L O S I N G L U S T R E : O b s tac l e s a b o u n d a s lu x u ry b r a n d s s u f f e r s lo w d o w n i n A s i a
november2012
w
ping in o o
to
s
NORTH ASIA EDITION
Law firms eye Korean market BIOTECH BOOM
IN-HOUSE SUMMIT
HK LAW AWARDS
INSIDE
China propels a nascent sector, and investors look to reap rewards
Fraud and insolvency, risks and Cambodia in focus at annual HK meet
Linklaters and Mayer Brown JSM emerge big winners
n Deals SPOTLIGHT
04
n THE BIG STORY
06
PAGE 16
PAGE 38
PAGE 40
n LEAGUE TABLES
10
n SUNDRIES
63
ASIA IS DRIVING THE WORLD ECONOMY. WE SEE THE ROAD AHEAD. Change defines our times – nowhere more so than in Asia. Your legal adviser should see change coming and understand its implications – wherever it arises. We are a leading Asian and global law firm with the vision to help our clients navigate complexity and change, evaluate risk and seize opportunity. HERBERTSMITHFREEHILLS.COM
CONTENTS
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
40
1
“I don’t think you can discount the possibility of boutique firms trying to carve out their own niche, and perhaps looking to merge with an international firm when that becomes possible. But I think it is speculative at this point.” Jinduk Han, Cleary Gottlieb Steen & Hamilton
28
NEWS
COVER STORY
The amazing race: Swooping into Seoul
20
Free trade agreements with the EU and the U.S. have opened Korea’s doors to law firms from both regions and ignited a flurry of applications from foreign firms eager to open an office on the peninsula. Kanishk Verghese reports.
06 China’s biotech boom
Burberry, Bulgari and Bentley; as luxury brands experience a slowdown in Asia, Seher Hussain investigates what obstacles, regulatory and legal, lie ahead for the Chinese and Indian markets.
16 Hong Kong Law
China’s sustained efforts to develop its biotech industry are finally paying off as it is attracting a steady flow of foreign investment. Despite persisting regulatory challenges and lengthy approval processes, Western multinationals and corporate funds are coming forward to invest. Raghavendra Verma reports.
Awards 2012
04
BRIEFS
06
LEAGUE TABLES
10
APPOINTMENTS
15
INDEX
64
SPONSORED Regional Updates
FEATURES The Luxe Life
DEALS
40
It was a jubilant night for Linklaters and Mayer Brown JSM at The Macallan ALB Hong Kong Law Awards 2012, which was held on Sept. 7 at the Conrad Hong Kong. The event recognised the best law firms and legal work in Hong Kong.
— China Paul, Weiss — Singapore Loo & Partners — Malaysia Wong & Partners — Philippines Sycip Salazar Hernandez & Gatmaitan
SPONSORED UPDATES
56 57 58 58
— Emerging Markets Kelvin Chia Partnership — International Tax AzureTax
60
SUNDRIES
63
60
ASIAN LEGAL BUSINESS november 2012
2 ON THE COVER
MANAGING DIRECTOR Andrew Smart andrew.smart@thomsonreuters.com NORTH ASIA REGIONAL EDITOR Candice Mak candice.mak@thomsonreuters.com SOUTHEAST ASIA REGIONAL EDITOR Ranajit Dam ranajit.dam@thomsonreuters.com MIDDLE EAST REGIONAL EDITOR Shaheen Pasha shaheen.pasha@thomsonreuters.com JOURNALISTS Seher Hussain seher.hussain@thomsonreuters.com Zhen Liu zhen.liu@thomsonreuters.com Kathryn Crossley kathryn.crossley@thomsonreuters.com Kanishk Verghese kanishk.verghese@thomsonreuters.com copy editor Vasundhara Chatterjee REUTERS/Paul Yeung REUTERS/Yuriko Nakao, REUTERS/Lee Jae Won, REUTERS/Kacper Pempel
associate copy editor Sanchita Ghosh HEAD OF SALES May Wong may.wong@thomsonreuters.com
THOMSON REUTERS TRUST PRINCIPLES 01
That Thomson Reuters shall at no time pass into the hands of any one interest, group or faction;
DIRECTOR, EVENTS Lucinda Maguire lucinda.maguire@thomsonreuters.com ACCOUNT MANAGERS Jessie Cheung (Senior Sales Director, North Asia) jessie.cheung@thomsonreuters.com Yvonne Cheung (Senior Account Manager, China) yvonne.cheung@thomsonreuters.com Rebecca Ng (Account Manager, North Asia) rebecca.ng@thomsonreuters.com
02 That the integrity, independence and freedom from bias of Thomson Reuters shall at all times be fully preserved;
DESIGNERS John Agra Yvette Chiu
03
TRAFFIC MANAGERs Rozidah Jambari (Singapore) Ivy Tsang (Hong Kong)
That Thomson Reuters shall supply unbiased and reliable news services to newspapers, news agencies, broadcasters and other media subscribers and to businesses governments, institutions, individuals and others with whom Thomson Reuters has or may have contracts;
04 That Thomson Reuters shall pay due regard to the many interests which it serves in addition to those of the media; and 05 That no effort shall be spared to expand, develop and adapt the news and other services and products so as to maintain its leading position in the international news and information business. Please contact Andrew Smart with any questions. andrew.smart@thomsonreuters.com
ASIAN LEGAL BUSINESS is available by subscription. Please call +852 3762 3269 (Hong Kong), +65 6775 5088 (Singapore) for details or visit www.legalbusinessonline.com 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 ALB can accept no responsibility for loss. THOMSON REUTERS 10/F, Cityplaza 3, Taikoo Shing, Hong Kong T (852) 3762 3269 | F (852) 2154 6425 www.thomsonreuters.com
EDITORIAL
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
3
Surging into Seoul Several events in South Korea have hit the news in recent times. Firstly, its free trade agreements (FTAs) with the EU and the U.S. have been enacted, which is likely to bolster Korea’s slowing economy. Secondly, as a result, the legal sector is now open for international firms to enter. About 20 foreign firms have already submitted their applications, and the Korean Ministry of Justice has so far given its stamp of approval to half. Full integration for foreign law firms is still five years away, but the legal community is cautiously gauging the situation. Thirdly, the country’s elections in December will have a strong bearing on economic policy and resulting legal work for the years to come. In the South Korea Country Report – our cover story for this issue – ALB investigates how the dynamic in the Korean legal sphere may change as international firms set up shop on the ground, and reports on the latest market trends in the region. The international firms are focusing their Korean office expertise on outbound work, intellectual property, and litigation – three fast-growing areas in the country. A rise in litigation and antitrust matters has created ample legal work for both domestic and foreign firms, with many growing Korean companies finding themselves embroiled in lawsuits and investigations. On a personal note, this ALB issue will be my final for a few months as I head off to start my journey as a new mother. Since I joined the ALB team in February, I have witnessed the steady maturation of the magazine into a product that provides trusted market insights from our in-house team, as well as Reuters content, and am so proud of ALB_210x87mm_bleed10mm.pdf 1 2011-8-12 11:04:50
the collaborative effort. In a mere 10 months, we introduced a new series of rankings, women-in-law features, client surveys, and a reinvigorated awards methodology – all based on the transparency and credibility Thomson Reuters stands for. I look forward to the new year when I can continue building up the ALB brand, and working with the excellent team here. In my stead for the next while – as acting North Asia editor - will be our current Middle East editor, Shaheen Pasha. An experienced Reuters journalist and former journalism professor, Shaheen has almost single-handedly transformed The Brief into one of the top legal market publications in the EMEA region. I am very grateful for her assistance in my absence, and am sure you will find her contributions most enriching. So as always, if you have any comments or feedback, please don’t hesitate to get in touch with us. Have a wonderful winter!
Candice Mak and Shaheen Pasha North Asia Regional Editors, Asian Legal Business Thomson Reuters
DEALS spotlight
4
ASIAN LEGAL BUSINESS november 2012 n your month at a glance Deal name
Pfizer Inc’s joint venture with Zhejiang Hisun Pharmaceutical
Firm
Value ($ mln)
Deal type
China
295
M&A
Japan
2,300
M&A
Jurisdiction
King & Wood Mallesons Jun He Law Offices
Morrison & Foerster
$2.3 billion
Akin Gump Strauss Hauer & Feld
M&A SOFTBANK’S ACQUISITION OF eACCESS LTD • According to Reuters, the deal is expected to be the sixth-largest merger involving a Japanese firm since the start of the business year on April 1. • The purchase will enable Softbank, Japan’s No. 3 mobile carrier, to step up its battle for market share with its nearest competitor; KDDI. • Softbank will pay 52,000 yen ($670) for every eAccess share under a share swap that will be completed in February.
Sullivan & Cromwell Softbank’s acquisition of eAccess Ltd
Simpson Thacher & Bartlett Anderson Mori & Tomotsune
C
Nagashima Ohno & Tsunematsu
M
Y
CM
Slaughter and May John Swire & Son’s sale of its entire shareholding in Swire Properties
Simpson Thacher & Bartlett
MY
CY
Japan/U.S.
3,700
M&A
K
Freshfields Bruckhaus Deringer
$20.1 billion
Hokuetsu Kishu Paper Company’s purchase of Financiere Bernard Dumas and its subsidiary
SOFTBANK’S PROPOSED BUY OF A 70 PERCENT STAKE IN SPRINT NEXTEL CORP • The deal marks the largest outbound acquisition by a Japanese company. • Combined, Softbank and Sprint will have 96 million users. • Part of the deal involves an injection of billions of dollars into Sprint, empowering it to compete more effectively with its two larger U.S. rivals, AT&T and Verizon Wireless. • The Sprint-Softbank tie-up elevates outbound deals by Japanese firms to a record $75 billion this year, according to Thomson Reuters data.
Clifford Chance
Japan/EU
N/A
M&A
Japan/U.S.
20,100
M&A
Hong Kong/ Singapore
400
Debt
Hong Kong
2,140
M&A
Skadden, Arps, Slate, Meagher & Flom
M&A Softbank Corp’s proposed purchase of a 70 percent stake in Sprint Nextel Corp
Morrison & Foerster
Mori Hamada & Matsumoto Sunac China Holdings’ senior notes offering due 2017 Cash sale of ING’s insurance business units in HK and Macau, and its Thailand life insurance operation to Pacific Century Group
CMY
Norton Rose
Allen & Overy Freshfields Bruckhaus Deringer
06
BRIEFS
11.2012
T
the big story
BURBERRY, BULGARI AND BENTLEY: AS LUXURY BRANDS EXPERIENCE A SLOWDOWN IN ASIA, SEHER HUSSAIN INVESTIGATES WHAT OBSTACLES, REGULATORY AND LEGAL, LIE AHEAD FOR THE CHINESE AND INDIAN MARKETS.
