LEGAL KNOWLEDGE UPDATES –HIGHLIGHTS FROM 2022

by Sam Ng, Of Counsel, James Fisher, Associate and Denise Loh, Senior Associate at CMS Holborn Asia

It is both a challenging and changing landscape for emerging companies operating out of Singapore. Whilst remaining on top of macro-issues, there have been some developments covering areas such as fundraising, company registers and personal data that need to be borne in mind. Read on for a short summary of these key developments.

Investments and Fundraisings in Singapore

If your business is looking to raise funding in 2023, there is never a better time to check out the Singapore Venture and Private Capital Association’s Venture Capital Investment Model Agreements (VIMA) 2.0 kit , updated in September 2022 to incorporate feedback from user and industry consultations.

The documents in the VIMA 2.0 kit – including a short/long form term sheet, subscription agreement, shareholders’ agreement and model constitution – are often used as a starting point for early-stage investment deals in Singapore as they contain a set of basic provisions which could help narrow the scope of open issues in a funding round, thus making for a smoother fundraising/negotiation process. The main updates in the VIMA 2.0 kit are:

1) additional annotations and alternative provisions in the initial set of model agreements – term sheet, shareholders’ agreement, subscription agreement, convertible agreement regarding equity – to provide better guidance to users and reflect market developments since 2018;

2) the introduction of new model documents and agreements – constitution, founders’ agreement, convertible note, and employee share option plan primer and schedule – to provide a more expansive suite of documents to get your business up and running; and

3) the introduction of short and longform Environmental, Social and Governance (ESG) letter agreements for incorporation of ESG-related provisions and obligations into transactions. ESG is the new hot topic throughout many industries, so be sure to read these!

Company Registers in Singapore

On the topic of general corporate compliance, the Corporate Registers (Miscellaneous Amendments) Act 2022 of Singapore came into force on 4 October, following which:

1) local and foreign companies are required to set up a register of nominee shareholders, which is to be maintained at its registered office or at the registered office of its appointed registered filing agent; and

2) companies and limited liability partnerships (LLP) which cannot identify a registrable controller with “significant interest” or “significant control” are required to identify individuals with executive control as their registrable controller(s); i.e. company director(s) with executive control and the company chief executive officer; and LLP partners with executive control. Such individuals’ prescribed particulars must be recorded in a company’s or LLP’s Register of Registrable Controllers (RORC) and lodged with the central register of the Accounting and Corporate Regulatory Authority of Singapore within 2 business days of the RORC being updated.

Data Protection in the Region

Singapore

The enhanced financial penalty for breaches of the Personal Data Protection Act 2012 took effect from 1 October 2022 namely:

• S$1million, or

• a maximum of 10% of annual turnover for organizations with an annual turnover that exceeds S$10million, whichever is higher.

The financial penalties levied may likely increase across the board, regardless of whether the organisation crosses the annual turnover threshold. Australia has most recently enacted even more severe fines for breaches of its privacy legislation.

Indonesia

After years of deliberation, Indonesia’s Personal Data Protection Law (PDPL) came into effect on 17 October 2022. The PDPL is a welcomed move amid the spate of data security breaches in Indonesia. The PDPL applies to any person that carries out legal actions in Indonesia and to any person that carries out legal actions outside of Indonesia if such actions have a legal impact in Indonesia or for Indonesian subjects who reside outside of Indonesia. Organisations will have two years to comply with the new requirements under the PDPL.

Thailand

Thailand’s Personal Data Protection Act (PDPA) came into effect on 1 June 2022 after three years of delay and is Thailand’s first consolidated law on data protection. The PDPA applies to the processing activities of a controller or processor who has an establishment in Thailand, as well as a controller or processor outside of Thailand to the extent they are offering goods or services to individuals in Thailand or monitoring the behaviour of individuals in Thailand.

Vietnam

Currently, there is no single comprehensive law governing the collection, storage and use of personal data in Vietnam. Vietnam’s data protection laws are covered by various legislation, including the Civil Code, Penal Code, Law on Network Information Security, Law on Cybersecurity, Law on Information Technology, Law on Telecommunications, Law on Consumer Protection, and Law on E-Transactions.

The Ministry of Public Security released a draft personal data protection decree in February 2021 for public consultation, and it is expected to be finalised by early 2023. The new decree is expected to be a major overhaul of Vietnam’s data protection regime.

About the company

CMS Holborn Asia is a full-service legal services provider assisting clients in Singapore and throughout the Asia Pacific region. We focus on transactional, commercial, regulatory and dispute advice and have particular experience in the key areas of technology, media, telecommunications, life sciences, infrastructure, construction, energy, finance, fundraising and M&A.

CMS has over 25 lawyers based in Singapore, including those qualified in the UK, Singapore, Australia, Indonesia and Malaysia. Many also have native bilingual proficiency in many languages, including Malay, Tamil, Indonesian and Mandarin.

CMS and its individual lawyers are consistently recognised by respected legal and industry directories such as Chambers, Legal 500 and Who’s Who Legal. CMS Holborn Asia is a formal law alliance between CMS Cameron McKenna Nabarro Olswang (Singapore) LLP and Singapore law practice Holborn Law LLC. For more details visit https://cms.law/en/sgp/