ISSUE 9.10
Offshore financial centres Bucking the G20 backlash
The Shariah-compliant law firm An organisation model for future service?
Shipping Lawyers weather a perfect storm
Energy & resources Fuelling the recovery
Asia’s most dynamic corporate counsel LATERAL MOVES ISSN 0219 – 6875 MICA (P) 215/07/2009
DEALS ROUND UP
REGION-WIDE UPDATES
LATEST DEBT & EQUITY MARKET DATA
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1
EDITORial >>
The deal-blocker is dead: long live the deal-maker
T
he misperception of in-house lawyers and their legal teams as ‘business prevention units’, as one business leader refered to them earlier this year, must now surely have been corrected. A look at this issue’s ALB/Jun He Inhouse Top 25, a snapshot of the region’s most dynamic corporate counsel, provides ample proof that the role successful in-house lawyers play today is as commercial as it is legal. The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked. But while the new-look in-house legal team boasts a relevance and value to the business that many chief executive officers would argue has increased exponentially, the fact that things have changed so much, in many cases over just 10 or 15 years, means it also faces a unique set of challenges. As corporate lawyers get ever closer to the executive, and many sit on boards and share the performance-based incentives of their fellow board members, the chances grow of the profession’s most important weapon – independence – being compromised. The 25 corporate counsel profiled in this issue of ALB have all developed programs to address this fundamental challenge as well as the many others they face. The message for law firms is clear. They need to be acutely aware of the rarefied, prickly, exacting new atmosphere in which their clients operate, and should adjust the nature of their counsel accordingly. As one of the featured GCs noted, external lawyers must work “as if they were in-house counsel.”
IN THE FIRST PERSON “We did look at the possibility of a merger in 2001-02 and have had a lot of interest since, but we wouldn’t consider it because frankly we don’t need it” Lindsay Esler, managing partner, Deacons Hong Kong (p50)
“My advice would be to adopt a more long-sighted view of inhouse clientele and the work that they bring in ... to focus on the relationship being fostered” Damian Yeo, director, Nokia (p33)
“Multinational oil and gas companies have access to technology, and in many cases downstream marketing networks, that most national oil companies do not possess” Brad Roach, partner, Lovells Lee and Li (p64)
The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked
2
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News | deals>> >> CONTENTS
contents 30
ALB issue 9.10
54
In-house
COVER STORY 30 ALB/Jun He Law Offices In-house Top 25 The who’s who of Asia’s most distinguished corporate counsel for 2009
ANALYSIS 10 The first Shariah-compliant law firm Can a law firm that turns clients away and doesn’t invest in interest-growth funds ever be successful? ALB investigates. 12 Legal practices go green The latest must-have for China’s self-respecting modern law firms: environmental lawyers and climate change practices. 14 PRC seeks ASX More Chinese companies are listing on the ASX – this year alone three companies have launched major IPOs
FEATURES 40 Offshore financial centres Crackdowns on offshore financial centres haven’t dampened investor interest – but how are offshore law firms benefiting? 50 ALB Managing Partner series Following the break-up with Deacons Australia, Deacons Hong Kong’s Lindsay Esler explains to ALB that the firm is looking for new best-friends, not merger partners. 54 Shipping The big ticket M&As and project financings have vanished for the region’s shipping firms, but shipping may just be recession-proof.
4
60
50
60 Energy & resources No other region in the world has seen a more positive outlook for this sector work – but Asia’s law firms have many challenges ahead of them.
22 International tax AzureTax
Regulars
26 REGIONAL UPDATES • China Paul Weiss • Philippines Sycip Salazar Hernandez & Gatmaitan • Singapore Loo & Partners • Indonesia BTPartnership • Vietnam Indochine Counsel
6 DEALS 16 NEWS • Arrested Rio Tinto employees find legal representation • India pressed by UK in liberalisation talks • Kirkland & Ellis takes on China • Recovering fees a struggle for firms • Rebound seen in Asia legal roles • Malaysia leads Islamic finance bond market • Holman Fenwick taps Blakes for Sydney launch • China outbound investment doubled in 2008 16 UK report 18 US report 66 M&A deal update 68 Capital markets deal update
23 Islamic financial Azmi & Associates
PROFILES 44 Appleby 57 TS Oon & Bazul 59 Holman Fenwick Willan 62 Loo & Partners
INDUSTRY UPDATES 20 IT Guidance Software 21 Intellectual property ATMD Bird & Bird
64 Sycip Salazar Hernandez & Gatmaitan Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business can accept no responsibility for loss.
Asian Legal Business ISSUE 9.10
NEWS | deals >>
| Australia/China |
deals in brief
►► Yanzhou Coal Mining – Felix Resources merger Value: US$2.5bn
Firm: Baker & Andrew Knox Allens Arthur McKenzie Robinson Client: Yanzhou Coal Mining Company
►► ANZ – Royal Bank of Scotland Asian assets acquisition Value: US$550m Firm: Blake Dawson Lead lawyers: Tiffany Barton, David Williamson, John Sartori, Peter Stirling Client: ANZ
Tiffany Barton Blake Dawson
Firm: Allen & Gledhill Client: Royal Bank of Scotland Group
Firm: Linklaters Client: Royal Bank of Scotland Group Firm: Russin & Vecchi Client: Royal Bank of Scotland Group • ANZ Bank acquired selected Asian assets of RBS as part of Asia expansion strategy, using funds from recent capital raising • Cross-border deal involved acquisitions in Taiwan, Singapore, Indonesia, Hong Kong, the Philippines and Vietnam, representing 54 branches, US$3.2bn in loans and US$7.1bn in deposits
Firm: Drew & Napier Lead lawyers: Gary Pryke, Sandy Foo Client: ANZ
Firm: Soebagjo Jatim Djarot Client: ANZ
Firm: SyCip Salazar Hernandez & Gatmaitan Client: ANZ
Firm: Lee and Li Lead lawyers: Robin Chang, Alex Jui-Lin Liu Client: Royal Bank of Scotland Group
Firm: Freshfields Bruckhaus Deringer Lead lawyers: Tony Foster, Jerome Buzenet, An Hoang Ha Client: ANZ
Firm: LCS & Partners Lead lawyers: Victor Chang, Mark Harty Client: ANZ
HEADLINE DEAL
Gary Pryke Drew & Napier
Sandy Foo Drew & Napier
• Range of complex local law and regulatory issues involved in transfer of each banking business, with corporate issues (e.g. employment) arising out of separation from RBS Group • Blake Dawson acted as principle advisors to longstanding clients ANZ, whom it most recently advised on A$4.7bn equity raising
“... discussions with local financial regulators were challenging because this deal is huge in size and there is no similar precedent for it in Taiwan” Robin Chang and Alex Jiu-Lin Liu, Lee and Li 6
Firm: Corrs Chambers Westgarth Lead lawyer: Andrew Lumsden Client: Yanzhou Coal Mining Company Firm: King & Wood Client: Yanzhou Coal Mining Company • Chinese coal miner Yanzhou agreed to merge with Australian coal producers Felix Resources via a scheme of arrangement • Yanzhou Coal to finance acquisition from existing A$1.8bn worth of cash resources and bank debt • If completed, largest-ever Chinese deal in the Australian coal sector
| CHINA | ►► Sinochem Petroleum Exploration & Production – Emerald Energy acquisition Value: US$774m Firm: Memery Crystal Lead lawyers: Andrew Titmas, Merrill April, Tim Crosley Client: Emerald Energy
►► The Royal Group – Millicom International Cellular acquisitions Value: US$346m
Firm: Allens Arthur Robinson Lead lawyer: Andrew Knox Client: Felix Resources Limited
| AUSTRALIA/PAN ASIA |
| Cambodia |
Firm: DFDL Mekong Lead lawyers: Edwin Vanderbruggen, Martin Desautels Client: The Royal Group
Edwin Vanderbruggen DFDL Mekong
Firm: Clifford Chance Lead lawyers: Andrew Whan, Matt Truman Client: The Royal Group
Firm: Linklaters Client: Millicom International Cellular • Cambodian investment company, The Royal Group acquired remaining 58.4% stake in telcos Royal Telecam International and Cambodia Broadcasting Services, from Millicom International Cellular SA • Largest M&A transaction ever completed in Cambodia • TRG are longstanding clients of DFDL Mekong
| JAPAN | ►► NipponKoa Insurance – Sompo Japan Insurance merger Value: US$4.6bn Firm: Morrison & Foerster Client: Bank of America Merrill Lynch Firm: Shearman & Sterling Client: NipponKoa Insurance
Christopher Wong Freshfields
Firm: Freshfields Lead lawyers: Christopher Wong, Graham Watson Client: Sinochem International Corporation • Chinese raw materials and chemical producer Sinochem launched public offer to acquire entire outstanding share capital of UK oil company Emerald Energy • Emerald Energy is longstanding client of Memery Crystal
Firm: Sullivan & Cromwell Lead lawyers: Izumi Akai Client: Sompo Japan Insurance
Izumi Akai Sullivan & Cromwell
• Japanese insurance firms, NipponKoa Insurance and Sompo Japan Insurance to merge • Will establish third-largest casualty insurer with reported annual income of US$24.5bn • Merrill Lynch is longstanding client of MoFo Asian Legal Business ISSUE 9.10
NEWS | deals >>
| INDIA | ►► Tata Power global depository receipts issue Value: US$335m Firm: Linklaters Allen & Gledhill Client: Lead managers Firm: AZB & Partners Lead lawyer: Shameek Chaudhuri Client: Lead managers
Shameek Chaudhuri AZB & Partners
►► your month at a glance Firm
• Tata Power issues 14,838,110 Global Depositary Receipts • Clifford Chance previously advised on Tata’s US$950m loan in 2007
►► Almarai – Hail Agriculture Development Company takeover bid
PT Gajah Tunggal – GT 2005 Bonds BV bonds exchange
420 Debt market
Almarai – Hail Agriculture Development Company takeover bid
252 M&A
Allen & Gledhill
Singapore
Tufton Oceanic Finance Group – Allocean stake acquisition
243 Shipping/finance
Singapore
Ascendas Real Estate Investment Trust private placement
208 Equity market 550 M&A
Firm: Clifford Chance Lead lawyer: Mike Taylor Client: Almarai Company • Dairy company Almarai bid to acquire entire issued share capital of Saudi food company Hail Agriculture Development • First-ever takeover by a public listed company in Saudi Arabia
ANZ – Royal Bank of Scotland Asian assets acquisition CitySpring Infrastructure Trust rights issue
163 Equity market
Singapore
Starhill Global REIT rights issue
234 Equity market
Allens Arthur Robinson
Aust/China
Yanzhou Coal Mining – Felix Resources merger
India
Tata Power global depository receipts issue
India
Fortis Hospitals – Wockhardt Hospitals acquisition
Appleby
Hong Kong
Town Health Bermuda redomicile
AZB & Partners
India
Tata Power global depository receipts issue
India
Tyco Electronics Corporation – BSA Facilities wire harness division acquisition
Baker & McKenzie
2,500 M&A 335 Equity market 185 M&A Undisc Corporate 1,500 Equity market Undisc M&A
India
Wireless TT Information Services stake divestment
1,298 Corporate/M&A
Aust/China
Yanzhou Coal Mining – Felix Resources merger
2,500 M&A
Blake Dawson
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
550 M&A
City-Yuwa
Japan
Himawari – Ozeki Co acquisition
343 M&A
Japan
CITIC International Assets Management – Merchant Bankers share acquisition
4 M&A
Cleary Gottlieb
Malaysia
Petroliam Nasional Berhad bond offer
Clifford Chance
Saudi Arabia
Almarai – Hail Agriculture Development Company takeover bid
India
Tata Power global depository receipts issue
335 Equity market
Indonesia
Matahari International BV issuance
200 Equity market
Hong Kong
Star Cruises convertible bond issue
150 Debt market
Cambodia
The Royal Group – Millicom International Cellular acquisitions
346 M&A
4,500 Islamic finance 252 M&A
Commerce & Finance
China/S’pore
China Pharma – Sihuan Pharmaceutical Holdings acquisition
319 M&A
Conyers Dill & Pearman
China/S’pore
China Pharma – Sihuan Pharmaceutical Holdings acquisition
319 M&A
Aust/China
Yanzhou Coal Mining – Felix Resources merger
Singapore
Tufton Oceanic Finance Group – Allocean stake acquisition
Davis Polk & Wardwell
Taiwan
Green Energy Technology GDS offering
DFDL Mekong
Cambodia
The Royal Group – Millicom International Cellular acquisitions
Denton Wilde Sapte
Bahrain
Gulf Air Airbus ijara financing
Desai & Diwanji
India
Wireless TT Information Services stake divestment
1,298 Corporate/M&A
China
Sequoia Capital – American Dairy equity financing
63 Private equity
Japan
CITIC International Assets Management – Merchant Bankers share acquisition
DLA Piper
2,500 M&A 243 Shipping/finance 77 Equity market 346 M&A 70 Islamic finance
4 M&A
Drew & Napier
Pan-Asia
ANZ – Royal Bank of Scotland asian assets acquisition
Fangda Partners
China
TPG, Hony Capital – Wumart Stores Inc stake acquisition
142 M&A
Freshfields Bruckhaus Deringer
China
Sinochem Petroleum Exploration & Production – Emerald Energy acquisition
774 M&A
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
Greenburg Traurig
UAE
Yahoo! – Maktoob.com acquition
Haiwen & Partners
China
TPG, Hony Capital – Wumart Stores Inc stake acquisition
Harry Elias Partnership
Singapore
Fair Link Investments – Tsit Wing acquisition offer
Hassan Radhi and Associates
Bahrain
Gulf Air Airbus ijara financing
Holman Fenwick Willan
Singapore
Tufton Oceanic Finance Group – Allocean stake acquisition
J Sagar & Associates
550 M&A
550 M&A Undisc. TMT/M&A 142 M&A Undisc Corporate 70 Islamic finance 243 Shipping/finance
India
Essar Steel – Shree Precoated Steels acquisition
162 M&A
S’pore/India
Punj Lloyd qualified institutional share placement
140 Equity market
Jisung Horizon
Korea
Hite Holdings – Hite Brewery acquisition
318 M&A
JSM (in assoc. with Mayer Brown)
China
CITIC Pacific – Jiangyin Special Steel Mill subsidiary acquisitions
222 M&A
Kadir Andri & Partners
Malaysia
Petroliam Nasional Berhad bond offer
Khaitan & Co
India
Srei Equipment Finance non-convertible debenture issue
India
Ativir Securities – Dhuika Trading acquisition
India
ETA Engineering finance loan
KhattarWong
China/S’pore
China Pharma – Sihuan Pharmaceutical Holdings acquisition
Kim & Chang
Korea
Korea Gas Corporation LNG carrier refinancing
King & Wood
Aust/China
Yanzhou Coal Mining – Felix Resources merger
Latham & Watkins
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Pan-Asia Singapore
Amarchand & Mangaldas
Value: US$252m Firm: Al-Jadaan & Partners Lead lawyers: Abdullah Al-Hashim, Mohammed Al-Jadaan Client: Almarai Company
Deal type
Saudi Arabia
Corrs Chambers Westgarth
| SAUDI ARABIA |
Value (US$m)
Al-Jadaan & Partners
• One of first deals worked on by both AZB & Clifford Chance following best-friends alliance • Indian conflomerate Tata Group are longstanding clients of Amarchand
Deal name
Ali Budiardjo Nugroho Reksodiputro Indonesia
Firm: Clifford Chance Client: Bank of New York Mellon Firm: Amarchand & Mangaldas Client: Tata Power Company
Jurisdiction
Taiwan
Green Energy Technology GDS offering
Indonesia
PT Gajah Tunggal – GT 2005 Bonds BV bonds exchange
4,500 Islamic finance 205 Equity market Undisc M&A 97 Project finance 319 M&A 481 Shipping/finance 2,500 M&A 77 Equity market 420 Debt market
7
NEWS | deals >>
| TAIWAN | ►► Green Energy Technology GDS offering Value: US$77m Firm: Davis Polk & Wardwell Lead lawyers: Andrew Lin, James Lin Client: Joint bookrunners
| SINGAPORE/INDIA | ►► Punj Lloyd qualified institutional share placement Value: US$140m Eugene Lee
Latham & Firm: Lee and Li Watkins Lead lawyers: Sherry Lin, Hsu Hsin-Lan, Chang Chu-Chu Client: Green Energy Technology
Firm: Latham & Watkins Lead lawyers: Eugene Lee, Benjamin Su Client: Green Energy Technology • Taiwan solar manufacturer Green Energy Technology offering of Global Depositary Shares, listed on the Luxembourg Stock Exchange • Latham team closed firm’s second Taiwan solar deal in two years – following Motech Industries US$218m GDS offering
| SINGAPORE | ►► Tufton Oceanic Finance Group – Allocean stake acquisition Value: US$243m Firm: Watson Farley & Williams Lead lawyer: Goh Mei Lin Client: Lenders Firm: Corrs Chambers Westgarth Client: Ferrier Hodgson
Firm: DLA Piper Lead lawyer: Stephen Peepels Client: Joint global coordinators and sponsors
| MALAYSIA | ►► Petroliam Nasional Berhad bond offer Value: US$4.5bn Firm: Zul Rafique & partners Lead lawyers: Zandra Tan, Lim Mun Lai Client: Deal managers Firm: Lovells Rahail Ali Lead lawyer: Lovells Rahail Ali Client: Deal managers
Stephen Peepels Firm: J Sagar & DLA Piper Associates Lead lawyers: Lalit Kumar, Shivpriya Nanda Client: Punj Lloyd
• Asian construction conglomerate Punj Lloyd in US$140m qualified institutional placement • Equity shares sold to US and international investors, listed on the Bombay Stock Exchange and the National Stock Exchange of India • Demonstrates DLA’s focus on Indian market
| CHINA/ UK/HONG KONG | ►► CIMC Enric equipment acquisitions 2009
Firm: Cleary Gottlieb Lead lawyers: Robert Williams, Sung Kang Client: Petronas Firm: Kadir Andri & Partners Client: Petronas Firm: Milbank Tweed Lead lawyer: Naomi Ishikawa Client: Joint bookrunners • Deal is largest Asia ex-Japan issue in last five years, second-largest Asia ex-Japan issue ever, one of two largest global sukuks ever and first global corporate sukuk in 2009 • US$4.5b bond offering by Malaysia’s Petroliam Nasional Berhad – one of world’s largest oil companies • Offering consisted of US$3bn senior unsecured 10-year notes, US$1.5bn in Shari’a-compliant fiveyear ijara sukuk
Value: US$543m
Goh Mei Lin Watson Farley & Williams
Firm: Allen & Gledhill Client: Tufton Oceanic Finance Group Firm: Holman Fenwick Willan Client: Tufton Oceanic Finance Group Firm: Rajah & Tann Client: Ferrier Hodgson • Tufton Oceanic Finance Group’s acquired 50% stake in Allocean from Allco Finance Group: deal comprised of loan restructuring to Allocean • Allco went into receivership last year due to financial crisis
8
• WFW advised on financing documents and restructuring issues of Allocean and its fleet
Firm: Paul Hastings Lead lawyers: Raymond Li, Phoebus Chu Client: CIMC Enric
| BAHRAIN | ►► Gulf Air Airbus ijara financing Value: US$70m Raymond Li Paul Hastings
• Enric expanded its transportation, storage and equipment business by acquiring equipment Phoebus Chu Paul Hastings in China, Netherlands, Denmark and Belgium • First transaction of its kind within transportation, storage and processing equipment manufacturing industry
Firm: Linklaters Lead lawyer: Robert Fugard Client: Gulf Air Firm: Hassan Radhi and Associates Client: Gulf Air Firm: Denton Wilde Sapte Lead lawyers: Paul Jarvis, Sami Syadi Client: Bahrain Islamic Bank • Gulf Air’s US$70m loan to partly finance eight new Airbus A320 aircrafts
• Signals upturn of Gulf aviation sector deals, and increased use of Islamic financing options by clients
| KOREA | ►► Dongkuk S&C IPO and share listing Value: US$200m Firm: Paul Hastings Lead lawyer: Daniel Kim Client: Samsung Securities Firm: Lee & Ko Client: Dongkuk S&C
Daniel Kim Paul Hastings
• Largest Korean IPO in 2009 so far • Third-ever domestic IPO in Korea with international tranche following Korean securities law changes, first IPO on KRX KOSDAQ market with international tranche • Wind towers manufacturer, Dongkuk S&C IPO and share listing on KRX KOSDAQ • Paul Hastings previously advised Samsung Securities on STX Pan Ocean’s global offering and listing on Korea Stock Exchange
| INDONESIA | ►► PT Gajah Tunggal – GT 2005 Bonds BV bonds exchange Value: US$420m Firm: Latham & Watkins Lead lawyer: Jake Redway Client: PT Gajah Tunggal Firm: Ali Budiardjo Nugroho Reksodiputro Lead lawyers: Chandrawati Dewi, Ferry Madian, Zacky Husein Client: Credit Suisse, HSBC • PT Gajah Tunggal exchanged outstanding Guaranteed Secured Bonds through its subsidiary, GT 2005 Bonds BV • Ali Budiardjo advised both security agents and underwriter
Asian Legal Business ISSUE 9.10
NEWS | deals >>
| CHINA/ SINGAPORE | ►► China Pharma – Sihuan Pharmaceutical Holdings acquisition
►► your month at a glance (CONT) Firm
Jurisdiction
Deal name
Lee & Ko
Korea
Korea Gas Corporation LNG carrier refinancing
481 Shipping/finance
Linklaters
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
550 M&A
Bahrain
Gulf Air Airbus ijara financing
Cambodia
The Royal Group – Millicom International Cellular acquisitions
Value: US$318m Firm: Commerce & Finance Client: China Pharma Firm: KhattarWong Client: Sihuan Pharmaceutical Holdings Firm: WongPartnership Client: China Pharma
Jack Lange Paul Weiss
Firm: Conyers Dill & Pearman Client: China Pharma Firm: Paul Weiss Lead lawyer: Jack Lange Client: China Pharma • China Pharma Holdings in offer to acquire all shares in Sihuan • Sihuan is engaged in the research, production and sale of pharmaceutical drugs, with a focus on cardio-cerebral vascular drugs
| INDIA | ►► Fortis Hospitals – Wockhardt Hospitals acquisition Value: US$185m Firm: Amarchand & Mangaldas Lead lawyers: Cyril Shroff, Nivedita Rao Client: Wockhardt Hospitals Firm: Vaish Associates Lead lawyers: Bomi Daruwala Client: Fortis Healthcare • Sale of 10 Wockhardt Hospitals in Bangalore, Mumbai and Kolkata to Fortis Hospitals • Amarchand also advised Wockhardt on sale of nutritional business and animal health division to Vetoquinol
Value (US$m)
Deal type
70 Islamic finance 346 M&A
Linklaters Allen & Gledhill
India
Tata Power global depository receipts issue
Lovells
Malaysia
Petroliam Nasional Berhad bond offer
4,500 Islamic finance
335 Equity market
Mallesons Stephen Jaques
Aust/China
China Everbright – Macquarie Bank JV
1,500 JV
Memery Crystal
China
Sinochem Petroleum Exploration & Production – Emerald Energy acquisition
774 M&A
Milbank Tweed
China
Waste Management Inc – Shanghai Environment Group stake acquisition
140 M&A
Malaysia
Petroliam Nasional Berhad bond offer
Miyakezaka-Sogo Law Offices
Japan
Hitachi – Hitachi Software Engineering stake acquisition
Morrison & Foerster
Japan
NipponKoa Insurance - Sompo Japan Insurance merger
4,500 Islamic finance 834 M&A 4,600 M&A
Nagashima Ohno & Tsunematsu
Japan
Hitachi – Hitachi Maxell stake acquisition
Nishith Desai Associates
India
Orbit Corporation QIP equity share issue
India
Flakt India – Caryaire Equipments India acquisition
China/HK
CIMC Enric equipment acquisitions
Korea/US
Wilshire Grand Hotel redevelopment
1,000 Construction/ Finance 1,500 JV
Paul Hastings
408 M&A 30 Equity market Undisc M&A 543 M&A
Aust/China
China Everbright Limited – Macquarie Bank JV
Paul Weiss
China/S’pore
China Pharma – Sihuan Pharmaceutical Holdings acquisition
319 M&A
Rajah & Tann
Singapore
Tufton Oceanic Finance Group – Allocean stake acquisition
243 Shipping/Finance
Russin & Vecchi
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
550 M&A
Shanghai Runhe
China
Waste Management Inc – Shanghai Environment Group stake acquisition
140 M&A
Shearman & Sterling
Japan
NipponKoa Insurance – Sompo Japan Insurance merger
Simmons & Simmons
UAE
Yahoo! – Maktoob.com acquition
Skadden
4,600 M&A Undisc. TMT/M&A
China
TPG, Hony Capital – Wumart Stores Inc stake acquisition
142 M&A
Hong Kong
SRE Group high yield bond offer
200 Debt market
China
Sequoia Capital – American Dairy equity financing
Slaughter and May
Hong Kong
Swire Pacific – Cathay Pacific share aquisition
63 Private equity
China
TPG, Hony Capital – Wumart Stores Inc stake acquisition
142 M&A
Soebagjo Jatim Djarot
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
550 M&A
130
Stamford Law Corporation
Singapore
Passion Holdings IPO
Sullivan & Cromwell
Japan
NipponKoa Insurance - Sompo Japan Insurance merger
4,600 M&A
22 Equity market
SyCip Salazar Hernandez & Gatmaitan
Pan-Asia
ANZ – Royal Bank of Scotland Asian assets acquisition
550 M&A
Vaish Associates
India
Fortis Hospitals – Wockhardt Hospitals acquisition
185 M&A
Watson Farley & Williams
Singapore
Tufton Oceanic Finance Group – Allocean stake acquisition
243 Shipping/Finance
Korea
Korea Gas Corporation LNG carrier refinancing
Weil Gotshal & Manges
Philippines
Stream Global Solutions - eTelecare Global Solutions merger
481 Shipping/finance
White & Case
Malaysia
Analabs Resources Berhad – Coveright Surfaces Malaysia acquisition
Wongpartnership
Singapore
Verigy senior notes offering
138 Equity market
Singapore
First Resources proposed bonds due 2014 issue
100 Debt market 319 M&A
1,000 M&A 11 M&A
China/S’pore
China Pharma – Sihuan Pharmaceutical Holdings acquisition
Yulchon
Korea
Lotte Asset Development – Coralis SA acquisition
Zaid Ibrahim
Malaysia
Analabs Resources Berhad – Coveright Surfaces Malaysia acquisition
11.30 M&A
Zul Rafique & partners
Malaysia
Petroliam Nasional Berhad bond offer
4500 Islamic finance
58 M&A
Does your firm’s deal information appear in this table? Please contact
alb@keymedia.com.au
61 2 8437 4700
CORRECTIONs In ALB issue 9.8, in the feature titled “ALB’s leading arbitration and dispute resolution firms 2009”, the table on p38 presenting Singapore’s Domestic Law Firms listed the local firm MPillay & Associates. The correct title of the law firm should be MPillay. ALB regrets this error. www.legalbusinessonline.com
9
NEWS | analysis >>
Analysis >>
Principles before profit
with a similar mindset. I believe some clients would be best served if they had an independent base of lawyers that practiced their own conduct in accordance with Shariah, as well as offering Shariah services.” The other ‘trigger’ was spiritual. Following Agha’s high-ranking corporate positions in the world’s biggest law firms (Clifford Chance’s Saudi affiliated firm and Fulbright), the independence that opening up a niche firm offered was highly attractive. “Having worked at large law firms my entire professional career, I was very interested in setting up a law firm with an express ethical mandate, which serves the law and … a higher spiritual purpose,” he explained. “Of course it also means you can chart your own course – there’s a lot of independence in being a farmer waiting for the rain to come, rather than working on someone else’s land.”