REUTERS/Jason Lee
he luxury brand market in general has continued to defy the global economic downturn, posting sustained growth especially in the East, with China continuing to grow at a much faster rate than the traditionally established markets of Japan, Italy, Europe and the U.S. However, China’s recent slowdown has affected the luxury industry, with a recent report by Bain citing that global luxury goods sales are expected to grow by 5 percent this year, compared with 13 percent last year. Despite that, the might of the Chinese consumer has vaulted the country into the top echelon, as it becomes the world’s second-largest luxury market this year, topped only by the U.S. However, as the Chinese buyer grows increasingly more sophisticated, international brands face an evolving set of obstacles. Luxury companies also continue to eye India; as one of the world’s fastest growing economies with an increasing number of high net worth individuals, it is well placed to capture a significant market share. Will the newly released FDI regulations give this sector the much needed boost it has been waiting for? GUCCI AND GIVENCHY: GRAPPLING WITH CHINA According to the Bain report, Chinese luxury goods sales are set to rise by 8 percent at constant currencies and 20 percent at current currencies, while last year they climbed to 30 percent on both measures. Burberry, Hermes and other brands have reported slowing revenue growth in Asia over the past year; however they have still performed well, with LVMH up 4.1 percent, Burberry up 17 percent and Hermes up 9.4 percent. Now, Chinese buyers make up half of all the luxury purchases in Asia. So what challenges do these international brands face? “It’s not about the new brands per se; it’s not about entering China anymore,” says Helena Huang, partner at King & Wood Mallesons, “now, it’s about expansion within the country. Luxury brands are expanding from the first tier cities into the second, and even the third.” As these companies expand, Huang points out several challenges that arise, namely nailing down the correct legal structure for the brand. “Once you have regional headquarters in China, how many stores or subsidiaries are you going to set up there? You have to get this structure right from the very beginning because coordinating between different cities and different provinces can be very difficult,” she says. Part of that legal structure and strategy is choosing your distributor and joint venture partner, another process that can be problematic. Gabriela Kennedy, partner at Hogan Lovells, elaborates that: “In China, the extra difficulties are how you are going to do your business in that market; are you going to choose a distributor? You have to be very careful and make sure that they have the right legal contract to protect your position. Are you going to trust and license a local party and enter into a joint venture? Brands need to have their exit strategy in advance, in case things don’t work out.” Inevitably, data protection issues also raise an ugly head. Alongside fake shops and counterfeit products, market sources also point out that in their eagerness to enter China, many luxury brands do not ensure that they possess the best portfolio in terms of the protection that they need in the market. Kennedy says that: “Very few brands actually consider thinking
BRIEFS
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
about their Chinese brands; they come in with a foreign name but you have to educate your consumers on how that is pronounced. The reality is that most of the Chinese people will approximate, give up, and choose a Chinese name for you. If you’re not careful, it may not be the brand that you want.”
7
CHINA’S LUXURY MARKET 100
China’s domestic luxury consumption forecasts % of global luxury mrkt Luxury consumption Bln euros
20
80
16
60
12
Most desired luxury brands in China 2011 Brand Stores % of mentions in luxury survey Louis Vuitton Chanel
38 7
Gucci
45
Dior
30
Armani
104
Hermes 19 FENDI AND FERRARIS: 40 8 FINDING A FOOTHOLD IN Rolex N.A. INDIA Cartier 37 Despite the flurry of attention 20 4 Prada 18 devoted to India’s economy and its growing middle class, luxury Burberry 56 0 0 brands have failed to find a firm '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 0 10 20 30 40 50 footing here, with the sector Note: Most desired brands according to Bain Survey of Luxury Goods Consumers in Mainland China (n=1,959). Cartier store data worth only about $1.3 billion, excludes watch counters. Sources: CLSA, 2011 Bain China Luxury Market Study. accounting for 1 to 2 percent of the global luxury market. Reuters graphic/Christine Chan 24/09/12 Myriad reasons underline this lack of growth, from scarcity of retail locations to incredibly or the U.S. It’s almost like an advertisement or Swiss watches) sourcing from India may high import duties. But industry experts point as opposed to a serious approach of making entail some significant commercial chalto foreign direct investment regulations as one the product available.” lenges. Many brands will be unable to alter of the primary obstacles. their “Made in France” or “Made in Italy” Previously, India’s FDI laws capped foreign A DIAMOND-BRIGHT FUTURE specifications, leaving them no wiggle room ownership of retail operations at 51 percent, It is evident that luxury brands still face hurin the new sourcing requirements. but in a high- profile decision earlier this year, dles when it comes to entering the subconFDI reforms aside, several other challenges the government officially lifted restrictions on tinent and the problem is far from resolved, remain. Jai Pathak, partner at Gibson, Dunn foreign investment in the retail sector, which even given the recent reforms. However, & Crutcher, recounts that, “In the new policy, would allow international luxury brands like taking a long term view, Pathak says that at least $100 million must be invested in the LVMH, Burberry and Gucci to acquire 100 “the government is moving very aggressively relevant multi-brand retail company, and 50% percent ownership of their India operations. and clearly intends to push through economic of the foreign investment proceeds must be inAparna Mittal, partner at Luthra & Luthra reforms and attract foreign investment given vested over 3 years, in back-end infrastructure. says: “When the new policy was announced, the recent slump due to the uncertainty over The foreign investor needs to factor that in to there was palpable excitement in the market, tax treaties and taxable transactions.” his financial model as he thinks about investanticipating that the market would really open Sharma agrees, relating that the dement in multi-brand retail in India.” up. However upon closer examination, there mand for and awareness of luxury goods is Distribution is also a sticking point, says remain some ambiguities in the way that this prevalent in the Indian consumer, and global Rahul Sharma, managing director of retail policy has been drafted.” brands need to start taking India more sericonsultancy firm Neev Capital. Sharma The main requirement is that foreign ously as a potential market. comments, saying: “Up till now, the route companies intending to invest on the 100% Hopping across to China, a similar outlook has been to go to a five star hotel and set route are required to source 30% of their emerges. The number of rich Asians exceeded up shops there; the approach has been very production from India. Mittal continues that in the U.S. for the first time this year piecemeal. The local customer comes to the that, as luxury brands are associated with (see “A Wealth of Opportunity”, in ALB’s flagship, but it’s a showcase; he will actually a particular quality and sometimes even September issue) as reported by Capgemini purchase the goods when he travels to Europe geographic associations, (such as Thai silk, and RBC Wealth Management. Home to now 3.37 million high net worth individuals, 17 “NOW IT’S ABOUT EXPANSION percent of Asia’s wealthy are based in China, WITHIN CHINA. LUXURY BRANDS and their appetite for luxury goods may be insatiable. Huang sums up, by saying: “There ARE EXPANDING FROM THE may be some adjustment in growth due to the FIRST TIER CITIES INTO THE slowdown, but Chinese wealth is still at a very SECOND, AND EVEN THE THIRD.” early stage. This market has not matured yet, and has great potential.” HELENA HUANG, King & Wood Mallesons
8
BRIEFS
ASIAN LEGAL BUSINESS november 2012
FDI pours into Indonesia despite Bumi saga
I
ndonesia attracted a record $5.9 billion in foreign direct investment in the third quarter, signaling that Southeast Asia’s biggest economy remains a hot favorite despite a bleak global outlook and worries about corruption and corporate governance most recently exemplified by the ongoing Bumi saga. In rupiah terms, total FDI in July to September rose 22.00 percent year-on-year to 56.6 trillion rupiah ($5.90 billion), after 30.2 percent annual growth in the second quarter. The third quarter number is a record for any quarter, signaling that Indonesia’s spotty reputation in protecting foreign investors and other worries are being seen as acceptable risks. Earlier this month, British-born financier Nat Rothschild resigned from the board of Bumi Plc (BUMIP.L), one of the world’s biggest coal exporters formed with Indonesian shareholders two years ago in a $3 billion deal. He had earlier pressed for investigations into financial irregularities at the company’s Indonesian subsidiaries. “The vast majority of Indonesian business people are shocked by the appalling impression Bumi PLC has given to potential foreign investors in Indonesia,” he wrote in his resignation letter. However, Indonesia’s vast mineral wealth, and growing domestic market, appear to be outweighing worries arising from Bumi’s troubles.
BUMI PLC TIMELINE Financier Nat Rothschild resigns from the board of Bumi Plc, as it looks at a $1.38 billion proposal from the Bakrie family, to exit their stake and take back the firm's operating assets 1200
Share price - GBp Rothschild ups stake in Bumi
1000 800 600 400
CLSA downgrades Bumi to "underperform" Bumi halts buy of PT Bumi Resources stake
Rothschild calls for clean-up at PT Bumi
Bumi Plc shareholders attempt to oust Rothschild Samin Tan’s Borneo Lumbung to buy 23.8% of Bumi Plc for $1 bln Bumi shakes up board, brings in Tan Bumi posts Truce declared H1 net loss in row over on forex control of and derivatives PT Bumi
Rothschild resigns from the board of Bumi Plc
200 Bumi Plc launches investigation into potential financial irregularities
0 2011
2012
Source: Reuters Reuters graphic/Catherine Trevethan
16/10/12
A Japanese national flag flutters near a chimney emitting fire at an oil refinery in Kawasaki, near Tokyo October 22, 2012. The volume of Japan’s customs-cleared crude oil imports rose 22.5 percent in September from the same month a year earlier, the Ministry of Finance said on Monday. REUTERS/Toru Hanai
BRIEFS
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
9
GC INTERVIEW
‘Always hire the best lawyers’
ROHIT KUMAR Position: General Counsel Company: United Phosphorus Ltd Location: Mumbai, India Firms currently used: Linklaters, Herbert Smith, Mishcon de Reya, Solicitors, Field Fisher Waterhouse, Holland & Knight, TozziniFreire Advogados
REUTERS/Fayaz Kabli
ALB: How is being an in-house lawyer in your industry different from other industries? RK: Globally, the agrochemical industry is a highly regulated sector, as it is part of the food supply chain process. The role of a GC is to ensure that the interest of the company gets protected, and act like an ombudsman rather than an enabler. United Phosphorus Ltd (UPL) has businesses in more than 125 countries, and being present in so many geographies has its own challenges. It sometimes means that I may end up having calls at odd hours of the day. It may sometimes also mean that one may have to get involved in solving a complicated legal problem in a country which is totally unfamiliar to you. It may also mean that sometimes you may be held responsible for something on which you have no control, and is in an unfamiliar jurisdiction. ALB: What are some of the major trends in your industry? RK: The two broad trends which I am witnessing are: Consolidation in the industry, and the growing importance of IPR. UPL has always been very active in the M&A space. We have probably made the highest number of overseas acquisitions by any Indian company. I joined the company in July 2010, and within 12 to 15 months, we
made seven overseas acquisitions. I think this trend is going to continue for some time unless the industry reaches some level of consolidation. The other area where I have started spending a lot more time is in IPR disputes. A few years back, IPR disputes were rare and far in between. This has changed recently. ALB: How many lawyers does your team consist of, and how does the structure work as a whole? RK: We have a lean team. The total number of lawyers in our company would be around 10 to 12, of which most would be at our headquarters. Besides the headquarters, we also have lawyers in Brazil and France. The role and responsibility of the legal team is well defined. We have a separate team that takes care of litigation in India. There is no direct reporting structure between the company’s lawyers located outside India to the headquarters. They report to the local business heads. ALB: What are your criteria for selecting external counsel? RK: One underlying philosophy that we use is: No matter which jurisdiction we go to, we always hire the best lawyers. We follow a three-fold strategy. We share close relationships with some of the large international
law firms and whenever we need lawyers in say U.S., UK or any other established jurisdiction, we go with them. When we need lawyers in unfamiliar jurisdictions, we typically approach two big international law firms with whom we share a close relationship and ask them to recommend lawyers. Sometimes the recommendations are the same, but if we get different recommendations from the two firms, we factor costs and gut feeling, and pick one of them. Several large international law firms have affiliate offices in jurisdictions where they don’t have direct presence. My experience is that it is better to go with large, established local firms than to go with the affiliate offices of such large international law firms. ALB: What is the best advice you have ever received? RK: The best advice I have received is from Charlie Munger, Warren Buffett’s partner at Berkshire Hathaway. Charlie himself was a lawyer, and he famously said that you should only sell something if you would be willing to buy it if it were on the other side of the table. It is a remarkably simple theory, but so difficult to follow. Obviously, this is not only applicable to lawyers. I try living up to it.
