO of Maxis, Malaysia’s largest mobile phone company, in the early days of 2010. “Really, if you look at the landscape this time last year there were hardly any IPOs being undertaken,” says Adrian Chee, a partner at Adnan Sundra & Low. “It was kind of like adopting a wait-and-see attitude … It’s only been in the last six months that the pipeline has started flowing again.”
Looking forward IPO activity in Hong Kong should be maintained as Chinese companies continue to seek listings on the stock exchange. “If the market holds up then there will be a lot more deals that will get launched this year, so I think that this level of activity is expected to continue,” says Luk. “From the lawyers’ side, we do a lot of the work leading up to the deal going to market, so generally lawyers are expected to be very busy in capital markets work.” O’Melveny & Myers’ Roberts is cautiously optimistic. “What’s happened in 2009 is a good thing but isn’t necessarily indicative of a recovery to the levels we saw in 2006 or 2007 for IPOs from China,” he says. “I do think the rest of 2010 looks very promising. We know that because we are beginning to work with clients that are preparing for an IPO in 2010 and we are getting requests for proposals from underwriters for other IPOs. There is a very visible pipeline but the hard thing to say is which ones will complete and which will not.” Equity capital markets in Singapore began the year with the successful IPO of Tiger Airways and the market atmosphere continues to be positive. “We see an increased interest in Singapore listings – work has resumed on a number of equity IPOs that had previously been put on hold and we expect increased activity on the IPO front,” says A&G’s Gay. “We are working on a number of new listings and equity fundraisings in the REIT and business trust space for 2010.” A focus on growth in the clean Asian Legal Business ISSUE 10.4
Feature | capital markets >>
technology sector in Singapore may also result in capital markets work. “Catalist will prove to be an attractive avenue for fundraising by early stage companies including clean-tech,” says WongPartnership’s Tong. Considering the price-sensitive nature of debt capital markets transactions, work flow will be dependent on the environment surrounding interest rates. “The conventional wisdom seems to be that it will probably be cheaper for issuers to tap the debt capital markets in the first half of the year as compared to the second half. As a result, we expect to be kept busy for at least the rest of the first half of the year,” says Wongpartnership’s Hui. Although the Singapore Exchange is the main hub for capital markets activity in the South-East Asian region, there is certainly potential for regional development. “In line with the SGX’s focus Tan Tze Gay to target listings from Allen & Gledhill Singapore businesses as
www.legalbusinessonline.com
well as from jurisdictions outside the country, we see new listings coming from companies, REITs and business trusts – both local as well as those with a regional footprint,” says Allen & Gledhill’s Gay. “China, Indochina, Indonesia and India also continue to be a source of capital markets activity given the increased demand for funds from businesses seeking to expand in these regional jurisdictions.” Adnan Sundra & Lo’s Chee also notes that local Malaysian law firms are closely watching the ongoing debate about the liberalisation of the legal industry, which is part of the country’s broader measures to liberalise its financial services sector. In 2009, the Malaysian government announced that it would allow foreign law firms to set up offices in the country, provided they only advise on Islamic finance transactions. “Notwithstanding the potential for an increase in competition, the general sentiment among corporate and banking lawyers is positive,” says Chee. ALB
“Notwithstanding the potential for an increase in competition, the general sentiment among corporate and banking lawyers is positive” Adrian Chee
Adnan Sundra & Low
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Feature | European law firms in Asia >>
Continental drift
European law firms may often be overlooked in the Asian legal market, having entered the region late and being relatively small in size. But their aggressive growth strategies in the past few years, either through acquisitions or alliance building, warrant growing attention. Alice Yan investigates
C
ontinental European law firms are sometimes, perhaps rather unjustly, seen as the runt of the law firm litter anywhere outside of their home market, and their presence in Asia is no exception. The established players in the region – the US, UK and Australian firms – rarely regard them as real competition. They dismiss the continental firms politely – as operating in slightly different markets – and bluntly – as merely filling in the gaps the established firms have left behind. Yet while continental firms may have moved in late, they are moving fast, often accelerating their growth through acquisitions. Further, they have been very good at identifying niches in the market, in which they have now begun to consolidate a leading position. The big players may shrug their shoulders about losing work to continental firms in these specialised areas, but they should be wary that continental firms may poach more business through this initial niche play.
The latecomers It is true that continental law firms have lagged behind in the race to move into Asia; their US, UK and Australian counterparts are generally far ahead both in size and time spent in the region. “While the Magic Circle firms were setting up offices in Hong Kong,
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Asian Legal Business ISSUE 10.4
Feature | European law firms in Asia >>
►► The race to enter Asia UK Magic Circle (exception of Baker & McKenzie)
US firms Australian firms Continental firms 1880s Established
Late 1880s
1970-1980
1980-1990
1990-2000
2000-present
Enters Asian market
the German and French firms were just beginning to incorporate,” says Salans’ Greater China managing partner, Bernd-Uwe Stucken. Those early entrants enjoy a natural advantage in relationships, reputation and expertise in the region, as well as being much larger. Stucken says that continental firms with smaller operations in Asia simply cannot achieve the economies of scale the big international firms enjoy. Salans is one of the larger continental law firms with French headquarters, and already has three offices in China. But Stucken says its Beijing and Hong Kong offices are still too small and its Shanghai office would have to double in size before the firm can come close to its aim of securing a dominant role in China. Continental firms further suffer the traditional hurdle of jurisdictional disadvantage. Philippe Taverne, a partner of Cotty Vivant Marchisio & Lauzeral, another French-based international law firm, says that the governing law in M&A, bond issue and project financing is usually UK, US and occasionally Australian law. “Continental firms commonly do not have large presences in these jurisdictions and may lack the expertise and experience to offer competitive services in this area,” Taverne says. As a result, continental firms were held back from capitalising on the surge in Asia-based transactional work that their UK, US and Australian counterparts have feasted on in the past decade. However, this traditional disadvantage – the limited pool of large financial clients – worked to their advantage during the financial crisis. “Continental firms have traditionally relied more on strategic investors, which insulated us from the collapse of the financial markets,” Stucken says. “We didn’t lose as much as others lost.” www.legalbusinessonline.com
Stucken’s 2010 outlook for Salans is bright. “Revenue is up by at least 20% since last year in our China offices,” he says. Cotty Vivant Marchisio & Lauzeral reported similar good news. Taverne says the firm’s Singapore office has already picked up a large amount of corporate deals and commercial projects this year, and its Tokyo office never stopped being busy.
Changing clientele Most continental firms set up their Asian offices as an extension of their core business in the continent, almost exclusively servicing the inbound Asia interests of clients in their home markets. From these modest beginnings, they have developed both the reputation and relationships in
The firm was able to leverage these relationships and its growing regional reputation in tax work to attract local clients. “Increasingly, we find ourselves being engaged by Asian investors, especially in Indonesia, Malaysia, Singapore, Hong Kong, China and India, to assist with tax and legal advice for their investments in Europe and sometimes Asia,” de Ridder says. He notes that European and Asian clients now make up Loyens & Loeff ’s client base in equal proportions. Almost 40% of the firm’s workflow is Asia-outbound into Europe, from multinationals based in Asia or local companies – in particular, capital market financing for Indonesian groups. This gradual diversification from their traditional narrow client base is a
“Increasingly, we find ourselves being engaged by Asian investors, especially in Indonesia, Malaysia, Singapore, Hong Kong, China and India, to assist with tax and legal advice for their investments in Europe and sometimes Asia” Asia, and are attracting more and more local clientele. Loyens & Loeff, headquartered in The Netherlands, is a prime example of this transformation. Partner Pieter de Ridder says the firm has renowned tax capabilities in the Benelux countries. It initially established Asian offices when their European clients wanted to use the firm’s tax expertise for their investments in Asia. “As the firm worked with local counsel in Asia to handle the restructuring of investments… it built contact with local firms over the years,” de Ridder says.
Pieter de Ridder
Loyens & Loeff
common trend seen across continental firms – de Ridder says that a third of its clients are multinational corporations based in Asia. “We are beginning to coordinate more outbound business for Chinese clients, but this is still at the beginning,” he says. “It will grow much more important in the long term.” After establishing a New York office in 1999 Salans has also tapped into the US market. “More and more mid-caps in the Mid-West are using us,” de Ridder says. “Their enterprise structures are similar to those on the continent.” The US and UK firms can no longer
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Feature | European law firms in Asia >>
“China is a busy market – it is crowded with many players already, both international law firms and Chinese local firms. We are open to finding partners and integrating with teams already present in China” Phillippe Taverne
Cotty Vivant Marchisio & Lauzeral
►► Breakdown of the largest Continental firms in Asia* Salans
Loyens & Loeff
Chiomenti Studio Legale
Cotty Vivant Marchision & Lauzeral
Gide Loyrette Nouel
Offices in Asia
Shanghai Hong Kong Beijing
Singapore Tokyo
Hong Kong Beijing Shanghai
Tokyo Singapore
Hanoi Ho Chi Minh Hong Kong Shanghai Beijing
Total number of partners and fee earners in Asia
9 partners 24 fee earners
2 partners 6 fee earners
6 partners 40 fee earners
4 partners 10 fee earners
12 partners 74 fee earners
Number of partners in each office
Shanghai – 2 Hong Kong – 5 Beijing – 2
Singapore – 1 Tokyo – 1
Hong Kong – 4 Shanghai – 1 Beijing – 1
Beijing – 6 Hong Kong –2 Shanghai –3 Hanoi/Ho Chi Minh City – 1 partner for both offices
Number of fee earners in each office
Shanghai – 21 Hong Kong – 8 Beijing – 4
Singapore – 3 Tokyo – 3
Hong Kong – 20 Beijing – 15 Shanghai – 8
Beijing - 23 Shanghai - 23 Hong Kong – 10 Hanoi/Ho Chi Minh City - 18
Year established in Asia
2004
1984
2007
2006
1995 *This list does not purport to be exhaustive
claim that continental firms cater to a completely different audience in Asia. They are poaching both the inbound work they have traditionally relied on in Asia, and the outbound work they increasingly want to win.
Finding niches So how have continental firms, despite their late-entry disadvantage, managed to grow their market share? The legal market in Asia, though relatively young, is already highly competitive. Continental firms have been very good at finding and strategically adapting their expertise to tap into niches in relatively underserved sectors. Loyens & Loeff is a good example: conscious of its late start, the firm never sought to compete with its larger US and UK counterparts as a full-service provider. Its growth strategy, while aggressive, is carefully strategic – it is focussed and structured to leverage and extend the tax expertise which first gave the firm a competitive edge in the region. “We aim to be the leading tax advisor for regional work,” de Ridder says. “The legal work we handle is to support our tax work.” Strategic specialisation has enabled the firm to achieve differentiation in a concentrated market. “We have a fairly unique role in Asia, being one of the few continental European law firms with an established
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tax expertise,” he says. Loyens & Loeff ’s closest competitors in the region are foreign law firms who handle regional tax work, but de Ridder says there are not many around. Focused growth has meant expansion of the firm has been mostly unhindered by competition, enabling de Ridder to claim within 25 years of the firm opening their first Asia office that “we probably rank amongst the top three in terms of regional tax work for law firms in Asia.” Loyens & Leoff may have started in the region as a gap filler, but has since leveraged its reputation in tax to win related work. de Ridder says the firm now attracts work in capital markets financing, fund management private equity structuring and direct investment.