Model of business
Meet the man behind the world’s first Shariah-compliant law firm who thinks this is the start of a new business model
M
oving from a high-profile position as the global head of DLA Piper’s Islamic finance practice, Oliver Agha went it alone earlier this year to launch the world’s first Shariah-compliant law firm in the UAE, Agha & Shamsi, a move which stunned and intrigued many in the legal industry. The firm’s mantra is ‘Principle before Profit,’ and its founding partner is certainly principled. So much so, in fact, that early this year he went where others wouldn’t dare, at a time when the world’s economy was in turmoil from the first wave of the financial crisis. By going fully Shariah law-
10
compliant, Agha & Shamsi would be turning away many ‘conventional’ clients and big-ticket legal work, which is the foundation behind many of the world’s most successful law firms. What led to this sudden breakthrough and why, more importantly, the timing? Agha says he’d been contemplating the idea for a number of years, and it was in fact, the perfect time, considering the growing number of clients in the Islamic banking sector. “There were a number of triggers for this, but overall, it was the right climate,” Agha said. “There are many Islamic banks and Islamic insurance companies who feel comfortable with a service provider
The law firm’s business model is unique, and to some it would seem to limit the firm’s chances of corporate success. By Shariah law, it cannot invest in funds linked to – or that bear – interest. It also maintains a Shariah board of scholars who provide rulings on the firm’s constitution, structure, deals and transactions, not unlike a corporate board, but un-secular. Where most other firms are locked in decades-long competition around league table rankings to judge the number of deals closed, the Shariah-compliant firm may not be as competitive as its international counterparts. Agha’s firm cannot welcome every potential client; it must turn away those from certain businesses – including ‘conventional’ international banks, insurance companies, and clients linked to gambling and alcohol, and others from Islamically impermissible areas. “We’ve had to turn away a fair degree of business that is by mandate, proscribed for us,” Agha said. “It’s a significant carve out, and the kind of work and clients we can work with are limited. That hasn’t been an easy decision because in this market it’s obviously helpful not to have to turn work away.” Conventional work and clients are largely behind the success of the world’s biggest law firms. Global law Asian Legal Business ISSUE 9.10
NEWS | analysis >>
International links
Oliver Agha, Agha & Shamsi
firms are arguably dependant on these clients to survive. So can a new-model law firm thrive on its principles? The managing partner of Malaysian firm, Azmi & Associates, said that although Agha & Shamsi may have carved out a large portion of high-value work, there is enough business and global clientele to sustain it. “The pool of clients might be limited, but on the other hand in a globalised world the market is huge. There should be plenty of opportunities for a Shariah-compliant law firm in crossborder transactions,” said Azmi Mohd Ali. “If a Shariah-compliant law firm has skill-sets needed by clients, then those firms will remain sought-after within those bounds.” Agha & Shamsi’s clientele includes members of the royal family, Islamic mortgage financing companies, highnet-worth individuals, and of course, Islamic banks and entities. If client feedback is any marker, it seems the firm’s ‘niche’ status has been welcomed. “The reaction from clients has been very favourable. They are generally pleased and intrigued by the concept of a Shariah-compliant law firm and have a very positive view of the firm’s ethical mandate,” Agha said. “We’ve had considered growth at our firm.” Whether the rest of the legal industry follow in Agha’s pioneering footsteps remains to be seen. Azmi & Associates for one, welcomes the move, but did not say whether it would consider something similar. “We congratulate Agha & Shamsi on the achievement of their new business model, and look forward to working with them on cross-border deals between Malaysia and the Middle East,” said its managing partner. www.legalbusinessonline.com
Having spearheaded DLA Piper’s global Islamic finance practice and its Saudi office, Agha left that firm in October 2008 [with colleague Peter Hodgins, following management differences within the Saudi office] with a view to establishing his firm alongside noted Emirati figurehead Dr Saeed Mohammed Al-Shamsi. In only a few months the firm secured an affiliation with Pillsbury Winthrop, putting to rest any thoughts that a Shariah law firm is less appealing for international clientele. Although Pillsbury is unlike Agha & Shamsi’s offering, using a conventional business model, Agha says there is no conflict of interest in aligning with a non-Shariah compliant firm. “This is simply an arrangement between two law firms who have affiliated on a non-exclusive basis, and when it makes sense we co-operate on matters,” Agha explained. “We don’t share systems, client bases, staff or resources.” Inevitably, questions arise on how the firms work together – how Agha & Shamsi maintains its Shariah compliance working alongside its affiliate on a contentious and potentially ribawi (interest-bearing) matter? “While the firm could not work on an interest-bearing transaction – for example the documentation of a conventional loan – if we’re working on a large project in the UAE or the Kingdom of Saudi Arabia that had a conventional finance tranche, then subject to review and approval of our board we may be able to work on the permissible parts of the project. We would have to be mindful, of course, not to share in any fees from the impermissible representation – this would need to be clearly marked and delineated so there’s no issue,” Agha said. “The whole reason we’ve set up the firm is to take a position and endeavour to develop a genuine Islamic finance
practice. It would be hypocritical if we were to set up an ownership structure with an international firm and have that kind of financial backing from them where we’d be able to enjoy the revenues that effectively came from interest-bearing transactions.”
Distinguishing factors
The concept of a Shariah-compliant law firm is still in its infancy. Agha & Shamsi is filling a gap in the market, and for law firms around the world struggling with competitors popping up around them, it’s clear that the firm has been able to distinguish itself. It may also demonstrate that although firms with clients in the conventional banking and financial sectors have seen steady growth rates, their larger exposure to the economic downturn can also lead to their demise – as was the case with Heller Ehrman. Agha says that the financial crisis has led to a positive outlook for work. “A lot of the problems in leverage, collateral debt obligations, hedge funds and the issues that have plagued the conventional banking system are largely not tolerated in the Islamic system,” he said. “I think that’s resulted in the implicit endorsement of the Islamic system, as it hasn’t been as affected.” There’s also much benefit in being surrounded by a large base of the right clientele and resources in the Middle East. As the understanding of Islamic finance practices grows, it will become more accepted as an important and alternative method of financing. Successful or not, it’s clear that Agha remains steadfast in his pursuit, with the concept of the wholly profit-driven law firm having to take a backseat. “We are confident that the firm will be successful; however it matters more to us that our success is rooted in doing this correctly,” he said. “We don’t compromise on our principles or integrity.” ALB
“I was very interested in setting up a law firm with an express ethical mandate, which serves the law ... and a higher spiritual purpose” Oliver Ahga, Agha & Shamsi 11
NEWS | analysis >>
Recent green deals
Analysis >>
►► Amber Energy Hong Kong IPO Value: US$2.19bn
Firms: Jones Day, King & Wood, Conyers Dill & Pearman, DLA Piper, Jingtian & Gongcheng Clients: Amber Energy, Piper Jaffray • The Hong Kong IPO of Amber Energy, a Zhejiangbased clean energy company, was 1247 times oversubscribed, making it the fourth-most oversubscribed IPO in the history of the Hong Kong Stock Exchange
Greener is the future for firms
►► GCL-Poly Energy acquisition of Jiangsu Zhongneng Value: US$3.4bn Firms: Freshfields Bruckhaus Deringer, Hogan & Hartson, Milbank, Tweed, Hadley & McCloy, Paul Hastings Clients: GCL-Poly Energy. Jiangsu Zhongneng, sellers • Hong Kong-listed GCL-Poly Energy, a leading integrated green energy company in China, acquired Jiangsu Zhongneng Polysilicon Technology Development, a world-leading supplier of polysilicon and wafers to companies operating in the solar industry
►► Olympus Capital investment in Zhaoheng Hydropower Value: US$57.5m Firms: Baker & McKenzie, Zhong Lun, Purrington Clients: Zhaoheng Hydropower, Olympus Capital • Olympus Capital has led a US$57.5m investment in Zhaoheng Hydropower Holdings, a hydropower generator and supplier in China, for an undisclosed-sized stake
►► Inner Mongolian wind farm financing Value: US$48.9m Firms: Capital Associates, Norton Rose, Milbank, Run Ming, Simmons & Simmons, Momo-o Matsuo & Namba, Atsumi & Partners Clients: The Asian Development Bank, Japanese sponsors, Datang, Sumitomo, Kyushi Electric • The Asian Development Bank (ADB) and the Industrial and Commercial Bank of China (ICBC) will provide a multi-tranche RMB financing, valued at US$48.9m, to a wind farm in Inner Mongolia to be developed and operated by Datang, Sumitomo and Kyushu consortium
12
Pioneering the way to a low-carbon economy, environmental lawyers and climate-change practices are the latest “must have” for any future-facing, self-respecting modern law firm
I
n a world that has never been more aware of climate change, law firms are taking steps to reduce their carbon footprint and minimise environmental impacts, as part of their corporate social responsibility initiatives. “There has been a sharp increase in public awareness and interest in the green energy sector,” said Baker & McKenzie partner, Beatrice Schaffrath, co-head of the firm’s environmental and climate change practice. “Law firms are increasingly aware of climate-change
issues, both from a business perspective as well as from a day-to-day operational perspective.” Baker & McKenzie’s offices have undertaken a number of environmentally focused initiatives, including recycling measures like the increased use and collection of recycled materials. There is also an energy-efficiency program in operation, with a focus on energy conservation and smarter use of electricity and equipment; and participation in Asian Legal Business ISSUE 9.10
NEWS | analysis >>
environmental conservation activities like a tree-planting day. “Another substantive impact that law firms can have is in using their legal skills to assist with the development of best practices globally, in policy formation, in the establishment and framing of regulatory responses, and in establishing market mechanisms,” Schaffrath said.
Develop good practices
Driven by government policies to tackle climate change, the green technology industry is burgeoning, attracting billions of dollars of investments. Law firms have been increasingly busy with projects and transactions in this sector. They have become part of a driving force in making the green energy revolution happen. Over the past 18 months, a majority of the leading transactional firms have reported a significant increase in instructions related to green energy, ranging from solar power, wind farm and hydroelectric to clean development mechanism (CDM) projects, and nowhere more so than in China “There is definitely an increase in renewable energy investment, mostly driven by the government being very pro-active in this area,” said Gide Loyrette Nouel’s Beijing senior associate, Sarah Stokoe. “Part of the US$586bn economic stimulus plan announced last year will be directed at renewable energy projects including wind and solar power, so it’s an exciting time for those involved in the sector.” Baker’s Schaffrath has acted on many green energy sector projects and transactions, and holds a more measured perspective on development of the practices. “Investor interest in the sector has been high, but those investors are often challenged by the ROI aspects of the green energy projects they are considering,” Schaffrath says. “In the past we have seen a steady and progressive increase in investor interest, driven in large part by the enhanced financial prospects of a project which is, or has the potential to be, a project certified pursuant to the CDM under the Kyoto Protocol.” In recent months, China-based cleanenergy companies have been the shining lights in a relatively quieter market, compared to a year ago.
www.legalbusinessonline.com
Go green for business
A number of companies have raised capital through an IPO or private placement, while some have completed M&A deals. Another Chinese-based clean-energy company, Amber Energy, recently completed its public offering and share placement in Hong Kong. The IPO was hugely oversubscribed, being the fourth-most oversubscribed offering in the history of the HKSE. “The success of this IPO is another stride towards a thriving clean energy market, a priority sector with vast opportunities for many investors in China today,” says head of DLA Piper’s capital markets practice, Liu Wei. In July, Hong Kong-listed GCL-Poly Energy, a leading integrated green energy company, acquired Jiangsu Zhongneng Polysilicon Technology Development, one of the world’s leading suppliers of polysilicon and wafers to companies operating in the solar industry. Upon completion of the acquisition, valued at US$3.4bn, GCL-Poly will become the first Hong Kong-listed large-scale polysilicon manufacturer and one of the world’s five largest polysilicon suppliers. Shanghai-based Comtec, a leading solar silicon material manufacturer, is reported to be raising US$150m from its IPO, scheduled for the end of 2009. “There is no question that there will be a consolidation in the Chinese solar power industry generally, “ said partner and head of Milbank’s global securities group, Douglas Tanner. “In addition to M&A, we would expect there will be issues of intellectual property and lots of finance work as the industry expands.” Tanner led the legal team that represented the target company in the GCL-Poly deal. Leading Chinese domestic firms have also recognised the opportunities in the green energy market, particularly those who have worked closely with investment banks, PE and venture capital funds. Zhong Lun recently teamed up with Baker & McKenzie to advise Zhaoheng Hydropower in its US$57.5m capital raising, led by Olympus Capital Holdings Asia. The firm has gained tremendous exposure by simply following the footprint of its investment bank and PE clients. “Affected by the global financial crisis, private equity investors are more cautious in doing deals. However,
“There is definitely an increase in renewable energy investment, mostly driven by the government being very pro-active in this area” Sarah Stokoe, Gide Loyrette Nouel we have seen an increase in investor activities and deal flows in recent months. [The] green energy sector has certainly been gaining lots of attention,” said Zhong Lun partner, Gong Lefan. He attributes the investment momentum in the sector to recent government policy initiatives and the stimulus package, as well as the rise of Chinese domestic clean-energy and technology companies. “Investment in this sector not only makes [a] positive impact on the environment and economy, but also makes perfect business sense,” Lefan said. “Not surprisingly, PE and venture capitalist investors and investment banks have tremendous interest in it.” Global Law Office is another Chinese firm that has experienced a sharp increase in the volume of investment in this area. The firm has represented CDH in its investment in LDK Solar, which completed its IPO on the New York Stock Exchange. It also acted for New Horizon in its investment in Gold Wind Technology, completing its IPO on the Shenzhen Stock Exchange. Global Law Office is currently involved with ET Solar’s IPO plan. “Green energy projects are very popular in the capital markets, and we expect related work to become a more important part of our firm’s practice,” said Beijing-based partner, George Niu. The Chinese government reaffirmed its commitment to create a green energy path to prosperity. It announced in May that it will invest more than RMB2 trillion in renewable energy sources, as part of its new energy industry stimulus plan. Consequently, the demand for legal expertise in relevant areas will definitely rise. ALB 13
NEWS | analysis >>
Analysis >>
Australia’s stock exchange can be an attractive place to list – as three Chinese companies have recently discovered
“T
Heading south – industry looks to Australia ►► PRC COMPANIES LISTED ON AUSTRALIAN SECURITIES EXCHANGE PRC company
Industry
Listing code TWT
Australian legal representation Tindall Gask Bentley
TWT Group
Outdoor furniture manufacturing
Mesbon China Nylon
Time of listing 2007
Nylon manufacturing
MES
Treyo Leisure & Entertainment
Electronic mah-jong table manufacturing
TYO
Minter Ellison 2007 (Adelaide)/ Tindall Gask Bentley Deacons (Melbourne) 2009
Thomas Bryson International
Textile and home decor manufacturing and distribution
TBI
Minter Ellison (Adelaide) 2009
Shenhua International
Textile manufacturing
SHU
Chambers & Company
2009
Source: ASX data 2009
14
here is every reason why Australia should be a regional financial hub, continuing to engage with greater vigour in the global marketplace,” said Senator Nick Sherry, the Australian Minister for Superannuation and Corporate Law, last year. The Australian Securities Exchange hoped to become a financial hub in the Asia-Pacific; a dream which was quickly derailed by the deepening of the global economic downturn. Yet the delay may have only been temporary, if the recent interest by Chinese companies in the ASX is an indicator. This year alone has seen three manufacturers from the mainland launch IPOs in Australia. The ASX has been identified as an ideal listing environment for Chinese companies, in comparison to the options available in Hong Kong, Shanghai and New York. “The relatively straightforward ASX listing requirements makes it an attractive proposition for smaller Chinese companies, as in this aspect it represents a lower barrier of entry to listing,” said Pierre Lau, a senior associate at Chambers & Co. In order to list on the ASX, the threshold for market capitalisation is a mere A$10m. In contrast, the HKSE requires approximately three times that amount (HK$200m). Similarly, the HKSE requires aggregated profits of HK$50m in the three financial years before listing, whereas the ASX only requires A$1m. The listing rules of the Nasdaq are even more onerous, requiring up to US$11m in aggregated profits over three years.
Track record counts
The reputation of the Australian market is also appealing to Chinese Asian Legal Business ISSUE 9.10
NEWS | analysis >>
companies, especially those that are not state-owned. “Australia presents a politically stable and relatively lowcost environment in which to base a corporate headquarter for Chinese companies wishing to operate internationally,” says Fai-Peng Chen, a partner at Minter Ellison’s Adelaide office. “Australia is also recognised for its strong corporate governance and has a transparent listing process.” This compares to the SSE, where a listing halt was in place between September 2008 and July 2009. “Our sources tell us that there are currently more than 300 companies on the waiting list in China, which has created a backlog that could take up to two years or more to clear,” says Lau. Similarly, the Chinese government has discretion as who is able to list on the SSE. “There is no level playing field since the government decides when you list, whether there has been enough companies from a certain province or a certain industry,” says Brendan Connell, a partner in South Australian firm Tindall Gask Bentley. The reputation of the ASX market also precedes itself, and has excellent connotations in the Chinese economy. “The ASX has a reputation for honesty and reliability, and so there is significant kudos for a PRC company to say it is ASX listed – the inference is that it must be good,” Connell adds. However, although the opportunities may be ripe, there are still relatively few Chinese companies that have opted for an ASX listing. “It is hard to say if there is a window of opportunity – everyone is probably waiting on more positive and consistent signals coming from the equities market in general,” says Jonathan Murray, a partner at Steinepreis Paganin. Existing referral networks have played a role in Australian firms gaining Chinese work. Shenhua were referred to Chambers & Co for their IPO by AllBright Law Firm in Shanghai, as a result of the memorandum of understanding between the firms. AllBright has also shortlisted another three Chinese enterprises interested in the ASX, which bodes well for the Exchange becoming a regional hub in Asia-Pacific. ALB
“Australia represents a politically stable and relatively low-cost environment in which to base a corporate headquarters for Chinese companies wishing to operate internationally”
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15
NEWS >>
China >>
Arrested Rio Tinto
uk report Lovells tie up with French firm Lovells recently formed a co-operation agreement with Paris-based insolvency boutique Kuntz & Associés which will allow the two firms (who have a history of working together) to form a closer bond without entering into a full-scale alliance. The arrangement will also grant Kuntz access to Lovells’ full-service French practice and will permit Lovells to utilise Kuntz’s specialist insolvency expertise. Herbert Smith raises bar on partner performance Herbert Smith has switched its former ‘make a difference’ initiative for partner appraisals to more formal assessments on their performance, in a bid to place more emphasis on the firm’s international ambition. The new system will include formal feedback from partners in international offices for the first time and assessments on matters such as cross-selling between offices. Partners will also be assessed annually against four distinct areas: client skills, technical skills, people skills and how their performance fits with the firm’s strategy. The move to monitor partner performance more closely follows a change in the firm’s associate appraisal process made earlier this year. It is a definite step away from the consensual approach introduced in 2007 by senior partner David Gold, clearly sending the message to partners that the expectations upon them will be rising.
Clifford Chance elections approaching Clifford Chance will soon embark on a series of senior leadership elections. David Childs is expected to stand for re-election as the firm’s managing partner. If he is successful, his second four-year term at the firm’s helm would begin in May 2010. Other management positions soon to be up for grabs include London managing partner, general counsel and practice head roles for real estate and tax, pensions and employment. Clifford Chance is reportedly also reviewing the position of global litigation and dispute resolution head, which became redundant after the May departure of Mark Kirsch to join global player Gibson Dunn & Crutcher. UK firms star in big business rankings The Hemscott rankings of legal advisers to FTSE 100 companies has revealed Linklaters and Slaughter and May as the firms currently advising the highest number – 25 – of the UK’s biggest companies. The rest of the top five is rounded out by Herbert Smith (which saw its FTSE 100 client count drop one from 19 to 18, as it is no longer listed as an adviser to Friends Provident), Allen & Overy (A&O) and Freshfields Bruckhaus Deringer. Freshfields recently gained two top-ranked clients – the London Stock Exchange Group and Wolseley – and is now running head to head with A&O, with 17 FTSE 100 clients.
F
our Rio Tinto employees who stand accused by the government of bribery and industrial espionage have been granted legal representation. While the four will have individual lawyers they will all be tried collectively, and they have all chosen renowned PRC lawyers. Australian citizen Stern Hu, general manager of the Rio Tinto sales team in Shanghai, is represented by Charles Duan, the managing partner of Shanghai-based Duan & Duan. Three Chinese nationals, Liu Caikui, Ge Minqiang and Wang Yong, have engaged legal representation through Shanghai-based criminal lawyers. Liu, who was the manager of the Rio sales team, will be represented by Tao Wuping from Shenda Partners, who has previously acted for Shanghai property tycoon Zhou Zhengyi in the stock manipulation case in 2003. Criminal defence lawyer Zhai Jian, who founded Zhai Jian law firm and gained national fame for defending a Beijing resident who killed six police officers last July, will defend Ge, an employee of the company. Zhang Peihong, also from Zhai Jian, will act for Wang, also an employee. “There is no reason for me to not accept this case. It’s like operating a hospital – you can’t turn away
india >>
ROUNDUP
• Kiev partner Jared Grubb has replaced Nick Fletcher as managing partner of the Clifford Chance office. Fletcher will return to Warsaw, where he was managing partner prior to relocating to the Ukraine • Mayer Brown partner Gillian Sproul recently replaced Frances Murphy to head the competition and anti-trust group at the firm’s London office. Murphy led the City team for eight years and left for the London antitrust practice at Jones Day • CMS Cameron McKenna recently pushed back the start dates for a handful of trainee solicitors, with the seven who were set to qualify on 1 September agreeing to defer their start dates by up to three months • Leading Spanish firm Garrigues, led by Madrid-based corporate restructuring partner Antonio Fernandez, recently launched a specialist restructuring & insolvency group, in response to data from Spain’s National Statistics Institute showing the number of formal insolvency orders has almost tripled compared to last year • Clifford Chance’s Amsterdam head Jan ter Haar has been named as the firm’s new Moscow managing partner, following the announcement that current incumbent Michael Cuthbert plans to retire at the end of the year. CC is also reportedly gearing up to overhaul its management structure in the region, with Moscow and Kiev to come under one remit and Bucharest, Prague and Warsaw under another
16
India pressed T
he United Kingdom says it welcomes more Indian law firms to its legal industry. As part of broader lobbying efforts towards the liberalisation of the Indian legal market, the British Minister of Justice, Lord Bach, met with Veerappa Moily, the Indian Minister for Law and Justice, in August. As part of the visit, Bach also met with local lawyers in a forum to explain that Indian law firms are allowed to work in Britain. FoxMandal Little and ALMT Legal are among the Asian Legal Business ISSUE 9.10
NEWS >>
news in brief >>
employees find legal representation
patients,” said Zhai. “[It] has been receiving an overload of media attention, but I am not pressured and will try it as any other litigation case.” China announced the formal arrest of the Rio employees on 12 August 2009; and their lawyers have filed for permission to see their clients. Chinese law does not require the defendants to have access to their lawyers until after the current stage of investigation. “At this stage, all lawyers still do not know the detailed facts of the case and [I] am unable to comment further,” Zhai added. Although the four Rio employees were detained weeks ago the allegations against them have now been amended: from stealing state secrets, which is punishable
by execution, to bribery and theft of commercial secrets. The accused face up to seven years imprisonment if found guilty. The matter has affected tensions somewhat between China and Australia, as the “Rio Four” case has been mentioned when Australian firms report their major transaction and investments dealings from China. The recent arrests have also kept China-based Western companies on their toes. Many companies are seeking legal advice on how to prevent similar accusations happening to their employees. The case also questions the boundaries of acceptable commercial behaviour in China and the cost of overstepping the line.
by UK in liberalisation talks select few Indian law firms who have now set up there. Local lawyers, who are largely opposed to liberalisation, have previously raised the lack of reciprocity to allow them to practice in the UK as a major impediment towards the liberalisation process. “We welcome Indian lawyers,” said Bach, in his speech to the UK trade and investment workshop, held in Chennai. “We allow virtually unrestricted access for foreign firms. It doesn’t mean that the UK lawyers www.legalbusinessonline.com
have to compete with them for work. On the contrary, the foreign firms present extra work opportunities for English lawyers.” In an earlier meeting with the Indian Minister, Bach argued that foreign lawyers should be allowed to advise local clients, but not to stand in court. However, the Minister said any decision on liberalisation would depend on the opinions of local lawyers, which further delays any decisive steps towards this happening soon.
litigation booming in dubai Herbert Smith has transferred London partner Stuart Paterson to the Dubai office to strengthen the firm’s litigation and arbitration practice, as the number of construction-related disputes surge in the region.Paterson will work alongside Dubaibased dispute resolution partner, Craig Shepherd, on commercial and banking litigation, ADR and risk management. While the law firm had always planned to augment their Middle East Practice, this was accelerated to meet recent demand. “The original plan was to have a litigation partner in the second half of 2011,” said Shepherd. Law firms across the region have recently cited a massive increase in litigation and dispute work arising from the crisis-addled construction sector. Shepherd agreed that Herbert Smith was dealing with similar volumes. “There are now more disputes related to the suspension or termination of projects, or shareholder disputes in relation to project funding,” he said. China infrastructure built up by firms An increasing number of law firms are reaping good returns from the thriving business relationship developing between China and Australia. China Everbright Limited (CEL) has ventured Down Under, building two funds with John Sullivan Mallesons Australia’s Macquarie Bank to leverage China’s infrastructure opportunities. Mallesons and CEL’s ongoing legal advisor, Paul Hastings, both have a hand in the joint venture. Australian and Hong Kong partners, John Sullivan and Hayden Flinn, are leading Mallesons representation for Macquarie Bank. Paul Hastings’s Hong Kong-based corporate partner Raymond Li, partner Vivian Lam and Jenny Law are acting for CEL. The joint venture will raise US$1.5bn to create two funds for Chinese infrastructure investments. partners down in UK’s top 50 firms If Clifford Chance and Simmons & Simmons are anything to go by, new partner promotions across the United Kingdom’s top 50 law firms have decreased somewhat, with 399 promotions made in 2009, compared with 598 in 2008. As a group, Magic Circle firms also experienced a drop across the board, with promotions falling 41% from 120 to 71. Female partner promotions across the top 50 firms have also plummeted – just 95 women were promoted to partner in 2009, compared with 149 in 2008. However, despite the fall in overall promotions, the number of new partners in London alone has only fluctuated slightly .
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NEWS >>
CHINA >>
Kirkland & Ellis takes on China
us report Dewey scores big in M&A Dewey & LeBoeuf’s corporate group recently secured two high-profile M&A mandates. Dewey M&A head Mort Pierce advised Disney on its US$4bn acquisition of Marvel Entertainment; and Richard Climan and Keith Flaum led a team advising eBay on the US$1.9bn sale of Skype. The firm won a role in both deals as the result of longstanding relationships, highlighting why Dewey has been among the more successful US firms during the downturn in deal flow. Mergermarket’s global M&A survey for the first half of 2009 recently revealed that the US firm moved up to 12th place from 25th in the global deals value table.
100 associates for its intake as a result of the dismal economic climate. It later informed successful candidates that their start dates would be deferred until 2011. The new figures are in stark contrast to the numbers the firm recruited for its 2009 program: 225 summer associates were accepted of whom 95% were offered full-time positions. The firm will also implement a ‘Skadden Offer Day’, where associates from its 2010 intake will receive their offers on the same day (22 September 2009). The firm will continue to give those who receive offers 45 days to evaluate them, in compliance with guidelines set down by the National Association for Law Placement.
White & Case steppes into Kazakhstan White & Case recently assisted the Kazakhstan government on the creation of new restructuring laws in the country, following the US firm winning a role advising UBS on the restructuring of Kazakhstan’s BTA Bank earlier this year. The firm also advised Goldman Sachs on the restructuring of Kazakhstan financial institution Alliance Bank. London-based European capital markets co-head Francis Fitzherbert-Brockholes led the advice team.
Kirkland & Ellis effect layoffs in NYC Kirkland & Ellis finally followed suit and joined the list of US firms to make mass redundancies. The firm laid off more than 20 associates in New York in September, following its annual performance review period, citing the turbulent economic climate as the cause. Kirkland had roughly 335 lawyers in the New York office prior to the cuts being made.
Skadden slashes summer associate intake Skadden Arps Slate Meagher & Flom recently decided to reduce the size of its summer associate intake for 2010, following a delay in the start dates of its 2009 group. The firm advised US law schools it would only be recruiting around
Brettle appointed to White & Case executive committee White & Case London head Oliver Brettle recently replaced New York partner Dimitrios Drivas on the firm’s executive committee. He will join Turkish partner Asli Basgoz and New York partner Anthony Kahn on the committee that works under firmwide chairman Hugh Verrier.
K
irkland & Ellis has taken its first step onto the mainland by opening its second Asian office in Shanghai. The new office, which will be led by corporate PE and M&A partners Li Xiaoyang and Li Chuan, will represent international private equity firms and Chinese entities abroad. “The Shanghai office is a direct response to our clients’ growing activity in China, and we also see opportunities to serve rapidly globalising Chinese companies,” said Thomas Yannucci, chair of Kirkland’s firmwide management committee. The firm’s Hong Kong branch opened three years ago, focusing on transactional business for PE funds and serial strategic acquirers. “Crossborder transactions involving China are inherently complex. Getting a deal done often requires experienced M&A lawyers in both mainland China and Hong Kong,” said Li. Li Xiaoyang joined Kirkland last year from Jun He’s Beijing office. Before his role at Jun He, he was the managing partner of the corporate practice group and a member of the management committee of King & Wood. Li Chuan joined Kirkland’s Chicago office in 2001, where he focused on leveraged buyouts and other complex deals for large and mid-market PE funds. He relocated to Hong Kong in 2007.
ROUNDUP • Willkie Farr & Gallagher and Paul Weiss recently scored lead roles on the US$2.6bn acquisition of US drugmaker Sepracor by Japan’s Dainippon Sumitomo Pharma (DSP) • Sonnenschein Nath & Rosenthal recently confirmed that the firm had made additional layoffs in September but declined to say exactly how many positions were eliminated • Partners Sarah Cogan and Laura Palma have become the first female partners to be elected to the executive committee at Simpson Thacher & Bartlett in the firm’s 125-year history. The election to the exclusive 12-member group is drawn by secret ballot with each partner having one vote • McDermott Will & Emery recently launched a private client practice in its London office, aligning the office with its New York counterpart. The practice focuses on wealth management for private companies, charitable institutions, private individuals and families and also works with the corporate and tax teams
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Asian Legal Business ISSUE 9.10
NEWS >>
industry >>
Recovering fees a struggle for firms L
aw firms are dealing with more feerecovery issues and some have been forced to delay staff salaries or launch disputes against non-paying clients. The problem has taken its toll recently in the US, where a number of disputes are running between high-profile firms and longstanding clients. In July, Bingham McCutchen filed a suit seeking US$760,000 in unpaid legal fees from Capital Properties, who had reportedly been clients of the firm for over twenty years. Morgan, Lewis & Bockius also filed a suit for US$2.5m in late fees from Home Solutions of America. Kostelanetz & Fink is suing a former client from KPMG over an alleged outstanding bill of US$1.3m. Indian firm FoxMandal Little admitted in July that it had not paid some of its staff salaries because clients had not paid them. “It’s not a case where there isn’t work; we have a lot of work, but it’s just that the bill has been raised and clients haven’t paid,” said a source at the firm. However, some law firms in Singapore that hire debt collectors to recover fees have been advised against the practice, as it could breach the country’s codes of professional conduct. The Law Society of Singapore recently issued a notice stating that hiring debt collection agencies could “adversely affect the standing and perception of the legal profession in the eyes of the public. [Lawyers] should bear in mind that they owe fiduciary obligations to their clients and that the courts are the ultimate arbiters of the recovery of any legal fees and expenses. It would therefore be improper for [firms] to recover their fees and expenses by adopting a method used … in ordinary creditordebtor relationships,” the statement went on to say.
www.legalbusinessonline.com
Although law firms offer debt recovery services themselves, as a result of the notice pressure on them to recover fees internally will be Tan Min Li Colin Ng & greater. SingaporePartners based recovery agency Milliken & Craig expects to see a drop in instructions received from law firms on these matters as a result. “We have worked with several firms in the past to collect from their slow-paying debtors in Singapore and abroad. With the latest directive from the Law Society, we do not see any possibility of working with Singapore law firms,” the company said in a statement. However, while Singapore’s law firms should expect to see more work handling debt recovery issues, Tan Min-Li, a partner and co-head of the corporate finance practice group at Colin Ng & Partners, says that these problems are not widespread among local law firms. “Firms which have been using the services of debt collectors may initially be affected by having to allocate additional time and resources to pursue outstanding claims but, in the long run, they can pre-empt it by adopting different billing and collection mechanisms,” she says. “Ask for monies to account and render interim bills. Ultimately, if you serve your clients well, you should get paid.”