LEAGUE TABLES
10
ASIAN LEGAL BUSINESS november 2012
CHINA Announced M&A Legal Rankings
HONG KONG Announced M&A Legal Rankings
Freshfields Bruckhaus Deringer
26,603.6
DEALS: 10 RANK
Freshfields Bruckhaus Deringer
4,849.8
VALUE ($mln)
DEALS: 5
MARKET SHARE: 17.1
LEGAL ADVISER
VALUE ($MLN)
DEALS
MARKET SHARE
RANK
VALUE ($mln)
MARKET SHARE: 10.9
LEGAL ADVISER
VALUE ($MLN)
DEALS
MARKET SHARE
2
Sullivan & Cromwell
24,363.4
5
15.7
2
Clifford Chance
4,047.9
14
9.1
3
Davis Polk & Wardwell
20,633.8
5
13.3
3
Sullivan & Cromwell
3,854.7
3
8.6
4
Paul, Weiss
19,605.9
4
12.6
4
Allen & Overy
3,781.7
7
8.5
5
Cleary Gottlieb Steen & Hamilton
18,724.6
7
12.1
5
Baker & McKenzie
3,641.6
8
8.2
6
Stikeman Elliott
17,911.8
2
11.5
6
Linklaters
2,662.7
9
6.0
7*
Burnet Duckworth & Palmer
17,665.6
1
11.4
7
Jones Day
2,400.7
2
5.4
7*
Richard A Shaw Professional Corp
17,665.6
1
11.4
8
Zhong Lun Law Firm
2,190.6
3
4.9
7*
Blake Cassels and Graydon
17,665.6
1
11.4
9
WongPartnership
1,354.1
8
3.0
7*
Osler Hoskin & Harcourt
17,665.6
1
11.4
10
Allen & Gledhill
1,247.1
5
2.8
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
JAPAN Announced M&A Legal Rankings
SOUTH KOREA Announced M&A Legal Rankings
Lee & Ko
Mori Hamada & Matsumoto
39,524.0
DEALS: 94 RANK
8,071.5
VALUE ($mln)
MARKET SHARE: 33.8
LEGAL ADVISER
DEALS: 58
VALUE ($MLN)
DEALS
MARKET SHARE
RANK
VALUE ($mln)
MARKET SHARE: 20.8
LEGAL ADVISER
VALUE ($MLN)
DEALS
MARKET SHARE
2
Nagashima Ohno & Tsunematsu
32,678.5
89
27.9
2
Kim & Chang
6,839.7
66
17.6
3
Nishimura & Asahi
25,553.6
63
21.8
3
Bae, Kim & Lee
4,088.8
28
10.5
4
Anderson Mori & Tomotsune
14,829.4
16
12.7
4
Latham & Watkins
3,623.1
2
9.3
5
Blake Cassels and Graydon
14,262.4
4
12.2
5
Jipyong Jisung
3,526.1
2
9.1
6
Jones Day
9,262.8
11
7.9
6
Freehills
3,309.1
1
8.5
7
Skadden
8,238.2
11
7.0
7
Shin & Kim
2,545.2
16
6.6
8
Davis Polk & Wardwell
7,086.4
9
6.1
8
Yulchon
2,184.1
16
5.6
9
Paul, Weiss
6,692.3
4
5.7
9
Linklaters
1,695.5
3
4.4
10
Shearman & Sterling
6,538.5
8
5.6
10
Yoon & Yang
1,578.6
8
4.1
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)
160
Series1
140 120
93.9
100 80 60
Series2 128.9 112.5 104.9 103.4 99.7
54.5
143.7
92.4
70.5
61.7
130.2 112.1 100.8 81.8
75.3
3,000
136.6 128.3
127.1128.0 114.6 107.0
83.8
98.4
2,500
116.4
2,000 50.2
54.1
1,500 1,000 500
40
No. of Transactions
Rank Value US$ Billion
ANY NORTH ASIA INVOLVEMENT ANNOUNCED M&A ACTIVITY - QUARTERLY TREND
0
20 1Q 06
3Q 06
1Q 07
3Q 07
1Q 08
3Q 08
1Q 09
3Q 09
1Q 10
3Q 10
1Q 11
3Q 11
1Q 12
3Q 12
NOTES: League tables, quarterly trend, and deal list are based on the nation of either the target, acquiror, target ultimate parent, or acquiror ultimate parent at the time of the transaction. Announced M&A transactions excludes withdrawn deals. Deals with undisclosed dollar values are rank eligible but with no corresponding Rank Value. Non-US dollar denominated transactions are converted to the US dollar equivalent at the time of announcement of terms. North Asia includes China, Hong Kong, Taiwan, South Korea, Japan. Data accurate as of October 30, 2012
SP ONS O R E D A RTI CL E
MAXWELL CHAMBERS An intersection of legal talent has found a home at Maxwell Chambers, forging a legal community focused on dispute resolution issues that is unique in Asia and offers a one-stop suite of services for clients worldwide.
Professor Lawrence Boo
David Mildon QC
Home to a number of arbitrators, barristers and international alternative dispute resolution institutions, Maxwell Chambers is about people dedicated to creating a professional and cordial setting to handle thorny legal issues, said Chief Executive, Ban Jiun Ean, adding that the mix took time and deep thought to assemble. “We looked at which sets were considered among the best in their respective fields, and were also active in Singapore and the region. Over time, as space became available, we looked at who had registered interest in our facility and brought more on board gradually.” Two of Singapore’s leading arbitrators were among the earliest to take up space at Maxwell Chambers. Senior Counsel Christopher Lau, who opened his office in September 2009, said that his practice had benefited from “Maxwell Chambers being recognised as the situs of all the major institutional arbitrations both domestic and international and for arbitration hearings in Singapore.” For Professor Lawrence Boo, a founding resident of The Arbitration Chambers and former deputy chairman of the Singapore International Arbitration Centre (SIAC), meeting other legal minds from around the world on a nearly daily basis has been fantastic. “An unexpected bonus is the constant stream of visitors, mainly foreign lawyers and arbitrators, who drop by whenever they are involved in cases or attending seminars here,” Professor Boo said. As for the London sets, barristers from Essex Court Chambers and 20 Essex Street were the first to set up at Maxwell Chambers. David Mildon QC of Essex Court Chambers said, “Those like myself who have the advantage of private practice rooms within Maxwell Chambers are both committed to Singapore as a world class arbitration centre and able to provide a better service when we are appearing in arbitrations in Singapore.” The London barristers were followed by New Zealand set Bankside Chambers which opened shop at Maxwell Chambers in February 2011, and
David Williams QC
David Barnes
Belgian firm Hanotiau & van den Berg in January this year. For David Williams QC of Bankside Chambers, “It is trite to say that Singapore is now a leading international arbitration venue in the Asia-Pacific region. We can only see further continued development in that direction so the future of Maxwell Chambers is assured.” The arbitration community at Maxwell Chambers will soon be welcoming new members into the fold. Thirty Nine Essex Street is slated to open its Singapore office in January 2013. David Barnes, Chief Executive and Director of Clerking, and Roderick Noble, Director of Asian Business, expect the rapid investment in emerging and developed economies in the region to grow sharply in the coming years, bringing strong demand for dispute resolution services.
Roderick Noble
Gerard Forlin QC
“With Singapore now widely regarded as a leading legal hub in Asia, in addition to being well positioned geographically, it was the natural choice for us as the location of our new international office,” Barnes and Noble said. “The scale of the commercial activities being carried out there, the extent of the arbitration facilities and the professionalism of staff was unmatched by any other location and we were happy to wait for an office to materialise.” One Essex Court is launching its Singapore office this month. Ian Glick QC said the set’s presence at Maxwell Chambers sends a message to clients. “Not only would it enable us to operate quickly and efficiently in the same time zone as those seeking our services, but a presence here at Maxwell Chambers would demonstrate that we are serious about pursuing relationships with professional clients in the region.” As for Gerard Forlin QC, opening an office at Maxwell Chambers this month is imbued with special significance. “I feel extremely fortunate to be a new tenant at Maxwell Chambers,” he said. “Having spent part of my childhood years in Singapore, Maxwell Chambers represents, in my view, all that is excellent in Singapore – highly prestigious, efficient, helpful, charming, and in every sense global.” Ban said Maxwell Chambers and its tenants have found a good equilibrium. “Our relationship with the institutions, arbitrators and barristers at Maxwell Chambers is one of great mutual benefit,” Ban said. “They bring the cases and help to give us visibility in their markets and sectors, and in return, we provide them with world class hearing facilities and conveniently located office space.” Although all the office space at Maxwell Chambers has now been taken up, Ban says that going forward, “We will be looking at integrating our services even more with the surrounding buildings, which can provide more office space, covered car parking and hotel rooms.”