Building local alliances Some continental firms, grown impatient with organic growth, are looking to accelerate their expansion through local mergers and acquisitions. Chiomenti, the leading Italian law firm in Asia, has rapidly expanded its presence through a series of mergers – either by absorbing smaller continental law firms in the region or aligning with leading local firms. The firm recently announced an exclusive association with Hong Kong law firm CdB and JC & Co, effective from April 2010. Asian Legal Business ISSUE 10.4
Feature | European law firms in Asia >>
Chiomenti partner Filippo Modulo says the move will enable the firm to provide fuller service offerings in M&A, private equity, restructuring and litigation services in Hong Kong. This association followed on shortly after Chiomenti’s integration with Birindelli & Associates in 2008. This firm has operated in Asia since 1987 and the alliance gave Chiomenti a presence in Beijing, Hong Kong, Shanghai, Singapore, Hanoi and Pyongyang. Salans is equally ambitious about its growth. “We are in the mid-tier but aggressively trying to get into the toptier,” Stucken says. He too sees local connections as the accelerator, saying that building local alliances across Asia is key to tapping into the growing demand from continental clients for packaged Asian offerings. “Previously clients had a very strong focus in China,” Stucken says. “But they have now begun to diversify and see Asia as a whole.” There is a growingly lucrative market for what Stucken calls ‘panAsia services’ – a client with wideranging interests across Asia wants a single point of contact with a law firm which can coordinate legal services in different parts of the region. “A client may come through our office in Shanghai. We can help them set up a holding company in Hong Kong, cooperate with a law firm in the Philippines on their production and work with a Korean law firm on their distribution,” he explains. Building a local alliance may also serve as an effective vehicle for penetrating a highly competitive market. Cotty Vivant Marchisio & Lauzeral still does not have an onshore presence in the mainland, but Taverne says integration is one way into the market. “China is a busy market – it is crowded with many players already, both international law firms and Chinese local firms,” he says. “We are open to finding partners and integrating with teams already present in China.”
Asia against the global strategy The common trend unifying all continental firms is the changing emphasis over the past decade given to Asia in global firm strategy. Asia is no longer seen as an extension of the firm’s www.legalbusinessonline.com
core practice in the continent; it has become the growth hub, the focus, the centre of attention. Loyens & Leoff ’s de Ridder says his firm’s global priorities have shifted from West to East to reflect the strategic importance of Asia. The firm has restructured the role and expectations of specialists and practice areas relevant to this region, to encompass more Asian work. “[Lawyers] are being expected to prioritise Asian matters,” de Ridder says. Asia’s importance has also manifested itself in the mobilisation of Salans’ global resources and expertise. Focussed on growing its strength in arbitration, Stucken says that the firm is considering the relocation of its global arbitration head from Paris to Shanghai. And Taverne from Cotty Vivant Marchisio & Lauzeral forecasts the future movement of his firms’ support services to Asia. Aside from obvious cost savings, he says the growing size and role of the Asia practice demands and justifies realtime on-the-ground support. Continental firms have also been busy strengthening links between their Asian offices and those elsewhere, in appreciation of the fact that Asia is a hub of both inbound and outbound work. Cotty Vivant Marchisio & Lauzeral has built up successful crossreferral ties between Singapore (its hub in Asia) and Dubai (its hub in the Middle East). “There is a flow of M&As and private equity from the Middle East to South-East Asia, and private equity and project contracts flowing back, Taverne says.” Salans sees significant cross-referral potential between its Beijing and St Petersburg offices. He says that the firm, as the first foreign law firm to obtain a practicing licence in Russia, has strong and longstanding relationships in Eastern Europe. It is uniquely positioned to capitalise on the growing interest both markets have developed for one another. “There are many outbound opportunities for acquisition of minerals, oil and gas, establishing distribution structures, and creating agent agreements which facilitate trade,” Stucken says. “Inbound opportunities include trade finance and dispute settlement.” ALB
“A client may come through our office in Shanghai. We can help them set up a holding company in Hong Kong, cooperate with a law firm in the Philippines on production and work with a Korean law firm on distribution” Bernd-Uwe Stucken
Salans
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Feature | interview >>
In-house perspective
Jane Niven, Jones Lang LaSalle:
Keeping the peace Jane Niven explains her dual roles as Jones Lang LaSalle’s general counsel and head of compliance for Asia-Pacific, and how she manages to strike a balance between the often-competing demands of these positions
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s not only the Asia-Pacific general counsel for property giant Jones Lang LaSalle but also the company’s head of compliance in the region, Jane Niven is a rare breed among corporate counsel in Asia – even less common in Singapore where she is based. Where others have spoken of the two roles that Niven holds in the company as ‘incompatible’, she says that there are some synergies between them that may actually make her general counsel role a little easier. “The dual roles are difficult because as general counsel you act in a commercial and pragmatic way. The company looks to its general counsel to facilitate business,” she says. “On the other hand, the role of the compliance officer is to set out restrictions on the activities of the business. It’s difficult but the two positions can be reconciled by finding a balance.” Niven says that if this can be achieved it is not only possible to find a number of synergies between the two roles but it also goes some way to alleviating the potential for those conflicts that arise. “It is not uncommon in a compliance role to have to say ‘you can’t do that’ to the company; being a gatekeeper of policy can sometimes create conflict,” she says. “But the real value that a general
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counsel can add to the position is that after you say ‘no’ as a compliance officer, you are in a position to provide alternatives and solutions … this is the key to handling both the positions.” However, striking this balance is but one of the difficulties inherent in holding both offices. Apart from having to keep up to speed with the high amount of work generated by the positions, Niven says that keeping abreast of the latest compliance developments across thirteen Asian jurisdictions, plus the US, is perhaps the most challenging aspect. Even where she and her in-house legal team are able to keep on top of changes, Niven says the next challenge is figuring out just how these changes will be interpreted, providing recent changes to China’s labour laws as an example. “As much as the growing pace of legislating is a challenge, the uncertainty that this creates is even more so,” she explains. “So with the case of China’s labour laws, even though there is an edict from Beijing each province will interpret the changes according to their own requirements, and courts will hand down judgements based on their own interpretations. Understanding the changes themselves is important but knowing how they will be interpreted is just as important.”
“There is still a perception that the in-house posting is the last bastion of the incompetent and retirees… the feeling that people who go in-house have done it because they can’t cut it in private practice is still common in Asia”
Asian Legal Business ISSUE 10.4
Feature | interview >>
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Feature | interview >>
Outside assistance
Niven said it is on issues like these that outside legal advisors can best prove their worth to in-house legal teams. Jones Lang LaSalle has global relationships with Baker & McKenzie and DLA Piper, both of whom the company uses for pan-regional work. The firm also uses local counsel throughout the region, looking for firms with specific strengths in real estate and litigation. They use Rajah & Tan in Singapore, Mayer Brown JSM in Hong Kong and Blake Dawson in Australia, supplemented with smaller local firms who Niven says “have good strengths in local licensing matters and well-developed relationships with local regulators.” But even when Niven does engage outside counsel, she prefers to work with her external advisors rather than just outsource work to them. “We try to handle pretty much everything inhouse,” she notes. “All contract reviews are done by us unless we are subject to heavy workloads, and we handle all first-claim basis contentious work as well. Once litigation moves past this stage we will send it out and the same goes for all M&A work, but in all these instances we want to be working in conjunction with external legal advisors, not for them to just work on matters on their own.”
Getting the deal through
Since becoming the company’s general counsel in 2006, Niven has seen her fair share of transactional work. “We have been through a massive acquisition program across the region over the last few years,” says Niven. “In India we doubled the size of our operations through a merger and we have also grown in Hong Kong and elsewhere.” While these transactions were pivotal in helping the company to solidify its position as one of the largest, if not the largest, real estate services firm in the Asia-Pacific, they also provided Niven and her in-house team with some valuable lessons for the future. “The biggest lesson I learnt was that no two acquisitions are ever identical,” she says. “You can have deals that go through smoothly and those that don’t, even where the target and the vendor have a good relationship.” 58
“The biggest lesson I learnt was that no two acquisitions are ever identical. You can have deals that go through smoothly and those that don’t, even where the target and the vendor have a good relationship”
She points out that the latter is compounded when seeking to execute an acquisition in emerging markets. “Going into emerging markets and working through M&As can be very difficult,” Niven says, drawing a contrast between the company’s recent acquisitions in India and Hong Kong as an example. “In Hong Kong we got through the process of acquiring assets and satisfying regulatory requirements very easily, everything was quite straightforward and the deal went through relatively smoothly for an acquisition of that size. But in India it took more than a year to finalise regulatory requirements. We had to go through several layers of government, several different regulatory bodies and the merger needed to be approved by the High Court.”