“It would therefore be improper for [firms] to recover their fees and expenses by adopting a method used ... in ordinary creditor/debtor relationships” Law Society of Singapore
news in brief >> ITAlian firm targets China expansion Following the line taken by US and UK firms who have been increasing their China practices recently, Italian firm NCTM has boosted its Asia team with the appointment of former Allen & Overy associate Hermes Pazzaglini. While the firm currently has no presence in Asia, it is planning to use the appointment to expand to the China and East Asia markets, led by the firm’s co-managing partner and head of its China team, Vittorio Noseda. Pazzaglini, who has previously held positions at Baker & McKenzie and Barlow Lyde & Gilbert, will work alongside Noseda to head the expansion. “Despite the uncertain economic climate there is a significant demand from our clients for support in China and other East Asian markets,” said senior partner Paolo Montironi. “For NCTM, this represents the most natural move in our overall international expansion strategy.” software pirates imprisoned in China China is taking a firm stand against the country’s piracy problem. A district court recently sent four men to prison and ordered them to pay a CNY1m fine for infringing Microsoft’s copyright. The four men are from China’s largest online software piracy syndicate, Chengdu Gongruan Network Technology, and include founders Hong Lei and Sun Xianzhong. The court also sentenced the men to imprisonment for up to three-and-a-half years and gave them a collective fine of US$1.6m. “Criminal IP infringement cases with such severe penalties are uncommon in China,” said King & Wood’s Shanghai-based intellectual property lawyer, Cecilia Lou. “However, in recent years, China has increased its efforts to combat IP violations and has made great progress.”
Eversheds to slash staff count again Eversheds recently launched its fourth redundancy round, putting over 100 legal roles under threat. The top 10 UK law firm will see around 22 fee-earners in the real estate practice laid off, along with up to 95 secretarial posts nationally, in a bid to save up to £2m a year through an outsourcing deal with South African-based outsourcing company Exigent. The review will see the firm lower the level of in-house secretarial support from one secretary for every 3.4 fee-earners to one for four and will also consider a number of flexible working alternatives including sabbaticals and reduced hours. Eversheds has conducted three redundancy consultations over the last 18 months and more than 80 lawyers have been laid off.
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NEWS >>
Update >>
industry >>
IT column
TM
Internal computer investigations as a critical control- under Sarbanes-Oxley
T
he Sarbanes-Oxley act of 2002 was enacted to protect investors by combating corporate crime and improving corporate governance. Sarbanes-Oxley requires companies to implement extensive corporate governance policies to prevent and respond to fraudulent activity within the company including vigilant self-policing to deter and quickly investigate and contain internal fraud.-eg- Sarbanes-Oxley expressly requires publicly traded companies to create anonymous hotlines for the reporting of fraud, to investigate those instances, and certify that they have discovered fraud involving management and or other key employees up to the board of directors. Many companies, however, are ill-equipped to identify and acquire relevant electronic data that is central to responding to incidents of fraud. While companies have spent considerable time adopting and amending policies in response to Sarbanes-Oxley, relatively few have implemented the information technology infrastructure that will enable companies to turn anti-fraud policies into concrete results. Companies need an investigative infrastructure to fulfill the intent of Sarbanes-Oxley. Section 404 of Sarbanes-Oxley requires organizations to institute effective “internal controls”. Under SEC rules, internal controls must include policies and procedures that“Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets, that could have a material effect on the financial statements” Put simply, an adequate internal control structure must include “controls related to the Prevention, Identification, and Detection of fraud” . Prior to Sarbanes-Oxley, courts recognized the importance of preserving electronic data in connection with litigation. When an incident is detected, it may not be obvious that it will result in possible court action. Therefore, a danger exists that necessary evidence is destroyed accidently, before the seriousness of the incident is realized. An enterprise can minimize this danger by utilizing the best computer forensics tools available, for response to security incidents so that collecting data will be quick and easy. Only an effective computer forensics capability allows a company to gather accurate, timely information concerning incidents, and permit the ready access of that information. Typically a network based investigative infrastructure, based on leading forensic technology, such as EnCase Enterprise, gives companies this peace of mind, and capability to respond, and comply with Sarbanes-Oxley. A company’s management can feel confident that including such tools in its assessment of the organizations internal controls will pass muster with regulators. The above is an excerpt from a whitepaper available on Guidance Software’s web site, entitled - Internal computer investigations as a critical control- under Sarbanes-Oxleywww.GuidanceSoftware.com
By Carl Kimball For more information, please contact: Carl Kimball, General Manager, Asia Pacific Guidance Software, Inc Phone: +65 6248 4527 Email: apac.sales@guidancesoftware.com
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Carl Kimball
Rebound seen in Asia T
he number of legal positions advertised in Hong Kong and Japan has improved in the second half of 2009, in what may be another signal of economic ‘green shoots.’ The Robert Walters Asia Job Index tracks advertisements posted by recruitment companies, newspapers and job sites in the region. According to the index, vacant positions for lawyers in Hong Kong grew by 20%, jumping from 574 jobs in April to 692 in June. In Japan, there was nearly a 12% increase in advertisements, up from 94 to 104 roles. The number of positions advertised in China and Singapore contracted, however. China posted 4,198 roles in June compared to 4,513 in April. Singapore remained relatively stable, advertising 268 jobs in April and 262 in June. Jacqueline Keddie, managing consultant at legal recruitment firm Law Alliance, said that although it’s still a tough market, especially in Japan, there are signs of growth around the region. “Across the board things are improving in the corporate and finance side. There are more deals happening and that translates through to law firms,” she said. “We’re seeing specific opportunities across a range of practice areas.” Keddie predicts that the Singapore government’s recent investment in the arbitration field will create new job opportunities there. “Singapore is making a very strong push as a jurisdiction for arbitration, so that on the dispute-resolution side we’re seeing some opportunities, just as we saw some Qualifying
MALAYSIA >>
Malaysia leads Islamic M
alaysia has emerged as the leading market for sukuk (Islamic bonds) issuances, with a market share of around 45% of deals this year, according to a report by Standard & Poor’s. The report is also supported by figures released by the Securities Commission of Malaysia, showing the value of sukuks issued in the first half of the year at approximately US$512m. This is likely to surpass the total values for 2008, of around US$596m. Although the sukuk market has shrunk in the past 12 months, a number of high-value deals completed recently suggest a recovery is underway. For example, a string of law firms advised on the recent US$1.5bn issuance by Malaysian oil company Petronas. Allen & Overy advised on the Saudi Electricity Company’s US$1.8bn sukuk issue; while Norton Rose and Lovells advised on the Government of Bahrain’s US$750m sovereign sukuk issue. While Singapore has positioned itself as a centre for international arbitration, Malaysia aims to become the regional Islamic finance hub. One investment the country is making is to allow five foreign law firms to set up locally to give advice on Islamic finance law. Zandra Tan, Asian Legal Business ISSUE 9.10
NEWS >>
legal roles
Update >>
Intellectual Property Proposed Changes to the Singapore Patent System
O Japan: 12% increase in advertised legal roles
Foreign Law Practice (QFLP) opportunities following the liberalisation of the legal market,” she said, adding that across Asia finance and corporate work was starting to grow. While she predicts that the current quarter – July to September – will be the best seen this year for levels of activity, law firms largely remain cautious about hiring. “Firms need to see sustainability in the workload before they are prepared to hire, particularly in circumstances where [they] have gone through retrenchment exercises.”
finance bond market a partner at Malaysian firm Zul Rafique & partners who advised the banks on the Petronas deal, said that the government’s initiatives are welcome. “I think Malaysia is one of the leaders [in Islamic finance] because of the government’s support, for example by setting up the Zandra Tan Malaysian International Islamic Financial Zul Rafique & partners Centre (MIFC), and with these initiatives, Malaysian and foreign companies have a wider avenue to Islamic financing. They are encouraging it and it makes our work easier,” she said. A number of foreign companies have used Malaysia to issue sukuks, including the IFC, Shell and Toyota Capital. Tan said that her firm has seen more instructions from foreign clientele recently. “We have seen a lot more enquiries from foreign funds wanting to come into Malaysia to set up, but at the end of the day it depends on how the authorities are going to change the regulations in order to make them more attractive. To an extent, Malaysia is also more attractive to Middle East investors because of cultural similarities,” she said. www.legalbusinessonline.com
n 3 July 2009 the Intellectual Property Office of Singapore (IPOS) announced proposals that would significantly change the present Singapore patent system. Most significantly, the proposed changes are to convert the present patent system from a “self-assessment” regime into a “positive examination grant” system. The current self-assessment system came into force in 1995 and is unique from patent systems in other jurisdictions. A patent may proceed to grant regardless of whether the patent is valid, i.e. novel, inventive or capable of industrial application. The onus is on the patent owner patentee to ensure the patent is valid, otherwise the patent may be subject to challenges by third parties should the patentee try to enforce the patent. Under the proposed changes, a patent would only be allowed to proceed to grant based on a positive examination result reached by a patent examiner during the examination process. IPOS proposes that such a positive examination grant system has advantages over the current self-assessment system, by “providing greater certainty from the business and enforcement perspective for both the patentee and third parties” and “potentially increase the quality and standards of Singapore granted patents”. Adoption of the positive examination grant system will also change the current patent prosecution procedures and timelines. For example, IPOS has proposed that an opportunity be made available for applicants to request hearings to overcome any objections raised by an examiner. Such a hearing process would not only provide the applicant with a further opportunity to secure a positive examination result, but the resulting publically available decisions reached at the hearings will provide guidance to applicants, examiners, practitioners and other interested parties on Singapore patent practice. Other notable proposed changes include capping specific time limits available for automatic extensions of time to six months with no opportunity for further extensions of time which are currently available at the discretion of IPOS. Additionally, the period is proposed to change from 30 months to 20 months and the criterion is proposed to change from a “reasonable care” to an “unintentional” standard for restoration of a lapsed patent. In addition to the above areas, IPOS has requested feedback in their public consultation on whether Singapore should follow the European/United Kingdom approach or the United States approach to medical use inventions. The proposed changes to the Singapore patent system are significant, and if adopted will bring the system in closer harmony with the vast majority of patent offices around the world.
Nevin Carmichael Patent Attorney Intellectual Property and Technology Group ATMD Bird & Bird LLP Phone 65 6428 9845 Email Nevin.Carmichael@twobirds.com
Nevin Carmichael
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NEWS >>
Update >>
australia >>
International Tax
Holman Fenwick raids Blakes
Historic Liechtenstein /UK Tax Treaty
M
T
he UK and Liechtenstein signed a Tax Information Exchange Agreement (TIEA), on 11 August 2009. The Preamble to the Liechtenstein TIEA refers to the other Agreements and states that the respective governments have: ‘….reached an understanding covering various matters including the introduction by the Government of the Principality of Liechtenstein of a five-year taxpayer assistance and compliance programme and the introduction by the competent authority of the United Kingdom of a five-year special disclosure facility. It is the Contracting Parties’ intention that by the conclusion of the five year period contemplated by the taxpayer assistance and compliance programme, there will be no beneficial owners who are liable to taxation within the jurisdiction of one Contracting Party who are using the laws of the other to disguise such liability without paying appropriate tax in the manner contemplated by the understanding.’ The two countries also signed a Memorandum of Understanding and a Joint Declaration in relation to the Memorandum. Under these various Agreements there is to be a Liechtenstein disclosure facility and a Liechtenstein taxpayer assistance and compliance programme of which the main provisions are as follows: ‘The Liechtenstein Disclosure Facility (LDF) runs from 1 September 2009 to 31 March 2015. All Liechtenstein financial intermediaries will have to review all clients identifying those who need to confirm their tax position with HMRC and advise them to do so within a specific time frame. Where a UK investor confirms to the intermediary that they are cooperating with HMRC the financial intermediary can continue to provide financial services to that person. Where a UK investor cannot confirm that they are cooperating with HMRC the financial intermediary must withdraw financial services in Liechtenstein or apply various sanctions. The Liechtenstein Government will introduce new laws to ensure audit of the process. The day before these Agreements were signed the Financial Times reported that: ‘5,000 British investors with an estimated £2bn to £3bn in secret Liechtenstein bank accounts will be asked to come clean under a ground-breaking deal to be signed on [11 August 2009]’ As the UK-Liechtenstein offshore disclosure agreement comes into effect, UK law firm McGrigors reckons it has found a loophole for British holders of hidden offshore savings to halve their back tax liability. They simply shift the cash into a new Liechtenstein account before declaring it. 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.
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Debbie Annells
aritime specialist firm Holman Fenwick Willan has opened an office in Sydney, to be headed by former Blake Dawson partner Alex Baykitch.This will be the firm’s second office in Australia following its 2006 launch in Melbourne, achieved by hiring lawyers from Blake Dawson and Middletons’ transport and Gavin Vallely Holman Fenwick trade practices. Baykitch, who headed Blakes’ international arbitration practice, will be joined in the next month by three other oil & gas and litigation specialists sourced from around the world. Melbourne managing partner Gavin Vallely said that the firm had originally planned to open the Sydney office following the Melbourne launch. “It was part of our original plan when we started in 2006; it’s just been a question of timing and having the right people to facilitate that.” The Sydney office is intended to strengthen the firm’s client relationships. “We have a significant client base in Sydney who we’ve been serving from Melbourne. We have strong relationships there, and certainly [clients] were indicating that the relationship would be enhanced,” said Vallely. Baykitch, who has experience in international arbitration and litigation matters, will also develop the firm’s connections with
CHINA >>
China outbound investment
O
utbound M&A work has long been hailed as the ‘next big thing’ among law firms in China, with the phenomenon now arriving as clients go shopping world-wide for raw materials, technology, and brands. According to a report jointly issued by the Ministry of Commerce, the National Bureau Wang Li DeHeng of Statistics and the State Administration of Foreign Exchange, Chinese net ODI in 2008 totaled US$55.91bn, up over 100% from the previous year. Non-financial ODI reached US$41.86bn in 2008, up 68.5% year-on-year, and financial ODI increased to US$14.bn, up by nearly 750% year-on-year. The vast majority (over 85%) of enterprises investing overseas are state-owned. SOEs are rich in capital, and low asset valuations have made now an opportune time for Chinese companies to gain a foothold in the global markets. While most international firms located in China were initially set up to service inbound investments, they have been reinventing themselves to target outbound investments. “The increase in Chinese companies undertaking M&A activities offshore is a clear and growing trend, and one that plays to the strengths of international firms,” said Antony Dapiran, M&A partner at Freshfields. China’s awakening has shaken the world and its outbound Asian Legal Business ISSUE 9.10
NEWS >>
Update >>
for Sydney launch Asia, where the firm has offices in the regional shipping hubs of Hong Kong and Singapore. Singapore partner Simon Davidson said that he expects to see growing participation with the Sydney office. “We’ve worked quite closely with our Melbourne office which had links between Alex Baykitch Holman Fenwick Singapore and other jurisdictions here, and we’d certainly be looking to work with the Sydney office, in particular in the container liner trade which tends to focus more on Sydney,” Davidson said. “There’s a great deal of trade between Sydney and Singapore, and we hope to develop that business further going forward.” Holman Fenwick has been working on many of the major energy & resources deals flowing between Australia, Asia, and South America. That type of work, said Vallely, will continue to grow. “We’re already heavily involved in the work coming out of Western Australia and a higher percentage of our business is serving the oil & gas sector there, for both domestic an international stakeholders. There are dozens of projects over there, and the [three lawyers] who will be joining us have significant experience in that sector,” he said. For more on how shipping law firms are faring following the economic crisis, see the report on page 54.
doubled in 2008 investment surge has been felt not only by international but also domestic law firms. “As China’s fast recovery ahead of [the] global economy has triggered a new, phenomenal crossborder M&A wave led by domestic companies, the emergence of PRC firms is a natural progression,” said DeHeng Law Firm’s chief global partner Wang Li.
Islamic Finance Trustees’ Role In Sukuk Structuring
I
n Malaysia, a trustee appointed for an Islamic bond or sukuk structuring is governed by both the Companies Act 1965 and the Capital Markets and Services Act 2007. Apart from the common law duties of the trustee, the role of the trustee is spelled out in detail in these statutes, and its fiduciary duties under these Acts are in pari materia. Essentially, the trustee is the independent referee for the players in the sukuk transaction flow, and acts as the watchdog for the Securities Commission to which it reports any breach of statutory provisions by either the borrower or guarantor. Vigilance is the keyword, and the trustee has to monitor the debenture deed and ensure that the rights and obligations of the borrower and guarantor are observed, in relation to the beneficiaries under the debenture, namely the investors or debenture-holders. Owing a duty of care exclusively to the beneficiaries, the trustee plays a proactive role to ensure that the debenture is enforced, especially in the event of default. In a recent interaction with the Securities Commission in relation to proposed amendments to the SC Guidelines on sukuk structuring and issuance, the trustees were debating an issue whether they ought to be involved in the transactions leading to a sign-off as they were mindful of the already onerous duties of trustees to a debenture. It is the view of the writer that being involved in the transaction documents and deliberations should not be avoided as trustees by the very nature of their statutory duties are responsible to ensure that the beneficiaries’ interests are always protected. Short of signing off, which they should not be asked to do as this will compromise their independence, trustees should be involved in the transaction documents at every stage as this will give them the critical knowledge about the state of affairs of the transaction, especially in regard to the solvency of the parties of which they are bound to make a report. More importantly, involvement in the transaction will be proof that they have exercised due diligence and care in carrying out their duties as trustees. As both statutes do not allow exclusion of liability as trustee, the best way to protect themselves is for trustees to pass the ‘reasonable trustee’ test, viz. that notwithstanding a breach, it has done what a reasonable trustee ought to have done to discharge its fiduciary duties. Being involved in the transaction flow instead of being passive allows the trustees to show that they are exercising due diligence and care, hence demonstrating that they are reasonable trustees as expected in common law as well as under the relevant statutes on the role and duties of trustees. Haji Idrus bin Ismail, Senior Associate Islamic Banking & Finance Practice Group Azmi & Associates 14th Floor, Menara Keck Seng, 203 Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia Tel: +6 03 2118 5000 ext 5033 Fax: +6 03 2118 5111 www.azmilaw.com E-mail: idrus@azmilaw.com
www.legalbusinessonline.com
Haji Idrus bin Ismail
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NEWS | appointments >>
In-house
appointments ►► LATERAL HIRES Name
Leaving
Going to
Practice
Location
Jeffrey Tan
Raslan Loong
Azmi & Associates
IP
Kuala Lumpur
Suhaimi Lazim
N/A
Azmi & Associates
Singapore law
Hong Kong/Kuala Lumpur
Stephen Jiew
In-house
Lee Hishammuddin Allen & Gledhill
IP
Kuala Lumpur
Swee Siang Boey
Rajah & Tann
ATMD Bird & Bird
Dispute resolution
Singapore Singapore
Colin Jarraw
Allen & Gledhill
Navin & Co
Shipping
Ashwin Sapra
Ascend Therapeutics
Luthra & Luthra
IP
Peter Siembab
Citi
Nomura
In-house
Hong Kong
Lee Kuen Yip
Lee Kuen Yip & Co
Colin Ng & Partners
Real estate and conveyancing
Singapore
Sam Kok Yin
Yeo Wee Kiong Law
Colin Ng & Partners
Corporate & commercial
Singapore
Josh Clarke
Norton Rose
Watson, Farley & Williams
India/structured finance
Singapore
Patrick Zheng
China International Economic and Trade Arbitration Commission
Herbert Smith
arbitration
Beijing
Paul Teo
Pinsent Masons
Lovells
Asian construction & infrastructure
Singapore
Jun Bautista
International Centre for Dispute Resolution
Baker Botts
Arbitration
Hong Kong
Michael Guilday
Linklaters
Ropes & Gray
Private investment fund
Hong Kong
Joel Hogarth
White & Case
O’Melveny & Myers
Finance and restructuring
Singapore
Hermes Pazzaglini
Allen & Overy
NCTM
China/Asia
Milan
►► relocations Partner
From
To
Allen & Overy
Srinivas Parthasarathy
Singapore
Trilegal, Mumbai
Herbert Smith
Stuart Paterson
London
Dubai
Herbert Smith
Justin D’Agostino
London
Hong Kong
Herbert Smith
Damien McDonald
Shanghai
Beijing
Azmi & Associates
Azmi boosts international presence Kuala Lumpur-based Azmi & Associates is planning to expand to neighbouring countries. The fastgrowing Malaysian firm has recruited the head of Raslan Loong’s IP and technology practice, Jeffrey Tan, as a partner and Hong Kong-based lawyer Suhaimi Lazim as a foreign counsel in its international law division, specialising in Singapore law. Managing partner Azmi Mohd Ali said that the firm needed to bolster its numbers before embarking on its plans for regional growth. “As a firm that desires to be a top-tier firm in
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Lawyer takes partnership over in-house Lee Hishammuddin Allen & Gledhill, Malaysia’s sixth-largest law firm by headcount, has appointed Stephen Jiew as a partner in its IP department, taking partners numbers up to 23. Jiew, who joins private practice from a position as general counsel of one of the world’s largest fast moving consumer goods (FMCG) companies, has specific experience managing IP matters. He was responsible for devising strategic IP protection programs for large-volume owners and managing their IPR portfolios locally and across multiple jurisdictions. On the transactional side he worked on aspects of corporate reconfiguration exercises, cross-border M&A, investments, procurement, IPOs, divestitures, and joint ventures.
Rajah & Tann
ATMD Bird & Bird
ATMD snare Rajah & Tann dispute partner ATMD Bird & Bird has appointed Swee Siang Boey as a partner in its dispute resolution practice. He is the second partner to join the dispute resolution group in the last 18 months, which has doubled in size since early 2008. Boey joins the firm from Rajah Swee Siang Boey & Tann, where he was noted for work on some of Singapore’s most high-profile cases, including cross-border insolvencies, defamation and medical negligence actions, as well as several litigation cases in the High Court.
Rajah & Tann
Firm
Raslan Loong
Lee Hishammuddin
the Malaysian market and with regional presence in the near future, we need to expand our partnership base,” said Azmi. Suhaimi, a former partner at Shook Lin & Bok, will assist in developing best practices for clients in investments and Suhaimi Lazim projects in Southeast Asia. Tan said he was attracted to the firm because of its rapid growth. “I believe this firm is very progressive, there are plans to expand in the Asia Pacific region and that’s what I like about it.”
New management unveiled at Rajah & Tann Two new partners have been elevated to senior management positions, following the retirement of the longstanding managing partner and deputy managing partner, who are joining the bench. Singaporean President, SR Lee Eng Beng Nathan, appointed the firm’s managing partner Steven Chong and deputy managing partner Quentin Loh as one of three new judicial commissioners of its Supreme Court. Philip Pillai, former senior partner of Shook Lin & Bok, is the third lawyer appointed to the court, with the appointments taking effect from September and Sundaresh Menon October 2009. The firm will replace the two retirees with senior partner Sundaresh Menon SC – a former judicial commissioner himself – as the new managing partner. Asian Legal Business ISSUE 9.10
NEWS | appointments >>
Lee Eng Beng SC, currently the head of business finance and insolvency practice, will be the deputy managing partner. Rajah & Tann said it was indebted to both retirees for their contributions to the firm over the years and “will miss them very much but takes much pride in their willingness to serve Singapore.”
Allen & Gledhill
Navin & Co
Shipping firm bolsters partnership Singapore-based boutique shipping firm Navin & Co has appointed former Allen & Gledhill lawyer Colin Jarraw as its third partner. Jarraw, who specialises in admiralty and maritime law, said the firm is also looking to add another associate soon. Working with a smaller, more specialised firm was part of the motivation behind Jarraw’s move. “It’s a challenge and I’ll be joining guys who are specialised in this industry,” he said. “Personally, I have known them for a while ... they’ve done great work in setting this firm up so we’ll compliment each other.” Asia’s shipping industry has been hard hit by the downturn and slower volume of trade and finance. Like other practices, Navin & Co’s litigation workload has been compensating for the decline. “There is definitely a lot of work in the litigation side, and while finance work is not as heavy, it’s not altogether completely dead,” Jarraw said.
In-house
Luthra & Luthra
Lawyer enticed home by Luthra Indian firm Luthra & Luthra has appointed expatriate Ashwin Sapra as group head of its IP and pharmaceutical practice team. Sapra, who joins the firm from an in-house position at Ascend Therapeutics, a Washington DC-based specialty pharmaceutical company, has wide-ranging expertise in the sectors. In his previous role he was responsible for managing the company’s IP and corporate compliance portfolios and played a lead role in patent prosecution and litigation. Sapra’s move makes him the eighth lawyer that Luthra & Luthra has enticed back to India over the past 12 months.
Citi
Various
Colin Ng
Colin Ng expands with dual hire Singapore’s Colin Ng has added two new partners to its corporate and real estate practices, raising its numbers to 19. The firm has appointed Lee Kuen Yip in the real estate and conveyancing practice and Sam Kok Yin in the corporate & Lee Kuen Yip commercial practice. Sam is a former director and head of the China desk at Yeo Wee Kiong Law and gives the firm leverage in China. Yip brings over 25 years’ experience, having advised banks and property developers on corporate agreements, joint ventures, and property Sam Kok Yin acquisitions. Previously he was a sole proprietor of Lee Kuen Yip & Co, which merged with another firm to create Bernard & Rada Law Corporation. Managing partner Colin Ng said the firm is also planning to expand its dispute resolution practice group – especially in arbitration matters – in light of recent investments by the Singaporean government to capture more of the international arbitration market.
Most recently, Clarke advised lenders and borrowers on the GMR Infrastructure – InterGen acquisition, which won the SE Asia ‘Deal of the Year’ award at the ALB SE Asia Law Awards 2009. While the volume and value of financing deals has dropped significantly over the last year, Clarke said a select number of cash-rich investors and banks are ploughing on with important deals in a difficult market.
Herbert Smith
Herbert Smith gears up PRC practice Herbert Smith is gearing up its arbitration practice with new additions to its China offices. Patrick Zheng will join the Beijing office as senior consultant from China International Economic and Trade Arbitration Commission (CIETAC), where he handled over 200 arbitration cases. Senior associate Damien McDonald will relocate to Beijing to assist Zheng. Also due to relocate is Justin D’Agostino, who will move from the firm’s London office to join the Asian team in Hong Kong. He is experienced acting as counsel and advocate before arbitral tribunals in several jurisdictions and he also sits as an arbitrator.
Pinsett Masons
Lovells
Lovells gains Pinsent construction partner Lovells has boosted its Asian construction & infrastructure practice with the appointment of Paul Teo, who joins as a consultant in the Singapore office. Teo arrives from the Hong Kong office of Pinsent Masons and will advise on pre-contract Paul Teo matters and construction and engineering disputes. Teo will work alongside Lovells’ Singapore managing partner James Harris, who heads the Asian projects group, as well as the finance team in southeast Asia. “Paul’s practice is primarily in post-contract work so he will be helping people on contracts and dispute resolution matters,” said Timothy Hill, head of the firm’s Asian engineering & construction projects group. “We’ve certainly seen an upturn in that area and growing strength in the regional infrastructure market.”
Nomura
In-house: Siembab swaps Citi for Nomura Japanese investment bank Nomura has hired lawyer Peter Siembab to head up the bank’s transaction legal team in Hong Kong, covering the investment banking division in Asia, excluding Japan. Siembab’s team, comprising five lawyers Peter Siembab based in both Hong Kong and Singapore, plays an active role in advising and assisting in structuring, originating and executing Nomura’s investment banking www.legalbusinessonline.com
advisory, capital markets and financing transactions in the region. The team also works closely with Nomura’s related businesses and legal teams providing derivatives solutions. “We have an outstanding legal team and Peter’s addition, with his knowledge and extensive experience, will ... make us a top-notch in-house legal group in the market,” notes Charlton Tse, Nomura’s regional head of transaction legal for non-Japan Asia. He joins Nomura from Citi where he was most recently managing litigation matters for the US bank in Asia and, previously, advised Citi’s investment bank on transactional matters in the region. Prior to Citi, Peter was at Skadden Arps in Hong Kong and Los Angeles, and Dow Lohnes + Albertson in Washington DC.