Maxwell Chambers@Centennial | 3 Temasek Avenue #16-01, Singapore 039190 | +65 6595 9010 | info@maxwell-chambers.com Maxwell Chambers Premier | 32 Maxwell Road #03-01, Singapore 069115 | +65 6595 9011 | info@maxwell-chambers.com
12
BRIEFS
ASIAN LEGAL BUSINESS november 2012
IN CASE YOU MISSED IT
THIS MONTH’S TOP HEADLINES FROM WWW.LEGALBUSINESSONLINE.COM
x
REUTERS/Bazuki Muhammad
Canada blocks Petronas bid for Progress Energy Canada has blocked Malaysian state oil firm Petronas’ C$5.17 billion ($5.2 billion) bid for gas producer Progress Energy Resources in a surprise move that could signal problems for a much larger Chinese deal in the country’s energy sector.
ZHONGHAO JOINS FORCES WITH HONG KONG’S ONC Chongqing-based Zhonghao Law Firm and Hong Kong’s ONC Lawyers have recently signed a memorandum in Hong Kong, in which the two firms reached an agreement to construct a closely associated operation, and an agreement of intent on a possible merger in the future.
REUTERS/Grace Liang
LOEB & LOEB DEBUTS IN HONG KONG, TIES UP WITH PANG
Loeb & Loeb has opened an office in Hong Kong in association with local law firm, Pang & Co. It will be helmed by Pang & Co managing partner Benny Pang and Loeb & Loeb Beijing partner Lawrence Venick, who will relocate to Hong Kong.
LPA enters Beijing through TransAsia alliance
French law firm Lefèvre Pelletier & associés (LPA) has entered into an alliance with PRC firm TransAsia Lawyers, opening up its presence in Beijing. LPA currently has three offices in Greater China: Hong Kong, Guangzhou, and Shanghai.
REUTERS/Sheng Li
U.S. victory against China in WTO steel case The World Trade Organisation barred China from imposing duties on certain U.S. steel exports, siding with U.S. President Barack Obama in a dispute with Beijing over a type of steel made in two election battleground states.
REUTERS/Aly Song
Herbert Smith Freehills launches
The full equity merger between Herbert Smith and Freehills took effect on Oct. 1, creating Herbert Smith Freehills – the eighth-largest law firm in the world. The firm’s 2,800 lawyers – including 460 partners – are operating under a single profit pool across 20 offices worldwide.
CHINA INTERNATIONAL ECONOMIC AND TRADE ARBITRATION COMMISSION
CHINA’S EXPERIENCE IN
INTERNATIONAL ARBITRATION INTERNATIONAL IMAGE OF
CHINESE ARBITRATION CHINA INTERNATIONAL ECONOMIC AND TRADE ARBITRATION COMMISSION Announcement On the Administration of Cases Agreed to be Arbitrated by CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission The 2012 Arbitration Rules of the China International Economic and Trade Arbitration Commission came into effect as of 1 May 2012. Yet, as branch offices of CIETAC, the CIETAC Shanghai Sub-Commission and the CIETAC South China Sub-Commission (originally named the CIETAC Shenzhen Sub-Commission) refuse to apply the CIETAC Arbitration Rules (2012), and refuse to remain under the leadership of CIETAC in respect of case administration. Such conduct violates the basic principles provided in the CIETAC Articles of Association and the CIETAC Arbitration Rules (2012) that CIETAC and its Sub-Commissions form an integrated arbitration institution and that the SubCommissions conduct arbitration business under the authorization of CIETAC. In order to ensure the effective realization of parties’ autonomy in choosing CIETAC for arbitration, safeguard the exercise of parties’ arbitration rights and facilitate the effective resolution of parties’ disputes through CIETAC arbitration, CIETAC hereby announces the following decisions in accordance with the CIETAC Articles of Association (2012) and CIETAC Arbitration Rules (2012): 1. As from 1 August 2012, CIETAC’s authorization to the CIETAC Shanghai Sub-Commission and the CIETAC South China Sub-Commission for accepting and administering arbitration cases is hereby suspended. 2. As from 1 August 2012, where parties have agreed to arbitrate their disputes by the CIETAC Shanghai Sub-Commission or the CIETAC South China Sub-Commission (the CIETAC Shenzhen Sub-Commission), the parties shall submit their applications for arbitration to CIETAC and the CIETAC Secretariat shall accept such arbitration applications and administer such cases. Without CIETAC’s authorization, no institutions shall have the right to accept and administer the afore-mentioned arbitration cases. 3. When the CIETAC Secretariat accepts and administers the above-mentioned cases, unless otherwise agreed by the parties, for cases agreed to be arbitrated by the CIETAC Shanghai Sub-Commission, the place of arbitration and the place of oral hearing shall be Shanghai; for cases agreed to be arbitrated by the CIETAC South China Sub-Commission (the CIETAC Shenzhen Sub-Commission), the place of arbitration and the place of oral hearing shall be Shenzhen. 4. For information and consultation about the afore-mentioned cases, please contact the CIETAC Secretariat at the following: Shanghai: Tel: 86-21-58200329 | Fax: 86-21-50810965 | Email: infosh@cietac.org Shenzhen: Tel: 86-755-82796739 | Fax: 86-755-23964130 | Email: infosz@cietac.org Beijing: Tel: 86-10-82217788 | Fax: 86-10-82217766 | Email: info@cietac.org China International Economic and Trade Arbitration Commission
Address: 6/F, CCOIC Building, 2 Huapichang Hutong, Xicheng District, Beijing 100035, P.R.China Telephone: (86-10) 8221 7788 | Fax: (86-10) 8221 7766 64643500
APPOINTMENTS
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
LATERAL HIRES NAME
Leaving
GOING TO
PRACTICE
LOCATION
Pui Hong Chik
Baker & McKenzie
Linklaters
Corporate
Beijing
Lewis Ho
Simmons & Simmons
Dechert
Corporate
Hong Kong
Jeremy Hunt
Allen & Overy
Morrison & Foerster
Corporate
Hong Kong
Tim Jeffares
Clifford Chance
White & Case
Finance
Tokyo
Thomas Yunlong Man
Orrick, Herrington & Sutcliffe
Morrison & Foerster
Corporate
Beijing
William Rosoff
Cozen O’Connor
Akin Gump Strauss Hauer & Feld
Corporate
Beijing
Masahiro Shiga
Skadden, Arps, Slate, Meagher & Flom
Morrison & Foerster
Finance, Real Estate
Tokyo
Germain Sinpraseuth
Salans
Adamas
Corporate
Shanghai
Chris Swift
Allen & Overy
Jones Day
Corporate
Hong Kong
Asia ex-Japan Legal & Compliance Best Headhunting Executive: Rank 1 Asia ex-Japan Legal & Compliance Best Contingency Firm: Rank 2 Asia ex-Japan Legal & Compliance Best Retained Firm: Rank 3
The Recruiters Partners speak to in Asia. Discreet. Professional. Effective. CmlAsia
CareerAsia
Partners • Team Moves • Associates • In House +852 2836 6382
www.cmlrecruitment.com.hk
15
16
BIOTECH & SCIENCE
ASIAN LEGAL BUSINESS NOVEMBER 2012
CHINA’S
BIOTECH BOOM CHINA’S SUSTAINED EFFORTS TO DEVELOP ITS BIOTECH INDUSTRY ARE FINALLY PAYING OFF AS IT IS ATTRACTING A STEADY FLOW OF FOREIGN INVESTMENT. DESPITE PERSISTING REGULATORY CHALLENGES AND LENGTHY APPROVAL PROCESSES, WESTERN MULTINATIONALS AND CORPORATE FUNDS ARE COMING FORWARD TO INVEST. RAGHAVENDRA VERMA REPORTS.