In-house importance
Niven says that even though most companies outsource their legal work relating to large-scale transactions to external legal advisors, the role that in-house lawyers hold in the whole process is vitally important. “In-house teams play the role of intermediaries in these cases – they help to manage the company’s expectations” she says. “In our transactions we guided management and counterparties through the whole process, what was required and more importantly why it was required. We were the ones that head office turned to – and not our external legal advisors.” While Niven asserts that the value
of in-house lawyers “has always been appreciated at Jones Lange LaSalle” – so much so in fact that the company is increasing the size of its teams in India and Japan – the same cannot be said elsewhere in the region, especially in Singapore. “There is still a perception that the in-house posting is the last bastion of the incompetent and retirees,” she says. “The feeling that people who go in-house have done it because they can’t cut it in private practice is still common in Asia.” She points out that these negative views were impacting on younger lawyers’ willingness to consider spending time in-house. “In places like Australia and New Zealand, for example, it is not uncommon for young lawyers to work in private practice for a couple of years, then move to an in-house role,” she says. “In Asia this is still quite rare, and it is unfortunate for companies as it means that very little good talent comes into the in-house role.” Niven adds that in-house organisations like the Singapore Corporate Counsel (SCCA) are playing a positive role in helping override such negative perceptions of the inhouse role but more still needs to be achieved. “One thing that needs to be done is to licence in-house lawyers in Singapore; to provide them with a practicing certificate like those available elsewhere in Asia,” she says. “For whatever reason, the Law Society here is resistant to the idea, but until this happens we won’t be on par with private practice lawyers.” ALB Asian Legal Business ISSUE 10.4
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BEIJING 25NOVEMBER 2010
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SINGAPORE 29-30 JuUNE 2010
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HONG KONG 25 JUNE 2010
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SHANGHAI 9-10 JuUNE 2010
Bo
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l se un co or e f us end ho tt In a
Feature | interview >>
s at
d ite Lim
Asia’s most respected monthly legal magazine presents the: ALB In-House Legal Summit in Hong Kong, China and Singapore 2010. These special legal events are tailor-made to bring together leading private practice lawyers and senior in-house legal counsel from Asia. The Summits represent a fantastic opportunity to address and interact with some of the most active and influential corporate counsel and business leaders in the region today. The focused practice area workshops, plenary sessions and panel discussions provide a unique platform for the frank exchange of views, sharing of best practices and formulation of strategies to best deal with opportunities in 2010. “We are seeing a representative of a whole variety of interests and sectors… There’s a real richness of representatives here. They’re obviously very interested…” Vincent Connor, Head of Asia Pacific, Pinsent Masons – speaking in 2009
“It’s been good to interact with corporates in China and Hong Kong. It gives us a little bit of insight on what’s important to them.” Alastair Da Costa, Asia Managing Partner, DLA Piper – speaking in 2009
For further information and registration (complimentary for in-house legal counsel), please contact Michelle: michelle@kmimail.com +852 2815 5988 +852 2815 5225 For sponsorship opportunities, please contact David Burton: davidb@kmimail.com +852 2815 5988 +852 2815 5225 ALB enjoys alliances with the following organisations
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Feature | recruitment >>
2010 legal job market: cleared for takeoff What you can expect in this year’s legal recruitment market
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s 2010 unfurls and the economy recuperates, the job market looks sure to return to its former glory. Lawyers could be pleasantly surprised with the opportunities awaiting them as the year goes on. According to Ricky Mui, manager of the legal division at Robert Walters, although the economic slowdown is far from over the legal job market is looking up, with demand increasing for many roles in both private practice and in-house sectors. “With the fall of AIG, Lehman Brothers and the credit crunch in general, law firms and some companies had to impose different methods to limit outlays, including reducing working days per week and pay freezes. However, [several firms] have recently announced that in 2010 pay freezes will be lifted. Although the outlook is far
be in corporate and corporate finance at all levels, due to an increase in IPO activity and Hong Kong being China’s premier listing location. Additionally, firms are also continuing to hire in dispute resolution, litigation, and restructuring/insolvency. Recently, recruitment in the financial services sector has also picked up. We are seeing a trend of recruiting equity derivatives and structured products lawyers by various financial institutions, on the back of strong trading activity and front-office business requirements for more legal support.” Mui also says that in Hong Kong, the hub of Asian capital markets, lawyers with securities, asset management and funds experience are also highly demanded, as are qualified lawyers in IT&T and FMCG sectors. This demand is being fuelled by significant
“In private practice, for example, we have witnessed key areas of growth to be in corporate and corporate finance at all levels, due to an increase in IPO activity and Hong Kong being China’s premier listing location” from certain, such action is suggestive that firms are cautiously optimistic that the market is looking up again, moving into 2010,” ” he says. “In private practice, for example, we have witnessed key areas of growth to
Ricky Mui
Robert Walters
improvement in the in-house commerce and industry market. Research by Robert Walters also indicates that some internationally listed companies are setting up offices in Hong Kong and recruiting their first sole in-house
►► Month by month analysis of job advertisements for professional positions placed in Q42009/Q32009: *Hong Kong
Singapore
Japan
China
TOTAL
July 2009
106,478
63,643
89,069
1,891,031
2,150,221
August 2009
109,787
67,639
88,871
2,323,765
2,590,062
September 2009
116,624
69,214
91,391
2,481,405
2,758,634
Total – Q32009
332,889
200,496
269,331
6,696,201
7,498,917
October 2009
114,741
74,128
93,703
2,636,452
2,919,024
November 2009
112,504
71,348
77,594
2,493,417
2,754,863
December 2009
105,708
59,916
108,092
2,512,573
2,786,289
Total – Q42009
332,953
205,392
279,389
7,642,442
8,460,176
%change Q3–Q4 2009
0.02%
2.44%
3.73%
14.13%
12.82%
%change October 2009–December 2009
-7.87%
-19.17%
15.36%
-4.70%
-4.55%
Source: Robert Walters
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►► Norton Rose on Asia hiring spree As major banking and financial institutions in Asia look to recoup their post-financial-crisis talent shortages, so too it seems is law firm Norton Rose. The firm is building up its Tokyo and Beijing offices, currently offering up to eight banking and corporate positions. According to position descriptions posted in late March, Norton Rose is looking to recruit two banking and two corporate associates in Tokyo, and three banking and two corporate associates in Beijing. Signs of the renewed recruitment market for banking & finance lawyers are also being reflected in Asia’s financial services sector. Banks such as Citigroup, Bank of America Merrill Lynch and UBS are reportedly offering lucrative pay packets and bonuses, to hedge their talent shortages following the financial crisis. According to recruitment firms, demand from industry is being transferred to the legal sector. Carolyn Dickason, regional director of Hays Legal, said that in the last quarter the highest demand for lawyers has been in the banking and finance sectors. “Banking and financial services has seen the greatest legal jobs growth over the last three months,” she said. “Firms have an ongoing need to identify banking & finance lawyers who have handled matters with the leading financial institutions.”
counsel, in order to reduce the costs of external legal expenditure. Demand for bilingual and/or trilingual lawyers has also increased, according to Mui. “More evident as a general trend across all industries, we are seeing a mandatory requirement for lawyers to have fluent Cantonese, English and now Mandarin language skill sets, due to the business development with China,” he says. Not only is the job market set to pick up but lawyers currently working in firms can also expect conditions such as pay, working days and flexibility to improve from here on, as employees regain control in the market and law firms begin to contemplate their retention strategies. “Law firms are working hard to retain good staff to avoid them moving to other betterpaying law firms, or moving in-house for a better work/life balance,” says Miu. “With salary freezes lifted, most of the firms have had to realign salaries to pay competitive market rates and also review the longer-term career plans of their lawyers, to avoid losing valued staff.” ALB Asian Legal Business ISSUE 10.4
Feature | recruitment >>
www.legalbusinessonline.com
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Feature | arbitration >>
Centralising international arbitration The growth of the international arbitration market in Asia and the Middle East has prompted demand for new hearing centres, in turn creating new opportunities for law firms. Rashida Yosufzai reports
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hen a venture doesn’t go according to plan, the most important outcome is to keep matters out of court and resolved as quickly as possible. That, in part, explains the rapid growth of the arbitration market in the last few years. According to Baker Botts arbitration specialist Jun Bautista, the correlation between growth in cross-border investment with that of international arbitration is strong. 62
“As cross-border transactions involving parties from different jurisdictions increase, so does the [likelihood of] disputes arising from these transactions,” he says. “Once a dispute arises, a party may become wary of having the matter resolved in the other party’s “home court”, hence the need for a neutral forum.” A 2008 PricewaterhouseCoopers report shows that international arbitration is being embraced by companies as an effective dispute resolution method for cross-border disputes. In the report, 88% of surveyed counsel say they have used arbitration at least once, and 86% say they were satisfied with this option as an effective dispute resolution method. “The explosion in arbitration is largely due to the fact that international investors want to avoid the uncertainty of litigation in a foreign court system with
the associated lack of familiarity over processes,” says Clayton Utz lawyer, Doug Jones. This growing preference for arbitration has translated into significant case loads for Asian arbitration institutions such as the HKIAC (Hong Kong), SIAC (Singapore), KCAB (Korea) and KLRCA (Kuala Lumpur), all of which have seen their hearings significantly increase since 2002 (see table, right). New arbitration hearing centres are popping up across Asia and the Middle East. In July 2009, Singapore launched its state-of-the art hearing centre Maxwell Chambers and in Bahrain, a partnership with the American Arbitration Association helped realise the creation of a new chamber this January. Australia too has joined the tide and will open its first arbitration centre in Sydney later this year. Asian Legal Business ISSUE 10.4
Feature | arbitration >>
“A new career path has emerged for lawyers: the professional arbitrator. Many of them previously worked as lawyers in law firms” Government growth Government support goes a long way towards bringing in new work for law firms. This is certainly the case in Singapore, where the local legal industry has benefited from government investment in the arbitration sector. In 2007 Singapore introduced new measures to capture some of the growing arbitration market, principally targeting the maritime & shipping and oil & gas industries. The country had sound motivation to do so: SIAC was seeing caseloads more than double – between 2000 and 2009 going from 58 to 160 cases. Singapore amended its laws to allow a number of changes to be made. Foreign lawyers could advise on arbitration hearings; and five foreign law firms were granted local practicing licences. The country adopted the United Nations Commission on Unilateral Trade Law’s model law on international commercial arbitration (UNICTRAL Model Law) to its International Arbitration Act; and signed on to the 1958 New York Convention which allows locally granted arbitration awards to be enforceable in 140 countries. Alongside those significant measures was the creation of a dedicated hearing centre in Maxwell Chambers. “What [Singapore previously] missed was a first-class venue for holding international arbitration hearings,” said the centre’s chairman, Chelva Rajah, at the January 2010 opening ceremony. Within six months of launching Maxwell Chambers had seen 60 arbitration hearings, many of them involving international parties from the UK and Australia. “Since our official opening in January we have seen a steady stream of cases for February and March. To date, we have hosted more than 90 arbitration hearings and 46 business functions,” says Katherine Yap, head of communications and customer relations at Maxwell Chambers. “We anticipate that more cases will come our way in www.legalbusinessonline.com
Jun Bautista
Baker Botts
the second half of the year, given the increased volume of cases administered by our partners. For example, the Singapore International Arbitration Centre will be ready for hearing then.” The success of arbitration in Singapore encouraged two of Australia’s leading arbitration lawyers, Doug Jones and Alex Baykitch, to see if a similar model could be adopted for a new hearing centre in Sydney. Both lawyers – president and vice president respectively of the Australian Centre for International Commercial Arbitration (ACICA) – have steered a campaign to bring the international arbitration market to Australia. In March this year government support was received with an A$600,000 grant towards a new centre. “It was thought that in order to be competitive in the Alex Baykitch Asian market we really Holman Fenwick Willan had to have a purposebuilt centre here, and the government had to get behind that in a similar fashion that the Singapore government was behind Maxwell Chambers,” says Baykitch. Before its opening in May, the primelocated chamber will be refurbished to house three arbitration hearing rooms and breakout rooms and offices for ACICA staff. Baykitch is confident that the new centre will succeed in shifting some of the arbitration market ‘Down Under’, based on Australia’s stable political and legal structures and its quality of lawyers. “We’ll be looking to promote Sydney as a venue for US
parties,” he says. “They’re likely to be attracted by the fact that we are a common law jurisdiction, with English as our main language. I think a lot of western parties would feel at home here in Australia.” Like Singapore, Australia will revise both state and federal arbitration laws, adopt the UNCITRAL Model Law, and look at ways the judicial system can better facilitate international arbitration hearings. Baykitch also adds some more practical influences to the mix. “Certainly, we were impressed with the facilities at Maxwell Chambers – such as videoconferencing, internet breakout rooms and various other technological set-ups,” he says.