Norton Rose
Watson Farley & Williams
Watsons lures specialist from Norton Rose Watson, Farley & Williams has appointed cross-border finance specialist Josh Clarke as a partner in its Singapore office. Clarke, a former senior associate in Norton Rose’s Singapore office, will work alongside two other partners Josh Clarke to build the firm’s India practice in the international project and structured finance group.
Linklaters
Ropes & Gray
R&G ropes in Guilday US firm Ropes & Gray has appointed Michael Guilday as a partner in its private investment fund group in Hong Kong. Guilday will advise on structuring and establishing investment funds, capital raisings, and M&A transactions. Previously he served two years as counsel in Linklaters’ Hong Kong office, where he headed the Asian investment management group. Prior to Linklaters, Guilday was a senior associate at Allens Arthur Robinson in Sydney.
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News | regional update >>
Regional updates
CHINA
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CHINA
Paul Weiss
Philippines
SyCip Salazar Hernandez & Gatmaitan
SINGAPORE Loo & Partners
INDonesia
BT Partnership
Vietnam
Indochine Counsel
Each month, ALB draws on its panel of country editors to bring readers up to date with regulatory developments across the region
China Strengthens Administration of Virtual Currency On June 4, 2009, the Ministry of Culture (“MOC”) and the Ministry of Commerce (“MOFCOM”) jointly issued a Circular on Strengthening the Administration of Virtual Currency for On-line Gaming (the “Circular”). The Circular is intended to regulate the issuance and trading of on-line game virtual currency and indicates the government’s strong desire to strengthen supervision of the rapidly growing on-line gaming market in China. Pursuant to the Circular, virtual currency is a virtual exchange tool created by the on-line game operator and sold to game players to be used to exchange for on-line game services provided by the operator. It may be presented in the form of prepaid amount or points but does not encompass virtual items earned within the game world. An operator proposing to issue online game virtual currency (an “Issuing Operator”) or to operate a platform facilitating trades of on-line game virtual currency (a “Trading Operator”) must first qualify as an operational Internet culture entity and obtain approval from MOC. A Trading Operator should also satisfy MOFCOM’s requirements on the provision of e-commerce platform services. No entity may operate as both an Issuing Operator and a Trading Operator simultaneously. Operators that are already engaged in the on-line game issuing or trading services must, within three months upon the promulgation of the Circular, apply to the relevant culture administrative authority for approval. Those that fail to apply by the deadline will be investigated and penalized. The Circular also provides that virtual currency may be used to purchase services from the issuer only and must not be used to purchase real goods or
exchange for products or services from any company other than the original issuer. Current industry practice where large game operators handle payment issues for games operated by smaller companies but require customers of such smaller companies to use virtual currency issued by the large operators appears to have been rendered illegal by the Circular. Following the issuance of the Circular, MOC also promulgated guidelines on July 23, 2009 setting forth application documents and procedures for Issuing Operators and Trading Operators (the “Guidelines”). According to the Guidelines, operators wishing to issue or trade virtual currency must now indicate such intent in the application form for Internet culture units formulated by MOC, and include in the feasibility study report information relating to the issuance of virtual currency or the operation of platform services, together with details of purchase methods, measures for safeguarding user rights and technology security measures. Written by Jeanette Chan, partner Stella Jiang, associate 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
Philippines Adopts Renewable Energy Framework The renewable energy market has experienced rapid growth over the past several years. This is partly due to an increased global consciousness of the dangers of climate change and the need to focus on sustainable and Asian Legal Business ISSUE 9.10
News | regional update >>
environmentally friendly sources of energy. In 2008, the Philippine Renewable Energy Act was signed into law. The Act declares it State policy to accelerate the exploration and development of renewable energy resources, increase the utilization of renewable energy, and establish the necessary infrastructure and mechanisms to develop the Philippine renewable energy market. The Act aims to achieve this objective through the establishment of fiscal incentives for enterprises engaged in the exploration, development and utilization of renewable energy sources or the actual operation of renewable energy systems or facilities. These fiscal incentives include: (a) an income tax holiday for the first seven years of commercial operations; (b) duty-free importation of machinery, equipment and materials for a period of 10 years from accreditation; (c) special, lower rates of taxation on civil works, equipment, machinery and other improvements used for renewable energy facilities; (d) the carry-over of net operating losses incurred during the first three years of operations for the next seven years; (e) after the lapse of the seven-year income tax holiday, the imposition of a reduced corporate income tax rate of ten percent (10%) of net taxable income (as opposed to the normal thirty percent (30%) income tax rate); (f) option to apply an accelerated depreciation rate for plant, machinery and equipment; and (g) the imposition of a zero percent (0%) value-added tax rate on the sale of fuel or power generated from renewable sources of energy. The Act also provides that all proceeds from the sale of carbon emission credits shall be exempt from any and all taxes. Renewable energy sources recognized by the Act include biomass, solar, wind, geothermal, ocean energy and hydropower. Other emerging renewable energy technologies may also be recognized in the future. Electric power industry participants will be required to purchase a specified fraction of their electricity from renewable energy sources. The Act also requires the establishment of a feedin tariff system, whereby electricity produced from wind, solar, ocean, run-of-river hydropower and biomass is entitled to priority connection to the Philippine electric grid and to priority www.legalbusinessonline.com
purchase, transmission and payment at a fixed price. The fixed tariff will be in place for a minimum period of twelve years. The Act also envisions the establishment of a Renewable Energy Market where participants may trade in certificates confirming the amount of electricity sold or used and produced from renewable energy sources. To be entitled to the fiscal incentives, developers must be certified by the Department of Energy and register with the Board of Investments. The Department of Energy has issued several sets of regulations aimed at implementing the provisions of the Act. Nonetheless, the infrastructure of the Philippine renewable energy market is still in its infancy, and the implementing details need to be threshed out by the relevant government agencies in consultation with other stakeholders. We anticipate significant developments in this market over the next few years. Written By Philbert E. Varona 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 pevarona@syciplaw.com
SINGAPORE
Review of Singapore Companies Act In Singapore’s bid to create a more efficient and transparent corporate regulatory framework for its growth as an international hub for both businesses and investors, a Steering Committee to Review the Companies Act was formed in 2007 to undertake a fundamental review of Singapore’s Companies Act (the “Act”).
The Steering Committee, chaired by the Attorney General Professor Walter Woon, has to explore ways in which the Act can be kept fluid in order to maintain its relevance in today’s rapidly changing business environment. At the same time, it must ensure that the new Act conveys the intent of corporate legislation and the rules in clear, concise and unambiguous language. Some issues which are currently under the scrutiny of the Steering Committee include, inter alia: • Codification of Directors’ Duties Section 157 of the Act contains a statutory statement of a director’s duties which is non-exhaustive. In contrast, the UK Companies Act spells out specifically the duties of directors. While the UK approach clarifies the law on directors’ fiduciary duties and helps directors to better understand their role, it has been criticised for not having the flexibility to accommodate developments and evolving practices in the business environment. Instead of codifying all the directors’ duties in the Act, the Steering Committee will be exploring the option of providing greater clarity to directors via practice directions or guidance notes. • Removing Restrictions on Financial Assistance The prohibition on a company providing financial assistance for the acquisition of its own shares or those of its holding company, as set out in Section 76 of the Act, exists to protect creditors and shareholders of the company against possible misuse and depletion of the company’s assets. This section is known to be complex, and has resulted in uncertainty and difficulty in its application. In view that several countries, such as the UK and Australia, have liberalised the restriction, the Steering Committee will be considering if Singapore should follow suit. • Appointment of Multiple Proxies The Act provides that a member is entitled to appoint a maximum of two proxies to attend and vote at a general meeting, unless the articles of association for that company states otherwise. While having two proxies may be sufficient under most normal circumstances (of individual shareholders), it may not be so for fund managers or institutional investors
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News | regional update >>
who hold shares through a nominee company or custodian bank. The Steering Committee will be considering whether the Act should be amended to allow a nominee company or custodian bank to appoint more than two proxies to attend the general meeting of a company. The Steering Committee is currently in the process of distilling feedback and deliberations on the Act into a series of consultation documents. It will be issuing a public consultation paper next year on its recommendations for the public to provide their views and comments. For readers who are interested to learn more on the above, you may wish to access the relevant websites (http://app. mof.gov.sg/news_speeches/speechdetails. asp?speechid=278 and http://app.mof. gov.sg/news_speeches/speechdetails. asp?speechid=303). Written by Ms Tan Chin Yee and Ms Wong Joy Ling By Ms Tan Chin Yee Legal Associate, Corporate Practice Ph: (65) 6322-2238 Fax: (65) 6534-0833 E-mail: tanchinyee@loopartners.com.sg Ms Wong Joy Ling Foreign Counsel, Legal Associate, Corporate Practice Ph: (65) 6322-2234 Fax: (65) 6534-0833 E-mail: wongjoyling@loopartners.com.sg Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907
INDonesia
Immovable Assets of Limited Liability Company from the Civil Law Standpoint As a legal entity, a limited liability company (LLC) has rights, obligations and also assets separated from its founders, organs, and shareholders. Assets of LLC may vary which pursuant to elucidation of Art 102 (1) of Law No. 40/2007 shall cover all goods, movable
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or immovable, tangible or intangible, owned by the company. Goods, in general, comprise every properties and rights that can become the object of ownership (Art 499 Indonesian Civil Code). Pursuant to Indonesian Civil Code and other regulations in force, we will describe the goods that could be owned by LLC. Immovable goods cover all goods that cannot be easily moved or transferred and can be divided into two types, immovable-tangible goods and immovable-intangible goods. For immovable-tangible goods, the perfect example is land. Asset of LLC in form of land is limited by the law because not every LLC may possess the ownership right over a land. Pursuant to Law No 5/1960 regarding Law on Agrarian Principles, the Government will determine which legal entities may possess an ownership right over land. This is regulated under Regulation No 38/1963 which provide the list of legal entities that may have an ownership right over land as follows: a. State-Owned Banks b. Agrarian Cooperation which established according to Law No 79/1958; c. Religious Entities; d. Social Entities. From the list above, one can conclude private LLC may not possess an ownership right over land. Alternatively, LLC may utilize a land through the right to build (hak guna bangunan) and right of business utilization (hak guna usaha). As set forth in Art 36 (1) (b) and Art 30 (1) (b) of Law No 5/1960. On the other hand, immovable-intangible goods may form as a right attached to the immovable goods, for instance: – Hypothec Hypothec is a security/collateral attached to immovable goods which is regulated under Art 1162 Indonesian Civil Code. However, this security is no longer applicable for lands because there is new mechanism of security imposed by Law No 4/1996 regulating mortgage. Hypothec, now, only applicable to immovable goodsnon land i.e. ship sized more than 20m3 which registered in ship register according to Indonesian Commercial Code. – Mortgage Mortgage is a security attached only to
a land. Similar with hypothec, the object of mortgage can be sold if the debtor fails to fulfill its obligation concluded under contract or agreement. – The right of business utilization (hak guna usaha) According to Art 28 (1) of Law No 5/1960, this right stipulates the use of certain land owned by the State for conducting business such as fishery, livestock, and agriculture. – The right to build (Hak Guna Bangunan) According to Art 35 (1) of Law No 5/1960, this right allowed a limited company to build building/s in a land owned by State or by private individuals based on agreement between them. Written by Tyana Asri Martianti BT PARTNERSHIP BRI Tower II, 19th Floor Jl. Jend. Sudirman No.45 Jakarta 10210, Indonesia Tel. 62 21 5700 777 Fax. 62 21 5700 877 Email: martianti@btplawfirm.com Web: http//www.btpartnership.com
Vietnam
Stronger penalties expected to hinder copyright violations in Vietnam Though much improvement has been made in recent years, copyright infringements in Vietnam remain a burning issue for not only foreign copyright holders but local companies and authors as well. Various measures have been taken by the Government authorities for more effective copyright protection in the country. However, the dealing with copyright violations is still the most weakness of the enforcement of intellectual property rights in Asian Legal Business ISSUE 9.10
News | regional update >>
Vietnam. Copyright violations are seen in a wide range of areas from software, books, music recordings, films to online products on the internet. In order to further improve the enforcement of copyrights, the Government has recently issued Decree No. 47/2009/ND-CP dated 13 May 2009 providing sanctions on administrative violations of copyrights and related rights (“Decree 47”). The new decree replaces the respective provisions (Chapter VII) of Decree No. 56/2006/ND-CP providing sanctions on administrative violations in the fields of culture and information. For the first time, this is a separate decree dealing with the copyright violations in Vietnam. Of note, under Decree 47, specific acts of copyright and related right infringements are defined and much stronger penalties and measures are introduced to deal with the violations. For example, the highest level of monetary fine (as the main form of penalty) has been increased from VND70 million (approx. US$4,200) as under Decree 56 to VND500 million (approx. US$30,000) pursuant to Decree 47.
www.legalbusinessonline.com
Amongst actions of infringement, the acts of copying the protected work, performance, phonogram, or broadcast program without the authorization of the copyright owners are considered to be most serious. For these actions, subject to the value of the infringing articles and the seriousness of the case, the monetary fine may fall within 11 levels, ranging from VND1 million to VND500 million (approx. US$60 – US$30,000). And the highest level, VND500 million, shall be applied in case the value of the infringing articles is above VND500 million. Decree 47 also provides for 11 levels of monetary fine, from VND0.5 million to VND250 million (approx. US$30 – US$15,000), applicable to the actions of selling protected works, or distributing directly or indirectly to the public the original or copy of performance, the original or copy of phonogram, the copy of broadcast program. In addition, actions of appropriating the property rights of the copyright owners, phonogram producers, or broadcasting organizations are now also considered to
be serious infringements, and the highest monetary fine of VND500 million may be applied for such actions. With respect to an action of storage or concealment of goods in infringement upon copyrights and/or related rights, a fine of from VND20 million to VND30 million may be applied, while the action of transportation or advertisement of the infringing goods may be subjected to a fine of up to VND10 million. Decree 47 took effect as of 30 June 2009. While the administrative channel is still common for settlement of copyright disputes and violations in Vietnam, it is expected that the new decree will help copyright holders to better enforce their rights in the country. Written by Dang The Duc, Managing Partner, and Nguyen Thi Hong Anh Indochine Counsel Unit 4A2, 4th Floor, Han Nam Office Bldg. 65 Nguyen Du, District 1 Ho Chi Minh City, Vietnam (Tel) +848 3823 9640 (Fax) +848 3823 9641 duc.dang@indochinecounsel.com www.indochinecounsel.com
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FEATURE | ALB/Jun He Law Offices In-house 25 >>
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TOP
Asia’s most dynamic corporate counsel of 2009 It’s time to pay tribute to the in-house lawyers who have distinguished themselves and the legal profession over the past year — and also to ponder the challenges they are currently facing
I
t’s that time of the year again. After taking a survey of over 100 lawyers across the Asia-Pacific region, ALB has identified 25 of the most outstanding in-house legal counsel. We bring them together in the following pages, in no particular ranking or order, merely to recognise their achievements, reward them for their hard work, and gain some insight into their challenging roles. The In-House 25 testifies to the fact that it’s not easy being a corporate lawyer, contrary to prior opinions. Once viewed as the lifestyle
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option when compared with private practice, in-house lawyers in Asia’s rapidly developing markets are working just as hard as their private practice counterparts, seeing their responsibilities grow to straddle an ever-wider range of legal challenges. Regardless of original jurisdiction or industry sector, ALB would like to congratulate all of those who made this year’s In-House 25 for continuing to push the standards of this important legal role to greater heights. We wish all of our internal counsel continued success! ALB
METHODOLOGY ALB conducted a survey of private practice lawyers across 10 jurisdictions in Asia-Pacific region, asking them to nominate who they considered the preeminent in-house counsel in their own jurisdiction. This nomination was based on a range of factors including deals undertaken, knowledge of the law, business acumen or even just who they respected and most enjoyed working with. Combined with ALB’s own research and market knowledge, the resulting list is for 25 of Asia’s most dynamic corporate counsel, arranged in no particular order of merit
Asian Legal Business ISSUE 9.10
FEATURE | ALB/Jun He Law Offices In-house 25 >>
ALB In-house 25: the list for 2009 Name
Company
Position
Location
Wayne Bannon
Carlyle Group
General counsel Asia
Hong Kong
Cheng Meifen
China Construction Bank
Legal department manager
China
Chen Weihua
China Southern Airlines
Legal department manager
China
Luo Gang
China Unicom
General counsel
China
Royce Miller
Citi
Managing director & general counsel, Citi institutional clients group AsiaPacific
Hong Kong
Roy Huang
CITIC Ka Wah Bank
General counsel and head of compliance
Taiwan
David Flavell
Danone (Asia)
General counsel Asia-Pacific
China
Karl Chong
DBS Bank
Head of legal, compliance and secretariat
Taiwan
Zhang Chengming
GD Midea Holdings
Legal manager, legal centre
China
KP Madhan Kumar
GMR Group
Manager – legal
India
Gareth Bater
Goldman Sachs (Asia)
Managing director and general counsel, legal department
Hong Kong
Edith Shih
Hutchison Whampoa
Head, group general counsel and company secretary
Hong Kong
Zhang Wei
ICBC
General manager, legal affairs department
China
Geraldine Kamalanathan
Maybank
General counsel
Malaysia
Patrick Moran
Bank of America Merrill Lynch
Head of global markets & investment banking counsel, Asia-Pacific region
Hong Kong
Brett Graham
Morgan Stanley
Managing director, legal and compliance
Hong Kong
Damian Yeo
Nokia
Director, legal and government relations, south-east Asia-Pacific
Singapore
Clifford Levy
Nomura
General counsel Asia
Hong Kong
Yao Jun
Ping An Insurance Group
Chief counsel
China
Lily Khairi
Shell Malaysia
Managing counsel, business operations and support services
Malaysia
Seung-Kook Synn
SK Energy
Vice president and general counsel
Korea
Liu Wenzhao
Sinochem International
General manager of legal department
China
Shao Jingyang
Sinopec
Legal department manager
China
Jeffrey Wong
UBS
Executive director
Singapore
Fumitaka Eshima
UBS (Japan)
Managing director, head of legal
Japan
“Our in-house 25 hail from a wide variety of jurisdictions, from markets in Hong Kong, Singapore and Japan to constantly evolving (and sometimes uncertain) markets in China and India. Lawyers represent sector cross-sections including health, real estate, banking, technology, shipping energy and consumer goods. Some have worked on precedent-setting transactions, while others have quietly built up strong legal teams, ensuring continual compliance of their organisation and also influencing the passage of legislation.” www.legalbusinessonline.com
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FEATURE | ALB/Jun He Law Offices In-house 25 >>
Clifford Levy Title: General counsel Asia (excl. Japan) Company: Nomura Location: Hong Kong
Edith Shih Title: Head, group general counsel and company secretary Company: Hutchison Whampoa Location: Hong Kong
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• Notable achievements over the last 12 months Looking back it is surprising to see how quickly 12 months have passed. Is it almost one year since Nomura in Asia made the bold decision to achieve significant change at a time of such market and economic turmoil by acquiring all staff and fixed assets of Lehman’s Asian operations other than those related to its investment management business? Time has flown by. Naturally there have been both significant challenges as well as achievements during this process. It started with a short but extremely intense period of negotiations and then the finalisation of the terms of a transaction that was designed to reshape the institution, something that involved managing 10 jurisdictions/cities together with external legal advisers for each. This was immediately followed with the integration of all staff and of course a period of transition. Some difficult choices had to be made in terms of utilisation of the abundant talented professionals that now made up the New Nomura legal team at a time when we were seeking to resume or start businesses and at a time when cost and expense controls were of paramount importance. It was with this backdrop that we had to quickly forge a single legal team (equivalent to a reasonably sized law
firm) providing best-in-class legal services, committed to the restoration of the preeminence of the businesses and the franchise. To manage and motivate a diverse team of highly intelligent and skilled professionals, and to put in place a robust organisational structure that could meet the demands of a new Nomura during uncertain market and economic times. This is something that I would not have been able to do without the help of all within Nomura but of course most importantly with the positive mindset and determination of those within the legal team
• Notable achievements over the last 12 months Over the past 12 months, the Hutchison Whampoa legal department served the legal and regulatory needs of the group and discharged its duties in the same manner as it did in the past. Some transactions that were reported in the news include our telecommunications joint venture with Vodafone in Australia, the spin-off of our Hong Kong and Macau telecommunications operation and the sale of our Israel telecommunications operations.In addition, the group continued to increase its land bank in Mainland China and the legal team has provided good support for our project team. But these are not the achievements of any one single person – it’s a team effort. During this time, as new investment activities slowed down, we concentrated on re-enforcing
the strong foundation we have built in all of our five core businesses. On the personal front, over the past 12 months, while I carry a full load serving as head group general counsel and company secretary of the Hutchison group, I have continued to serve the Hong Kong community in my professional capacity – as a member of the Hong Kong Stock Exchange Listing Committee and the standing committee on company law reform, and as a council member of the Hong Kong Institute of Chartered Secretaries and Hong Kong Institute of Certified Public Accountants. I am grateful to my employer for its support toward my work to the community and the profession
Freshfields and Shearman Sterling
• Law firms used most often We use a number of external law firms, the major ones are Baker & McKenzie, Linklaters,
• External legal counsel: how can they serve you better? We ask of our external
• Law firms used most often Like all of our peers we use a wide range of law firms depending on the relevant jurisdiction and of course product or issue expertise. We rely on a number of international law firms but we also have a need to call on the talents of those within local or regional firms. I would not wish to single out any law firm at this time. Naturally the demands of the businesses, which are constantly evolving and developing, drive our needs • Areas in which work is most frequently outsourced I think we have to distinguish between internal outsourcing and external outsourcing. As part of Nomura’s continued development and
commitment to Asia Nomura has acquired an internal outsourcing capability based in Mumbai India. While this resource covers a broad spectrum of functions it does include some of our legal needs. This new pool of talent provides a new dynamic. Looking at the external outsourcing requirements I would say that these fall in to three basic areas: litigation; regulation and transaction. As we now have a larger pool of extremely capable individuals with diverse technical experience we naturally try to meet the requirements in-house. That said I doubt that the three broad areas listed above will come as any surprise to your readers. We tend to outsource for three basic reasons: efficiency or accepted market practice, experience and reassurance or confirmation
prevailing climate. I would add that our budget has been and continues to be well controlled but in absolute terms it has increased as a result of the creation of the enlarged Nomura • External legal counsel: how can they serve you better? They need to provide exceptional value for money and of course distinguish themselves not just by the quality of their advice but also the depth of their team and their responsiveness. They need to be focused, providing both legal and commercial or market relevant information, providing updates on a timely basis in respect of industry trends, peer activity as well as legal/regulatory developments
• Budget for external counsel: how has it changed in the last 6-12 months? Unavailable, however the figure is of course in the millions of dollars and this is to be expected with an organisation of our size which is expanding existing businesses and commencing new businesses. As is the case with all of our peers we are trying to extract maximum value for each dollar we are spending and of course we have tightened the control over our legal spend in the
• Areas in which work is most frequently outsourced Work that we outsource includes major M&A, capital and debtfinancing and dispute resolution matters. But we do not generally litigate. The fact that it is on the list does not mean that we have a great deal of disputes, just an area that the in-house team does not practise unless these are minor cases. We expect the three areas of outsourced work to remain the same in the next year • Budget for external counsel: how has it changed in the last 6-12 months? Our legal spend has decreased, mainly due to fewer acquisition/investments transactions
lawyers the following: top-quality advice and work, responsive processing of instructions, good value for services rendered. We particularly value those that are commercial-minded and proactive, especially those that are in a position to anticipate our needs. Our professional relationship with our external advisers is a long-term partnership. We appreciate those that are professional serving us and are flexible on fee arrangements. I hope that they consider us fair to them as well. Over the past year, we have been approached by law firms offering free secondees so that during this down time, their quality associates could be properly deployed and the client/lawyer relationship is enhanced
Asian Legal Business ISSUE 9.10
FEATURE | ALB/Jun He Law Offices In-house 25 >>
Damian Yeo Title: Director, legal and government relations, southeast Asia-Pacific Company: Nokia Location: Singapore
David Flavell Title: General counsel Company: Danone (Asia) Location: China
• Notable achievements over the last 12 months I would interpret this question as addressed to the Nokia legal team as a whole instead of to myself as these achievements have been obtained as a team and not by any single individual. The last 12 months has been an extremely challenging time for us both in terms of the organisation coping with the economic climate and specifically the legal function as a whole. Of the most notable achievements, I would point firstly to the Herculean feat of maintaining the mental, physical and emotional well-being of my team. Keeping the legal team motivated and even enthused about their daily work while maintaining a “can-do” attitude amidst the uncertain business and legal environment and fundamental changes in the organisation and its strategy has been an extremely challenging task. I am happy to say that the Nokia legal team has embraced these changes and the myriad challenges it brings with just the right balance of a risk-taking mindset and prudent
assimilation into the many different legal environments in south-east Asia. I would also like to commend the huge efforts of my team in mapping out workable and practical business models for Nokia’s extremely innovative new strategies and businesses in bringing solutions which amalgamate both hardware and services to the masses in spite of the very challenging legal environment in some of the emerging markets
• Notable achievements over the last 12 months Significant achievements over include managing Danone’s sale of Australasian beverage company Frucor Beverages to Suntory of Japan for in excess of EUR600 m. The transaction was conducted as a competitive bid which involved negotiations with numerous interested parties over a tight timeframe. Key Frucor brands include V Energy drink (the leading energy drink in Australia and New Zealand). We also completed the acquisition of two dairy production sites in Beijing and Shanghai and started the production of yoghurt in Beijing
China Jun He. We used Bell Gully in NZ for the Frucor sale and were very happy
• Law firms used most often Allen & Overy, Freshfields, Baker & McKenzie, and in
Zhang Wei Title: General manager, legal affairs department Company: ICBC Location: China
www.legalbusinessonline.com
• Notable achievements over the last 12 months Establishing overseas branches and subsidiaries in important global markets like New York, Sydney, Moscow, Doha and Dubai. The US$5.6bn acquisition of a stake in Standard Bank, the largest bank in South Africa
• Law firms used most often We use a variety of law firms in the region depending on the type of work. However, I would say that of all the law firms, we have over the last quarter employed the services of Baker & McKenzie quite extensively in the different countries in South-East Asia • Areas in which work is most frequently outsourced Litigation and contentious proceedings; IP enforcement and protection; trade compliance and tax matters. Apart from expanding the scope of outsourced legal work (for example in competition law, consumer protection, Internet Web 3.0) due to the fast-expanding
• Areas in which work is most frequently outsourced Main areas where we work with external counsel are in M&A, dispute resolution and IP protection. I prefer not to use the word “outsource” because the internal legal team manages all legal projects and works closely with external lawyers. I don’t expect any change to occur in the next 12 months • Budget for external counsel: how has it changed in the last 6-12 months? Not available, although spend is significant with the main variable being volume of M&A projects. We constantly
and the US$583m acquisition of Seng Heng Bank in Macau. Restructuring (A-Share and H-Share IPOs) of ICBC, which is the largest IPO in the world to date, raising $US21.9bn • Law firms used most often Linklaters, Davis Polk, Allen & Overy, King & Wood, JunZeJun
ambit of products and services (including the various innovative distribution channels that Nokia is exploring), I don’t forsee much change to the scope of the outsourced legal work. This is due to the fact that in many countries, these areas of law require local expertise • Budget for external counsel: how has it changed in the last 6-12 months? Amid the tough economic environment, we had to just like everyone else, adopt prudent cost cutting measures and creative ways of ensuring a win-win relationship with our external law firms.Notwithstanding this, in light of Nokia’s current metamorphosis into a service and solutions business we are cognisant of the need to balance our risk taking by employing wise and prudent and sometimes creative utilisation of our external legal resources
look at every client or piece of work not as simply another file or transaction but to focus on the “relationship” that is being fostered and built. In order to build this relationship, the law firm has to make an investment of time and effort into developing an in-depth insight into not only the business/products of the client but also on a more esoteric level, the core values and culture of the client as these are fundamental aspects which play a big part in any company’s mindset and appetite for risk. This in my mind is critical to being able to offer any service that is of any real value-add to the client. In the current competitive environment, it is also vital for law firms to reach out to their clients and be proactive in proffering relevant updates in the law and legal environment and also in keeping up with the current issues that the client is facing
• External legal counsel: how can they serve you better? My advice would be to adopt a more long-sighted view of in-house clientele and the work that they bring in. To
look for ways to ensure we are getting value for money and will continue to focus on this • External legal counsel: how can they serve you better? Providing good service and gaining repeat business is not rocket science but many external counsel fall well short. External lawyers should take the time to get to know our business and to get to know our legal team so they can better understand how we like to work. I expect lawyers to be technically correct (this should be a given) and I get very frustrated with how often we have to correct mistakes. External lawyers need to be commercial and they need to be cost-sensitive.