REUTERS/Jason Lee
I
n September, U.S. medical technology company Medtronic announced a $755 million merger with Chinese Orthopaedic devices manufacturer KangHui. In a press release, Medtronic’s executive vice president Chris O’Connell described China as “one of the fastest growing medical device markets with significant scale opportunities.” The Medtronic merger follows a series of other M&As in the Chinese biotech sector. According to the Centre for Asia Private Equity Research, in the first half of the current year, private equity investments in the Chinese healthcare sector amounted to $489 million, double that of last year. The centre attributed this sudden rise to the increased spending by the Chinese government, and its reforms measures. Significantly, in its 12th Five Year Plan from 2011 to 2015, Beijing has allocated $3 billion on innovative medicine, the cultivation of new varieties of genetically modified organisms, and the prevention and control of infectious diseases. The government’s efforts to promote the industry also include legal and regulatory reform measures. For example, in 2011, it relaxed certain restrictions in respect of foreign investment in hospitals and diagnostic centres. The Chinese government is also setting up biotech zones across the country to support for new drug innovation, which until now has been a weakness of the Chinese biotech industry. According to Richard Bird, counsel at Freshfields Bruckhaus Deringer, China has been relatively slow in this area, and there are currently not many promising products and technologies in the pipeline, he says. The foreign pharmaceutical companies too
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
have made investments mostly in their own R&D and biomedical centres. In November 2009, the U.S. pharmaceutical giant Novartis announced an investment of $1 billion over a period of five years. This money is going into its Chinese research facility, and also the expansion of the Novartis Institute for BioMedical Research in Shanghai. MANY OPPORTUNITIES Tony Wang, a partner at Weil, Gotshal & Manges, notes that foreign investment in the biotech, pharmaceutical and healthcare industries remain attractive to multinational companies and private equity investors. According to him, many companies making investments in China’s biotech sector see the potential of lowering R&D costs in China in connection with the development of new products. In addition, companies have also used joint ventures and other strategic partnerships to distribute their products in the Chinese market. Demographics are also playing a vital role in the growth of this sector. The Chinese population, while getting richer, is also becoming older, thus making it a huge consumer market for biotech products. The large population also makes China a good source for collecting clinical trial data, and already the vaccine market and supply chain in China are relatively mature, says Bird. “In the near future, novel vaccine products are expected to contribute to the greatest growth of the Chinese biotech sector,” he says, “more so because the Chinese government has listed the novel vaccine industry as a sector where foreign investment is encouraged.” CHALLENGES REMAIN However, investing in the Chinese biotech sector is by no means a simple task as the sector poses several challenges related to regulatory and transparency issues. According to Wang, for many companies, these relate to legal and regulatory compliance issues, corporate governance, intellectual property rights and financial and accounting due diligence issues. In this regard, he advises his clients to be patient, and also to prepare for a steep learning curve. The Chinese regulatory maze is considered to be the most challenging part of a biotech M&A transaction as the regulators involve multiple government departments at different levels. “In addition to the general approvals of foreign investment and corporate registration, the transaction may also need to be approved by an industrial regulator like the State Food and Drug Administration (SFDA) and the regulator of biopharma products,” says Bird. For an M&A transaction involving a bio-
“IN THE NEAR FUTURE, NOVEL VACCINE PRODUCTS ARE EXPECTED TO CONTRIBUTE TO THE GREATEST GROWTH OF THE CHINESE BIOTECH SECTOR, MORE SO BECAUSE THE CHINESE GOVERNMENT HAS LISTED THE NOVEL VACCINE INDUSTRY AS A SECTOR WHERE FOREIGN INVESTMENT IS ENCOURAGED.” RICHARD BIRD, Freshfields Bruckhaus Deringer
pharma company with a new product in the pipeline, the SFDA’s approval for clinical trials may take about a year to obtain, with the permission to market it taking another, says Bird. It is important to consider these timelines in terms of deal structure and payment milestones, he adds. One option for buyers trying to get around the problem is to have a R&D collaboration during the clinical trial phase, before finally buying out the partner’s share once the product is approved, says Bird. The ownership of the intellectual property, and the products manufactured using the same remain the most critical part of any biotech related deal, and take the longest time to negotiate in a joint venture. “Generally, the IP infrastructure in China does infuse enough confidence, and the government has made great efforts to improve it further,” says Bird, while adding that “taking action against IP infringement remains a big concern for foreign investors in China.” For this reason, he strongly advises the inclusion of robust risk mitigation measures in the deal structure and the transaction documents. Indeed, protection of IP rights is the primary issue negotiated by foreign investors in China. In a joint venture deal currently under negotia-
BIOTECH & SCIENCE
17
tion between a Chinese and a foreign party, very strong IP protection clauses have been proposed by a strategic foreign party that is represented by Helen Jiang, senior counsel at Weil’s Shanghai office. In case of any IP dispute the foreign company will have recourse to termination rights, buyout rights and other remedial provisions. “This way, the core IP will be transferred to our client if the local party breaches the joint venture contract,” says Jiang. In addition, the foreign party has retained certain core IP rights that are essential to the joint venture to provide additional leverage against the local party. Serious IP-related regulatory issues also arise when the IP is owned by the Chinese party. For example, according to Chinese patent law, if the inventors of the product are employees of the company owning the patent, they will also receive royalties from the commercial exploitation of the patent. If there is no agreement between the employer and employee over the sharing of financial benefits, then the statutory provisions come into play and the employee can claim a certain percentage of the royalty or commercial benefit arising from the invention. Taking into account the latest developments in the biotech industry, the Chinese government is in the process of updating and reviewing other laws in the biotech sector. They include the IP law, the patent law, the copyright law, and the trademark draft. DUE DILIGENCE With a long list of potentially hazardous issues facing any biotech deal, the importance of legal, operational and financial due diligence cannot be overstated. In fact, according to Jiang, “in comparison to other industries the biotech industry carries higher risks. In many failed transactions the company’s financial books and records may not have been accurate or even falsified, and in some other cases, the company does not hold the required licences or FDA approval,” she says. Furthermore, according to Jiang, “particularly for U.S. investors, the compliance with the Foreign Corrupt Practices Act is another major issue to deal with.” As most hospitals and other healthcare providers in China are state controlled, the government invariably becomes the biggest client of any biotech company, and this can raise serious proprietary issues. “The first question that would come to any Western investor is how the target company actually gets its business,” says Jiang, “we often discover that a local company in China may have material non-compliance issues, particularly
18
BIOTECH & SCIENCE
ASIAN LEGAL BUSINESS NOVEMBER 2012
“THE FIRST QUESTION THAT WOULD COME TO ANY WESTERN INVESTOR IS HOW THE TARGET COMPANY ACTUALLY GETS ITS BUSINESS,” SAYS JIANG, “WE OFTEN DISCOVER THAT A LOCAL COMPANY IN CHINA MAY HAVE MATERIAL NON-COMPLIANCE ISSUES, PARTICULARLY AS IT RELATES TO FCPA.” HELEN JIANG, Weil, Gotshal & Manges
as it relates to FCPA.” According to Bird, information related to a company’s market standing, approved products and approved patents are publicly accessible. However, as China has not established a database for ongoing lawsuits and government proceedings, the due diligence in this regard is largely based on the information provided by the target. Furthermore, insufficient records of R&D processes are a challenge that lawyers often face. According to Bird, proper representations and warranties should always be included in transaction documents to cover potential losses or third-party claims arising from improper information. Jiang advises that the rigorous compliance policies are critical for ensuring that both the parties are on the same page regarding a company’s future business model and therefore these policies should be discussed in detail. “Recently, a deal fell through because the Chinese company was unwilling to accept the foreign party’s strict compliance standards,” she says. “However, we do see that all compliance standards are improving.” CORPORATE STRUCTURES While setting up R&D facilities in China, multinational biotech companies always prefer fully owning them in order to rule out IP protection issues. Indeed, in March 2011, Pfizer transferred the whole of its antibacterial R&D centre from the U.S. to Shanghai. However, according to Bird, foreign biotech and pharmaceutical companies have yet to fully bring over their core R&D activities, and create upstream intellectual property in China. “This is due to the technology export control regulations and the general IP protection environment in China,” he says. That said, a partnership with a local company makes good sense when the investor requires a new manufacturing licence, says Jiang. “To acquire such a licence from FDA it takes several months,” she says. In most joint ventures the Chinese and foreign parties take on predictable roles.
“As the foreign investors are very concerned with product quality and compliance issues, especially, those relating to anti-bribery laws, they usually nominate their own candidates to head these departments,” says Bird, “while the Chinese partners control the management of sales and marketing.” Citing a recent example of a joint venture between MedImmune and WuXi AppTec for the R&D of a biopharma product, Bird says that, the Chinese partners in that deal provided local regulatory, manufacturing, and clinical trial support while foreign investors contributed the core IP with proper risk mitigation measures. Regarding corporate structures adopted by the foreign investors, Bird says that, depending on tax arrangements, foreign investors generally use an offshore vehicle or one based in Hong Kong. THE ROLE OF LAWYERS The boom in the biotech sector also presents several opportunities and challenges to the law firms, many of whom have established dedi-
cated teams to serve the industry. According to Wut, Baker & McKenzie’s pharmaceutical and healthcare practice comprises of lawyers who have a background in science and also those who have previously worked in pharmaceutical companies. “Nowadays, clients expect their lawyer to have some understanding of how the industry works, and what are the typical issues,” she says. More importantly, Liu says that, while conducting IP due diligence for the life science sector, there are several technical tasks that a law firm may undertake. For this reason, she says, lawyers with the relevant industry training and background can better help their clients to identify any underlying issues found during the due diligence exercise and to discuss them timely with the clients’ in-house teams. According to Wang, biotech lawyers must also understand compliance procedures for approval of drugs, devise, licensing requirements, foreign ownership requirements, the monopoly law, and anti-trust concerns.