Middle East Clive Hopewell, a Bahrain-based partner at Charles Russell, says there are similarities between growth seen in the Middle East and Asian markets. “In tandem with the soaring business development throughout the AsiaPacific region, international arbitration is naturally expanding at a rapid rate in the Middle East,” he says. Development of the international arbitration market in the Middle East is somewhat parallel to the Asian experience. Bahrain had to meet similar needs in setting up its own hearing centre – a neutral platform to hear domestic and regional disputes with proper legal and regulatory backing, and reassurance for parties that arbitral awards would not be subject to judicial interference. That led to the establishment of the Bahrain Chamber for Dispute Resolution in January this year, a joint venture with the American Arbitration Association. It’s only been a few months since opening but the Bahrain Chamber’s CEO James MacPherson says that word of mouth is helping boost the market. “Since the Chamber was launched we’ve been getting enquiries from hundreds of international and
►► local and international arbitration caseloads – statistics Year
HKIAC
AAA
CIETAC
ICC
KCAB
KLRCA
SIAC
SCC
2008
602
703*
1,230
663*
47*
47
71*
176
2007
448
621*
1,118
599*
59*
40
70*
84
2006
394
586*
981
593*
47*
37
65*
141
2005
281
580*
979
521*
53*
30
45*
56
2004
280
614*
850
561*
46*
19
48*
50
*Statistics cover international arbitration only (as known to the HKIAC) Source: Hong Kong International Arbitration Centre
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Feature | arbitration >>
Bahrain introduces world first in Interview with James MacPherson, CEO of BCDR-AAA
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ahrain has long been a centre for trade and business. Traditionally rich in oil, Bahrain has been successfully diversifying its economy into finance and industrial production in recent years. The financial services sector in Bahrain has grown remarkably quickly and now holds over 400 licensed financial institutions and it was voted the most open and liberal economy in the Middle East and 13th in the World by the Heritage Foundation Index of Economic Freedom 2010. Accompanying an increased level of trade and investment is the need for world class alternative dispute resolution (ADR) mechanisms. Bahrain’s Ministry of Justice and the Economic Development Board realised that more had to be done in order to continue attracting and maintaining trade and investment. Therefore, as part of Bahrain’s national strategy, “Vision 2030” they decided to partner with the world leaders in ADR, the American Arbitration Association (AAA), in order to create a new Bahrain Chamber for Dispute Resolution, known as the BCDR-AAA. The Chamber which opened its doors for business on 11 January 2010 provides international, regional and domestic commercial and government users with arbitration and mediation services for the rapid, effective and certain resolution of commercial disputes. Historically a centre of international and commercial arbitration, Bahrain has an outstanding reputation for judicial independence and integrity and embraced international conventions on arbitration early on. Since 1988, Bahrain has been a party to the New York Convention and in 1994 it adopted the UNICTRAL Model Law on International Commercial Arbitration.
What is so unique about the BCDRAAA’s arbitration rules? The BCDR-AAA’s unique ADR legislation introduces two ‘world firsts’ in international ADR; these are section 1 ‘statutory ADR tribunals’ and section 2 which provides a ‘Free Arbitration Zone’ option. Statutory ADR tribunals are a method for allowing the BCDR-AAA to resolve, through a newly designed ADR hybrid (which includes elements of a judicial hearing and elements of an arbitration process) certain international financial and commercial
64
disputes that would otherwise have been heard by the national courts. The Free Arbitration Zone is an optional way of providing parties in dispute arbitration with the reassurance that the award handed down will not be interfered with by the national courts.
What is section 1 (statutory ADR tribunals)? Section 1 refers to the BCDR-AAA, for final and binding resolution, financial and commercial disputes involving an international party or a party licensed by the Central Bank of Bahrain, where the contested sum exceeds 500,000BD (approximately US$1.3 million); cases which otherwise would have gone to the national courts to be heard. Disputes that come within Section 1 will be heard by either (a) a panel of three arbitrators, two of whom will be judges of the Bahraini courts who will have received special training from the BCDR and the AAA, and the third of whom will be an arbitrator appointed by the BCDR-AAA; or (b) a panel of three arbitrators, a judge of the Bahraini courts and two other arbitrators whom the parties agree to appoint. The arbitrators will respect the parties’ agreement as to the governing substantive law. In the absence of such an agreement, the tribunal will apply Bahraini law. Section 1, in effect, creates a specialised international commercial quasi-judicial process which has many of the benefits of an arbitration process in Bahrain. This move is aimed at providing additional benefit to commercial, banking and financial services sectors operating in the wider Gulf region.
What is the section 2 ‘Free Arbitration Zone’ option? Section 2 refers to cases in which parties are arbitrating by agreement. Uniquely, it also provides the option to parties to make use of our innovative ‘Free Arbitration Zone’. Here the BCDR-AAA has the jurisdiction to hear a dispute if the parties agree in writing to settle it through the Chamber. There is no criteria for the amount of money contested and contains no requirements that the dispute be international or commercial, only that the parties have agreed to submit it to the BCDR-AAA.
Disputes referred to arbitration under section 2 can be administered by any rules of the parties choosing - including under the international arbitration rules developed by the AAA and adopted by the BCDR-AAA. Further, the BCDR-AAA is a comprehensive joint venture in which everything has been shared and put in place: including the AAA’s extensive ADR knowledge, resources, arbitrators, international best practice standards, and world-renowned case management - all in Bahrain. Section 2 provides that the tribunal shall determine the appropriate substantive law to apply only ‘if the parties do not agree on the applicable choice of substantive law’. The Free Arbitration Zone enables parties to agree between themselves, to cut off recourse to the courts of Bahrain for any proceeding to validate or turnover an arbitration award handed down by the BCDR-AAA under section 2 unless that award is to be enforced in Bahrain. For the free arbitration zone to work effectively for parties, they must agree that a non-Bahraini law will be applied and that the award should be enforced outside of Bahrain and in the country whose law has been selected to govern the dispute. The Free Arbitration Zone offers a new, effective approach to arbitration – where parties elect to take advantage of the zone – they can now hold their arbitration in a neutral, business friendly environment in the Gulf, under any law they agree on, under the rules administered in accordance with the world class standards of the AAA, and without concern that the local courts will set aside the award of the arbitration.
“The Chamber’s plans are very exciting and reflect forward looking approaches to dispute resolution. The two part approach (statutory ADR tribunals and the free arbitration zone) is both sensible and constructive and I would expect that the initiative will be very successful. The BCDR-AAA has a very long future which will be most important for Asian Legal Business ISSUE 10.4
Profile
Feature | arbitration >>
BCDR-AAA
alternative dispute resolution Bahrain in particular and in the region in general.” The Right Honourable Lord Woolf of Barnes and President of the QFC Civil and Commercial Court
The world already has several ADR centres, why is the BCDR-AAA any different? The primary concern across much of the world remains to be that national courts, in general, have a limited (or even poor) track record of enforcing arbitral awards. The main difference between the BCDR-AAA and other ADR centres across the world is that BCDR-AAA seeks to cut through this, offering a much welcomed guarantee of enforcement of awards through its statutory ADR tribunals (Section 1) for those doing business in Bahrain and the Free Arbitration Zone option (Section 2) to the legal and business community doing business anywhere in the world.
“The increase of ADR institutions in the Middle East is very positive. It demonstrates the growing acceptance of mediation and arbitration among governments, lawyers and business-people in the region. Moreover, we welcome the competition because we believe that it will contribute to the continuous improvement of the ADR landscape in the Middle East.” James MacPherson, CEO BCDR-AAA
Who are the arbitrators? In international cases, the parties can appoint as their arbitration clause stipulates or, if they wish, the parties using the BCDR-AAA will have access to the AAA’s international roster of arbitrators which includes more than 600 neutrals. Parties can specify to the BCDR-AAA what particular expertise they want to see in the chair. The Chamber can then provide them with a list of candidates possessing those qualities; each party will have a limited number of strikes; and whoever is left on the list will be www.legalbusinessonline.com
the arbitrator. Alternatively, the parties can choose an arbitrator who is not on the roster of the Chamber or of the AAA.
How can you guarantee the independence of the BCDR-AAA? The government support of the BCDR-AAA is contingent on the continued independence of the Chamber. The July 2009 statute entrenching the BCDR-AAA in Bahraini law and the Chamber’s own mission statement, guarantees the Chamber’s independence. In addition the membership of William Slate, CEO and president of the AAA, and Richard Naimark, senior vice president of the AAA’s international division, on the BCDR-AAA’s board of trustees is another mark of the Chamber’s independence.
What next for the BCDR-AAA? The developmental focus of the BCDR-AAA includes the training and development of mediators and arbitrators locally and across the region from legal and nonlegal backgrounds by providing training of an international standard and we will continue to invest heavily in this area. To date, in addition to staff training in case management at the AAA in New York, our professional staff as well as over 200 local lawyers and judges have completed training delivered by the London-based Chartered Institute of Arbitrators. Furthermore, we have held briefings and training sessions for judges and lawyers in Bahrain aimed at expanding professional development in the practice of ADR. As a result, Bahrain’s legal community is well positioned to take full advantage of the further development and enhancement of the ADR sector in Bahrain and the wider region. Also, the BCDR-AAA continues to make ADR more accessible. In order to ensure the Chamber is affordable, user friendly and efficient, we have brought the very latest in technology in-house. To aid the business of ADR, we have introduced the very latest in translation technology, digital audio video session recording, conferencing facilities and state-of-the-art case management technology – all offered at competitive rates. Our vision is to work in partnership with the legal and business communities to develop a powerful centre of excellence in ADR.
How does one access the BCDRAAA? Parties need not wait until they are in conflict to approach the BCDR-AAA. Pre-emptive action can be taken in the form of a future disputes clause inserted into contracts that addresses the parties’ specific needs for the contract in question. Further, if the contract already exists, parties can work with the BCDR-AAA to administer the arbitration or mediation clause via a post-contract dispute clause. Moreover, if parties have gone past this stage and are in a midst of a dispute, the BCDR-AAA can assist in bringing the parties to the table when there is no mention of ADR in the contract. Model clauses are available on the BCDRAAA website (www.bcdr-aaa.org) and parties are encouraged to contact the BCDRAAA directly.