• Areas in which work is most frequently outsourced Cross-border M&A, crossborder syndicate loans, debt litigation and arbitration
However, the two key things I look for in external counsel are: first, I want them to make a call: wishywashy advice with no clear recommendation is useless. I expect external counsel to exercise judgment and give me their best call. Second, in project work I want external counsel to be proactive and really help drive projects. I do not want to be over-serviced but I do want my external lawyers to be focused on the project and thinking several steps ahead to ensure we get to where we need to go
conduct, diligent and responsible working attitude, and excellent technical skills combined with great attainments in specialised areas
• External legal counsel: what are your main selection criteria? Professional ethics and
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FEATURE | ALB/Jun He Law Offices In-house 25 >>
Fumitaka Eshima Title: Managing director, head of legal Company: UBS Investment Bank Location: Japan
Gang Luo Title: General counsel Company: China Unicom Location: China
Wayne Bannon Title: General counsel Company: Carlyle Group Asia Location: Hong Kong
• Notable achievements over the last 12 months One notable achievement for my legal department and me personally, has been to have helped the management of our firm to navigate it through the market turmoil. The market dislocation from the autumn of 2007 required many financial institutions (including UBS) to adjust themselves in terms of business focuses, the size of balance sheets and on other fronts. This process raised a lot of legal issues where our management expected us to provide legal advice which was based on knowledge on business as well as laws. I am confident that my inhouse legal team has played this critical role for our firm in
what has been an extremely difficult period
• Notable achievements over the last 12 months I was involved in three major transactions, all of which are of great significance to the strategic development of our company. Number one, the merger between China Unicom Ltd and China Netcom Group (Hong Kong) Ltd was closed on 15 October, 2008 and was awarded the “M&A Deal of the Year (Corporate Award)” in Asia by the Financial Times and Mergermarket due to its strategic importance and complexity. Number two, China Unicom (Hong Kong) Ltd (“HK Lisco”) acquiring of assets and business across 21 provinces in southern China from China United Network Communication Group (“China Unicom Group”).
Upon the completion of this acquisition, HK Lisco could provide full spectrum of telecommunications services across all regions in mainland China. Number three is the privatisation of PCCW Ltd – in November 2009, joint with PCPD (the majority shareholder of PCCW Ltd), China Unicom Group propose to privatise PCCW
• Notable achievements over the last 12 months Working alongside Carlyle investment professionals to assist our portfolio companies and executives navigate the extremely challenging financial and economic environment. Developing investment structures, alongside internal compliance and oversight procedures, to allow Carlyle funds to invest and take advantage of the opportunities that will arise throughout Asia in coming months
HanYi Law Offices, King & Wood, Nagashima Ohno & Tsunematsu, Nishimura & Asahi, Lee and Li, Gilbert + Tobin, Freehills
• Law firms used most often Carlyle and its Asia Funds use a wide spectrum of law firms across the region. To mention a few, Paul Weiss, Linklaters, Clifford Chance, Simmons & Simmons, Allen & Overy,
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• Law firms used most often We know most of the major law firms in the jurisdictions where we operate. However, we constantly review our list of approved law firms, and try to make it shorter • Areas in which work is most frequently outsourced We outsource legal work for a number of different reasons. If I list three areas where we outsource, I would mention highly-structured transactions, high-volume flow work, and litigation. Given the market conditions for the last year and a half, demand for highly-structured transactions
• Law firms used most often Freshfields, Sullivan & Cromwell, King & Wood, Baker & McKenzie • Areas in which work is most frequently outsourced We outsource legal work relating to litigation and arbitration to law firms. Besides, when we are involved in major transactions, such as long-
• Areas in which work is most frequently outsourced Regulation and compliance, investments and transaction Management, fund formation and management. Over the next year I would not anticipate a change in these areas but the overall percentage spent on the individual areas will, most likely, change. The likelihood of change in the regulatory environment for private equity in the US, Europe and possibly Asia, will almost certainly mean legal spend on regulation/compliance will increase, as PE firms
decreased. While it has come back to some extent most recently given some sign of market recovery, it may decrease again depending on market players’ risk appetite in the next year
the right lawyers to each matter. By “right lawyers”, I mean lawyers with the right expertise and levels of experience
• Budget for external counsel: how has it changed in the last 6-12 months? Not available, but I can say that the amount of legal fees is always carefully reviewed within our firm, and this is even more of the case under the current market environment • External legal counsel: how can they serve you better? External law firms should make sure they assign
term investments and M&As, we would retain lawyers to participate in negotiations and draft legal documents • Budget for external counsel: how has it changed in the last 6-12 months? Our budget for external legal spend is based on our revenue and business expansion plan. When our revenue increases or we have new expansion plans, we would increase our legal spend budget correspondingly. In the last 6-12 months, our legal spend kept stable
different from other business sector and is subject to specific government regulations. It would greatly facilitate our business if our external lawyers have a general idea of the telecommunications sector, especially governmental regulations in this area
• External legal counsel: how can they serve you better? Our company provides telecommunications services, which is tremendously
implement changes to take account of new regulations • Budget for external counsel: How has it changed in the last 6-12 months? We do not have a fixed budget. Legal spend has remained generally constant in 2009 when compared with 2008 and is likely to rise in 2010, both on the regulation/compliance side (as per above) and on the investment side. As dealflow and exit options returns, legal spend on investment structuring may also be expected to increase
legal/compliance side. This will allow you to provide real value-added services during a transaction. Clients do remember (and reward) flexibility and innovation on fees. Hourly charge-out rates are increasingly seen as bad value by clients
• External legal counsel: how can they serve you better? Know your client – both on the deal side and on the
Asian Legal Business ISSUE 9.10
FEATURE | ALB/Jun He Law Offices In-house 25 >>
Karl Chong Title: Head of legal, compliance and secretariat Company: DBS Bank Location: Taiwan
Royce Miller Title: Managing director & general counsel, Citi institutional clients group Asia-Pacific Company: Citi Institutional Clients Group- Asia Pacific Location: Hong Kong
www.legalbusinessonline.com
• Notable achievements over the last 12 months DBS’s takeover of Bowa Bank’s “good assets” in 2008 /09 stands out in Taiwan. It was a deal that was of great strategic importance, for Singapore’s largest SGX listed bank and for Taiwan. Following the acquisition, DBS now has a total of 40 distribution outlets across Taiwan, of which almost 20 are in the Taipei area. The investment by DBS enhances the bank’s position as a leading provider of financial services in Asia and a pioneer in wealth management. The acquisition presents a sizable platform for DBS to allow it to capitalize on the growing trade and investment flows between Taiwan, Hong Kong and mainland China. In terms of the number of branches, DBS is amongst the top 3 largest foreign banks in Taiwan. The entire transaction can be classified into mainly the taking over the assets and liabilities of Bowa Bank, the taking over the people, and the taking over the operations. DBS had to ensure that it had legal rights over the assets of Bowa Bank on the takeover date. The quantity and complexity of legal and regulatory work was enormous given that it was an asset deal. It was noteworthy that DBS’ in-house legal and compliance teams, comprising dedicated professionals, were involved from the front end i.e. the bidding process of the “Good Bank Assets”, to the completion of the transaction. Heavy lifting was involved in terms of legal / regulatory due diligence and liaising with the regulators, reviewing and
resolving issues related to the businesses, licenses, material documents, litigation, employees, investments, financial assets, and other related issues. Over the last 12 months, a robust legal, compliance, secretariat and compliance services (a department with AML, investigation and corporate security responsibilities) structure of almost 20 persons was built in Taiwan. These professionals have since been actively involved in the enhancement of legal and regulatory support, internal controls and corporate governance, contributed to the improvement of business practices, and integrating employees from different cultures and background. I have responsibility in heading these teams in Taiwan. The Acquisition of “Good Bank Assets” of Bowa Bank was recognised by Finance Asia as the Best Taiwan Deal 2008. It is also a finalist in the ALB Taiwan Deal of the Year 2009. I have also responsibility to head the legal support for DBS’ capital markets businesses and brokerage business in Singapore. Having broad shoulders, the ability to act as an enabler in a new environment for our businesses and also contributing to the new legal and regulatory environment which we operate, would be my most notable achievements over the last 12 months.
• Notable achievements over the last 12 months Keynote speaker on improving regulatory relationships, and panelist on mutual recognition, at the Chief Regulatory Officers International Conference in Sydney in September 2008. Have lectured on corporate governance at HKMA and CBRC joint-sponsored Banking Supervision seminars, where attendees were senior CBRC officials. Assisted in obtaining Asia-Pacific regulatory approvals for the exchanges by the US government and other holders of Citigroup preferred shares into Citigroup common shares, these transactions
resulted in substantial increases to Citigroup’s Tier-1 common and tangible common equity (TCE). Personally, following a period of approximately 15 years in which I rarely played, I resumed playing cello regularly. In August 2009 I attended a week-long intensive chamber music program at Kneisel Hall in Blue Hill, Maine where I rehearsed and performed the Beethoven Archduke Trio
• Law firms used most often Depending on the matter, we use a variety of firms including Baker & McKenzie, Lexcel Partners and Lee
• Law firms used most often Citi uses a panel of local and international law firms. The panel is reviewed periodically, and we use law firms outside the panel in circumstances
& Li, all in Taiwan. Others such as A&G, A&O, and WongPartnership in Singapore have also assisted on a number of matters. • Areas in which work is most frequently outsourced They tend to be project work (e.g. M&A), and work relating to institutional banking and investment banking. Also, we occasionally outsource litigation and contentious matters. This is not likely to change in a material way in the next 12 months.
commercial practice – this will be a very good value-add. For billing of ongoing work, do send across an invoice regularly that contains the amount owing (attributable to each lawyer) and amounts paid, and newly invoiced amount. Bills that are clear and easy to read go a long way – this will be helpful to us and law firms. Take a long term view by keeping in touch regularly, not only when the climate is unfavorable and law firms are looking for work.
• Budget for external counsel: How has it changed in the last 6–12 months? Budget for external legal spend is not fixed and it depends on the matter at hand, whether bank or client paid work. As long as there is a need for external legal spend on a matter and it is to be spent judiciously, we are happy to consider the fees. Of course we constantly look for value. It has been no sharp changes in the external legal spend over the last 6 – 12 months. • External legal counsel: how can they serve you better? Technical expertise is a given. The margin of error is virtually nil. Do discuss with us upfront if it becomes necessary to collaborate with someone else with a higher level of expertise for an aspect of transaction so that we can ascertain how best to address the issue. Please do not charge us for the “tuition fees” e.g. clients should not be double charging for the same work reviewed or discussed by several lawyers. There should be efficiencies. Be aware of industry and
where we feel that is appropriate. The list of panel firms is not public information • Areas in which work is most frequently outsourced We use law firms for a broad range of matters including capital markets transactional work, M&A transactions and contentious matters. I do not expect this to change in the next 12 months
think costs may exceed any estimates given. Keep the client informed. If you have any concerns, call the client’s general counsel right away
• External legal counsel: how can they serve you better? Be flexible on fee arrangements and staff appropriately for the matter at hand. Keep close track of costs and alert the client well in advance if you
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FEATURE | ALB/Jun He Law Offices In-house 25 >>
Gareth Bater Title: Managing director and general counsel, legal department Company: Goldman Sachs (Asia) Location: Hong Kong
• Notable achievements over the last 12 months I assumed my role as general counsel of Goldman Sachs (Asia) in the summer of 2008. We have an outstanding team of lawyers at Goldman Sachs in Asia and I have been very fortunate to work with them throughout the tumultuous events of the last year. The team was delighted to be awarded “ALB 2008 Investment Banking Team of the Year”. The highlight of 2008 for me personally was the birth of my daughter, Imogen • Law firms used most often We are fortunate at Goldman Sachs to work with most of the leading law firms in the region. It would be unfair of me to pick out individual law firms, given the terrific advice and support we receive from the lawyers in private practice in numerous firms across Asia.
KP Madhan Kumar Title: Manager – legal Company: GMR Group Location: India
• Notable achievements over the last 12 months Litigation involving significant stakes, and acquisition and project finance documentation for over $3bn. Closely competed bid for Tuas Power project in Singapore, acquisition of stake in coal-mine licenses based in Indonesia and South Africa, and a power project in Singapore were some of the prominent transactions I was involved in recently. The jewel in the crown was the acquisition of a 50% stake in InterGen which was awarded the “Best Infrastructure Deal of 2008” by Infrastructure Journal. This transaction involved due diligence on power assets across the globe in four continents, obtaining anti-trust approvals from five countries (US, European Commission, Mexico, Australia and the Philippines), acquisition and closing documentation • Law firms used most often Our group work with various legal firms [is] based on the complexity of a transaction. A few of the notable legal firms we have worked with (during the past 18 months)
Chen Weihua Title: Legal department manager Company: China Southern Airlines Location: China
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• Notable achievements over the last 12 months Recruitment of new flight attendants and self paying pilot recruitment projects, sales of Airbus A300, MD-82 and MD 90, introduction of Boeing 787 and Airbus 380 aircrafts
The depth and quality of the law firms in Asia continues to go from strength to strength and the in-house team at Goldman rely upon the advice we receive from external law firms a great deal to leverage our business • Areas in which work is most frequently outsourced We work closely with external counsel to provide leverage to our team across all aspects of our businesses, although we tend to internalise more work in connection with broker dealing in listed securities and our derivatives businesses. We externalise a great deal of the legal execution in connection with public offerings and merger advisory work. As the capital markets recover we anticipate increased expenditure here. We also tend to externalise work in connection with specialist areas such as intellectual property
and real estate. Looking forward, it is likely we will see a great deal of regulatory reform in our industry and we will need to invest significant resources in this
are Amarchand & Mangaldas, Luthra & Luthra, AZB Partners and Link Legal domestically, and White & Case (US, London, Brussels, Mexico and Singapore), Norton Rose, Allen & Overy, Clifford Chance, Linklaters and Skadden internationally
regulatory requirements, corporates will continue to avail [themselves of] the services of external legal counsels/firms, in respect of all its capital market transactions
• Areas in which work is most frequently outsourced Litigations/dispute resolutions, M&A’s, capital market transactions. Recessions and downtrend generally don’t reduce the legal work. In fact it increases, more so in view of the rising feeling among many corporates that the financial crisis/downtrend will throw up more opportunities to consolidate their position and is an opportunity to become industry leaders. M&A’s and regulatory issues/compliance will be one of the primary areas of outsourcing. Many corporates have already reopened and initiated renegotiation of the existing terms of concluded contracts. Issues arising out of such renegotiations would only add further blues to evergrowing litigations. In view of various
• Law firms used most often Allen & Overy, Norton Rose, Herbert Smith and DLA Piper, King & Wood, Run Ming, Zhong Lun W&D and Guangdong Z&T
• Budget for external counsel: how has it changed in the last 6-12 months? Our legal expenditure in Asia is primarily determined by the volume of business we are able to execute for our clients, the expansion of our franchise across the region and the pace of regulatory change. External legal expenditure on the execution of private equity, capital markets transactions and merger advisory work was reduced significantly in the second half of 2008, but that was offset by increased costs, dealing with challenges in other areas. The tumultuous events of the last year have meant we
• Budget for external counsel: How has it changed in the last 6-12 months? The unprecedented credit crisis and economic volatility has prompted corporates to realign their strategies to handle the economic downturn. From engaging legal firms regardless of their necessity, to focusing on creating robust internal legal teams with increased capabilities, corporates have rationalised their legal spend. In-house teams are now carefully strategising which work to handle internally and which work to outsource, in order to reduce reliance on external counsel. Many in-house legal counsels across corporates are excelling in the challenges being handed to them. The business teams find it easier to brief the in-house counsel, as in-house counsel need not be sensitised on business necessities.
have been heavily focused on working with our clients on the challenges they face. We have invested legal resource on the many regulatory changes we have seen since the second half of 2008 and our legal expenditure reflects that • External legal counsel: how can they serve you better? It is helpful when law firms invest time to understand the structure of our business and the various regulated entities and products we have in each market. This familiarity enables them to provide a better quality service when we engage the law firm. A strong secondment program – so that private practice lawyers work within the clients offices to develop institutional knowledge – is also very beneficial. Finally, ensure transparent and timely communication on costs
This ‘win-win’ situation for both business and legal teams deliver maximum value to the business. Corporates are happy with this paradigm shift as the increased reliance on in-house counsel brings more accountability and facilitates the management to take timely business decisions • External legal counsel: how can they serve you better? Understand the client’s business, culture and environment and provide quality and timely advice (including prioritising the risks) that enables the client to make business decisions. Reduce/avoid lengthy and long list of assumptions and caveats in the opinions and DD reports so as to bring more accountability to their advice. Keep the client regularly updated on time and costs already incurred and keep within the agreed budget as far as possible, and more transparency in hourly billing. Keep in-house counsel informed of new areas/ developments which may be of interest, and in jury matters progress/areas of concern/ timing/budget
Costs, quality of service, professional standards and communication skills
• Main criteria when selecting external counsel
Asian Legal Business ISSUE 9.10
FEATURE | ALB/Jun He Law Offices In-house 25 >>
Jeffrey Wong Title: Executive director Company: UBS (Singapore) Location: Singapore
• Notable achievements over the last 12 months I am not able to claim any personal credit as to achievements, as any achievements are possible only because of the strength of the UBS platform and the contribution of the team, both from the legal and business side • Law firms used most often Given the strength of the UBS franchise in south Asia, I have worked with most of the top-tier international firms, as well as domestic counsel, in our transactions.
Patrick Moran Title: Head of global markets & investment banking counsel, AsiaPacific region Company: Bank of America Merrill Lynch Location: Hong Kong
Shao Jinyang Title: Legal department manager Company: Sinopec Location: China
Roy Huang Title: General counsel and head of compliance Company: CITIC Ka Wah Bank Location: Hong Kong
www.legalbusinessonline.com
• Notable achievements over the last 12 months The challenge and notable accomplishment of the last year has been advising on transactions in extraordinary market conditions, while navigating the financial crisis and our own corporate merger. Effectively executing deals for clients in this environment is in itself a notable accomplishment, whereas it might have been simply working on the biggest deal of the year in the past. With issuers seeking to maximize brief market windows, execution has become more difficult. The use of legal risk as a means to compete in Asian investment banking has actually increased, which is not what one would have expected given the situation in global banking
We have excellent relationships with most of the law firms which are active in the markets in which we have a footprint • External legal counsel: how can they serve you better? The law firms that I prefer to work with have a good understanding of not just the law (which is a given) but also the commercial drivers underpinning the transactions. Law does not exist in a vacuum and, accordingly, the appropriate and flexible application of the
and the choice depends on the country and the product. Recently Linklaters and Fried Frank have been doing a significant amount of work for us • Areas in which work is most frequently outsourced We do not have any legal area that is outsourced completely. The human resources area is one that is outsourced to a greater extent than other areas – however I expect that to decrease over time.
legal principles to the specific facts in each instance is a quality which I believe the inhouse clients would value. The ability to provide guidance and clearly articulate the considerations in situations where there are no clear-cut answers is also a quality that I like about some of the lawyers that I work with. Having periodic frank discussions about the services is also helpful in understanding how the clients view the services and what can be done to improve them. Among others, one way to acquire an understanding of
the client (and thus enabling a better delivery of services) would be to second a lawyer to the client. We have had various relationship law firms second their lawyers to us from time to time and find that such secondments are generally beneficial in that regard
whereas in other regions litigation expenses would be a significant portion of the legal spend. I expect a slight increase towards the end of 2009 and into 2010 if the markets continue to improve. Fees [that are] not directly tied to revenue producing transactions will continue to be closely scrutinised
noting situations in which that risk-reward analysis may be different. This requires partner involvement at critical times, and for the partner to make an effort to reach out to the key constituencies within the client. Conversely, some firms will pull back during critical decisions and give narrow technical advice with the view that this may help the client “get the deal done”. While this may appear to be business-friendly in the short-term, over time this erodes confidence in the firm, making it less likely they will be selected for complex matters
• Law firms used most often We use a variety of law firms
• Budget for external counsel: How has it changed in the last 6-12 months? While we do not publish legal budgets, the trend is that our legal spend has decreased from prior years due to lower transaction volumes. Our fee expense in Asia is mainly comprised of transaction-related expenses,
• External legal counsel: how can they serve you better? Law firms provide the best service when they proactively advise on risk generally, rather than simply offer technical legal advice. It is expected that the technical questions will be answered correctly – however the best firms distinguish themselves by thinking about the broader picture. One example is advising on how a particular decision set precedent for future transactions, and
• Notable achievements over the last 12 months US$8bn takeover bid for Addax Petroleum, a publicly traded company on both the Toronto and London stock exchanges.US$1.9bn acquisition of Toronto-listed Tanganyika oil Sinopec and CNOOC joined forces to buy
assets in Trinidad and Tobago from Canada’s Talisman Energy, for approximately US$315m. The department is very active in sharing its knowledge and experience with peers and colleagues. It has developed 42 special-topics PowerPoints and provides professional
training to more than 1,200 people, including general counsel of subsidiaries, heads of legal affairs organisations, in-house counsels, and contract managers. The department gave lectures to business people to spread legal knowledge and create a legal culture
• Law firms used most often Guantao, Haiwen & Partners, Grandfield, Jones Day, Herbert Smith and Vinson & Elkins
• Notable achievements over the last 12 months Privatisation of CITIC International Financial Holdings Ltd through a scheme of arrangement. Managing multi-faceted fallout from the bankruptcy of Lehman Brothers and the sale by the Bank of Minibonds and other Lehman related structured products. Negotiating complex credit support and related terms
in relation to a fully-funded investment vehicle previously restructured from an SIV, caught in the grip of the credit crunch
• Areas in which work is most frequently outsourced M&A, capital markets, contentious matters – I believe this will continue to be the trend over the next 12 months
• External legal counsel: how can they serve you better? Anticipate issues early, do not sit back, deliver advice with thoughtful and robust recommendations, always put your best effort and people forward and offer innovative solutions on billing without having to be asked
• Law firms used most often For significant transactions or contentious matters, Linklaters, Richards Butler, Clifford Chance, JSM Mayer Brown, Deacons. For regular banking activities we have a very strong panel of law firms that we use
• Budget for external counsel: How has it changed in the last 6-12 months? The budget is significant and it has grown over the last 12 months
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FEATURE | ALB/Jun He Law Offices In-house 25 >>
Geraldine Kamalanathan Title: General counsel Company: Maybank Location: Malaysia
• Notable achievements over the last 12 months I was actively involved in all the four different corporate exercises for the bank in the last year and a half
• Law firms used most often We have a panel of over 700 law firms to serve the bank, so there is no one firm that we use more often then any other • Areas in which work is most frequently outsourced Litigation and mergers and acquisitions • Budget for external counsel: how has it changed in the last 6-12 months? The department’s budget for legal spend is extremely low as most of the legal work is handled in-house. This is not likely to change • External legal counsel: how can they serve you better? To always update the client on the status of the matter being outsourced, no matter how insignificant
• Notable achievements over the last 12 months Title: Legal manager, Issuance of US$48m worth legal centre of new shares, acquisition of Company: GD Midea a stake in Hefei Rongshida Holdings laundering equipment Location: China manufacturing and Wuxi Filin electronics and investments in Thailand and Vietnam, to increase production capacity
Zhang Chenming
• Has the role of the legal department changed? The legal centre has been expanding its practices from disputes settlement to legal risk management. Our lawyers are trusted partners of business units • Biggest challenges? Helping our colleagues from the business units to understand the legal risks in daily business – in fastgrowing companies legal risks are easily neglected. Another major challenge is to keep building the capability of the in-house legal team to support the company, which is one of the largest home-appliance conglomerates and has over fifty subsidiaries, some listed companies. Making sure all in-house lawyers from different offices work effectively
• Notable achievements over the last 12 months Title: Managing counsel, Successfully raised the team’s business operations and profile both in the company support services Company: Shell Malaysia and externally, concluded several projects including a tool Location: Malaysia which the businesses could use for assurance and compliance purposes (for example the upgraded license and permit database which captures all the relevant laws that the company must comply with)
Lily Khairi
• Areas in which work is most frequently outsourced We do 95% of the legal work in-house and only outsource the specialist work – conveyancing, litigation and industrial relations. We do not expect this trend to change for the next 12 months • External legal counsel: how can they serve you better? Law firms need to understand the client’s business and systems in order for them to continue providing fit-for-purpose and value services to their clients, in a constantly changing business environment. Expectations by clients have evolved over the years. This includes the expectation that law firms manage the KPIs that are set by the clients. The law firms are now being assessed not only on the quality and timely deliverables of their work but also on assessability, innovation and the ability to provide commercially sound legal solution
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• Notable achievements over the last 12 months The US$70m acquisition of AIG Finance, a wholly owned subsidiary of AIG in Hong Kong, the issuance of US$2.9bn worth of subordinated bonds, and Bank of America’s sale of US$7.3bn of H-shares in China Construction Bank
Cheng Meifen
Title: Legal department manager Company: China Construction Bank Location: China
• Law firms used most often Jingtian & Gongcheng, King & Wood, Commerce & Finance, Beijing Dali, Allen & Overy (UK), Freshfields (UK), Sidley Austin (US), Herbert Smith (HK) • Biggest challenges? Since the fourth quarter of 2008, many policies were introduced by the government to accelerate economic growth and expand domestic demand. Commercial banks are encouraged to provide loans to business but it adds more difficulties for the legal department to control risks and ensure compliance, and, at the same time, to make sure the business’s growth is sustainable. The current market conditions have put the legal department’s skills and ability to balance risk management and business development to the test. The GFC has also reminded every financial institution that it’s crucial to prevent and eliminate risks when innovating new products and finance structures. This requires the legal department to be more involved in the process of product innovation, provide stronger support to R&D units, better protect intellectual property rights and work more closely with business units to control risks and avoid any potential disputes and losses
• Notable achievements over the last 12 months Juggling quite different roles; as deputy head of legal for Morgan Stanley for Asia, and as senior coverage lawyer for the private wealth management and investment banking division teams in Asia-Pacific
Brett Graham
Title: Managing director, legal and compliance Company: Morgan Stanley Location: Hong Kong
• Law firms used most often The usual major United States, United Kingdom and Australian firms, plus some specialist firms in areas like litigation • Areas in which work is most frequently outsourced Where there is a heavy execution rather than advisory element; for fact-intensive regulatory investigations, or litigation; and for regional surveys, for example. But we still supervise the process and work product closely • Budget for external counsel: how has it changed in the last 6-12 months? Not available. There is a clear focus on cost control across the organisation and legal costs are part of that • External legal counsel: how can they serve you better? The good firms pretty much know what to do. Being innovative and flexible on such things as secondees, legal bills, and free ad-hoc advice, always helps the relationship
Seung-Kook Synn Title: Vice president and general counsel Company: SK Energy Location: Korea
• Notable achievements over the last 12 months Viewing and adjusting the requirements of systems and operations, processes, documents and terms according to the revised Insurance Law claims, the control and prevention of legal risks. Recent acquisition of stake in Shenzhen Development Bank • Law firms used most often Infrastructure is Jun He, property is Zhong Lun, domestic acquisition is DeHeng Law Offices, foreign acquisitions is Kaiwen, DLA Piper
Yao Jun
Title: Chief counsel Company: PingAn Insurance Group Location: China
• Areas in which work is most frequently outsourced Agent litigation cases, construction, infrastructure and private equity investments require specialist legal advice. Wealth management and trust require specialists’ advice to ensure it operates in alignment with the changes within the government treasury • External legal counsel: what are your main selection criteria? Litigation experience, potential of team, the influence of lawyers and the firm, reasonable charges, history of dealings with Ping An
• Notable achievements over the last 12 months Title: General manager In 2007, an agreement to of legal department acquire a 28% stake in Company: Sinochem Jiangshan Nantong Pesticide Location: China Chemical. In 2008, through a wholly-owned subsidiary of Sinochem International (Singapore) Ltd, tender offer for 51% stake of SGX-listed company GMG Global Ltd. Winning a four-year cross-jurisdiction legal case against Malaysia International Shipping Corporation
Liu Wenzhao
• Law firms used most often Jones Day, Baker & McKenzie, Jun He, Tianyuan, Zhenghan Law Firm • Main criteria for selecting external counsel Professional ability, language proficiency, costeffectiveness and reputation • Biggest challenges? How to effectively manage an ever-growing IP portfolio and protect the company’s IP rights in domestic and overseas markets remain a challenging task for us. Another challenge lies in managing risks and protecting the company’s interests and rights in the domestic legal framework, which is still developing and perfecting. How to manage the differences between domestic and international legal practices and help the senior management understand the differences is also a challenge
• Notable achievements over the last 12 months Corporate reorganisations including the spin-off of SK Energy’s lubricant business
• Law firms used most often International: Paul Hastings, Orrick. Domestic: Lee & Ko; Yoon, Yang, Kim, Shin & Yu; Shin & Kim • Areas in which work is most frequently outsourced M&A, anti-trust and litigation • External legal counsel: how can they serve you better? Work as if you were an in-house counsel
Asian Legal Business ISSUE 9.10
FEATURE | ALB/Jun He Law Offices In-house 25 >>
www.legalbusinessonline.com
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Feature | offshore financial centres >>
Offshore fightback While offshore financial centres have taken a battering throughout the financial crisis, there is light ahead. From G20related fallout to political and economic victimisation, many have sought to place at least part of the blame for economic collapse on the shoulders of offshore financial centres. But those centres and the lawyers who ply their trade there remain unfazed, convinced of the important role that these facilities will play in the world economy
►► Offshore jurisdictions: The grey and the white White-listed offshore jurisdictions
Grey-listed offshore jurisdictions
Bermuda
Andorra
British Virgin Islands
Anguilla
Cayman Islands
Antigua and Barbuda
Cyprus
Aruba
Guernsey
Bahamas
Ireland
Dominica
Isle of Man
Gibraltar
Hong Kong
Grenada
Jersey
Liechtenstein
Luxembourg
Monaco^
Mauritius
Montserrat
Seychelles
Singapore
US Virgin Islands
Switzerland
^ At the time of going to press, Monaco was in the final stages of concluding tax information exchange agreements with the 12 countries needed for ascension to the white-list. Source: OECD
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Asian Legal Business ISSUE 9.10
Feature | offshore financial centres >>
I
n the long and drawn-out financial crisis post-mortem, the role of offshore financial centres has come under the microscope. Everyone from Barack Obama to United Kingdom prime minister Gordon Brown has sought to lay part of the blame for the financial collapse on the shoulders of the ‘shady dealings’ in places like the Cayman Islands, the British Virgin Islands (BVI) and Bermuda. “How much safer would everybody’s savings be if the whole world finally came together to outlaw shadowbanking systems and offshore tax havens? ” was the question asked by Brown to the United States Congress earlier this year. What was casually omitted from the political sabre-rattling of Brown, Obama and others though, is the critically important role that offshore financial centres like Cayman, BVI, Bermuda, Mauritius and others play in the global financial system. In the Asia-Pacific region offshore centres act as a nexus through which international investors can access the growth markets of China, India, Singapore and Malaysia, to name but a few. This is not limited to international clients, however. Asia-based clients, who have long-known the virtue of structuring investments through places like the BVI and Cayman will continue to use the offshore route, but perhaps with greater frequency in calmer economic times.