REUTERS/Claro Cortes
LOOKING FOR A CHANGE?
Post your CV online and let your new life come to you
20
South Korea Country Report
It is a fascinating time for South Korea. The free trade agreements with the EU and the U.S. have taken effect – opening Korea’s doors to law firms from both regions – igniting a flurry of foreign firms applying to open an office on the peninsula. About 20 firms are seeking to tap the market, offering a sound skillset in outbound work, intellectual property, and litigation. Kanishk Verghese investigates how the dynamic in the Korean legal sphere may change, and reports on the latest market trends.
L
ocal singing sensation Psy may have grabbed the headlines with his chart-topping single “Gangnam Style” in recent times, but several other events also have hit the news in South Korea. Firstly, Korea’s free trade agreements (FTAs) with the EU and the U.S. have been enacted, opening up the legal sector to international firms. About 20 have already applied to set up shop, many of them keen to offer corporate expertise to the large Korean companies rapidly expanding abroad. A rise in litigation and antitrust matters has created ample legal work, with many growing domestic companies finding themselves on the receiving end of several lawsuits and investigations. Full integration for foreign law firms is still five years away, but the legal community is cautiously gauging how the shifting dynamics between local and foreign firms will shape the future of Korea’s legal sector. Secondly, the country’s elections in December will have a strong bearing on economic policy and resulting legal work. South Korea – Asia’s fourth-largest economy – has weathered the global financial crisis reasonably well. It has reined in unemployment and the International Monetary Fund forecasts 2.7 percent growth for
** The Japanese translation is brought to you by Win-Win Language Service **
ASIAN LEGAL BUSINESS november 2012
The Amazing Race:
Swooping into
Se
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
ul 驚異のレース： ソウルに殺到中
** The Japanese translation is brought to you by Win-Win Language Service **
South Korea Country Report
21
韓国は現在、とても興味深い時期を迎えていま す。EU（欧州連合）と米国との自由貿易協定が発効 し、両地域の法律事務所による参入の門戸が開かれ たことを受け、外資系法律事務所が韓国国内で事務 所を開設するための申請を相次いで行っています。 約20社が、海外投資、知的財産、訴訟の分野におけ る専門能力を提供し、韓国市場を開拓しようとして います。カニシュク・バルギーズが、韓国の法律市場 におけるダイナミズムの変化の方向性について調査 し、最新の市場トレンドについて報告します。
最
近、「江南スタイル」でシングルチャートの1位 をとった韓国の歌手Psy（サイ）が注目されてい ますが、韓国では他にもいくつかの出来事が話題 になっています。第一は、韓国とEUおよび米国 との自由貿易協定（FTA）が成立し、法律市場が外国法律事務所に 開放されたことです。すでに約20社が事務所開設に向けた申請を 行っており、その多くは、急速に海外展開を進める韓国の大企業に 対し、企業法務の専門性を提供したいと考えています。訴訟と独占 禁止法関連事案の増加により、多くの国内成長企業が複数の訴訟や 調査の対象となっており、たくさんの法律業務が発生しています。 外国法律事務所が韓国市場に完全に統合されるのはまだ5年先にな りますが、韓国国内の法律事務所と外国法律事務所の力関係の変化 が、将来の韓国の法律市場でどのように具体化するか、法曹界は慎 重に見極めています。第二は、12月に行われる韓国の大統領選挙が 経済政策に大きな影響をもたらし、その後の法律業務にも大きく影 響することです。 経済規模でアジア第4位の韓国は、世界金融危機を比較的うまく 乗り越えました。失業率を抑え、国際通貨基金(IMF)は同国の2012
22
South Korea Country Report
ASIAN LEGAL BUSINESS november 2012
Part of Gangnam area is seen down the Han River in Seoul. REUTERS/Lee Jae Won
2012. However, the country has not escaped unscathed, as the global economic turmoil resulted in a drop in exports and M&A activity. Nonetheless, the signing of separate FTAs with the EU and the U.S. is likely to bolster Korea’s slowing economy. The Korean and U.S. governments expect their FTA to boost bilateral trade by billions of dollars and create tens of thousands of jobs, while the Korea Institute for International Economic Policy estimates that exports to the U.S. will rise by 12 percent per year. Opening the floodgates Along with stimulating foreign direct investment in Korea, the FTAs are expected to heighten competition in industry, including the legal sector. Law firms from the U.S. and the UK have not masked their intent, with as many as 20 firms from these two countries applying to open offices in Seoul. Of these, nine have already set up: Cleary Gottlieb Steen & Hamilton, Paul Hastings, Clifford Chance, Sheppard, Mullin, Richter & Hampton, Ropes & Gray, Simpson Thacher & Bartlett, McDermott Will & Emery, Squire Sanders and Cohen & Gresser. Historically, only a handful of international firms have had a noticeable presence in South Korea. Few in the legal community therefore expected foreign firms to apply in great numbers. “I was very surprised,” says Yong Guk Lee, a partner in Cleary Gottlieb Steen & Hamilton’s recently established Seoul office. “We didn’t anticipate that the opening of the market would attract so many law firms. It is ** The Japanese translation is brought to you by Win-Win Language Service **
年の成長率を2.7%と予想しています。しかしながら、無傷で切り 抜けたわけではなく、世界経済の混乱により、輸出とM&A活動は 減少しました。とは言え、EU韓国FTAと韓米FTAの締結は、減速 する韓国経済を下支えするものと思われます。韓国および米国政 府は、韓米FTAにより二国間貿易が数十億米ドル増加し、何万もの 雇用が創出されると期待しているほか、韓国対外経済政策研究院 （KIEP）は米国向けの輸出が年12%伸びると予想しています。 水門の開放 FTAは、韓国への対内直接投資を促進することに加え、法律市 場を含む産業界の競争を高めることも期待されています。米国と英 国の法律事務所は韓国進出の意図を隠しておらず、両国から20社に ものぼる法律事務所がソウルに事務所を開設するための申請を行っ ています。このうち、クリアリー・ゴットリーブ・スティーン＆ハ ミルトン、ポールヘイスティングス、クリフォードチャンス、シェ パードムリンリヒター&ハンプトン、ロープス&グレー、コーエン& グレッサーの6社はすでに事務所を開設しました。 歴史的に、韓国では目立ったプレゼンスを持つ外国法律事務所 は一握りしかありませんでした。したがって、多数の外国法律事務 所が事務所開設の申請を行うことを、法曹界ではほとんど予想して いませんでした。クリアリー・ゴットリーブ・スティーン＆ハミル トンが最近設立した韓国事務所のパートナー、イ・ヨングック氏は 「私はとても驚きました」と言います。同氏は「私たちは市場開放 がここまで多くの法律事務所を惹きつけるとは思っていませんでし
South Korea Country Report
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
an important market, but it’s not a huge market, so the notion that 20 law firms can open an office here and expect to thrive seems a bit improbable.” The Korean Ministry of Justice estimates that about 25 firms will open in Seoul by the end of 2013. This raises the question of whether there is really enough work for so many firms on the ground in Seoul, and if some foreign firms are prepared to accept the fees that Korean companies want to pay, says Benjamin Hughes, senior foreign attorney and co-chair of the international dispute resolution group at Shin & Kim. “Korean companies are very cost-sensitive and very eager to limit their exposure. Some of these cases end up being not necessarily lucrative for a firm with a large overhead like a U.S. firm,” states Hughes. Several of the firms that have applied do not boast a large book of business in Korea, and are strategically intending to sell their litigation capability in the U.S. The firms that have been operating their Korea practice solely out of the U.S. tend to focus on areas like intellectual property, litigation and a few aspects of corporate law, says Jinduk
23
た。韓国は重要な市場ですが、巨大な市場ではありません。ですか ら20の法律事務所が韓国に事務所を開設し成功する、との見方には やや懐疑的です」と述べています。 韓国法務部の推定によれば、2013年末までに約25社がソウルに 事務所を開設する見込みです。これについて、Shin&Kimの上席外 国弁護士兼国際紛争解決グループの共同議長であるベンジャミン・ ヒューズ氏は、それだけ多くの事務所に十分な仕事量があるのか、 そして、韓国企業が支払う報酬水準を受け入れることができるの か、という疑問につながるとしています。「韓国企業は非常にコス ト意識が高く、露出を避けようとします。いくつかの事案は、米国 の法律事務所のように人件費の高い事務所にとっては、必ずしも利 益につながらないものもあるでしょう」と同氏は言います。 事務所開設の申請を行っているいくつかの事務所は、韓国に大 きな顧客基盤を持っておらず、米国での訴訟能力の高さを戦略的に 売り込もうとしています。クリアリー・ゴットリーブ・スティー ン＆ハミルトンの在香港のパートナー、ハン・ジンドック氏による と、韓国関連の業務をもっぱら米国から行ってきた法律事務所の場
The entry of international firms Law Firm
Country
Korea office head
Korea focus areas
Cleary Gottlieb Steen & Hamilton*
U.S.
Yong Guk Lee, Jay Hoon Choi
Corporate, Finance, Regulatory, Litigation, Arbitration
Clifford Chance*
UK
Brian Cassidy, Hyun Kim
Capital Markets, M&A, Banking and Finance, Project Finance, Arbitration
Cohen & Gresser*
U.S.
S.C. Sohn
M&A, PE, Capital Markets, IP, Dispute Resolution
Covington & Burling
U.S.
William Park, Daniel Spiegel
Corporate, Banking and Finance, Antitrust, IP, Litigation
DLA Piper
UK
N/A
N/A
Han & Associates
U.S.
N/A
N/A
H.C. Park & Associates
U.S.
N/A
N/A
Herbert Smith Freehills
UK
Tony Dymond
N/A
K&L Gates
U.S.
N/A
N/A
McDermott Will & Emery*
U.S.
In-Young Lee
M&A, Finance, Antitrust, Restructuring, International Trade, IP, Litigation
McKenna Long & Aldridge
U.S.
Andrew Park
N/A
O’Melveny & Myers
U.S.
Sungyong Kang, Jinwon Park
Corporate M&A, Antitrust, International Trade, Litigation
Paul Hastings*
U.S.
Jong Han Kim, Daniel Kim
PE, M&A, Project Finance, Capital Markets, Litigation
Ropes & Gray*
U.S.
William Yongkyun Kim
Corporate, IP, Business Litigation, Arbitration
Sheppard, Mullin, Richter & Hampton*
U.S.
Seth Byoung Soo Kim
Corporate, Finance, Antitrust, IP, Entertainment
Simpson Thacher & Bartlett*
U.S.
Youngjin Sohn
M&A, Capital Markets, PE, Antitrust, IP, Litigation
Squire Sanders
U.S.
Joon Yong Kim
N/A
*The firm has received approval, and has opened an office in Seoul.
** The Japanese translation is brought to you by Win-Win Language Service **
24
South Korea Country Report
Han, a partner at Cleary Gottlieb Steen & Hamilton who is currently based in Hong Kong. Intellectual property, outbound M&A, and international arbitration will be the most coveted areas sought by foreign firms, says Sai Ree Yun, managing partner at Yulchon. “I predict half of them may leave the country in the next five years or so, and an equal number of law firms may decide to come to Korea. This has happened in countries like Japan and Singapore in the past,” Yun adds. Certainly, the influx of new legal market entrants will enrich the opportunity and choice for new and existing Korean clients. While the larger Korean conglomerates have enjoyed long-standing relationships with their domestic and international counsel, the smaller enterprises may face a tough task in deciding which law firms to retain. “For people who don’t currently have international lawyers, or want to do something overseas and are looking to hire a foreign law firm for the first time, I am a little concerned because you have firms claiming
ASIAN LEGAL BUSINESS november 2012
合、知的財産、訴訟、および会社法のいくつかの側面といった分野 に注力する傾向があります。 ユルチョンのマネージング・パートナー、ユン・セリ氏は、外 国法律事務所が最も期待している分野は知的財産、外国企業に対す るM&A、および国際仲裁だと言います。「私は今後5年程の間に、 半数の事務所は韓国を去り、同じ数の事務所が韓国への進出を決め るのではないかと思います。日本やシンガポールでも過去に同じこ とが起きました」とユン氏は言います。 確かに、法律市場への新規参入は、新規または既存の韓国顧客 にとって、選択の機会と幅の充実につながると思われます。韓国 の大手コングロマリットは、国内の弁護士および国際弁護士と長年 にわたる関係を築いてきている一方、中小企業は、どの法律事務所 を採用するべきか、難しい決定をしなくてはならないかもしれませ ん。「現在、国際弁護士を採用していない、あるいは、海外で何か をするために外国法律事務所を初めて利用しようとしている人のこ とを私は少し心配しています。なぜなら、何から何まで全てできま
“For people who don’t currently have international lawyers, or want to do something overseas and are looking to hire a foreign law firm for the first time, I am a little concerned because you have firms claiming that they can do everything from A to Z. It’s not going to be easy for a brand new Korean corporate client to necessarily be able to make a distinction among the law firms.” Yong Guk Lee, Cleary Gottlieb Steen & Hamilton
that they can do everything from A to Z,” says Lee of Cleary Gottlieb. “It’s not going to be easy for a brand new Korean corporate client to necessarily be able to make a distinction among the law firms.” At the same time, Lee acknowledges that many Korean companies are becoming quite sophisticated, possessing strong in-house capabilities. The key to success for the incoming firms will be whether their lawyers have established relationships on the ground, and can build on those connections. Although the EU signed its FTA with Korea before the U.S., the UK firms were not able to take advantage of the head start in getting into the Korean market. “The UK firms had very few Korean speakers that they could slot into that position as managing partner,” says Hughes, adding that most of the bilingual lawyers are U.S.-qualified and not UK or European-qualified. As a result, only three of the firms that have expressed interest in opening up in Korea are from the UK. The UK firms may increase their activity down the road, however, once foreign firms are allowed to hire Korean attorneys. Under the agreements, the liberalisation of the legal sector will occur in three stages – the first phase has already happened; in two years’ time, international firms can set up joint ventures with Korean counterparts, and will be allowed to practise Korean law and hire local attorneys after five years. One thing is certain: the future looks bright for Korean lawyers, as they will be highly sought after by both domestic and international firms. Many attorneys at Korean firms will be looking at opportunities that may develop for them down the road, says Hughes.