For questions on the BCDR-AAA, please contact: James MacPherson, CEO on james@bcdr-aaa.org
For questions relating to arbitration, please contact: Ahmed Husain, Chief Registrar on ahmed@bcdr-aaa.org
For questions relating to mediation, please contact: Ali Al Aradi, Chief Registrar on alaradi@bcdr-aaa.org
65
Feature | arbitration >>
regional law firms and companies…” he says. “They want to inform their clients and/or counsel about us in order to make use of it. We’re already receiving statutory ADR tribunal cases involving claims in the tens of millions of dollars.” However, the Middle East arbitration market differs from Asia’s in that it caters to different industry sectors – while Singapore is the regional hub for maritime and oil & gas disputes, the BCDR-AAA seeks parties from the regional construction, financial services, insurance and energy sectors. That is because the boom and subsequent bust of the Gulf ’s real estate and construction industries has led to more domestic and international parties using the arbitration process.
Benefits to the legal profession Lawyers and non-lawyers alike agree that new hearing centres create new opportunities for business in the legal industry in Asia and the Middle East regions. On whether industries will embrace the Sydney centre, Baykitch says “there is the expression that if you build it, the [work] will come. For lawyers, [another centre opening in Asia] means that there is more choice and an increase in work.” Innovative types of arbitration and legal work presents opportunities to broaden lawyers’ expertise, while firms have the bonus of launching new practice areas and garnering top talent. “There is an increasing interaction between arbitration practitioners in different regions of the world,” says Bautista. “So law firms are setting up global arbitration practices with a presence in different regions. This gives practitioners and arbitrators from the Americas and Europe the opportunity to work on disputes in the Middle East and Asia, and practitioners and arbitrators in the Middle East and Asia the opportunity to work on disputes in Europe and the Americas.” That cross-border working method means lawyers can carve out new specialisations and consequently update their careers. “A new career path has emerged for lawyers: the professional arbitrator,” says Bautista. “Many of them previously worked as lawyers in law firms.” MacPherson says training and development is one of the benefits of Bahrain’s centre. “The focus of the
66
BCDR-AAA involves training and developing mediators and arbitrators locally and across the region from legal and non-legal backgrounds,” he says. “Furthermore, judges and lawyers in Bahrain’s legal community have joined international participants in a series of symposia and briefings aimed at expanding professional development in the practice of ADR. As a result, Bahrain’s legal community is well positioned to take full advantage of the further development and enhancement of the ADR sector in the wider region.”
Competition for market share There’s no doubt that the competition in these emerging markets to be crowned as an arbitration hub is rife. In Singapore, it would seem that the government might sit back and watch the work come in. But complacency isn’t on the cards and the Minister for Law, K Shanmugam, has vowed that the government will do anything necessary to continue to compete globally. “We keep a close eye on developments in the arbitration industry … [and] when necessary, we move quickly and amend our legislation in a matter of months to keep up with global changes,” he says.
“Our focus involves training and developing mediators and arbitors locally and across the region from legal and non-legal backgrounds” The larger question is whether there will be enough work to sustain the international arbitration market, and for that matter, law firms. Alvin Yeo, who is senior counsel at Singapore’s WongPartnership, disagrees with the notion that firms will be competing for work as new centres open in other countries. “I feel it helps to add to the critical mass of institutions and centres in the Asia-Pacific region, so that Asian parties do not feel they haven’t any choice but to refer disputes to London, Paris, Geneva or Stockholm,” he says. Competition will also benefit those in the field, not act as a disadvantage. “We believe that competition will contribute to the continuous improvement of the arbitration landscape in the Middle East,” says MacPherson.
“The proliferation of arbitration institutions in the Middle East is good; it demonstrates the growing receptivity to arbitration among governments, lawyers and business people in the region.” But not all arbitration centres are created equally. Bautista – who holds memberships with various international arbitration organisations – says that each centre caters to a different market and has different goals. “Not all of these arbitration centres are created to cater to international disputes and do not compete for international arbitration. Some centres are established in order to decongest clogged dockets in domestic courts, or to provide expert decision-makers in very technical fields like domestic construction.”
Rising tide Regardless of regional competition, the international arbitration market is expected to continue to grow over coming years – and Asia and the Middle East is expected to drive that tide. As the economic shift from West to East gains momentum, international disputes with an Asian element
James MacPherson
BCDR-AAA
will increase, as will the preference for arbitration as a means to avoid litigation. “Hong Kong and Singapore will continue to challenge the traditional venues of arbitration such as London, Paris, Geneva, Zurich, New York, Washington DC and Stockholm,” says Bautista. “Other jurisdictions in Asia such as Beijing, Shanghai, Seoul, Sydney, Melbourne and Kuala Lumpur will also promote themselves as viable alternatives. I expect local and regional law firms to further develop their expertise in international arbitration and compete with the international law firms. We’re already seeing Korean, Singaporean, Chinese and Indian law firms with increasing arbitration caseloads.” ALB Asian Legal Business ISSUE 10.4
Feature | arbitration >>
www.legalbusinessonline.com
67
feature | relocation >>
Feeling lighter? Expatriate pay packages certainly add to the cost of an international assignment, but they are getting cheaper. ALB considers what’s being lost as more companies move to “local-plus” style compensation 68
Asian Legal Business ISSUE 10.4
feature | relocation >>
E
xpatriate pay packages have always been in the spotlight. Where they were once lavish, often attracting the ire of local employees, they are now becoming more modest. But there are still a number of benefits that separate them from the compensation setups of local employees in Asia. Emma Charnock, regional director of Hays Banking in Asia, says expatriate packages used to reflect their importance in the internal learning and capacity-building of a local organisation. “Expats traditionally brought to a company a wealth of experience and an excellent education from abroad,” she says. “They were valued for their insights and remunerated accordingly.” Today’s employers see expatriate and local workers bringing the same value to their companies – due to their often equal exposure to good education and overseas experience. Hence, the gap between local and expatriate pay packages is slowly shrinking. Employers have also been keen to cut costs, particularly during the recent economic downturn. This has led to more flexible pay structures emerging. These types of compensation and benefits packages are tailor-made to what the expatriate employee needs and hence, helps employers cut down on unnecessary components, in turn saving costs. “There is a growing trend towards partial expatriate or local packages – the so-called ‘local-plus’ packages,” says Phil Stanley, managing director of ORC Worldwide (Asia-Pacific). He says employers now pay expatriates according to the salary levels, structure, and administrative guidelines of the host location, rather than where the expatriate has come from. On top of that, they provide additional expatriatetype benefits, including housing, dependant education, and sometimes transportation.
a “menu-driven” package to give each worker the most flexible relocation options. “Some of the mandatory provisions of our relocation package are immigration and tax,” says Gazle Tacazon, a recruitment consultant with HP. “Added to this, there are additional provisions which include housing, transportation, shipment, and home leave. “The most popular component being availed to expatriates is housing for single employees and education for employees with families,” he adds. Relocation packages within Daimler include allowances for housing, school, insurance, transport, return tickets back home, and also assistance with career opportunities for an expatriate’s spouse. Once again, the company tailors each package to the individual. For example, employees who are single receive a housing allowance but those who have children can be provided with school fees instead.
Compensation structures
Familial reasons tend to be high on the list of reasons an expatriate worker would prematurely terminate an employment contract. Problems that an expatriate’s family may face include those regarding unfamiliar
Hewlett Packard (HP) says its relocation package for workers coming to Singapore is aimed at managing the needs and expectations of those foreign staff. At present, the company provides www.legalbusinessonline.com
“The most popular component being availed to expatriates is housing for single employees and education for employees with families” Gazle Tacazon
recruitment consultant, HP Daimler doesn’t just look at its expatriate assignment packages as talent attraction or retention tools. They also help to assimilate expatriates into the wider local community. “I think you do not have to attract and retain,” Michael-Joerg Ivan, senior manager, HR, Daimler South-East Asia, says. “The question is more how to localise expatriates – this is the bigger challenge.”
Keeping the kids in school
transportation, housing, food, healthcare, and, importantly, different education systems. It is therefore in an organisation’s best interests to keep their expatriate staff’s family happy by solving some of these problems before they happen. And one of the main strategies organisations use to do this is through sound dependanteducation allowance strategies. In April last year, the American Chamber of Commerce in Singapore created a “Select Committee of International Schools” (SCIS) to focus on one of the greatest issues facing its members today – ensuring their children have access to internationalstandard schools. In one of its first moves, SCIS conducted a survey on the demand for international schools. It found that children’s education rates highly on parents’ agendas and that 69% of employers report that their expatriates use an international school for their kids’ enrolment. Local Singapore schools are rarely an option for most two- to three-year expatriate families, as they will often need to stay with the home country curriculum. Expatriate parents also say the system can be confusing and school calendars do not align with most other national holidays for Western countries. 79% of parents told SCIS they would not be willing to enrol their children in a local school, even if no immediate slots were available at an international school. The current mix of international schools has both a quality and brand value that attracts expatriates. However, more expatriates are paying for schools (and housing) themselves, so school cost is an important factor. Although the SCIS survey reveals that 93% of employers feel access to an international school-of-choice was an important factor in workers accepting expatriate assignments, another piece of research has found that less than half (46%) of the employers in Singapore provide such funding. “Perhaps because of the more permanent nature of expatriates on local-plus terms, companies are less willing to contribute towards school expenses,” Stanley said. HP is one of the minority. It covers 69
feature | relocation >>
the transportation, textbook expenses, and tuition fees of all its expatriates’ children. The company also helps to expedite enrolment and other logistics. HP’s Tacazon says expatriate staff are free to choose any international school they prefer. “Generally, the trend is for these staff to choose residence locations near their children’s schools.” Daimler’s Ivan says his company also maintains funding for education in its expatriate packages. “School fees allowance and access to international schools is extremely important to expatriate staff with families.”