Centre of finance
“Asia-based clients have been using offshore financial centres like BVI, Cayman and Bermuda for the best part of 20 years and are already familiar with what they can bring to their business,” says Michael Gagie, the partner-in-charge of Harneys’ Hong Kong office. “We would expect new incorporations in those jurisdictions to pick up again as the economy picks up, as it is generally when people are making www.legalbusinessonline.com
money that they are looking to pay less tax on it,” he adds. But increased use by clients in Asia of offshore financial centres needn’t only be about tax minimisation. Regulatory changes and the relaxation of listing rules in onshore jurisdictions like Hong Kong and Singapore (which will permit companies incorporated in a number of offshore jurisdictions to list there) will also stimulate this process. Appleby’s Frances Woo explains how this works. “The stock exchanges of Singapore and Hong Kong already do allow the listing of Bermuda and Cayman companies and those jurisdictions are already well established,” she notes. “If that is further opened up, to say BVI and/ or Seychelles – or there is more use of Isle of Man in Singapore – then that would increase both awareness and use.” Recent developments on Taiwan’s stock exchange will have a similar affect. “The recent opening up of Taiwan’s stock exchange to foreign companies, and in particular, Cayman Islands companies has assisted and broadened the use of Cayman Islands in Taiwan,” she says. Historically, many Taiwan entities were using Bermuda, Cayman and/ or BVI for listing abroad (of which Nasdaq listings have been, so far, the most popular). In opening up, Taiwan is trying to attract both foreign groups to the nation (particularly in the technology space) as well as Asian groups who may find advantages to listing in their home region. Cayman-incorporated Array Networks became the first international company to list on Taiwan’s Gre Tai earlier this year with its US$79m IPO. On this occasion, Walkers were retained as counsel on Cayman law while K&L Gates acted as the issuer’s Taiwan legal advisor. Spencer Privett, Joint Managing Partner with Maples and Calder in Hong Kong says that Array’s IPO is the start of many more to come. Earlier this year, Maples acted for Want Want
“We do not believe that offshore law firms are anything close to ‘business as usual’. Not only do we have the continuing effect of the insolvencies and restructurings ... but our litigation departments are still very active as a result of the fallout that arose ... as well as [from] the significant market meltdown that took place” Frances Woo, Appleby
Frances Woo, Managing Partner Appleby
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Feature | offshore financial centres >>
“Asia-based clients have been using offshore financial centres like British Virgin Islands, Cayman and Bermuda for the best part of twenty years and are already familiar with what they can bring to their business. We would expect new incorporations in those jurisdictions to pick up again as the economy picks up”
Michael Gagie, Harneys
Michael Gagie, Partner, Harneys
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Holdings on its issuance of TDRs and Cowealth Medical Holdings on its Gre Tai listing and they are currently working on most of the other companies in the Taiwanese IPO pipeline.
Offshore leaders
Cayman, BVI and Bermuda remain the most widely-used offshore financial centres among Asiabased clients. The status quo is likely to remain unchanged in the future. According to lawyers ALB interviewed, Asia-based clients are starting to use other jurisdictions with greater frequency. However, the location chosen will continue to be dictated by the nature and needs of the deals being transacted. “Cayman, BVI and Bermuda have always been considered among the top offshore jurisdictions in Asia,” notes Christopher Bickley, a partner with Conyers Dill & Pearman in Hong Kong. “Companies in these jurisdictions have the characteristics of being tax-neutral, [with] flexible but sound laws and are relatively easy to maintain.” This is not to say that other offshore jurisdictions will be used from time, it just means that when Asia-based clients choose to do so, it is more about seeking out somewhere that dovetails with the structuring needs of a particular deal than anything else. Two jurisdictions which are used in this way are Mauritius and Isle of Man (IOM). Both have made a name for themselves over the past five years in particular, in the context of the high volume of India-bound investment that passes through these countries. Mauritius has a clear lead over other offshore jurisdictions in terms of access to India, ostensibly because it has a double taxation avoidance agreement (DTAA) with the country. The latest OECD statistics indicate that 44% of all foreign direct investment (FDI) into India passes through Mauritius. But the island isn’t all about focusing on India, as Harneys’ Gagie is quick to point out. “Mauritius is developing its profile in the PRC and has become very popular there,” he says. “Africa is also on its
radar and here, as well as with other BRIC countries, I expect its usage to increase.” Similarly, the IOM also enjoys a good reputation as on offshore jurisdiction that services India. However, where the focus for the Mauritius-India link is heavily inbound-focused, IOM is being used most commonly as an offshore centre through which Indiabased clients are channelling their own international investments. This is achieved most commonly through AIM listings as well as asset financing. Mike Edwards, a Singapore-based director with Cains says that IOM has more to offer than just these legal areas – and not just to Indian clients. “With liquidity coming back to India, we expect to see deals not only in the capital markets and asset finance areas but also project financing,” Edwards explains. “We tip [there will be] more IOM involvement in India-related power and infrastructure projects, especially where there is a public sector element. In relation to non Indianbased clients, Singapore and other parts of southeast Asia will remain active.” Cain’s recent involvement as IOM counsel on Genting Singapore’s US$1.14bn rights issue seems to suggest this is the case. This is not to say that the positions of Mauritius and IOM as the premier offshore jurisdictions through which to access India will remain unchallenged. Offshore lawyers expect Cayman to put up more of a fight – particularly in the funds area. Earlier this year, Cayman overcame one of the major hurdles that investment funds domiciled there face when seeking to invest into India’s capital markets, after the admission of the Cayman Islands Monetary Authority (CIMA) as a full member of the IOSCO. CIMA’s admission to IOSCO means that the process for the registration of Cayman funds as Foreign Institutional Investors (FIIs) with India’s Securities and Exchange Board (SEBI) will become much less complicated. In the past SEBI would often Asian Legal Business ISSUE 9.10
Feature | offshore financial centres >>
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Firm Profile Feature | offshore financial centres >>
Appleby
Appleby: a fast-growing offshore firm boosts its network for clients
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ppleby has led an impressive year of growth by significantly expanding its level of service and resource base. Not only did the fast-growing firm recently announce its merger with Isle of Man-based Dickinson Cruickshank, but less than two weeks later announced the launch of its office in the crucial growth market of Seychelles. It doesn’t stop there however, as recent regulatory changes in Mauritius allowed it to claim the title as the first foreign firm in Mauritius to be registered to practice both local and foreign law. To cap it off, it also opened a fiduciary and administration arm in Bahrain. “It’s a positive message to our clients in the downturn that we’re continuing to forge ahead with our strategy to be the leading global offshore service provider,” says Hong Kong managing partner Frances Woo. “We’re bringing all of these offshore jurisdictions to Asia via our Hong Kong office, which strengthens our position in the market.” The firm’s merger with Dickinson Cruickshank will make it the largest offshore firm by number of partners, as well as the first global offshore firm to launch an office on the Isle of Man.
Ground-breaking service Clients are juggling numerous regulatory changes across all offshore jurisdictions and through the maze of new developments. This brings new opportunities for the way clients are serviced, says Woo. “Clients and their advisers have become very sophisticated and are interested in hearing about new uses and new innovations,” says Woo. “The offshore jurisdictions that Appleby covers – Cayman Islands, BVI,
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Bermuda, Jersey, Mauritius, Seychelles, and the Isle of Man – keep closely abreast of changes in the international financial community. Amendments to their respective legislations are regularly made in order to meet with business needs. Appleby is at the forefront in advising on these changes and can assist in differentiating one jurisdiction from another for the most efficient deployment.” The firm has advised on some of the most important regional deals, such as the US$149m Lumena Resources IPO, the US$346m Sino-Forest Corporation share offer, and more recently, the US$67m Wisdom Marine Lines’ listing on Taiwan’s GreTai Securities Market. The latter is a significant deal as it follows the GreTai’s opening to foreign companies. “The recent opening up of Taiwan’s stock exchange to foreign companies, and in particular Cayman Islands companies, has assisted and broadened the use of Cayman Islands in Taiwan,” says Woo. “Historically many of the larger Taiwanese businesses were going outside of Taiwan to list using Bermuda, Cayman Islands and/or BVI. Taiwan is now trying to attract both foreign businesses to Taiwan (particularly those in the technology arena) as well as Asian businesses which may find advantages to listing in their home region.”
Jersey, Mauritius, Seychelles, London, Hong Kong, Zurich, Bahrain and the Isle of Man – the firm offers unrivalled coverage for its clientele. The firm was finalist for the Offshore Law Firm of the Year, and won the Debt Market Deal of the Year in the ALB HK Law Awards 2009. As a world-class legal, fiduciary and administration service provider, Appleby will lead the pack in providing the best resources and geographical reach for its clients. To speak to an Appleby specialist, visit applebyglobal. com, or contact below. Frances Woo Managing partner, Hong Kong 8th Floor, Bank of America Tower 12 Harcourt Road, Central, Hong Kong Phone +852 2905 5720 Fax +852 2524 5548 Email fwoo@applebyglobal.com
2009: a growth odyssey Appleby has experienced a solid year of growth despite the current economic conditions, whether advising clients on their outbound acquisitions, listing on non-Asian exchanges or conducting JVs with foreign partners. Having over 700 lawyers and staff spread across eleven offices – Bermuda, British Virgin Islands, Cayman Islands,
Frances Woo
Asian Legal Business ISSUE 9.10
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THE RIGHT PEOPLE. THE RIGHT PL ACES. THE RIGHT COMBINATION. %DKUDLQ %HUPXGD %ULWLVK 9LUJLQ ,VODQGV &D\PDQ ,VODQGV Hong Kong ,VOH RI 0DQ -HUVH\ /RQGRQ 0DXULWLXV 6H\FKHOOHV =XULFK Offshore Legal, Fiduciary & Administration Services
Feature | offshore financial centres >>
“With liquidity coming back to India, we expect to see deals not only in the capital markets and asset finance areas but also project financing. We tip more Isle of Man involvement in Indiarelated power and infrastructure projects, especially where there is a public sector element” Mike Edwards, Cains
Mike Edwards, Director, Cains
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conduct extensive due diligence investigations and inquiries before allowing a Cayman fund to register as an FII. As a result few Cayman funds sought registration with SEBI. It should be noted though, that Cayman does not currently have a DTAA with India. It is likely that funds from nontax treaty jurisdictions like Cayman will continue to use a structure via a wholly owned Mauritius subsidiary. This is evidence, according to lawyers ALB interviewed, that the offshore game isn’t necessarily a zerosum proposition. “It’s not a question of IOM or Mauritius or Cayman taking work away from one another … each have their own unique offering,” Edwards says. He does concede that in the long run, some jurisdictions may slowly “chip away at others’ tax bases” through establishing DTAA’s with countries like India and China. But will these jurisdictions rise to challenge the positions of the likes of BVI, Cayman or Bermuda? Maples’ Privett doesn’t believe that such a situation will eventuate. “The major offshore jurisdictions have advantages that the emerging ones do not,” he says. “In addition using BVI for holding companies and Cayman for funds and HK listings has a market acceptance element as well. All things being equal, I don’t think this will change anytime soon.” Appleby’s Woo says that the growth of so-called “emerging” offshore jurisdictions needn’t be a process that yields changes in the status quo. It can simply be about offering investors new opportunities, she says, citing Seychelles as an example. “Seychelles offers good opportunities to break new ground, given its network of DTAA treaties with certain Asian countries – for example China and Indonesia – [because of] its efficiency, speed, close time zone proximity to Asia and lower cost,” she says. Yet just as critical for places such as Seychelles is carving out their own niche. “The so-called emerging jurisdictions, apart from developing their network of DTAAs, need to find a specialisation, their own niche,”
says Harney’s Gagie. “Much like the BVI has found its space with holding companies and incorporation, Cayman with funds and listings and Mauritius with India. The alternative approach is to find a political attraction or motivation for being favoured.” What niches remain in an already crowded offshore market remain to be seen, but the backlash emanating from the G20 summit may well fall under the ‘political reasons’ that Harney’s Gagie notes above.
Black, white and G20
The offshore lawyers that ALB spoke to all note that, in the eyes of their Asia-based clients, there has been little fallout emanating out of the G20 summit earlier this year, where regulators pointed the finger at offshore financial centres. “Very few of our clients have expressed concerns about their use of offshore financial centres after G20,” says Maples and Calder’s Privett. Gagie cites a similar experience, saying that he expects the fallout from the G20 to be minimal. “The jury’s still out on what the longer-term practical impact will be, but we hope that in Asia it won’t be too profound.” Regardless of these sentiments, there is no denying that there still may be a stigma attached to the use of offshore jurisdictions. But the ascendancy of both Cayman and the BVI to the OECD’s ‘white list’ earlier this year – as offshore jurisdictions that have substantially implemented the internationally agreed standards in respect of the effective exchange of information for tax purposes – has gone a long way to eroding such views. This is so even if their elevation to the list is mere confirmation of the transparency with which both nations have been operating for many years. “The recognition by the OECD of the Cayman Islands, BVI and Bermuda as tax-transparent and cooperative jurisdictions is a very significant milestone in the long-standing efforts by these jurisdictions to cooperate with the various international initiatives by the OECD and other Asian Legal Business ISSUE 9.10
Timing.
Timing.
Is a combination of awareness, responsiveness and action.
At Harneys we understand that timing is everything. Thatâ&#x20AC;&#x2122;s why the worldâ&#x20AC;&#x2122;s leading law firms, financial institutions and corporates call on us when they need fast, accurate and commercially astute legal advice. With offices and affiliates in the British Virgin Islands, Cayman Islands, Hong Kong, and London, Harneys has jurisdictional expertise and business knowledge that spans the globe. Let us put it to work for you.
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British Virgin Islands | Cayman Islands | Hong Kong | London
Feature | offshore financial centres >>
“While we may not be over with the financial crisis we are seeing a recovery in funds... what is promising though is that it’s not just coming from the same existing managers but also start up managers. All bodes well for offshore law firms to move on from the crisis” Spencer Privett, partner, Maples and Calder
national and international agencies,” said Conyers’ Bickley.
Law firms
As the region’s equity markets are rebounding, there are new funds being formed in Cayman and multibillion dollar acquisition and asset financing deals returning to the deals pipeline. So is it correct to assume that the cycle is back to ‘business as usual’ for offshore law firms – have we worked through the full-cycle of offshore disputes, insolvencies and restructurings? Appleby’s Woo, while noting that activity has picked up across the region, doesn’t agree with such assertions suggesting that there is plenty more recession-related work to be completed. “We do not believe that offshore law firms are anything close to ‘business as usual,’ she says. “Not only do we have the continuing effect of the insolvencies
and restructurings … but our litigation departments are still very active. [This is] as a result of the fallout that arose, for example, out of the Maddoff issue as well as out of the significant market meltdown that took place, which created a number of substantial problems for funds incorporated in a number of our jurisdictions.” Woo says the pace of this type of work is declining, however. Maples’ Privett says he is seeing a notable increase in investment funds work, and it is not necessarily coming from the usual suspects. “While we may not be over with the financial crisis we are seeing a recovery in funds, especially in the last two or three months in terms of new fund formations,” he says. “What is promising though is that it’s not just coming from the same existing managers but also start up managers. All bodes well for offshore law firms to move on from the crisis.” ALB
N E W Y O R K S TAT E B A R A S S O C I AT I O N
International Section Seasonal Meeting 2009 October 26-29, 2009 Swissôtel The Stamford
Singapore The 2009 Seasonal Meeting of the New York State Bar Association’s International Section will be held at the Swissôtel The Stamford, Singapore from Monday, October 26 through Thursday, October 29, 2009. Educational programs will be held in cooperation with local bar associations, professors from local universities, and attorneys from law firms around the world, including Asia, the Americas, and Europe. Virtually every legal discipline will be represented in the programs. In addition, the Chief Justice of Singapore, the Singapore Minister of Law, the Attorney General of Singapore, and the Ambassador at Large of the Singapore Ministry of Foreign Affairs will address the meeting. There will also be a number of attractive social events and entertainment.
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Asian Legal Business ISSUE 9.10
profile | managing partner >>
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Asian Legal Business ISSUE 9.10
profile | managing partner >>
profile | managing partner >>
alb 2009 managing partnerS series
Lindsay Esler - Deacons:
Flying solo
Lindsay Esler, who was managing partner of Deacons for six years until the position was abolished earlier this year, tells ALB why Deacons has the position and approach to be a winner in a market where there is now a shortfall of big full service firms
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or as long as those familiar with the domestic legal services market in Hong Kong can remember, Deacons and Johnson Stokes & Master (JSM) have been the dominant players. It is they who have been in perpetual struggle for some of the SAR’s most lucrative work, blue-chip clients and the best and brightest legal talent on offer. But after JSM’s marriage with US-based firm Mayer Brown, the status quo was shaken up. Since the JSM merger announcement was made in early 2008, it has been Deacons alone filling the role of a dominant, truly independent law firm. More than double the size of its nearest competitor (Woo, Kwan, Lee & Lo is the next-largest firm with 80 lawyers compared to Deacons’ 160 plus), Deacons has one of the more lucrative and loyal client portfolios. The firm has also recently added membership of Lex Mundi, Interlex and World Services Group to its name. While Lindsay Esler agrees that the events of the past year have been a watershed for both his firm and Hong Kong’s legal services sector, he tells ALB that they aren’t enough to force the firm into a strategic sea change. Esler
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says Deacons is comfortable with its position in the Hong Kong legal market, and no amount of M&A activity in the legal services market will alter that, or its strategic direction. But while the mergers (more recently Deacons Australia’s teaming with Norton Rose) may not have as drastic an impact on Deacons Hong Kong as one would have thought, they are forcing the firm to analyse its own aspirations. Deacons, it seems, still has its heart set on being an international firm, but it’s a strategy that won’t be fulfilled in a conventional way.
Mergers, alliances, ententes
The last 18 months have been nothing if not momentous for legal services markets across the region. Law firms have merged, sought out strategic alliances and ententes and are looking for eligible partners everywhere. Esler says Deacons neither wants nor needs a merger — but this is not to say that the firm does not have its fair share of suitors. “International law firms seem to think we are a good target,” he says. “We did look at the possibility of a merger in 2001-02 and received a lot of approaches since, but now we wouldn’t consider it because, frankly, we don’t
need it.” The firm has been closer to a merger than some may think — through its alliance with US-based Graham & James and Deacons Australia in 1992. That alliance fell through when Graham & James collapsed in 2000. The other half — the entente with Deacons Australia — will come to an end in early 2010, when the Australian firm formally becomes a member of the Norton Rose network. This is an arrangement that Esler is completely comfortable with. “The merger did not surprise us,” he said. “Basically, we were two large associated firms and we were heading in different strategic directions. It is very much suited to Deacons Australia to merge with Norton Rose — and to be
“The tasks of the managing partner usually fall into two categories: the boring and the unpleasant” Lindsay Esler, Deacons 51
profile | managing partner >>
honest we are quite comfortable with our position within our own market, because we are by far the largest independent firm in Hong Kong.” But being the largest independent firm isn’t where the ambition stops. “We have access to international resources through our relationships with other leading independent firms,” says Esler, mentioning as an example the firm’s recent admission as the Hong Kong member of the world’s leading association of independent law firms, Lex Mundi. “We want to build on the good reputation we have in Hong Kong and the PRC — where we were the first international law firm to have been given three licenses to set up in cities there [Beijing, Shanghai and Guangzhou]. What we need now are like-minded friends rather than merger partners.” While a merger may not be on the cards right now, Esler does not rule out the possibility of ’closer cooperation’ with its associated firms in southeast Asia. Deacons has associated firms in Malaysia and Thailand, and a further Greater China presence in Taiwan. “We may assist the associated firms with support systems and marketing but there is no plan for financial integration – any closer relationships will all depend on the jurisdiction,” Esler says. “We can’t rule this out but at the moment it is really not on the radar. Asian markets are extremely diverse and even though other jurisdictions may offer good opportunities for growth, hourly rates may not justify doing things differently.”
Structural form
“The balance issues have created a logistical nightmare, but there are worse problems to have,” he says. Fixing the problem may be made easier by the fact that the firm’s client base is diverse. “Our client base is sufficiently flexible to allow us to have a more than third of our resources deployed in these areas,” he says. “We don’t have a handful of clients contributing 50% to our total revenues. In fact our largest client contributes only 2% to our total figure — so this fact will be immensely helpful in the process.”
Hands-on
Esler hasn’t been your usual law firm’s managing partner. For one thing, he is decidedly more hands-on and continued to play an active professional role as head of its 90-strong IP department for the entire time he was managing partner. “I am now the operations, management and projects partner,” he explains. “We realised some time ago that the firm has grown to a size where a single person could not handle the Managing Partner role , so we decided to abolish it and create an executive partner role (now held by Jeremy Lam) which involves, essentially, dealing with the partnership, marshalling the troops, convening management and strategy meetings and running negotiations,” he says. “Maybe it is similar to a whip.” This position frees up more of Esler’s time to concentrate on what he feels to be the aspects of the former managing partner role where he can best use his
skills and experience: the operational management, development, projects and IT sides of the practice. “The tasks of a managing partner usually fall into two categories: the “boring” and the “unpleasant”,” he says. “The “boring” parts, which I, perhaps perversely, find more rewarding are the operational things – being involved in marketing, technology and IT; while the unpleasant side from my perspective is dealing with all the “people issues” and the inevitable law firm politics.” Esler is intimately involved in the firm’s procurement, application and development of legal technology. “IT systems aren’t an afterthought for us; we see them as aiding overall growth,” he says. “We are focusing our efforts on developing software programs and integrating computer systems to better service clients. We employ 20 IT professionals and programmers who work on writing software — like costrecovery systems and programs that allow clients to check their WIP before we bill them — and then software to monitor how our clients use these services.” Esler says that while it is a “gutsy move” allowing clients to monitor completely how and for what they are being billed by their lawyers at any stage of a matter, it is most certainly the way of the future. “We believe we lead the way in this area in Hong Kong because we believe that it is what clients will eventually demand of their lawyers,” he says. “For lawyers, it is another way they can add value for clients.” ALB
While striking mergers or deepening ties with its network firms may not be at the top of the agenda now, tending to structural issues is something that will keep Esler increasingly busy. He concedes that, at present, the shape of the firm is a little incongruous. “Our expansion so far has not been through rigid strategic planning,” he says. “It has involved growing in areas where other firms did not have a strong local presence — for example, funds and insurance.” The result, says Esler, is that Deacons has a number of disproportionately large practice groups. For instance, together the firm’s IP and Insurance and Financial Services departments account for around 70 of its 160 lawyers. However, some other departments are relatively small for the size of the firm. 52
Asian Legal Business ISSUE 9.10
profile | managing partner >>
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FEATURE | Shipping >>
A perfect storm:
Asia’s shipping practices stay afloat
Although trade volumes and financing work remain at low levels, maritime and shipping law firms in Asia aren’t necessarily thrown by the stormy weather. ALB reports
I
t’s the standard rule of economics: when supply outstrips demand, business will be slow. This is certainly the case for Asia’s shipping industry, which some say has been affected by the financial crisis more than any other sector. Trade volumes have declined due to waning United States and European demand for Asian exports. From last year’s booming market, many of the new colossal-sized ships built to meet an expected boom in business are now left docked and unused in ports – and those vessels in use are running routes at minimum capacity and at lower charge rates. The industry is marked by an oversupply of vessels, a lack of demand for their use, and not enough capital to keep it going.
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Yet while Asia’s law firms may no longer be largely working on the bigticket deals financing new carriers, they are busy renegotiating contracts, resolving disputes and refinancing loans. Singapore-based shipping firm JTJB is handling more work than they had before the crisis, according to founder and managing partner, Dato´ Benny. “The word which best describes the market right now is buoyant,” says Benny. “It’s been like that for the last six to eight months. What we’re seeing is an increase in litigation and contentious work. It’s a different kind of work but it’s still reflective of a buoyant playing field.” For the Hong Kong-based lawyers at shipping specialist firm Holman Fenwick Willan, the pace has settled back to normal levels, from a year aptly
described as “frightful”. “2008 was the busiest in the firm’s 125 years,” says Holman’s Hong Kong managing partner, Paul Hatzer. “Our Asian offices all had a strong year and new enquiries were constantly being made. Since March, the level of work has slowed down a little, though we’re still planning to recruit young lawyers as they are vital for our long-term future.” Before the financial crisis, optimism abounded in the shipping industry. Law firms were advising on deals that were financing new and bigger ships and on maritime-related M&As. However, those deals have now led to an oversupply of shipping assets whose values have dropped and culminated in the recent flow of work. “Three or so years ago, there was a Asian Legal Business ISSUE 9.10
FEATURE | Shipping >>
Bazul Ashhab, TS Oon & Bazul
Simon Spark, Ince & Co
lot of confidence and many companies ordered new vessels or agreed to buy existing ones, assuming they would have the financial means from some source at the time of delivery,” says ship finance specialist Martin Brown of Ince & Co in Singapore. “Unlike previous downturns in shipping, this crisis was caused mostly by the illiquidity of the banks, and that caused difficulty for shipping companies to buy those assets they originally intended to. It also caused a collapse in charter rates … and as a consequence, vessel values. All aspects of the shipping market have been affected,” Brown adds.
“What we’re seeing is an increase in litigation and contentious work. It’s a different kind of work but it’s still reflective of a buoyant playing field” Dato’ Jude Benny, JTJB Simon Spark, a shipping litigation partner in the same office, adds that many of the firm’s shipping clients have been affected by the downturn. “We have seen an increased volume of disputes as owners and operators are forced to re-assess their contracts of agreement, charter and building commitments,” he explains. “This has been accompanied by an www.legalbusinessonline.com
increase in bank work-out work and restricts of loan commitments.” The type of work around now is also reflected in the shipping industry’s financial losses suffered during this year. Hong Kong’s Orient Overseas International reported a first-half loss of US$232m, Singapore’s Neptune Orient Lines lost US$391m, and Korea’s Hanjin Shipping reported a first quarter loss of US$110m – all suffering from the decline in trade volumes and lower charter rates. Parties in the shipping industry are defaulting on contractual commitments, as the value of assets has now dropped. The bulk of business that law firms have is on the contentious side of “dry work”– refinancing loans, restructuring contracts or litigating the defaulters. “Most active has been the dry shipping department which has been heavily involved in charterparty disputes,” says Bazul Ashhab, a partner at Singapore-based TS Oon & Bazul. “We’ve been very busy assisting parties [in] renegotiating terms and resolving disputes arising out of early re-delivery. Some of the disputes involved were very high-value and urgent. There was also a significant increase in the arbitration instructions coming from outside Singapore.” It’s also lucky that the “wet work” side, which deals with collisions, casualties and admiralty matters, isn’t as exposed to the credit crunch. Holman partner Paul Apostolis describes it as the fortuitous side of shipping practice. “On the wet shipping side, the global
Paul Hatzer, Holman Fenwick Willan
economic downturn has not had a significant impact on the number of marine casualties,” he says. “Most casualties are caused by factors unrelated to the state of the economy, like human error and extreme weather. For example, a recent typhoon which struck Taiwan caused a number of shipping casualties.” With work volumes at relatively stable levels, which firms are better positioned geographically to capitalise on future growth?