** The Japanese translation is brought to you by Win-Win Language Service **
すと言って売り込みをする事務所があるからです」とクリアリー・ ゴットリーブのイ氏は言います。イ氏によれば「新しく法律事務所 の顧客となる韓国の企業にとって、法律事務所の違いを見分けるこ とは簡単ではありません。」また、同氏は、多くの韓国企業が優れ たインハウスの法務機能を持つようになり、高度化が進んでいると 指摘しています。 韓国に進出する法律事務所の成功の鍵は、所属する弁護士が現 地ですでに顧客との関係を築いているかどうか、さらにその関係を 活かせるかどうかにあります。英国は、米国に先駆けて韓国とFTA を締結しましたが、韓国市場への参入が可能と考えた英国の法律事 務所はわずかでした。「英国の法律事務所には、マネージング・ パートナーのポジションに送り込むことのできる人材がほとんどい ません」とヒューズ氏は言い、さらに、ほとんどのバイリンガルの 弁護士は米国の有資格者で米国の事務所に所属しているとしていま す。結果的に、韓国での事務所開設に関心を示した英国の法律事務 所は3社にとどまりました。 この先、外国法律事務所による韓国人弁護士の雇用が認められ るようになれば、英国の事務所も活動を増やすかもしれません。自 由貿易協定のもとで、法律市場の自由化は3段階で進められます。 第1段階はすでに始まっており、2年以内に外国法律事務所による韓 国法律事務所との合弁事業の設立が認められ、5年後には韓国国内 の弁護士を雇用し、韓国法の業務を行うことができるようになりま す。確かなことが一つあります。それは、韓国国内の弁護士にとっ ては、国内と海外の事務所から必要とされることとなり、将来の展 望は明るいということです。ヒューズ氏は、韓国の事務所に所属す る多くの弁護士が今後のチャンスに注目していくことになるでしょ うと述べています。
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
SPONSORED PROFILE
25
Yoon & Yang LLC
A Patent War: Secondary Battery Separators
Wonil Kim, Partner, IP Practice Group, Seoul Office, Yoon & Yang LLC
Secondary Batteries and Separators At the center of the recent dispute on the secondary battery patent are the patent and technology involving the ceramic coated separators and the lithiumion secondary batteries containing such ceramic coated separators. A secondary battery means a rechargeable battery that can be used repeatedly by recharging it after discharge. It primarily consists of an anode, a cathode, electrolytes and a separator, among which a separator is a crucial component that directly affects the performance and safety of secondary batteries, since it keeps the anode and cathode apart from each other preventing short circuits but operates as the passage of ions. There are two types of separators, which are the conventional general separators and the ceramic coated separators. The general separators are vulnerable to heat. If the internal temperature of a secondary battery rises, a general separator may easily be contracted or deformed, posing a risk to the safety of the secondary battery. In search for a solution, separator manufacturers have been researching and developing separators coated with inorganic polymer, which would enhance heat resistance.
Yoon & Yang LLC Seoul A: 19th 22nd 23rd 34th Fl., ASEM Tower, 159 Samsung-Dong, Gangnam-Gu, Seoul, Korea 135-798 T: +82-2-6003-7000 F: +82-2-6003-7800 E: yoonyang@yoonyang.com W: www.yoonyang.com Tokyo A: 9F 904, Toranomonhousou Bldg, 1-20-3 Nishi-Shinbashi, Minato-ku, Tokyo 105-0003, Japan T: +81-3-5501-2550 F: +81-3-5501-2080 E: idpark@yoonyang.com Tashkent A: Republic of Uzbekistan, 100084, Tashkent, Amir Timur Street, 107-B T: +998-71-238-9032 F: +998-71-238-9031 E: hck@yoonyang.com
Markets for General Separators and Ceramic Coated Separators Among competitors in the global market for general separators for secondary batteries, Japanese companies, including Asahi Kasei and Toray Tonen, collectively own about 50% of the market share, followed by Celgard of the U.S. and SK Innovation of Korea. However, since Celgard uses a different manufacturing process referred to as the dry process while the other three companies use the wet process, the direct competitors in the market for general separators using wet process are Japanese companies and SK Innovation. In the market for ceramic coated separators, the main players are SK Innovation and LG Chem of Korea and Asahi Kasei of Japan, which altogether supply most of the ceramic coated separators in the world. The ceramic coated separators market has lately drawn attention with the development of the market for mid to large sized secondary batteries used in electric cars which require higher heat resistance than small sized secondary batteries. Although the global ceramic coated separator market is still in its early stage of development, the size of production is expected to grow since it is likely that the major companies producing mid to large size batteries will use ceramic coated separators. At present, the market for secondary batteries for electric cars is known to be led by Automotive Energy
Supply Corporation (joint venture of Nissan and NEC), followed by Primearth EV Energy (joint venture of Toyota) and GS Yuasa of Japan, and LG Chem, SB LiMotive (joint venture of Samsung and Bosch) and SK Innovation of Korea. Since automobile manufacturers introduced and implemented their second phase plan of electric car development in 2012, the competition among the producers of secondary batteries for electric cars is becoming ever fierce. Yoon & Yang on SK Innovation’s Patent Invalidation Action On August 9, 2012, the Patent Tribunal of Korea rendered its decision to invalidate LG Chem’s patent on secondary battery separator titled “Organic/ Inorganic Composite Porous Film and Electrochemical Device Prepared Thereby” (hereinafter the “Subject Patent”) in an invalidation action filed by SK Innovation against LG Chem. The history of patent disputes between SK Innovation and LG Chem on secondary battery separators started with the patent infringement action filed by LG Chem against SK Innovation in December 2011. SK Innovation responded with an invalidation action against LG Chem on the Subject Patent in December 2011. In the invalidation action, the Patent Tribunal found that the Subject Patent’s scope of claim regarding the pore structure of the active layer coated on the separator, which constitutes the core technology of the Subject Patent, is partially comprised of the pore structure of the separator of prior art. Adding that the Subject Patent does not appear to have novelty since certain improvements in performance and safety of batteries claimed on the Subject Patent are not different from the prior art, the Patent Tribunal invalidated the Subject Patent due to lack of novelty based on the existence of prior art. This decision is noteworthy since the Patent Tribunal precedents for patent invalidation actions generally cite the lack of non-obviousness as the primary grounds for invalidating a patent and rarely cite lack of novelty. The Patent Court’s ruling also carries a great significance since it is a result of a fierce battle between companies striving for global leader’s position in the market for secondary batteries for automobiles, which is expected to grow rapidly. The technological competition in the separator market will become even more intense as a consequence of the invalidation of the Subject Patent. Yoon & Yang previously has also contributed to the competitiveness of the Korean separator technology in the world by leading SK Energy’s successful defense in the general separator patent infringement action filed by Tonen of Japan.
26
South Korea Country Report
ASIAN LEGAL BUSINESS november 2012
REUTERS/Lee Jae Won
Careful consolidation It is not just individuals that are sizing up their future prospects. Some small and mid-sized firms already have begun to weigh the possibility of merging with domestic or international counterparts. “There are a lot of smaller firms now – a lot more than there used to be – and in fact there has been some consolidation already over the past several years,” says Lee, who adds that some foreign firms might consider absorbing an entire practice or law firm once it becomes possible to practice Korean law. “However, that is not something we would do. Traditionally, we’ve never acquired whole practices, and we’ve never merged with other law firms. We’ve hired lateral partners very selectively, and in Korea I don’t think we will follow a different strategy,” asserts Lee. For his part, Yulchon’s Yun believes that consolidation is an unlikely outcome. “Consolidation between top-tier domestic firms will result in a lot of conflict, which reduces the slice of market share for both,” he says. “The sum of the two may be less than the mere addition of the two.” “In the future, discussions could take place. But I believe, at least in the medium-term, no major Korean firms will consider that possibility,” agrees Jae Hoon Kim, a partner at Lee & Ko. The boutique era? Besides market consolidation, a developing legal market could open the doors for boutique firms. Dominated by a handful of local firms, the South Korean legal environment does not seem hospitable for ** The Japanese translation is brought to you by Win-Win Language Service **
合併には慎重 将来の見通しを品定めしているのは弁護士個人だけではありま せん。いくつかの中小の法律事務所は、国内または外国法律事務所 との合併の可能性について、すでに検討を始めています。 「今は、かつてに比べ、中小の法律事務所の数もかなり多く、 過去数年間を見ても、すでにいくつかの整理統合の動きがありまし た」とイ氏は言い、さらに、外国法律事務所のいくつかは韓国法の 業務が可能になり次第、業務全体または法律事務所全体を引き受け ることを検討するかもしれないと述べています。「しかしながら、 私たちの事務所はそうしたことをするつもりはありません。これ まで、私たちは業務全体を取得したことも、他の法律事務所と合併 したこともありません。私たちは同等のパートナーを注意深く見極 めながら採用してきましたし、韓国で違う戦略をとるとは思いませ ん」とイ氏は断言しています。 一方、ユルチョンのユン氏は、統合は起こりづらいとしていま す。ユン氏は「トップランクの韓国法律事務所間の統合は多くの対 立をもたらし、双方にとって、市場シェアの一部を減らすことにな るでしょう。2社の合計は、単に2社をたすよりも小さくなる可能性 があります」と述べています。 「将来的にはそうした議論につながることはあるでしょう。し かしながら、少なくとも中期的には、統合の可能性を検討する大手 の韓国法律事務所はないと思います」と法務法人廣場（Lee&Ko） のパートナー、キム・ジェフン氏も述べています。 ブティック型の時代？ 市場統合に加え、法律市場の発展は、ブティック型の事務所に
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
SPONSORED PROFILE
27
SHIN & KIM
Recent Changes to the Commercial Code Provisions on Exchangeable Bonds
S
Byoung Seon Choe, Partner, SHIN & KIM
ince its enactment in 1962, the Commercial Code has been amended some 20 times. The latest amendment, however, is the first to contain amendments to the “Bonds” Section. These amendments took effect in April, 2012, and include new provisions for the delegation of bond issuance related matters to a company’s representative director and matters relating to bond management companies. Bond classes have also been diversified to include participating bonds, redeemable bonds, derivativeslinked bonds and exchangeable bonds. The exchangeable bond class was actually first introduced in the “Act on Development of the Capital Market” in 1987 – a concept taken from abroad. Exchangeable bonds continued to be regulated under the subsequent Securities and Exchange Act of 1997 and the Financial Investment Services and Capital Market Act of 2007. But since the above statutes’ provisions on exchangeable bonds governed exchangeable bonds issued by listed companies only, it was the generally accepted view that exchangeable bonds can only be issued by listed companies with respect to listed securities; this drew some criticism. By including new exchangeable bond provisions in the latest amendment to the Commercial Code, the intent of legislators is to expressly permit the issuance of exchangeable bonds by non-listed companies with respect to non-listed securities. The Commercial Code defines an exchangeable bond as “a bond that can be exchanged for an equity security or any other security” and includes detailed rules on exchangeable bonds in its Enforcement Decree. According to such Enforcement Decree (announced in accordance with the implementation of the amended Commercial Code this year), a company’s board of directors shall decide the major terms and conditions of the exchangeable bonds, and a company that issues exchangeable bonds shall deposit the securities to be exchanged for such bonds in the Korea Securities Depository.