American or British school systems. These schools also teach a range of age groups, from kindergarten through to grade 12. The only problem can be securing a place. Demand for these schools is already at an all-time high and SCIS predicts it will become stronger over the next three years. It says another 2,000 school places are
International schools in Singapore
According to the Economic Development Board (EDB), Singapore has 45 ‘Foreign School Systems’ presently accepting enrolments. They offer a broad range of curricula, from the internationally-recognised International Baccalaureate (IB) program to the country-specific curricula of the Japanese, Australian,
urgently needed. While the numbers are in its favour, United World College of South East Asia (UWCSEA) is certainly working to bring that demand to its attendance sheet. The school has a good track record in terms of academic achievements, and it also offers a variety of service programs, environmental awareness initiatives, expeditions and activities for its students. The IB school is one of only three non-profit international education providers in Singapore. UWCSEA is currently expanding its enrolment capacity from 400 students at the East campus to 1,200 students at two campuses by August next year. Joy Stevenson, the director of communications for UWCSEA, says the expansion is a natural reaction to the expected influx of expatriate families over the coming years. “Demand for a UWCSEA education remains strong,” she says. “That is one reason why we decided to open a second campus.” ALB
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Asian Legal Business ISSUE 10.4
feature | relocation >>
www.legalbusinessonline.com
71
MARKETdata DATA| M&A | M&A market >>>>
In association with
M&A TRANSACTIONS AND STATISTICAL ANALYSIS Top 10 Announced Deals - Asia-Pacific (Mar 01, 2010 - Mar 26, 2010) Announcement Date 1-Mar-10
Target Company
Target/Seller Legal Advisor
Bidder Company
Bidder Legal Advisor
American International Assurance Co Ltd
Advising seller: Davis Polk & Wardwell; Debevoise & Plimpton; Norton Rose; Simpson Thacher & Bartlett; Sullivan & Cromwell; Weil Gotshal & Manges
Prudential Plc
Slaughter and May; Cleary Gottlieb Steen & Hamilton
Seller Company
Deal Value (USDm)
American International Group Inc
35,500
Advising financial advisors (Credit Suisse; HSBC; JPMorgan Cazenove; Lazard): Herbert Smith/Gleiss Lutz/Stibbe
Advising seller's financial advisors (Citigroup; Goldman Sachs): Cravath Swaine & Moore 10-Mar-10
Shanghai Pudong Development Bank (20% stake)
Shanghai United Law Firm
China Mobile Group Guangdong Co Ltd
5,831
22-Mar-10
Arrow Energy Ltd
Gilbert + Tobin
Consortium comprising Royal Dutch Shell and Petrochina
Allens Arthur Robinson; Blake Dawson
3,352
14-Mar-10
Bridas Corporation (50% stake)
Advising seller: Akin Gump Strauss Hauer & Feld
China National Offshore Oil Corporation Ltd
Baker & McKenzie
17-Mar-10
Astro All Asia Networks Plc
Kadir, Andri & Partners
Astro Holdings Sdn Bhd
12-Mar-10
Siam City Bank Plc
Weerawong, Chinnavat & Peangpanor
Thanachart Bank Public Co Ltd
Financial Institutions Development Fund
2,109
22-Mar-10
Bangkok Mass Transit System PCL (94.6% stake)
Tanayong PCL
Mr. Keeree Kanjanapas and Family
1,258
12-Mar-10
50Hertz Transmission GmbH
23-Mar-10
2-Mar-10
Notes:
Advising seller: White & Case
Bridas Energy Holdings Ltd
3,100
2,649
Elia NV; and Industry Funds Management Pty Ltd
Freshfields Bruckhaus Deringer; Lovells
Vattenfall Europe AG
1,115
CraFarms Ltd (Certain assets)
Natural Dairy NZ Holdings Ltd
Knight Coldicutt
Knight Coldicutt
1,058
Sichuan Swellfun Co Ltd (60.29% stake)
Diageo Plc
Freshfields Bruckhaus Deringer; Haiwen & Partners; Slaughter and May
CraFarms Ltd
839
Top deals table includes lapsed and withdrawn bids, and is based on geography of either target, bidder or seller company being Asia-Pacific•Quarterly trend graph excludes lapsed and withdrawn bids, and is based on dominant geography of target only being Asia-Pacific•League tables are based on geography of either target, bidder or seller company being Asia-Pacific. League tables of legal advisors include lapsed and withdrawn bids, while league tables of financial advisors exclude lapsed and withdrawn bids. League tables are ranked by value • Statistics includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m•Activities excluded from statistics include property transactions and restructurings where the ultimate shareholders’ interests are not changed•Q1 10* = 1 January 2010 to 26 March 2010
League Table of Legal Advisors to Asia-Pacific (ex-Japan) M&A (Jan 01, 2010 - Mar 26, 2010) Rank
House
League Table of Financial Advisors to Asia-Pacific (ex-Japan) M&A (Jan 01, 2010 - Mar 26, 2010)
Value (USDm)
Deal Count
Rank
Value (USDm)
Deal Count
1
Jones Day
2,293
12
1
Goldman Sachs
46,461
12
2
Freehills
2,636
11
2
Morgan Stanley
34,704
10
3
Freshfields Bruckhaus Deringer
2,092
11
3
UBS Investment
9,745
10
4
WongPartnership
1,995
10
4
Citigroup Inc
41,364
9
5
AZB & Partners
1,908
10
5
Pricewaterhouse Coopers
1,670
9
6
Mallesons Stephen Jaques
1,393
9
6
Macquarie Group
867
9
7
Clifford Chance
839
9
7
CIMB Group
2,894
7
8
DLA Piper
185
9
8
China International Capital
8,098
6
9
Baker & McKenzie
6,131
8
9
JPMorgan
8,045
6
10
Kim & Chang
2,226
8
10
Barclays Capital
5,124
6
Based on announced deals, including lapsed and withdrawn bids, from 1 January 2010 to 26 March 2010
House
Based on announced deals, excluding lapsed and withdrawn bids, from 1 January 2010 to 26 March 2010
Asia-Pacific M&A Activity - Quarterly Trends 900
200,000 180,000
800
Value (USDm) Volume
140,000
700 600
120,000
500
100,000
400
80,000
300
60,000
200
40,000
100
20,000 0
72
Number of deals
Value (USDm)
160,000
Q1 03
Q2 03
Q3 03
Q4 03
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1* 10
0
AsianLegal LegalBusiness BusinessISSUE ISSUE 10.3 Asian 10.4
MARKET DATA | |M&A M&A>> >> market data
In association with
Notes:
League tables are based on geography of either target, bidder or seller company. League tables of legal advisors include lapsed and withdrawn bids, while league tables of financial advisors exclude lapsed and withdrawn bids. League tables are ranked by value•Statistics includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m•Activities excluded from statistics include property transactions and restructurings where the ultimate shareholders’ interests are not changed
League Table of Legal Advisors to Greater China M&A (Jan 01, 2010 - Mar 26, 2010) Rank
House
League Table of Financial Advisors to Greater China M&A (Jan 01, 2010 - Mar 26, 2010)
Value (USDm)
Deal Count
Rank
House
Value (USDm)
Deal Count
31,234
7
8,089
6
Deutsche Bank
36,531
4
4
Citigroup
35,574
4
4
5
Optima Capital
201
4
35,950
3
6
Goldman Sachs
41,781
3
Linklaters
7,352
3
7
Guotai Junan Securities
6,505
3
8
Baker & McKenzie
5,305
3
8
Somerley
2,013
3
9
Skadden Arps Slate Meagher & Flom
1,563
3
9
KPMG
64
3
10
Clifford Chance
588
3
10
Goldman Sachs
35,800
2
1
Jones Day
2,269
11
1
Morgan Stanley
2
Freshfields Bruckhaus Deringer
2,008
9
2
China International Capital
3
Slaughter and May
38,659
4
3
4
Haiwen & Partners
2,777
4
5
Grandall Legal Group
142
6
Cleary Gottlieb Steen & Hamilton
7
Based on geography of either target, bidder or seller company being China, Hong Kong, Macau or Taiwan
League Table of Legal Advisors to Japanese M&A (Jan 01, 2010 - Mar 26, 2010) Rank
House
League Table of Financial Advisors to Japanese M&A (Jan 01, 2010 - Mar 26, 2010)
Value (USDm)
Deal Count
Rank
House
Value (USDm)
Deal Count
7,578
17
295
7
Citigroup
4,169
6
4
JPMorgan
4,938
4
4
5
Goldman Sachs
3,671
4
170
3
6
KPMG
425
4
Baker & McKenzie
117
3
7
Daiwa Securities Group
255
4
8
Kitamura & Hiraga
96
3
8
GCA Savvian Corporation
255
3
9
Skadden Arps Slate Meagher & Flom
6,885
2
9
Sumitomo Mitsui Financial GroupGCA Savvian
243
2
10
Gibson Dunn & Crutcher
4,611
2
10
PricewaterhouseCoopers
113
3
Value (USDm)
Deal Count
Rank
1,908
10
1
ENAM Securities
155
4
885
3
1
Mori Hamada & Matsumoto
7,727
11
1
Nomura Holdings
2
Nagashima Ohno & Tsunematsu
2,078
7
2
Mizuho Financial Group
3
Anderson Mori & Tomotsune
2,162
5
3
4
Nishimura & Asahi
1,191
5
5
TMI Associates
1,646
6
Baker & McKenzie
7
Based on geography of either target, bidder or seller company being Japan
League Table of Legal Advisors to Indian M&A (Jan 01, 2010 - Mar 26, 2010) Rank
House
League Table of Financial Advisors to Indian M&A (Jan 01, 2010 - Mar 26, 2010) House
Value (USDm)
Deal Count
1
AZB & Partners
2
Desai & Diwanji
134
6
2
Religare Capital Markets
3
Amarchand & Mangaldas & Suresh A Shroff & Co 1,935
4
3
ICICI Bank
57
3
4
Khaitan & Co
24
3
4
BMR Advisors
27
3
5
Argus Partners
162
2
5
Barclays Capital
2,272
2
6
Wadia Ghandy & Co
1,840
1
6
Citigroup
2,130
2
7=
Crawford Bayley & Co
1,184
1
7
Goldman Sachs
985
2
7=
Tozzini Freire Teixeira E Silva Advogados
1,184
1
8
UBS Investment Bank
415
2
7=
Veirano Advogados
1,184
1
9
Ernst & Young
40
2
10
WongPartnership
685
1
10=
Nomura Holdings
1,840
1
10=
Rothschild
1,840
1
10=
Standard Chartered
1,840
1