Lion nations, fragrant harbours
It seems the decade-old rivalry between Hong Kong and Singapore has stepped up over the past few years, to gain the title as Asia’s shipping hub. Recently Singapore tried to lure more shipping firms by investing in arbitration centres, allowing foreign law firms to give advice on Singapore law in arbitration cases, and providing tax incentives. “In our view this is one of the primary drivers of growth in the shipping legal services market in Singapore at the moment,” says Gina Lee-Wan, partner in the maritime & aviation practice at global firm Allen & Gledhill. “We see more interest from foreign players to move to Singapore to take advantage of these incentives.” The Singaporean government’s initiatives have managed to lure a mass of shipping clients who have found a number of other service providers at hand, from the bankers and lawyers to insurers. Others will undoubtedly follow with the arrival of major shipping firms, says JTJB’s Dato´ Benny. “What we’re seeing on the ground is 55
FEATURE | Shipping >>
Richard WIlmot, Holman Fenwick Willan
not just a migration from Asia, but from various parts of the world,” he says. “Firms are seeing the benefits of being in a melting pot like Singapore, where there are so many other maritime business partners. And that shift to Singapore accounts for the number of shipping law firms that have come here – why would they if there’s not an available pool of clients?” Ince & Co’s Singapore-based managing partner, Richard Lovell, says that the Hong Kong authorities have been slow to compete with Singapore’s development. “I have been here for over twenty years and the commercial rivalry between the two has always been there,” Lovell explains. “Through a cleverly co-ordinated program of incentives and promotional measures, the authorities here have established Singapore as the regional base for all key maritime services, and it is fast becoming recognised as the region’s arbitration and mediation centre.” It’s a different story for lawyers in Hong Kong, who are adamant they remain in the heart of Asia’s shipping industry. While Singapore has recently seen more clientele, the industry’s major shipping lines, such as Pacific International Lines, IMC, and Tanker Pacific, don’t keep large fleets there. Shipping practices in Singapore firms are also relatively smaller compared to Hong Kong firms. Although Singapore has invested in arbitration centres, Hong Kong lawyers also have access to the Singapore courts. 56
But the main factor which tips the debate in favour of Hong Kong is access to the China market. China’s overwhelming demand for energy and resources has led to a number of major shipping deals in defiance of the downturn which is pinching other countries. While many countries have largely put a stop on their shipping M&A deals, China and Taiwan have firmly bucked this trend. “This is a time where people are cancelling orders,” explains Holman’s oil and gas expert Richard Wilmot. “Chinese former state-owned enterprises (SOEs) are very cash-rich and it’s a very good time for them to go into new markets, because right now they don’t have to compete with more traditional buyers.” The proximity of Hong Kong’s law firms to major shipping clients in China will be an issue for Singapore in the long term. “Hong Kong has increasingly become an acceptable jurisdiction in which Chinese shipping firms are happy to resolve their shipping and trading disputes in arbitration,” says Holman’s Hatzer. “Hong Kong obviously has one of the biggest markets in the world on its doorstep.” “Our Shanghai office is also busy, but I think Hong Kong is still the preferred choice for regional management offices and the providers of legal services, largely because [it] has successfully maintained the rule of law and a fully functioning legal infrastructure, with top level providers,” Hatzer adds. Despite regional rivalries, however, the overall sentiment is that Asian shipping practices are situated exactly where they should be to capitalise on the boom.
Emerging markets
There will be an increase in infrastructure and port development work alongside the growth of developing Asian countries. Commodities work will also increase, especially in oil and gas markets, driven by trade between the Middle East and Asia-Pacific. Demand for larger vessels may also drive more M&A deals. “The emerging market for shipping practices is the AsiaPacific – these are where the big markets are going to be. Cash-rich Chinese
companies will be buying large volumes of oil and gas and other commodities and will need to arrange transport back to China,” says Holman’s Wilmot. “The energy needs of China are set to rise, irrespective of the downturn, and that increase is going to be reflected in the fuel stock coming into Asia, which will mean that Asia’s shipping lines and its power producers are going to have to have increasingly large fleets of vessels,” he adds. “You’ve also got big manufacturers in Malaysia, Vietnam and Indonesia, and all of those places are also hungry for raw materials.”
“We’ve been very busy assisting parties renegotiating terms and resolving disputes arising out of early redelivery. Some of the disputes involved were very high-value and urgent” Bazul Ashhab, TS Oon & Bazul As Asia’s other staggeringly fastgrowing nation, India is also increasingly making footholds in Singapore as tax incentives and their respective energy needs are bringing more shipping clients to south-east Asia. “More shipping and offshore companies are relocating from their historical bases and setting up offices here in Singapore, and that trend will continue,” says Ince & Co’s Brown. “Good examples are the Norwegian and Indian shipping companies… all lawyers are aware of the restrictions on foreign law firms setting up their own offices in India, rather than operating joint ventures or best-friend relationships. As soon as [this] market opens, there will be huge interest in doing so.” If recent growth trends continue, Asian Legal Business ISSUE 9.10
Firm Profile FEATURE | Shipping >>
TS Oon & Bazul
Bazul Ashhab
Oon Thian Seng
Goush Marikan
Kelly Yap Ming Kwang
Karnan Thirupathy
Ting Chi Yen
W
hen Oon Thian Seng and Bazul Ashhab set up a two-man shipping practice in 2002, not many would have expected then that T S Oon & Bazul would quickly grow into one of Asia’s leading shipping law firms. Today, the firm stands at 20 fee earners and there are already concrete plans to add another 5 lawyers to the team by next year. The firm which boasts an impressive line-up of clients including major shipping lines, marine insurers, traders, banks, P&I Clubs, ports and shipyards is consistently rated by clients as well as leading publications as one of the top shipping law firms in Singapore. Apart from the founding partners, Oon Thian Seng (TS) and Bazul Ashhab (BA), the other partners at the firm are ex-mariner Goush Marikan (GM) who heads the firm’s wet work department, dry shipping and international trade expert Kelly Yap (KY), ship finance lawyer Ting Chi Yen (CY) and international arbitration specialist Karnan Thirupathy (KT). Talking to the partners at T S Oon & Bazul, it quickly becomes apparent that the firm is by no means prepared to rest on its already impressive achievements and that plans are well under way to take the firm to the next level. What factors do you think have contributed to the firm’s growth? BA: Basically, there are two factors: - firstly, our ability to attract good work and clients and secondly, our focus on attracting the best lawyers. To attract and keep clients, we need to provide them with consistent and high standards of service. The way we do this is by gaining an understanding into what our clients’ real objectives are. With this understanding, we are able to devise the appropriate strategy to achieve these objectives. While the ability to give solid legal advice is essential, I don’t believe that our job ends simply with advising clients on the law. Our lawyers are all trained to offer commercially sensible solutions. Clients also appreciate the fact that although we are based in Singapore, our experience is not limited to the local jurisdiction. Shipping is by nature international and our lawyers are adept in handling disputes throughout Asia and are often involved in coordinating matters where the issues involve multiple jurisdictions. So when a client comes to us with a problem, we can easily guide him through what needs to be done and where best to do them. We have lawyers who are qualified in England, China, India, Singapore and Malaysia and this is very useful in dealing with issues wherever they may arise. TS: Apart from practical advice, quick response times are absolutely essential for shipping clients. Our partners are all available 24/7. Our Emergency Response Team led by ex-mariner Goush is able to provide immediate assistance as soon as a casualty arises anywhere in the region. As Bazul mentioned, we pay a lot of attention to recruiting bright young lawyers. The firm’s philosophy is to pay top dollar for top talent. Apart from money though, the firm is attractive to young lawyers as we make them feel from an early stage that they will have a future with us and that they will be taken care of.
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Are there any particular areas where the firm has seen significant growth? TS: While arbitration work has always been a significant part of our practice, there has been an increase in the shipping arbitration instructions we have been getting. Our lawyers are seeing an increasing number of instructions on arbitrations in London, Singapore and Hong Kong. To further strengthen our international arbitration practice, we have recruited Karnan Thirupathy who was formerly with the shipping team at DLA Piper. BA: Our marine insurance practice has also grown and we now probably have the largest dedicated marine insurance team in Asia. The team acts for a number of major international hull insurers some of whom instruct us exclusively on all their matters. Through our advice and assistance, we have helped clients’ record marked improvements in their loss ratio. What has the firm been busy with over the past year? GM: The wet practice has been very active over the past 12 months with us having attended to a number of casualties in the Asia Pacific region. Through our experience in the region over the years, we have built good working relationships with the relevant regional government authorities. Our Malaysian Associate office has been particularly helpful in working with the Malaysian authorities on major collisions and oil pollution cases. KY: The financial crisis has kept the dry side of the shipping practice busy. There has been a significant increase in charterparty disputes owing to charterers’ defaults. Apart from handling arbitrations and enforcement actions, we have also been very active in re-negotiating charterparties, advising on
FFA defaults and advising shipping clients in relation to insolvency and restructuring. CY: While there has been a dip in ship finance work owing to the economic downturn, our contracts lawyers have nevertheless been busy helping clients renegotiate shipbuilding contracts and to find alternative arrangements to help them tide over the difficult period. There are however signs of recovery and we are beginning to see renewed interest from clients on the purchase of newbuilds. We have also been busy assisting a number of foreign banks start up their ship finance departments. Karnan, I understand you joined the firm in May this year from DLA Piper. What was it that prompted you to leave an international law firm to join a Singapore law firm? KT: I don’t think I would have left my previous firm to join any other local Singapore shipping firm. What attracted me to T S Oon & Bazul is that this is clearly a very dynamic firm which is going places. I have not felt any major difference in the work since joining T S Oon & Bazul. The work as well as the clients remains largely international. I have also not seen any change in the quality of clients and instructions. One difference though is that, as T S Oon & Bazul is a Singapore law practice, I am now able to advise on Singapore law without any restrictions. Where does the firm see itself in the next 3-4 years? BA: With continued support from our clients, we see ourselves increasing our numbers to about 40 lawyers over the next 3-4 years. TS: We aim to be the top shipping law firm in Asia. These are exciting times in Asia and there is certainly room to increase our penetration into the growing regional shipping markets.
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FEATURE | Shipping >>
the future looks bright for the region’s shipping practices. Most of the firms interviewed for this feature say they will be expanding their practices in the near future. “Our Singapore practice has doubled in size in the last four years and we are planning to … bring out further specialists from our London office and train up our dual-qualified Singaporean lawyers to assist in this expansion,” says Ince & Co’s Lovell.
While some law firms are looking beyond the current circumstances, others may have benefited from the lessons learned in the downturn. “The financial crisis made companies pay more attention to whether they were getting value-for-money from their lawyers,” says TS Oon’s Bazul. “We made lasting relationships with the clients we assisted during the global financial crisis and we’ve also grown our dispute
resolution practice in that time.” For the team at Holman, the view looking out towards the Hong Kong harbour over the last year has not been as turbulent as expected. “The energy and activity here is just phenomenal,” says Wilmot. “In my perception the downturn really didn’t hit Hong Kong as hard as anywhere else in the world. It really is very buoyant and positive here.” ALB
“The energy needs of China are set to rise, irrespective of the downturn, and that increase is going to be reflected in the fuel stock coming into Asia, which will mean that Asia’s shipping lines and its power producers are going to have to maintain increasingly large fleets of vessels” Richard wilmot, Holman Fenwick Willan
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Asian Legal Business ISSUE 9.10
Firm Profile FEATURE | Shipping >>
Holman Fenwick Willan
Paul Hatzer
T
Paul Aston
here has been the biggest dislocation in the shipping market for the past 25 years, as the surge in activity in prices, chartering, futures and trading in the first half of 2008, gave way to a dramatic slump in the second half of the year and in to 2009. The consequences have been many: among them, the unwinding of leveraged positions, reneging of all kinds of shipping contracts and a general rise in disputes. The global credit crunch and subsequent economic downturn have obviously had a significant impact on the world economy generally and international trade specifically, whether in relation to significantly reducing banking liquidity, or restricting corporate activity. The shipping sector has seen some specific impacts; • Investment in shipping has declined dramatically, with newbuilding contracts not being completed, either due to shipyards defaulting or buyers not having committed finance in place and now being unable to raise funds. The difficulty of obtaining refund guarantees has put further pressure on the newbuilding sector. As asset values (and charter rates) drop, there is also an increased likelihood of disputes as parties try to back out of contracts that no longer seem so favourable. Falling values and charter rates also raise the spectre of future loan defaults as shipowners struggle to meet their financing covenants. • Corporate insolvencies have risen across international commerce – especially liner shipping companies, bulker and tanker owners, logistics businesses, commodities houses, port operators and energy businesses. • Funding of corporate activity has come sharply in to focus, with the recent rise of shipping funds and the need to both
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Simon Davidson
restructure and raise additional finance. • The restructuring of bank loans and workouts in relation to all classes of asset has become a major issue. • Freight and commodities contracts, with a rise in charterparty disputes and charterparty amendments, along with issues related to defaults and deferrals. • Derivative contracts often need to be renegotiated, either to ensure contractual obligations can still be met, or to agree liabilities and conclude arising disputes. • A rise of litigation activity generally amongst commercial organisations, as banks and corporates alike seek to explore liability for investment or commercial losses. • The regulatory environment in relation to world trade and competition, highlighted by the G20 conference and subsequent attempts to stimulate corporate and banking activity around the world. These unprecedented market conditions have led to an extremely busy year for our offices in Hong Kong, Shanghai, Singapore, Sydney and Melbourne. To enable us to cater for clients' needs in these volatile times, HFW has invested heavily within the region, with a team that now numbers 28 partners and 52 other fee earners, coupled with a master mariner in each of Melbourne and Shanghai, with two in each of Hong Kong and Singapore. As a direct result of this expansion, the region now accounts for over a quarter of the firm's revenue. The cases we are dealing with across our Asia-Pacific network highlight the nature of the current shipping market; due to the number of ships anchored offshore, our Singapore office is dealing with numerous mid-sized collision cases, groundings, pollution and the like. Meanwhile, our Melbourne office is dealing with an incident
Gavin Vallely
where a ship's anchor dragged over a gas pipeline in the Port of Melbourne, causing a loss in excess of A$300 million. It is the biggest maritime claim ever in Australia. Otherwise, our Hong Kong office has been dealing with a case where a Chinese flagged bulk carrier collided with a Ukrainian offshore supply vessel in Hong Kong territorial waters, leading to the total loss of the Ukrainian vessel and the loss of 18 of her crew. This was the single largest loss of life in Hong Kong waters in peace time since the Second World War. On the corporate and finance side of our business, the level of restructurings and re-financing has been unprecedented, whether of specific assets, or business entities. Contract re-drafting has also become the norm as businesses try to ride out the storm. However, in what have been highly unusual market circumstances, we have maintained our market leading reputation as top-tier for shipping and commodities, as well as investing in commercial litigation, corporate and finance capabilities to build a wider set of capabilities. Founded in 1883, Holman Fenwick Willan is an international law firm with over 300 lawyers across 10 offices globally - specialising in all aspects of international commerce. For further information, please contact; Paul Hatzer, Managing Partner, HFW Hong Kong Tel: +852 2522 3006 E-mail: paul.hatzer@hfw.com Paul Aston, Managing Partner, HFW Shanghai Tel: +86 21 5888 7711 E-mail: paul.aston@hfw.com Simon Davidson, Managing Partner, HFW Singapore Tel: +65 6534 0195 E-mail: simon.davidson@hfw.com Gavin Vallely, Managing Partner, HFW Australia Tel: +61 (0)3 8601 4500 E-mail: gavin.vallely@hfw.com Or go to; www.hfw.com
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FEATURE | Energy Energy &&Resources>> Resources >>
Energy & resources is something of a barometer for lawyers and firms in the region trying to gauge their success in overcoming the effects of the global downturn. And with plenty of investment still to come alongside strong government support, the readings are good
T
hose who know their way around the energy and resources (E&R) sectors will be familiar with the saying “as energy goes, so goes the economy”. In many ways the E&R sector is as much a perfect microcosm of the broader economy as it is a bellwether for overall macroeconomic health. Yet how true is this conventional wisdom in an economic climate where even the most elementary of economic theories has been turned on their head? ALB investigates.
Resilient leanings
Remaining resourceful 60
Asia’s E&R sectors have always enjoyed a special status. They have been talked of as possessing the potential to effect economic miracles and to deliver to regional economies that sometimes-elusive growth they thirst for. When things aren’t going to plan the E&R sector is considered the panacea – the ingredient most able to pull ailing economies out of recesssion and into the black. Arguably, no other region in the world is blessed with such abundant reserves of power, minerals and resources as is Asia. In the past, dilapidated power infrastructure development in places like Indonesia, Vietnam, Thailand, India and China was cause for embarrassment. Now this is part and parcel of the growth occurring in the region, a story which continues largely unabated despite the current financial crisis. It is this growth story – and those investors, sponsors and governments who Asian Legal Business ISSUE 9.10
FEATURE | Energy & Resources >>
want to be part of it – throwing E&R practices into overdrive. Even lawyers are somewhat surprised by the levels of activity in the sector. Brad Roach, a Singaporebased partner at Lovells Lee & Lee, says transactional activity in specialty areas like oil & gas remaining resilient (despite the financial crisis) has more to do with the types of deals coming to the market than prevailing economic conditions. “Our clients are investing in projects that have a 15- 25 year time horizon in many cases, such as LNG, geothermal and IPP projects. Their view of project economics is long-term and not driven by market volatility,” he says. “The fundamentals for energy demand in Asia are extremely strong, so time horizons are measured in decades rather than short-term business cycles.” Government stimulus packages have also helped focus attention on the long-term outlook. Since the beginning of Q3 2008, nearly US$100tr has been sunk into developing economies across Asia – with nearly half this amount being set aside exclusively for either oil, gas and power projects or the industries that are supporting them. Hector de Leon Jr, a partner with SyCip Salazar Hernandez & Gatmaitan in Manila, singles out infrastructure as the most prominent industry, saying funds Hector de Leon Jr, earmarked for this SyCip area will continue to push along E&R deal flow. “The huge stimulus packages being implemented around the world will result in the construction of more infrastructure, which will in turn result in increased demand for metals and drive up metal prices,” he explains. In the Philippines, de Leon says, it is the mining sector which is most active for lawyers. Here, firms are spending a greater percentage of their time advising companies that mine, process and sell minerals. “We [are] providing legal assistance on all aspects of mining projects including project structuring, mergers and acquisitions, www.legalbusinessonline.com
joint ventures, corporate financing and project financing, due diligence review and permitting.” Over the past year de Leon and his team has been involved in the following big deals: closing the sale of Anglo American’s interest in the Silangan project (formerly the Boyongan Project) to Philex Mining; the acquisition by Gold Fields of the right to earn certain projects of Mindoro Resources, and project financing by a group of banks (led by BNP Paribas) of the Masbate gold project by Filminera Resources/CGM Mining. For Lovells’ Roach, LNG activity in southeast Asia, particularly in Indonesia, remains a hot-spot for his practice. The firm is advising Indonesia’s largest independent exploration and production (E&P) company, PT Medco Energi, in connection with the Donggi-Senoro LNG project in Sulawesi, being developed in conjunction with PT Pertamina (Persero) and Mitsubishi.
Changed spaces
While E&R dealflow may not have been as adversely affected as that in the M&A or equity market space, it has nonetheless seen its fair share of change since the onset of the financial crisis. “During a period of depressed metal prices, low demand and a tight credit market, mining companies try to cut costs and operate more efficiently,” says SyCip’s de Leon. “They focus on core assets, and in certain cases they divest assets that are not on their priority list.” Part of this positioning also involves seeking out alternative financing arrangements. “Since bank financing can be very difficult [to obtain]
“I have not seen major changes in how deals are done and structured insofar as Philippines transactions I handle are concerned... the structures used prior to the financial crisis are still adequate for this purpose” Hector de Leon, SyCip mining companies try to raise funds through joint venture arrangements and bringing in strategic investors,” de Leon says. He goes on to note that while “only the brave” would contemplate listing their shares on stock exchanges and conduct public offerings at this stage, it is more common for some companies to scale back their operations or place certain projects on hold. While the focus of mining clients may have changed, the way deals are structured – at least in the Philippines – remains largely the same. “I have not seen major changes in how deals are done and structured insofar as Philippines transactions I handle are concerned,” de Leon says. “There are tried and tested means of structuring deals and while we are always on the lookout to innovate, the structures used prior to the financial crisis are
►► Government stimulus spending in energy/resources/infrastructure* Country
Amount
Type
Indonesia
INR85tr
Infrastructure, energy development
Malaysia
MYR2.6bn
Small-scale infrastructure, public transport and military facilities
Thailand
THB2.1tr
Thai Khem Khang (Thai Strength), mass transit, transportation and communication, energy, education, healthcare housing, water resources
Vietnam
VND300tr
Infrastructure projects
*Based on announced fiscal stimulus packages in period September 2008 through to present Source: UNESCO
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FEATURE | energy Energy & resources Resources>> >>
Energy & Resources Q&A E&R come rain or shine: Loo Choon Chiaw discusses Asian Legal Business: Do you agree that energy and resources activity is the answer to everyone’s liquidity blues? Loo Choon Chiaw: ‘Energy and resources’ (“E&R”) is very much like food. One has to consume food in good times or bad. By the same token, industries need to consume E&R, whether the stock market is having a bull run or when it turns bearish. One will see E&R activities come rain or shine.
ALB: To what extent has transactional activity in the sector justified such views?
Loo Choon Chiaw
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LCC: Notwithstanding the temporary slowdown in the demand for E&R, attributable to the Global Financial Crisis (“GFC”), the world’s need for E&R has been increasing at a fast pace. The International Energy Agency projected that the total world consumption for marketed energy would increase by 50 percent through 2030. Based on this projection, the world will use more energy over the next 50 years than in all of recorded history. This is mind boggling indeed! With the continuing depletion of E&R reserves and the corresponding increasing demand for E&R consumption, the low prices of E&R cannot sustain for long. This is merely a matter of basic supply versus demand. It is thus expected that cash-flushed corporations would capitalise on this golden opportunity to go on a shopping spree for E&R assets. As an illustration, the PRC, the world’s fastest-growing economy, has spent at least US$13 billion on overseas E&R assets since December 2008 as it took advantage of lower valuations caused by the GFC. Stateowned Yanzhou Coal Mining Corporation agreed to acquire Australia’s Felix Resources Ltd. on 13 August 2009 for about A$3.5 billion (US$2.9 billion), just one day after Sinochem Corporation, offered to acquire Emerald Energy Plc for 532 million pounds (US$881 million) to gain strategic interests in oil fields in Syria and Colombia. China National Petroleum Corporation’s proposed plan to acquire a 75% interests in the Argentina division of Repsol YPF SA, a Spanish oil conglomerate, for US$14.5 billion, if and when completed, may push the purchases of overseas E&R assets by the PRC
investors to a cool US$43 billion this year, a huge 48 percent jump from 2008. Thus, the E&R sector has clearly been generating the much needed activities in support of the quiet market.
ALB: How does practising in E&R during a downturn differ to practising in this area during calmer economic times? LCC: In a downturn of the present scale and duration, we advise on and execute more deals involving distressed assets. The parties invariably have to work on limited time frame. Time is therefore of the essence. This often resulted in accelerated due diligence process. In a distressed E&R merger and acquisition (“M&A”), the vendor will attempt to limit their representations and warranties. The purchaser, on the other hand, will attempt to insist on a holdback amount for a fixed duration after completion to prevent against possible losses arising from undisclosed encumbrances that may follow the underlying E&R assets. Where our purchaser client had a strong bargaining power, our client had been successful in demanding from the vendor specific quantitative material adverse change benchmarks allowing our client to terminate the deal without any liability should the financial and business conditions of the vendor deteriorate after the execution of the M&A agreement. It is imperative for practitioners to bear in mind that their clients are operating under fundamentally different factual matrix from the good old days. The balance has certainly been tilted in favour of the purchaser in the current downturn. With a much stronger bargaining position, the purchaser will try to ask for (and often get) more favourable terms. A failure on the part of the practitioners in recognising this commercial reality when advising and assisting their clients in the negotiation and finalisation of the contractual terms for E&R M&As will not help to advance their clients’ interests.
ALB: E&R is often a touchy subject for regulators in the Region with many seeking to impose restrictions on the acquisition by foreign parties of domestic E&R on the basis of national Asian Legal Business ISSUE ISSUE9.10 6.8
FEATURE| |Energy energy&&Resources resources >> FEATURE
Asia's energy & resources markets with ALB interests. Do you think that anti-trust or competition regimes will be effective in achieving the intended results? LCC: It is the legitimate expectation of any government that any acquisition of its E&R by a foreign interest will not be effected at below their true market prices nor done against its long term national interests. Personally, I am of the opinion that competition or anti-trust regimes are not effective tools in safeguarding its national interests. It will always be viewed with suspicion by the foreign investor, whose bid to acquire a domestic target has been blocked. It may lead to a subsequent retaliation by the government of that frustrated foreign investor. It just works retrogressively! In this context, the blocking of Coca-Cola’s highly publicised US$2.16 billion bid for Huiyuan by the Chinese Authorities illustrates this point aptly. It caused more than a few raised eyebrows. It invited speculation as to whether China was closing its doors to foreign direct investments. Many expressed fear that the newly promulgated Anti-Monopoly Law of China might be used by the Chinese Authorities as arbitrary tools to fend off large acquisitions of domestic entities, especially those involving well-known brands. Clearly worded foreign investment guidelines would, in my personal view, be a more superior tool available to a government in safeguarding its national interests.
ALB: Have many of your clients invested in the renewal energy projects? LCC: Although many in the industry expect a growth in renewable energy projects (geothermal, wind and solar etc), many prospective investors (including our clients) are hesitant to fund such projects because of the perceived lack of legislative and regulatory certainty.
ALB: E&R is also now being infused with some new and novel concerns - namely issues pertaining to climate change, emissions trading and general ‘green’ issues. What is the major challenge facing practitioners in relation to these? LCC: There will be a myriad of opportunities for practitioners in the area of renewable www.legalbusinessonline.com
energy projects once the legislative and regulatory policies are clarified. In order to seize those opportunities, the practitioners must equip themselves. This will pose a challenge to busy practitioners. E&R practitioners (and those who aspire to practise E&R) who refuse to invest time and effort in understanding issues relating to “climate changes”, “global warming”, “acid rain”, “zero-carbon technology”, “greenhouse gas policy”, “renewable energy policy”, “carbon credit”, “carbon trading”, “green investments”… will do so at their peril.
ALB: Not many law firms in the Region have an E&R practice. Why does your firm venture into this area and how has business been thus far? LCC: As a firm, we always try to venture into new profitable practice areas, as and when there is an opportunity and reason to do so. We do this in good times and bad. Indeed, we have to work even harder to detect the relevant market trend (with the attendant opportunities) during bad times. Once good opportunities have been detected and when we have adequate resources to do so, we shall capitalise on those opportunities and expand our scope of services to cover those new practice areas. In early 2008, we were approached by a client to act in an E&R M&A. In the process of taking our client’s instructions and as we researched more into the industry in general, we were impressed by the great commercial potential which might be presented to our firm should we mobilise our collective expertise in developing this practice area. Thereupon, we promptly set up a new practice group, namely, the Natural Resources and Energy Practice (“NREP”) Group. In connection therewith, we mobilised substantial in-house and external resources in equipping our NREP colleagues and in ensuring that they were familiarised with the commercial and legal intricacies of the E&R industry. We have been blessed in that our investment of resources in enhancing the capabilities of our NREP had yielded handsome dividends. One project leads to another. Our NREP colleagues are now busy executing the acquisitions of coal mines in Indonesia, the PRC, Mongolia and Russia. They are also busy advising on several other
mineral M&As, dedicated coal terminal projects and power plant projects in the PRC and Russia. More projects are in the pipeline.
ALB: How did you have the foresight then that your firm’s venture into the E&R space would be so successful? LCC: While it would be tempting to claim the credit for our firm’s venturing into the E&R space on account of my foresight and good judgment, I must resist the temptation to do so. In full and frank disclosure, I must confess that had there not been a GFC, which caused many of our clients’ IPO and non-E&R M&A projects to be shelved, there would have been considerably less incentive for us to develop our expertise in the natural resources and energy practice area. The opportunity costs would have been much too high. This happy episode perhaps underlines the concept of crisis (危机) (read: weiji) in the Chinese culture. 危 (read: wei) means danger, and 机 (read: ji) means opportunity. To the Chinese, while a crisis brings with it extreme danger, it also presents an ocean of opportunities. One just needs to identify those opportunities and seize them!
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.
63
FEATURE | Energy & Resources >>
still adequate for this purpose. There may be a tightening in the way some provisions are drafted, in order to address the issues and concerns brought about by the GFC.” As novel forms of financing are becoming popular in other Asian jurisdictions (mechanisms like forward sales of revenue streams or ‘flowthrough shares’) these have not yet reached the Philippines – although de Leon does not rule out the possibility that they may arrive soon.
Liquid sectors
The focus of companies in the oil & gas segments of the industry is decidedly different. In this regard, the buzzword is very much ‘invest’ rather than ‘divest’. Here, Roach notes that a number of E&P companies are “aggressively pursuing new acreage opportunities in Asia-Pacific, – particularly in Indonesia, Australia, Thailand and Vietnam.” Similarly, the recent coal-
Firm Profile
SyCip Salazar Hernandez & Gatmaitan
O
National resources
Resource nationalism and protectionism in the E&R sectors is nothing new, as those familiar with the industries in Mexico, Iran, Libya and Venezuela will attest. One of the outcomes of the global financial crisis, however, will no doubt be paying closer attention on what impact – if any – foreign involvement will have on local companies and domestic E&R reserves. Roach believes that irrespective of what course the financial crisis takes in the short to medium-term, regulators across the Asia-Pacific region will realise that foreign involvement in domestic E&R sectors is necessary, while potentially being politically undesirable. “While regulators and national governments will always prefer companies and national oil companies to develop their reserves, there are major technological and financial issues that need to be overcome in many cases,” he says. “Partnering with experienced and
Happy to Be A Minority?