Based on geography of either target, bidder or seller company being India
League Table of Legal Advisors to Southeast Asian M&A (Jan 01, 2010 - Mar, 2010)
League Table of Financial Advisors to Southeast Asian M&A (Jan 01, 2010 - Mar, 2010)
Value (USDm)
Deal Count
Rank
Value (USDm)
Deal Count
1
WongPartnership
1,995
10
1
CIMB Group
2,894
7
2
Allen & Gledhill
1,673
7
2
Goldman Sachs
1,547
3
3
Linklaters
628
3
3
AmInvestment Bank
622
3
4
Stamford Law Corporation
225
3
4
UBS Investment Bank
3,652
2
5
Clifford Chance
67
3
5
RHB Investment Bank
3,075
2
6
Rajah & Tann
376
2
6
Public Investment Bank
2,885
2
7
Allen & Overy
25
2
7
Barclays Capital
2,873
2
8
Kadir, Andri & Partners
2,649
1
8
JPMorgan
2,649
2
9
Weerawong, Chinnavat & Peangpanor
2,109
1
9
Standard Chartered
2,617
2
10=
Amarchand & Mangaldas & Suresh A Shroff & Co 1,840
1
10
Citigroup
2,148
2
10=
Wadia Ghandy & Co
1
Rank
House
1,840
House
Based on geography of either target, bidder or seller company being Southeast Asia
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73
market data | capital markets >>
Equity Capital Markets TRANSACTIONS List
Asia, inc Japan, ex Australia & New Zealand Mar 7 - Apr 3 Issuer Proceeds Issue date (USDm)
HONGKONG Noble Group Ltd Man Wah Holdings Ltd Fook Woo Group Holdings Ltd China Green(Holdings)Ltd Vtech Holdings Ltd CITIC Pacific Ltd Yue Yuen Industrial(Hldg)Ltd China Water Affairs Group Ltd APAC Resources Ltd Poly Development Holdings Ltd Far East Global Group Ltd Digital China Holdings Ltd Hybrid Kinetic Group Ltd China Chief Cable TV Group Ltd Ruyan Group(Holdings)Ltd Truly International Good Friend Intl Hldgs Inc Ming Fai International India NMDC Ltd Tata Motors Ltd IL&FS Transp Networks(India) Exide Industries Ltd Radico Khaitan Ltd India Cements Ltd Persistent Systems Ltd Indonesia Semen Gresik(Persero)Tbk PT XL Axiata Tbk PT BLD Investments Pte Ltd Japan Dai-ichi Mutual Life Ins Co Paltac Corp Mori Hills REIT Investment Nagoya Railroad Co Ltd Ringer Hut Co Ltd Daito Pharmaceutical Co Ltd Malaysia Malaysia Airport Holdings Bhd YTL Corp(Labuan)Finance Ltd CSF Group Plc Singapore Cache Logistics Trust Miclyn Express Offshore Ltd Ruby Assets Pte Ltd HSBC Institutional Trust Svcs South Korea Korea Life Insurance Co Ltd Hynix Semiconductor Inc E&Tech Co Ltd Taiwan Darfon Electronics Corp Chinese Maritime Transport Ltd Star Comgistic Capital Co Ltd
Currency
254.6 211.4 211.3 197.8 105.7 98.0 97.6 77.3 70.9 62.6 55.0 44.1 33.8 32.9 32.2 31.3 30.7
23/03/10 24/03/10 25/03/10 17/03/10 25/03/10 11/03/10 31/03/10 10/03/10 12/03/10 09/03/10 24/03/10 18/03/10 25/03/10 17/03/10 21/03/10 11/03/10 11/03/10
SGD HKD HKD CNY HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD TWD
Bookrunner(s)
Sector
Citi; Goldman Sachs & Co Macquarie Equities (Asia) Ltd Union Bank of Switzerland; RBS UBS AG; Macquarie Equities (Asia) Ltd Goldman Sachs & Co Morgan Stanley (Asia) Ltd Citigroup Inc DBS Bank Ltd Sun Hung Kai Financial Svcs CCB International Capital Ltd BOC International (China) Ltd; DBS Asia Capital Ltd Macquarie Equities (Asia) Ltd Upbest Securities Piper Jaffray Inc Chung Nam Securities Ltd Yardley Securities Limited BankTaiwan Securities Co Ltd; First Securities Inc; Grand Cathay Securities Corp; IBT Securities Co Ltd; Land Bank of Taiwan; President Securities Corp Tanrich Capital Ltd
Consumer Staples Consumer Products and Services Materials Consumer Staples Telecommunications Materials Consumer Staples Energy and Power Consumer Products and Services Industrials Industrials High Technology Media and Entertainment Media and Entertainment Healthcare High Technology Industrials
Materials Industrials Industrials
30.0
25/03/10
HKD
2,116.9 421.4 154.0
15/03/10 09/03/10 18/03/10
INR INR INR
118.8 75.1 64.9 34.6
10/03/10 16/03/10 09/03/10 17/03/10
INR INR INR INR
Citi; Edelweiss Capital; Kotak Mahindra Capital Co; Morgan Stanley; RBS; UBS Investment Bank Citi Enam Securities; Nomura International Asia; JM Financial & Investment; Avendus Capital Pvt Ltd; SBI Capital Markets Ltd UBS Investment Bank; Morgan Stanley; DSP Merrill Lynch Ltd; Enam Securities UBS Investment Bank; IDFC-SSKI Ltd Deutsche Bank Asia; RBS Enam Securities; JP Morgan
Consumer Staples
1,080.4 555.9 155.0
30/03/10 26/03/10 12/03/10
IDR IDR USD
JP Morgan Goldman Sachs & Co; CIMB Securities Credit Suisse
Materials Telecommunications Financials
11,159.0 450.3 171.0 113.3 35.2 31.3
23/03/10 09/03/10 15/03/10 15/03/10 17/03/10 15/03/10
JPY JPY JPY JPY JPY JPY
Nomura Securities; Mizuho Securities Co Ltd Nomura Securities Mizuho Securities Co Ltd Daiwa Sec Capital Markets Daiwa Sec Capital Markets Daiwa Sec Capital Markets
Financials Consumer Products and Services Real Estate Industrials Retail Healthcare
120.7 350.0 42.3
11/03/10 11/03/10 22/03/10
MYR USD GBP
CIMB Investment Bank Bhd; JP Morgan Securities Asia Pte Credit Suisse; CIMB Securities Cenkos Securities PLC
Industrials Financials High Technology
298.6 257.9 215.2 161.6
01/04/10 24/03/10 16/03/10 17/03/10
SGD AUD SGD SGD
DBS Securities Singapore Pte; Macquarie Equities (Asia) Ltd; Standard Chartered Asia Ltd Morgan Stanley (Asia) - SG; Macquarie Equities (Asia) Ltd; JP Morgan Securities Asia Pte Citigroup Global Markets Asia Credit Suisse
Real Estate Industrials Real Estate Real Estate
1,573.9 814.2 34.5
08/03/10 16/03/10 30/03/10
KRW KRW KRW
Daewoo Securities Co Ltd; Woori Invest & Sec Co Ltd; Tong Yang Securities Nomura Securities; Credit Suisse; Woori Invest & Sec Co Ltd; NH Investment & Sec Co Ltd Eugene Invest & Sec Co Ltd
Financials High Technology High Technology
68.7 50.0 22.9
10/03/10 24/03/10 22/03/10
TWD TWD TWD
Macquarie Equities (Asia) Ltd JP Morgan Secs (Asia) (HK) Capital Securities Corp
High Technology Industrials Retail
Energy and Power Consumer Staples Materials High Technology
DEBT CAPITAL MARKETS TRANSACTIONS LIST
Asia, inc Japan, ex Australia & New Zealand Mar 7 - Apr 3 Issuer w Proceeds Issue date (USDm) Hong Kong CLP Power Hong Kong Financing Fita International Ltd Hongkong Land Notes Co Ltd India Bank of India-London Branch
74
495.4 255.7 64.5
Currency
Bookrunner(s)
Sector
12/03/10 30/03/10 12/03/10
USD USD HKD
Barclays Capital; Citi; HSBC Holdings PLC; Standard Chartered Bank PLC HSBC Holdings PLC; JP Morgan; Morgan Stanley Standard Chartered Bank (HK)
Energy and Power Financials Financials
Barclays Bank PLC; Citigroup Global Markets Ltd; Deutsche Bank (Singapore); HSBC Holdings PLC; Royal Bank of Scotland AG Deutsche Bank AG; Citi; JP Morgan; Barclays Bank PLC; HSBC Holdings PLC Barclays Capital; Citigroup Global Markets Inc; Deutsche Bank (Singapore); Standard Chartered Bank PLC; HSBC Holdings PLC Axis Bank Ltd; ICICI Sec Primary Dealership; Trust Investment Advisors; Almondz Global Securities Ltd; ICICI Bank Ltd; Kotak Mahindra Bank Ltd; AK Capital Services Ltd; LKP Shares & Securities Ltd; SPA Merchant Bankers; Yes Bank Ltd; HSBC India; Edelweiss Capital; Darashaw & Co Ltd; R.R. Financial Consultants; Sec Trading Corp of India; SBI Capital Markets Ltd; Deutsche Bank (India); Real Growth Projects Ltd Axis Bank Ltd; ICICI Sec Primary Dealership; Trust Investment Advisors; AK Capital Services Ltd; Standard Chartered Bk (India); Kotak Mahindra Bank Ltd; ICICI Bank Ltd; HSBC India; SBI Capital Markets Ltd; Almondz Global Securities Ltd; Citibank NA (India); LKP Shares & Securities Ltd; Enam Securities Axis Bank Ltd Standard Chartered Bk (India) Standard Chartered Bk (India) Barclays Bank PLC Standard Chartered Bk (India) Axis Bank Ltd AK Capital Services Ltd; Axis Bank Ltd; ICICI Sec Primary Dealership; Kotak Mahindra Finance Ltd; Trust Investment Advisors Axis Bank Ltd Barclays Bank PLC AK Capital Services Ltd; Axis Bank Ltd; ICICI Bank Ltd; ICICI Sec Primary Dealership; Kotak Mahindra Bank Ltd; Trust Investment Advisors Barclays Bank PLC Axis Bank Ltd Barclays Bank PLC HSBC India Standard Chartered Bk (India); HSBC India Barclays Bank PLC Standard Chartered Bk (India); Citibank NA (India) Barclays Bank PLC; ICICI Securities & Finance Co Barclays Bank PLC Axis Bank Ltd; Trust Investment Advisors Barclays Bank PLC ICICI Sec Primary Dealership
Financials
497.0
24/03/10
USD
Axis Bank Ltd -Dubai Branch Bank of Baroda (London)
348.5 347.7
25/03/10 29/03/10
USD USD
Power Finance Corp Ltd
324.6
22/03/10
INR
Power Grid Corp of India Ltd
227.9
23/03/10
INR
SIDBI Tata Teleservices Ltd Small Operators Trust 2010 LIC Housing Finance Ltd NACIL IRFC IDBI Bank Ltd
222.9 222.9 214.2 158.0 154.1 131.7 131.7
29/03/10 29/03/10 10/03/10 09/03/10 25/03/10 10/03/10 15/03/10
INR INR INR INR INR INR INR
Export-Import Bank of India Export-Import Bank of India UCO Bank
111.1 109.9 109.8
31/03/10 11/03/10 15/03/10
INR INR INR
National Housing Bank HDFC SIDBI National Housing Bank Tata Communications Ltd SIDBI Indian Hotels Co Ltd IDFC IDFC SREI Infrastructure Fin Ltd Export-Import Bank of India LIC Housing Finance Ltd
109.8 109.7 109.7 88.7 88.1 66.5 66.0 52.4 46.2 44.0 44.0 43.9
08/03/10 09/03/10 09/03/10 26/03/10 23/03/10 26/03/10 19/03/10 10/03/10 19/03/10 19/03/10 25/03/10 09/03/10
INR INR INR INR INR INR INR INR INR INR INR INR