A Look at Philippine Mining Laws from the Perspective of a Foreign Investor
ne may think that being in the minority is not a situation a person would want to be in. The opposite appears true in the Philippines – based on foreign investments in the Philippine mining sector, many foreign mining companies have chosen to be in the minority. The Philippines experienced increased interest from foreign mining companies after a 2004 Philippine Supreme Court decision upholding the constitutionality of the Philippine Mining Act and the financial or technical assistance agreements (“FTAAs”) executed pursuant thereto. Under the Mining Act, non-Philippine nationals (“Non-Filipinos”) can own all of the shares of a company that holds a FTAA (“FTAA Company”). While the Supreme Court’s ruling paved the way for full foreign ownership of a FTAA Company, many foreign mining companies have remained a minority shareholder in a Philippine mining company (“MPSA Company”) that holds a mineral production sharing agreement (“MPSA”),
64
bed methane (CBM) gas developments are also attracting a lot of interest. “There has been a lot of attention lately on CBM opportunities given the developments in Queensland (Australia) where a number of international E&P companies have Brad Roach, Lovells spent billions of dollars to acquire CBM acreage and are planning large-scale LNG projects, in conjunction with Australian industry players such as Santos, Arrow Energy and Origin Energy,” he says. There are similarities with mining companies de Leon speaks of above, insofar as some E&P companies are also looking to effect acquisitions. “Many companies are also seeking to add production through acquisition rather than the drill-bit. We are working with a number of clients who are actively on the hunt for production,” Roach says.
notwithstanding the obstacles that a minority shareholding may bring. Under the FTAA scenario, the non-Filipino does not face limitations in its involvement in the management and operation of the FTAA Company. On the other hand, a MPSA Company is considered engaged in a partlynationalized activity. This means that: (1) nonFilipinos must not own more than 40% of the capital of the mining company; (2) the election of non-Filipinos as board members is limited to the proportionate share of non-Filipinos in the capital of the company; (3) non-Filipinos cannot hold positions in the MPSA Company other than technical positions; and (4) nonFilipinos cannot intervene in the management, operation, administration or control of the MPSA Company, whether as an officer, employee or laborer therein. Notwithstanding what may appear to be obstacles to non-Filipinos under an MPSA scenario, many foreign mining companies (including some of the world’s biggest mining companies) have made investments in MPSA
Companies. In fact, many of the investments made by foreign mining companies in the Philippine mining sector were made through acquisition of shares in MPSA Companies. In advising foreign mining companies, local practitioners need to consider structures and solutions that will alleviate concerns that arise from the fact that non-Filipinos hold a minority shareholding in, and do not have control over, the MPSA Company. In our firm’s experience, this requires a delicate balancing act of addressing the client’s concerns on being a minority stockholder and ensuring that the proposed structure and solution comply with applicable law. While this can be challenging, there are legal and commercially acceptable solutions to holding a minority stake in a MPSA Company. By Hector M. de Leon Jr. SyCip Salazar Hernandez & Gatmaitan Hector de Leon Jr, Partner 105 Paseo de Roxas, Makati City, Philippines (Phone) +632 817 98 11 (Mail) hmdeleon@syciplaw.com (Web) www.syciplaw.com Asian Legal Business ISSUE 9.10
FEATURE | Energy & Resources >>
well-capitalised multinational oil and gas companies is a necessary evil when viewed from this perspective.” This is also a reflection of the fact that some domestic and national oil companies have not reached the same level of sophistication as their international counterparts, although, says Roach, this is quickly changing. “Multinational oil and gas companies have access to technology, and in many cases downstream marketing networks, that most national oil companies do not possess. While this is changing, if you are faced with a deep-water drilling campaign, or a multi-billion-barrel oil or multi-trillion-cubit-feet gas field, it is generally a given that some degree of foreign participation will be required.” Prohibiting foreign involvement in some sectors within the E&R industry, as some regulators across the region have sought to do, may in the long run actually be harmful to national interests. “Enhanced and secondary oil recovery is another area where international oil
companies have technological know-how and experience from foreign operations that can be brought to bear. To preclude foreign participation in those areas will not be optimal from a production and recovery perspective,” Roach says.
Flexible outlook
Regardless of whether the discussion is about mining and minerals or oil and gas, lawyers will be required to adapt their approach to practicing in the E&R sector. Whether this adaptability takes the form of making sure they are as wellequipped to deal with effecting multibillion dollar deals as they are with covering off the legal aspects arising from putting projects on ‘care and maintenance’, there are a number of emerging issues that practitioners must confront head-on, if they want their E&R practices to continue to fire up. Being flexible on fee and billing arrangements is always a good place to start. The need to establish clear and open dialogue with clients about how
practitioners can deliver higher-value, more cost-effective service is cited by in-house lawyers as one of the most important areas in this regard. As is the need to develop ‘clientspecific’ fee arrangements, as Roach points out, that are in some cases fixed or “result in both [lawyers and their clients] sharing the pain.” ALB
“The fundamentals for energy demand in Asia are extremely strong, so time horizons are measured in decades rather than short-term business cycles” Brad Roach, Lovells
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market data | M&A >>
In association with
M&A TRANSACTIONS AND STATISTICAL ANALYSIS Top 10 Announced M&A Deals - Asia-Pacific, Aug 16 - Sep 15 Announcement Date
Target Company
Target/Seller Legal Advisor
Bidder Company
Bidder Legal Advisor
14-Sep-09
eircom Holdings ,imited
Gilbert + Tobin
Emerald Communications (Cayman) SPC; and Singapore Technologies TELEMEDIA 0TE ,TD
Mallesons Stephen Jaques
10-Sep-09
Daiwa Securities SMBC #O ,TD STAKE
Advising seller: 3KADDEN Arps Slate Meagher &LOM
Daiwa Securities Group Inc
Not disclosed
3UMITOMO -ITSUI &Inancial Group Inc
2,922
7-Sep-09
Chartered Semiconductor -ANUFACTURING ,TD
!LLEN 'LEDHILL ,ATHAM WATKINS Advising financial advisor: Weil Gotshal & Manges
Advanced Technology Investment Co
Shearman & Sterling; WongPartnership
TEMASEK (OLDINGS 0TE ,Td
2,861
3-Sep-09
Sepracor Inc
7ILLKIE &ARR 'ALLAGHER WilmerHale Advising financial advisors: $EWEY ,E"OEUF 3IMPSON Thacher & Bartlett;
Dainippon Sumitomo Pharma
Paul WEISS 2IFKIND 7HARTON Garrison Advising financial advisor: ,ATHAM WATKINS
18-Aug-09
!LCAN 0ACKAGING (majority of businesses)
Advising seller: &RESHFIELDS "RUCKHAUS Deringer; Gianni, Origoni, Grippo & 0ARTNERS ,INKLATERS /GILVY 2ENAULT 3ULLIVAN #ROMWELL
!MCOR ,IMITEd
Davies Ward Phillips & Vineberg; SJ Berwin
2IO Tinto Plc
2,025
31-Aug-09
!3/# -ACKAY 2IVER AND Dover oil sands projects) STAKE
Advising seller: "URNET $UCKWORTH 0ALMER
0ETRO#HINA #OMPANY ,IMITEd
3TIKEMAN %LLIOTt
Athabasca Oil Sands Corp
1,740
26-Aug-09
#HINA %VERBRIGHT "ANK #O ,TD STAKE
King & Wood
Consortium led by China 2EINSURANCE 'ROUP
Not disclosed
1,684
26-Aug-09
3INO 'OLD -INING ,IMITED STAKE
Allens !RTHUR 2OBINSON #ASSELS "ROCK "LACKWELL
Eldorado Gold Corporation
&ASKEN -ARTINEAU &REEHILLS ,INKLATERS 0AUL WEISS 2IFKIND Wharton & Garrison
1,496
6-Sep-09
China Unicom (Hong Kong) ,IMITED STAKE
&RESHFIELDS "RUCKHAUS Deringer
Telefonica SA
Clifford Chance
1,000
17-Aug-09
Cathay Pacific Airways ,IMITED STAKE
!IR #HINA ,IMITED 3WIRE 0ACIFIC ,TD
&RESHFIELDS "RUCKHAUS Deringer; Haiwen & Partners; Slaughter and May
Notes:
Deal Value (USDm)
Seller Company
6,044
2,336
#)4)# 0ACIFIC ,TD
948
Q3 09* = 1 July 2009 to 15 September 2009 s Based on announced deals, including lapsed and withdrawn bids, from 1 January 2009 to 15 September 2009 s Based on geography of either target, bidder or seller company being Asia-Pacific (ex-Japan) s Includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m s Activities excluded from table include property TRANSACTIONS AND RESTRUCTURINGS WHERE THE ULTIMATE SHAREHOLDERSg INTERESTS ARE NOT CHANGED s ,EAGUE TABLES ARE RANKED BY VOLUME
League Table of Legal Advisors to Asia-Pacific (ex-Japan) M&A 2anK
House
League Table of Financial Advisors to Asia-Pacific (ex-Japan) M&A
Value (USDm)
Deal Count
2anK
Value (USDm)
Deal Count
1
&reehills
12,516
33
1
House Morgan Stanley
24,944
35
2
BaKer & McKenzie
8,924
32
2
Ernst & Young
6,091
31
3
BlaKe Dawson
10,912
30
3
Goldman Sachs
17,685
29
4
Kim & Chang
8,415
28
4
UBS Investment BanK
24,643
27
5
Mallesons Stephen Jaques
24,512
27
5
PricewaterhouseCoopers
2,858
26
6
&RESHFIELDS "RUCKHAUS $ERINGER
19,767
27
6
Macquarie Group
12,435
24
7
Clayton Utz
2,654
24
7
Deloitte
4,656
23
8
,inKlaters
25,451
23
8
Citigroup
18,100
22
9
Minter Ellison
1,196
22
9
Deutsche BanK
14,199
22
10
D,A Piper
6,739
19
10
Credit Suisse
16,528
20
Asia-Pacific M&A Activity - Quarterly Trends 160,000 800
140,000
Value (USDm) Volume
700 600
100,000
500
80,000
400
60,000
300
40,000
200
20,000 0
66
Number of deals
Value (USDm)
120,000
100 0
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*
Asian Legal Business ISSUE 9.10
market data | M&A >>
In association with
Notes:
Based on announced deals, including lapsed and withdrawn bids, from 1 January 2009 to 15 September 2009 s Based on geography of either target, bidder or seller company being Asia-Pacific (ex-Japan) s Includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m s Activities excluded from table include property transactions and restructurings where the ultimate shareholders' interests are not changed s League tables are ranked by volume
League Table of Legal Advisors to Greater China M&A Rank
House
League Table of Financial Advisors to Greater China M&A
Value (USDm)
Deal Count
Rank
Value (USDm)
Deal Count
1
Freshfields Bruckhaus Deringer
17,099
19
1
House Morgan Stanley
12,775
20
2
Baker & McKenzie
6,534
16
2
Somerley
2,521
15
3
Linklaters
18,555
13
3
Optima Capital
1,796
15
4
King & Wood
14,866
12
4
China International Capital
17,793
13
5
Haiwen & Partners
5,640
12
5
PricewaterhouseCoopers
2,221
10
6
Commerce and Finance Law Offices
30,437
10
6
CIMB Group
343
10
7
Herbert Smith/Gleiss Lutz/Stibbe
4,243
10
7
UBS Investment Bank
8,059
9
8
Grandall Legal Group
4,549
9
8
Goldman Sachs
7,644
9
9
Lee and Li Attorneys at Law
2,226
9
9
Taifook Capital
328
9
10
DLA Piper
4,039
8
10
Bank of America Merrill Lynch
15,574
8
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 Rank
House
League Table of Financial Advisors to Japanese M&A Value (USDm)
Deal Count
Rank
Value (USDm)
Deal Count
1
Nishimura & Asahi
16,579
37
1
House Nomura Holdings
19,899
57
2
Mori Hamada & Matsumoto
12,055
32
2
Mizuho Financial Group
10,839
38
3
Nagashima Ohno & Tsunematsu
13,599
20
3
Daiwa Securities Group
5,113
34
4
TMI Associates
3,936
19
4
Citigroup
17,384
25
5
Anderson Mori & Tomotsune
4,237
18
5
Mitsubishi UFJ Securities
8,085
20
6
Morrison & Foerster
6,942
13
6
GCA Savvian
1,130
18
7
Davis Polk & Wardwell
7,239
12
7
PricewaterhouseCoopers
2,470
16
8
Baker & McKenzie
2,249
11
8
Ernst & Young
2,521
10
9
Shearman & Sterling
7,457
9
9
Deloitte
556
8
10
Latham & Watkins
3,939
8
10
KPMG
1,158
7
Value (USDm)
Deal Count
Rank
Based on geography of either target, bidder or seller company being Japan
League Table of Legal Advisors to Indian M&A Rank
House
League Table of Financial Advisors to Indian M&A Value (USDm)
Deal Count
1
Desai & Diwanji
3,677
14
1
House Ernst & Young
2,354
12
2
Khaitan & Co
2,910
11
2
BMR Advisors
259
8
3
AZB & Partners
1,930
11
3
Kotak Investment Banking
2,863
7
4
Amarchand & Mangaldas & Suresh A Shroff & Co
3,034
9
4
ICICI Bank
535
6
5
Trilegal
412
9
5
Citigroup
3,591
5
6
J Sagar Associates
1,024
6
6
Avendus Capital
615
5
7
Freshfields Bruckhaus Deringer
597
5
7
UBS Investment Bank
776
4
8
Luthra & Luthra Law Offices
530
3
8
PricewaterhouseCoopers
204
4
9
Platinum Partners
159
3
9
JM Financial
3,259
3
10
Mayer Brown
832
2
10
Bank of America Merrill Lynch
2,054
3
Value (USDm)
Deal Count
Rank
Based on geography of either target, bidder or seller company being India
League Table of Legal Advisors to Southeast Asian M&A Rank
House
League Table of Financial Advisors to Southeast Asian M&A Value (USDm)
Deal Count
1
Allen & Gledhill
7,099
11
1
House Citigroup
7,477
8
2
WongPartnership
6,401
10
2
Deutsche Bank
6,072
8
3
Stamford Law
1,228
8
3
AmInvestment Bank
402
8
4
Baker & McKenzie
1,476
5
4
UBS Investment Bank
10,294
7
4
Clifford Chance
534
5
5
CIMB Group
4
Jones Day
453
5
6
7
Allen & Overy
8
Shearman & Sterling
9
White & Case
10
Weil Gotshal & Manges
385
6
Bank of America Merrill Lynch
6,321
5
50
5
7
Morgan Stanley
6,197
5
6,983
4
8
Standard Chartered
4,020
5
435
4
9
OSK Investment Bank
212
5
3,161
3
10
HSBC Bank
906
4
Based on geography of either target, bidder or seller company being Southeast Asia
www.legalbusinessonline.com
67
market data | M&A >>
Equity Capital Markets List Asia, inc Japan, ex Australia & New Zealand Aug 21 - Sep 17 NB: Does not include transaction valued at less than USD10m, best efforts transactions and private placements Issuer
Proceeds (USDm)
Issue Date
China All Access Holdings Ltd
51.6
15/09/2009
Modern Media Holdings Ltd
16.6
8/09/2009
Imagi Intl Hldg Ltd
13.9
China Yunnan Tin Minerals Grp Poly Development Holdings Ltd
Currency
Bookrunner(s)
Sector
HKD
Guotai Junan Securities
High Technology
HKD
Industrial & Comm Bank China
Media and Entertainment
25/08/2009
HKD
Guotai Junan Securities
Media and Entertainment
11.6
24/08/2009
HKD
Cheong Lee Securities
Materials
11.1
26/08/2009
HKD
Chung Nam Securities
Industrials
hong kong
India Oil India Ltd
570.6
14/09/2009
INR
Citi, Hongkong & Shanghai Bank, JM Financial Group, Morgan Stanley
Energy and Power
Glenmark Pharmaceuticals Ltd
85.5
14/09/2009
INR
Citi, ENAM Financial Consultants
Healthcare
Opto Circuits(India)Ltd
82.7
10/09/2009
INR
Antique Capital Markets Pvt, HSBC
Healthcare
Nagarjuna Construction Co Ltd
74.8
1/09/2009
INR
DFC-SSKI Ltd, Kotak Mahindra Capital, RBS
Industrials
PSL Ltd
30.8
24/08/2009
INR
Edelweiss Capital
Industrials
Jindal Cotex Ltd
19.2
4/09/2009
INR
Saffron Capital Advisors
Consumer Staples
Intl Nickel Indonesia PT
92.6
26/08/2009
IDR
UBS
Materials
Rukun Raharja Tbk PT
21.4
24/08/2009
IDR
Ciptawira Binamandiri PT
Industrials
Elpida Memory Inc
611.7
14/09/2009
JPY
Morgan Stanley
High Technology
Tokuyama Corp
531.1
2/09/2009
JPY
Nomura Securities
Materials
Alfresa Holdings Corp
322.4
9/09/2009
JPY
Mitsubishi UFJ Securities
Healthcare
NTN Corp
269.4
7/09/2009
JPY
Mitsubishi UFJ Securities
Industrials
Ogaki Kyoritsu Bank Ltd
185.5
7/09/2009
JPY
Mizuho Securities
Financials
Oita Bank Ltd
118.4
24/08/2009
JPY
Nomura Securities
Financials
Mitsubishi Research Institute
71.6
2/09/2009
JPY
Mitsubishi UFJ Securities
Consumer Products and Services
Pack Corp
24.6
25/08/2009
JPY
Nomura Securities
Materials
C BON COSMETICS Co Ltd
21.4
2/09/2009
JPY
Daiwa Securities SMBC
Retail
Japan Communications Inc
20.2
28/08/2009
JPY
Credit Suisse Securities
Telecommunications
CanBas Co Ltd
16.6
7/09/2009
JPY
Mitsubishi UFJ Securities
Healthcare
INDONESIA
JAPAN
SINGAPORE 165.9
15/09/2009
SGD
DBS Bank, UBS
Energy and Power
First Resources Ltd
CitySpring Infra Trust
100
21/08/2009
USD
Credit Suisse
Consumer Staples
Swiber Holdings Ltd
78
27/08/2009
USD
DBS Bank
Industrials
GMG Global Ltd
69.6
4/09/2009
SGD
DBS Bank
Materials
Federal International(2000)Ltd
11.1
10/09/2009
SGD
CIMB-GK Securities
Energy and Power
1,116.10
10/09/2009
CNY
Kyobo Securities
High Technology Financials
SOUTH KOREA PREGM Co Ltd KB Financial Group Inc
897.4
28/08/2009
KWR
Goldman Sachs, Korea Investment & Securities, Morgan Stanley, Samsung Securities
Dongbu Steel Co Ltd
114.5
16/09/2009
KWR
Dongbu Securities
Materials
Moreens Co Ltd
43.4
14/09/2009
KWR
Woori Invest & Sec, Hyundai Securities
High Technology
Suprema Inc
35.3
7/09/2009
KWR
Korea Investment & Securities
High Technology
Koje Co Ltd
24.9
27/08/2009
KWR
Golden Bridge Investment & Sec
Materials
Genexine Co Ltd
21.9
4/09/2009
KWR
Kyobo Securities, Daewoo Securities
Healthcare
17
4/09/2009
KWR
Tong Yang Securities
Healthcare
14.8
1/09/2009
KWR
Hana Daetoo Securities
High Technology
14
3/09/2009
KWR
Woori Invest & Sec
Media and Entertainment
351
16/09/2009
USD
Macquarie Equities
High Technology
79.3
3/09/2009
THB
Nomura Securities, Bualuang Securities
Financials
Bi-nex Co Ltd Phoenix PDE Co Ltd Sports Seoul 21 Co Ltd TAIWAN Epistar Corp THAILAND Bangkok Life Assurance Ltd
68
Asian Legal Business ISSUE 9.10
market data | M&A >>
Debt Capital Markets Transactions Asia, inc Japan, ex Australia & New Zealand Aug 21 - Sep 17 NB: Does not include transaction valued at less than USD10m, best efforts transactions and private placements Issuer
Proceeds (USDm)
Issue Date
Currency
Bookrunner(s)
Sector
2,990.80
8/09/2009
USD
Barclays Capital, Deutsche Bank Securities Corp, HSBC
Financials
Punj Lloyd Ltd
123.7
24/08/2009
INR
Axis Bank, AK Capital Services
Industrials
Indian Overseas Bank
103.8
1/09/2009
INR
Standard Chartered Bk
Financials
1,601.90
28/08/2009
JPY
Daiwa Securities SMBC
Government and Agencies
1,090
10/09/2009
JPY
Nomura Securities
High Technology
1,024.90
1/09/2009
USD
Citi, Deutsche Bank Securities, JP Morgan
Financials
SoftBank Corp
701.9
3/09/2009
JPY
Mizuho Securities
High Technology
Japan Housing Finance Agency
627.3
21/08/2009
JPY
Daiwa Securities SMBC
Government and Agencies
Japan Finance Corp
531.6
26/08/2009
JPY
Mizuho Securities, Daiwa Securities SMBC, Nomura Securities, Mitsubishi UFJ Securities
Government and Agencies
Denso Corp
424.5
26/08/2009
JPY
Nomura Securities, Mitsubishi UFJ Securities
Industrials
Nissan Motor Co Ltd
385.9
11/09/2009
JPY
Mizuho Securities
Industrials
Nissan Motor Co Ltd
385.9
11/09/2009
JPY
Mizuho Securities
Industrials
327
10/09/2009
JPY
Nomura Securities
High Technology
Metropolis of Tokyo
326.6
10/09/2009
JPY
GSJCL
Government and Agencies
JFM
270.8
8/09/2009
JPY
Nomura Securities
Government and Agencies
Mitsubishi UFJ Lease & Finance
267
28/08/2009
JPY
Mitsubishi UFJ Securities
Consumer Products and Services
Toyota Motor Credit Corp
225
27/08/2009
ZAR
Daiwa Securities SMBC Europe
Financials
220.5
11/09/2009
JPY
Mitsubishi UFJ Securities, Mizuho Securities
Industrials
218
10/09/2009
JPY
Nomura Securities
High Technology
Chubu Electric Power Co Inc
216.7
8/09/2009
JPY
Daiwa Securities SMBC
Energy and Power
Urban Renaissance Agency
216.6
8/09/2009
JPY
Nomura Securities, Nikko Citigroup
Government and Agencies
216
3/09/2009
JPY
Nomura Securities
High Technology
Hokuriku Electric Power Co
215.1
4/09/2009
JPY
Mizuho Securities
Energy and Power
Narita Intl Airport Corp
215.1
4/09/2009
JPY
Nomura Securities, Mizuho Securities
Industrials
Electric Power Dvlp Co Ltd
211.9
21/08/2009
JPY
Mitsubishi UFJ Securities, Daiwa Securities SMBC
Energy and Power
BTMU RMBS 4 (JHF Guarantee)
204
28/08/2009
JPY
Mitsubishi UFJ Securities
Financials
Japan Housing Finance Agency
193
26/08/2009
JPY
Daiwa Securities SMBC, Mizuho Securities, Merrill Lynch Securities
Government and Agencies
NGK Spark Plug Co Ltd
165.4
11/09/2009
JPY
Nomura Securities, Mitsubishi UFJ Securities
Industrials
West Japan Railway Co
165.4
11/09/2009
JPY
Mitsubishi UFJ Securities, Daiwa Securities SMBC
Industrials
Hokkaido Bank Ltd
163.5
10/09/2009
JPY
Nomura Securities
Financials
163
9/09/2009
JPY
Nomura Securities
Consumer Products and Services
160.5
27/08/2009
JPY
Mizuho Securities, Mitsubishi UFJ Securities
Materials
129
4/09/2009
JPY
Mitsubishi UFJ Securities, Daiwa Securities SMBC
Government and Agencies
City of Kobe
110.3
11/09/2009
JPY
Mizuho Securities, Credit Suisse Securities, GSJCL
Government and Agencies
West Japan Railway Co
110.3
11/09/2009
JPY
Mitsubishi UFJ Securities, Nomura Securities
Industrials
Mitsubishi Plastics Inc
109.9
15/09/2009
JPY
Mitsubishi UFJ Securities
Materials
109
10/09/2009
JPY
Mitsubishi UFJ Securities, Nomura Securities
Government and Agencies
NTT Urban Development Corp
108.9
10/09/2009
JPY
Mizuho Securities, Mitsubishi UFJ Securities
Real Estate
Daibiru Corp
108.7
9/09/2009
JPY
Daiwa Securities SMBC
Real Estate
Kaneka Corp
108.7
9/09/2009
JPY
Daiwa Securities SMBC
Materials
Keihan Electric Railway Co Ltd
108.7
9/09/2009
JPY
Nomura Securities
Industrials
Keihan Electric Railway Co Ltd
108.7
9/09/2009
JPY
Daiwa Securities SMBC
Industrials
Tobu Railway Co Ltd
108.7
9/09/2009
JPY
Mizuho Securities
Industrials
Urban Renaissance Agency
108.3
8/09/2009
JPY
Nomura Securities, Nikko Citigroup Ltd
Government and Agencies
Osaka Prefecture
108.2
8/09/2009
JPY
Nomura Securities, Mitsubishi UFJ Securities
Government and Agencies
HONG KONG Hutchison Whampoa Intl Ltd India
JAPAN Japan Housing Finance Agency Sharp Corp Nissan Auto Lease Trust 2009-B
Sharp Corp
East Japan Railway Co Sharp Corp
Toshiba Corp
ITOCHU Corp Taiyo Nippon Sanso Corp Hyogo Pref Land Dvlp Public Co
Fukuoka-Kitakyushu Expressway
Chugoku Electric Power Co Inc
108
3/09/2009
JPY
Nomura Securities
Energy and Power
Kansai International Airport
107.5
4/09/2009
JPY
Mizuho Securities, GSJCL
Industrials
Kansai International Airport
107.5
4/09/2009
JPY
Mizuho Securities, Daiwa Securities SMBC
Industrials
Nagoya Expressway Public Corp
107.5
4/09/2009
JPY
Nikko Citigroup, Mizuho Securities
Government and Agencies
Nagoya Expressway Public Corp
107.4
4/09/2009
JPY
Nikko Citigroup Ltd, Mizuho Securities Co Ltd
Government and Agencies
City of Yokohama
105.9
21/08/2009
JPY
Nikko Citigroup Ltd, Nomura Securities
Government and Agencies
Syarikat Prasarana Negara Bhd
573.1
12/09/2009
MYR
Maybank Investment Bank Bhd, CIMB Bank Bhd
Industrials
MISC Bhd
286.5
11/09/2009
MYR
CIMB Investment Bank Bhd, HSBC Bank Malaysia Bhd
Industrials
Cagamas Berhad
187.7
25/08/2009
MYR
Standard Chartered Bk Malaysia, HSBC Bank Malaysia Bhd
Financials
MALAYSIA
www.legalbusinessonline.com
69
Valid from September 1st to November 30th , 2009 Valid from May 1st to August 31st, 2009
beijing.frasershospitality.com beijing.frasershospitality.com
Frasers Autumn Specials Frasers Good Morning Specials
Where you’re more than just a guest……… We welcome you home from the very first day you arrive. Our Fraser Difference ensures that you receiveWhere an array of exceptional services andjust fac ilities unique to our premium Gold-Service Standard you’re more than a guest……… brands globally. Apart from being one of Beijing’s latest addition in premium hospitality providers, our location in the We welcome you home from the very first day you arrive. Our Fraser Difference ensures that Central Business District guarantees that life’s conv enience will be within a “stone’s throw away” for you receive an array of exceptional services and facilities unique to our premium Gold-Service you in business or leisure. Standard brands globally. Apart from being one of Beijing’s latest addition in premium hospitality providers, our location Offerings exclusively for this promotion! in the CentralFloor BusinessRack District Special guarantees that ’ are convenience will surcharge. be within a “stone’s • All life’s rates subject to15% Area Rate Promotion throw away” for you in business or leisure. • Daily breakfast for up to 2 persons.
Apartment Type
Sqm
CNY/ Night
CNY/ Night
• Complimentary Internet connectivity . • Late check-out at 4:00pm, subject to availability.
Offerings exclusively for this promotion!
Special • Rates are subject to 15%surcharge. 33-43Floor 3,388Rack 888 Offers PromotionBonus • Daily breakfast for up to 2 persons/room. 55 Area 3,888Rate 1,088 Stay for minimum of 3 consecutive nights to receive: Sqm CNY/ CNY/ • Complimentary Internet connectivity 74 4,388 1,288 • 4th night free, maximum of 2 free nights per stay. Night • Late check-out at 4:00pm, subject to availability. 92 5,388Night 1,388 • RMB300 credit per stay to be redeemed for either one of the services consumed at prevailing Studio Premier 43 3388 788 BONUS OFFER published rates: 1 Bedroom Deluxe 55 3888 958 • Stay 3 consecutive nights at our Special Beijing Capital Airport pick-up or send off 1 Bedroom Premier 74 4388 1188 Promotional rates to receive a 4th night’s stay on a For sales enquiry, please contact In-room telephone charges (DDD & DID) 1 Bedroom Grand 92 5388 1288 complimentary basis. email: sales.fsbeijing@frasershospitality.com Laundry or dry cleaning • Maximum of 2 complimentary nights per stay. or contact Business Center Services For sales enquiry, please
Studio Apartment 1 Bedroom Deluxe Apartment Type 1 Bedroom Premier 1 Bedroom Grand
Toll-free: 400 817 1188 Email:+86 sales.fsbeijing@frasershospitality.com Address: 12 Jin Tong Xi Road, Chao Yang District, or Beijing Toll-free: +86PRC 400 100020 817 1188
Address: 12 Jin Tong Xi Road, Chao Yang District, Beijing PRC 100020
Note:Note: • In the event of less than 3 consecutive nights stay, benefits • Terms and conditions apply. will not be applicable and rates will be adjusted. • Benefits not consumed cannot be en-cashed or • Benefits not consumed cannot be en-cashed or transferred. transferred. • Terms and conditions may change and at the discretion of Fraser Suites CBD, Beijing without prior notice.
Fraser Suites, Fraser Place Fraser Residence of Frasers Hospitality's rapidly expanding network of Gold-Standard serviced residences located in gateway Fraser Suites, Fraser Place andand Fraser Residence are are partpart of Frasers Hospitality's rapidly expanding network of Gold-Standard serviced residences located in gateway cities throughout Pacific, Europe Middle East. more information, usfrasershospitality.com at frasershospitality.com cities throughout AsiaAsia Pacific, Europe andand the the Middle East. For For more information, visitvisit us at
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