Financials Financials Financials
Energy and Power Financials Telecommunications Financials Financials Industrials Financials Financials Financials Financials Financials Financials Financials Financials Financials Telecommunications Financials Media and Entertainment Financials Financials Financials Financials Financials
Asian Legal Business ISSUE 10.4
market data | capital markets >>
Indonesia Bank Permata Tbk PT Japan American Honda Finance Japan Housing Finance Agency Nomura Europe Finance NV
76.3
08/03/10
IDR
Standard Chartered Indonesia
Financials
998.7 978.8 759.0
09/03/10 18/03/10 16/03/10
USD JPY GBP
Bank of America Merrill Lynch; Barclays Capital; Citi; Deutsche Bank Securities Corp Nomura Securities Nomura International PLC
Financials Government and Agencies Financials
Loan Trust Spark Trust 0001 Japan Finance Corp Sumitomo Realty & Development Sumitomo T&B RMBS 4 ORIX Corp Aichi Prefecture JFM JFM Tokyo Broadcasting System Hldg Nishi-Nippon City Bank Ltd East Japan Railway Co East Japan Railway Co JFM JFM Acom Co Ltd Makino Milling Machine Co Ltd Tokyo Tatemono Co Ltd Tokyo Tatemono Co Ltd Osaka Prefecture Ocean 2010-1 Trust Certificate Okinawa Electric Power Co Inc ORIX Corp Applause 2010-1 Naganobank Ltd Tokyo Star Bank Ltd Tokyo, YokohamaCLO2010 MHCB-SCLO Series 2010-1 Malaysia Bank Pembangunan Malaysia Danga Capital Bhd
600.2 553.6 497.7 331.5 323.3 317.2 309.4 278.1 222.5 221.4 165.7 165.7 165.7 121.8 110.7 110.5 110.5 110.5 110.5 110.4 107.9 105.7 105.7 66.5 52.0 50.9 42.6 41.2
16/03/10 18/03/10 17/03/10 10/03/10 31/03/10 02/04/10 12/03/10 09/03/10 09/03/10 18/03/10 10/03/10 11/03/10 11/03/10 17/03/10 17/03/10 11/03/10 12/03/10 12/03/10 12/03/10 10/03/10 25/03/10 02/04/10 02/04/10 16/03/10 18/03/10 23/03/10 17/03/10 09/03/10
JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY
Mizuho Securities Co Ltd Daiwa Sec Capital Markets Daiwa Sec Capital Markets Nikko Cordial Securities Inc Sumitomo Trust & Banking Nikko Cordial Securities Inc Nikko Cordial Securities Inc; Tokai Tokyo Securities Co Ltd; Mizuho Investors Securities Co Mitsubishi UFJ Securities Co Mitsubishi UFJ Securities Co Nomura Securities; Nikko Cordial Securities Inc Nomura Securities Mitsubishi UFJ Securities Co; Daiwa Sec Capital Markets Mitsubishi UFJ Securities Co; Daiwa Sec Capital Markets Nomura Securities Mitsubishi UFJ Securities Co Daiwa Sec Capital Markets; Mitsubishi UFJ Securities Co; Nikko Cordial Securities Inc; Deutsche Securities Inc Nikko Cordial Securities Inc Daiwa Sec Capital Markets Daiwa Sec Capital Markets Daiwa Sec Capital Markets Mizuho Securities Co Ltd Mizuho Securities Co Ltd Nikko Cordial Securities Inc; Mizuho Securities Co Ltd Mizuho Securities Co Ltd Daiwa Sec Capital Markets Barclays Capital Japan Sumitomo Mitsui Banking Corp Mizuho Securities Co Ltd
Financials Financials Government and Agencies Real Estate Financials Financials Government and Agencies Government and Agencies Government and Agencies Media and Entertainment Financials Industrials Industrials Government and Agencies Government and Agencies Financials Industrials Real Estate Real Estate Government and Agencies Financials Energy and Power Financials Financials Financials Financials Financials Financials
771.0 612.1
01/04/10 30/03/10
MYR MYR
Financials Financials
Khazanah Nasional Bhd Gamuda Bhd Khazanah Nasional Bhd Philippines ADB ADB ADB Intl Container Terminal Svcs Singapore CMT MTN Pte Ltd SingTel Group Treasury Pte Ltd Housing & Development Board Sembcorp Financial Services Singapore Post Ltd CapitaMall Trust Ltd Asia Pacific Breweries Ltd City Developments Ltd South Korea Shinhan Bank Lotte Shopping Co Ltd Woori Bank GS Caltex Corp Dongkuk Steel Mill Co Ltd Hana Financial Group Inc Lotte Engineering & Constr Co STX Engine Co Ltd STX Pan Ocean Co Ltd Korea District Heating Corp Korea Hydro & Nuclear Power Co Kookmin Bank Jinro Ltd Aju Capital Co Ltd Kumho Life Insurance Co Ltd Hyundai-Kia Motor Group Tong Yang Major Corp Shinhan Card Kowepo(KEPCO/South Korea) Korea Seven Co Ltd Investemerald Co Ltd Daewoo Engineering & Constr Busan Bank KDB Capital Corp Woori Financial Co Ltd Hansol Paper Co Ltd Korea Securities Finance Corp Hyundai Capital Services Inc Industrial Bank of Korea Hana Capital Co Ltd Dongbu Corp Shinhan Card Hyundai Card Co Ltd SeAH Steel Corp Shinhan Card LS Mtron Co Ltd Sambu Construction Co Ltd KDB Capital Corp KT Capital Corp Hyundai Card Co Ltd Hana Bank Taiwan Taipower UMC Formosa Petrochemical Corp Formosa Petrochemical Corp Far Eastern Textile Ltd Yang Ming Marine Transport Thailand Glow Energy PCL Land & Houses PCL Glow Energy PCL PEA(Thailand)
182.4 96.4 47.8
12/03/10 22/03/10 10/03/10
MYR MYR MYR
CIMB Investment Bank Bhd; HSBC Bank Malaysia Bhd Standard Chartered Bk Malaysia; ;CIMB Investment Bank Bhd; OCBC Bank (Malaysia) Bhd; RHB Investment Bank Bhd; HSBC Bank Malaysia Bhd CIMB Investment Bank Bhd CIMB Bank Bhd; AmInvestment Bank Bhd Standard Chartered Bk Malaysia
400.7 354.8 280.2 250.0
23/03/10 26/03/10 26/03/10 10/03/10
AUD AUD ZAR USD
ANZ Banking Group; RBC Capital Markets; TD Securities Inc Daiwa Securities SMBC Europe Daiwa Securities SMBC Europe HSBC Holdings PLC; JP Morgan
Government and Agencies Government and Agencies Government and Agencies Industrials
500.0 428.7 285.5 213.1 142.9 71.6 53.8 42.6
30/03/10 30/03/10 22/03/10 25/03/10 23/03/10 15/03/10 12/03/10 25/03/10
USD SGD SGD SGD SGD SGD SGD SGD
Morgan Stanley DBS Bank Ltd; Hong Kong & Shanghai Bank (SG); Oversea-Chinese Banking Hong Kong & Shanghai Bank (SG) DBS Bank Ltd; Hong Kong & Shanghai Bank (SG); Standard Chartered Bank (SG) DBS Bank Ltd; UBS Singapore DBS Bank Ltd CIMB Bank Bhd Hong Kong & Shanghai Bank (SG)
Financials Financials Government and Agencies Financials Consumer Products and Services Real Estate Consumer Staples Real Estate
698.9 531.6 496.9 380.1 310.1 203.3 177.6 177.6 177.2 175.8 175.8 172.0 132.6 132.2 110.5 88.4 88.4 88.2 88.2 88.2 88.1 88.0 87.5 83.1 79.7 79.4 70.6 70.4 70.0 62.0 61.9 53.0 52.9 44.4 44.3 44.2 44.2 44.2 44.1 43.8 42.8
08/03/10 12/03/10 29/03/10 08/03/10 15/03/10 11/03/10 02/04/10 02/04/10 12/03/10 26/03/10 26/03/10 17/03/10 08/03/10 31/03/10 30/03/10 08/03/10 30/03/10 09/03/10 19/03/10 19/03/10 22/03/10 24/03/10 25/03/10 10/03/10 12/03/10 16/03/10 18/03/10 23/03/10 11/03/10 12/03/10 11/03/10 08/03/10 18/03/10 02/04/10 12/03/10 11/03/10 11/03/10 30/03/10 22/03/10 25/03/10 18/03/10
USD KRW USD KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW USD KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW KRW
Bank of America Merrill Lynch; BNP Paribas SA; Citi; Deutsche Bank Securities Corp; Morgan Stanley & Co Tong Yang Securities Credit Agricole CIB; Deutsche Bank Securities Corp; JP Morgan; Bank of America Merrill Lynch; Morgan Stanley Woori Invest & Sec Co Ltd; Daewoo Securities Co Ltd; Korea Investment & Securities; KB Invest & Sec Korea Development Bank; KB Invest & Sec SC Securities Korea Ltd KB Invest & Sec; Tong Yang Securities; Bookook Securities Co Ltd Korea Development Bank Tong Yang Securities Hyundai Securities Co Ltd Samsung Securities Kyobo Securities Co Ltd SC Securities Korea Ltd; Tong Yang Securities; Korea Investment & Securities; KB Invest & Sec; Dongbu Securities Korea Investment & Securities; Korea Development Bank; Tong Yang Securities Tong Yang Securities Korea Investment & Securities Dongbu Securities; Tong Yang Securities Dongbu Securities Woori Invest & Sec Co Ltd Tong Yang Securities Daewoo Securities Co Ltd Hyundai Securities Co Ltd; Tong Yang Securities Hana Daetoo Securities Co Ltd KB Invest & Sec Hanwha Securities Co KB Invest & Sec; KTB Securities Co Ltd Kiwoom Securities Co Hyundai Securities Co Ltd Samsung Securities RBS SK Securities Tong Yang Securities Kyobo Securities Co Ltd SK Securities Hana Daetoo Securities Co Ltd Samsung Securities E Trade Korea Co Ltd; Tong Yang Securities KB Invest & Sec Korea Investment & Securities Korea Investment & Securities SK Securities SC Securities Korea Ltd
Financials Retail Financials Energy and Power Materials Financials Industrials Industrials Industrials Energy and Power Energy and Power Financials Consumer Staples Financials Financials Industrials Materials Financials Energy and Power Retail Financials Industrials Financials Financials Financials Materials Financials Financials Financials Financials Industrials Financials Financials Materials Financials High Technology Industrials Financials Financials Financials Financials
562.6 314.7 188.9 188.6 172.8 157.3
15/03/10 29/03/10 11/03/10 23/03/10 24/03/10 22/03/10
TWD TWD TWD TWD TWD TWD
Yuanta Securities Co Ltd ChinaTrust Securities Capital Securities Corp KGI Securities (Taiwan) Masterlink Securities Co Capital Securities Corp
Energy and Power High Technology Energy and Power Energy and Power Materials Industrials
61.9 61.8 49.5 46.5
30/03/10 26/03/10 30/03/10 18/03/10
THB THB THB THB
Siam Commercial Bank PLC Siam Commercial Bank PLC Siam Commercial Bank PLC HSBC Holdings PLC
Energy and Power Real Estate Energy and Power Energy and Power
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