Shin & Kim A: 8th Floor, State Tower Namsan, 100 Toegye-ro, Jung-gu, Seoul 100-052, Korea T: +82-2-316-4298 F: +82-2-756-6226 E: bschoe@shinkim.com W: www.shinkim.com
The Enforcement Decree also states that where a company issues bonds that can be exchanged for its treasury stock to persons other than its shareholders, the board of directors may decide the party to which the bonds will be issued unless otherwise specified in the company’s articles of incorporation. In this regard, the generally accepted view is that a board can make all decisions regarding an issuance
of exchangeable bonds that are not exchangeable for treasury stock, on the basis that it would not have significant influence on the governance structure of the issuing company. But, exchangeable bonds that are exchangeable for treasury stock could influence the governance structure of a company, depending on the exchange conditions and the exchange amount. Accordingly, the new amendments permitting a board of directors to determine the terms and conditions of exchangeable bonds that are exchangeable for treasury stock have drawn criticism from some scholars that the effects of an issuance of such exchangeable bonds would in fact be substantially the same as an issuance of new shares. These scholars argue that the new amendment to the Commercial Code has the effect of regulating issuances of exchangeable bonds that are exchangeable for treasury stock at the same level as new share issuances. In short, the aim was to regulate issuances of exchangeable bonds for treasury stock by requiring that a company’s articles of incorporation permit such issuances or provide for a special resolution of the general meeting of the company’s shareholders on such issuances. But due to differences of opinion among legislators composing the Enforcement Decree, the requirement for a decision by the general meeting of shareholders was replaced by a requirement for a decision at the board of director level only. In other countries, there are cases in which issuances of exchangeable bonds for treasury stock are regulated at the same level as issuances of new shares, and the exchangeable bonds are referred to as convertible bonds to distinguish them from other exchangeable bonds. Some scholars theorize that the same level of duty of care required for issuing new shares should be imposed on directors deciding issuances of exchangeable bonds for treasury stock. But there are also objections to such argument, as there is no such explicit rule. There was a total of 12 issuances of exchangeable bonds in 2011, and 3 occurred before October, 2012. But none of the issuances were conducted by a non-listed company on non-listed securities. It is hoped that the latest amendment to the Commercial Code will benefit and develop Korea’s capital market and improve the financials of non-listed companies.
28
South Korea Country Report
boutique law firms. But there may be breathing space for them now. “This is what happens in developed markets, and it’s happening already,” says Shin & Kim’s Hughes. “There are some good IP boutiques, and there is a very good maritime boutique. There are not that many, but I think the number will increase because this is a function of the diversification of the Korean legal market, which is happening anyway.” Indeed, boutique firms with a specialisation could be a lucrative option for larger law firms looking to procure practice-specific expertise. Acquiring a boutique arm may be a viable and less conflicted proposition for international firms that are looking to enter the market after five years. “I think you will see a proliferation of boutique firms leading up to the five-year mark – when they can hire local attorneys – and then you will probably see a drop in the number as they merge into the foreign firms,” predicts Hughes. “I don’t think you can discount the possibility of boutique firms
ASIAN LEGAL BUSINESS november 2012
とってチャンスが広がる可能性があります。韓国の法律市場は、国 内の一握りの事務所が支配しており、ブティック型の事務所にと って良好な環境とは言えませんでした。しかしながら、今は一息つ ける余地があるかもしれません。「これは先進国で起きることです が、韓国でもすでに起こり始めています」とShin&Kimのヒューズ 氏は言います。同氏は「知的財産を専門とするいくつかのブティッ クがあるほか、非常に優秀な海事専門のブティックもあります。ま だそれほど多くありませんが、すでに起こり始めている韓国の法律 市場の多様化に伴う動きであり、今後、ブティック型の数は増えて いくと思います」と述べています。 実際、専門分野を持つ小規模なブティック型の法律事務所は、 特定の業務の専門性を得ようとする大手事務所にとって、魅力的な 選択肢となる可能性があります。5年後の市場参入を狙う外国法律 事務所にとって、ブティック型の事務所の取得は、対立をもたらす ことの少ない有望な判断となるかもしれません。「韓国国内の弁 護士を雇用できるように なるまでの今後5年間に かけては、ブティック型 の法律事務所が増えるで しょうが、その後は外国 法律事務所との合併が進 み、ブティック型の数は 減少するでしょう」とヒ ューズ氏は予想していま す。 また、ハン氏は「外国 法律事務所との合併が可 能になった時に、ブティ ック型の事務所がそれぞ れの得意とするニッチな分野を切り出して、外国法律事務所との合 併を試みる可能性を無視してよいとは思いません。ただし、今の時 点ではまだ思惑にすぎないと思います」と述べています。 とは言え、法曹界全体が賛同しているわけではありません。「 小さいブティック型の事務所が生き残るための十分な余裕はありま せん。少ない可能性を排除することはできませんが、この市場環境 で小さい事務所が生き残るのは容易ではありません」とキム氏は言 います。 「韓国にはいくつかのブティック型の事務所がありますが、い ずれも苦労しています。特に、外国法律事務所が進出してくるとな れば、あまり期待できないでしょう。ブティック型による仕事の機 会は以前よりもさらに限られてきています」とユン氏は述べます。 法律事務所、中でもブティック型の事務所にとって、競争は激 しくなるとしても、仕事が不足することはなさそうです。市場シ ェアの伸びと世界進出への野心の高まりにつれて、複雑な法律問 題に巻き込まれることが増えた結果、韓国の大手企業は、過去数 年間に法務関連の報酬支払いを急激に増やしています。これによ り、M&A、訴訟、および独占禁止法関連の業務に対する安定的なニ ーズが発生しています。
“I don’t think you can discount the possibility of boutique firms trying to carve out their own niche, and perhaps looking to merge with an international firm when that becomes possible. But I think it is speculative at this point.” Jinduk Han, Cleary Gottlieb Steen & Hamilton
trying to carve out their own niche, and perhaps looking to merge with an international firm when that becomes possible. But I think it is speculative at this point,” notes Han. Still, there is some debate amongst lawyers on whether boutique firms will find a foothold in the crowded legal market. “There are some boutique firms in Korea, and they are suffering. It is not very likely, particularly if foreign firms are coming in. Their room for opportunity is more limited than before,” adds Yun. While there may be greater competition for firms, and especially for boutiques, there is no shortage of work. Large Korean companies have rapidly increased their spending on legal fees over the past several years, as their growing market share and global ambitions have embroiled them in complex legal issues. This has created a steady stream of demand for work involving M&A, litigation and antitrust matters. Wars of attrition As Korean companies continue to raise their global profile, competition has never been fiercer. In today’s market, time is of the essence as companies worldwide churn out new ideas and technologies at breakneck speed. The scramble to innovate has added to corporate IP portfolios, and there has been little hesitation to spend big money on legal fees to protect their interests. “To survive in a tough business environment, patent owners are filing patent litigations against competitors to dominate their market,” says Lee & Ko’s Kim. In the past, important patent disputes were not litigated in Korea because new technology developers did not file in the country, and therefore possessed a relatively weak portfolio. But things have changed. Many U.S. companies now have a strong portfolio in the region – as well as considerable power – and are choosing to litigate ** The Japanese translation is brought to you by Win-Win Language Service **
消耗戦 韓国企業の世界での存在感は高まる一方ですが、これまでの道 のりは順風満帆ではありませんでした。現代においては、時間は最 も大切です。世界中の企業が新しいアイデアと技術を猛烈なスピー ドで量産しており、知的財産ポートフォリオに追加した上で多額の 法務費用を費やして権利の保護に努めています。「厳しい事業環境 で生き残るために、特許権者は競合相手に対し特許訴訟を起こし、 市場を支配しようとしています」とLee&Koのキム氏は言います。 以前は、新技術の開発者が韓国国内で特許出願を行うことはな
Korea’s Premier Law Firm Driving excellence to help clients succeed
Korea Deal of the Year Korea Deal Firm of the Year The Macallan ALB Hong Kong Law Awards 2012
www.kimchang.com
30
South Korea Country Report
in Korea. According to the Korean Intellectual Property Protection Association, the number of international patent lawsuits involving Korean firms has increased by over 80 percent from 154 in 2009 to 278 last year, reports The Korea Times. Many of Korea’s prominent standard-bearers – such as Samsung and LG – are now battling with multinationals on home soil. Most notably, arch rivals Apple and Samsung are locked in patent disputes in 10 countries, as they vie for market dominance in the thriving mobile industry. In one of the most recent high-profile battles in the U.S., Apple emerged victorious after the jury found that its Korean competitor had copied key features of the iPhone. Apple was awarded $1.05 billion in damages – a hefty blow to Samsung. However, the pendulum has recently swung in Samsung’s favour. In October, Britain’s Court of Appeal upheld the country’s High Court judgment that, despite some similarities, Samsung’s Galaxy tablet did not infringe Apple’s designs, in part because its products were “not as cool,” Reuters reported. The decision is valid throughout Europe and should bar further legal disputes between the two companies over the design of tablets in the region. Apple was dealt another setback in the U.S. after an appeals court overturned a pre-trial sales ban against Samsung’s Galaxy Nexus smartphone. While companies have been increasingly litigious in their utilisation of their IP portfolios, the global economic downturn has taken its toll on the number of patent and trademark filings in Korea. Kim highlights that Japan and Europe’s sluggish economies have led to a reduction in the number of Korean filings from abroad. “In the near future, I think filings will decrease or maintain its level, but litigation will increase,” he says. With the Korea-U.S. FTA taking effect in March 2012, a number of changes have been made to Korea’s intellectual property legislation. Amendments to the Korean Trademark Act include the introduction of non-visual – sound and smell – marks, changes to statutory damages in trademark infringement actions, and increased scrutiny of an applicant’s intent to genuinely use its registered trademark. Staying afloat Korea has weathered the global economic storm considerably well. While inbound M&A work has slowed greatly, substantial cross-border outbound activity is a sign of the current strength of Korea’s corporations. “An increase in outbound M&A is visible, but that trend might change if the Korean companies are affected more by the downturn of the world economy, and feel less secure about the future of the economy. At the end of the day, you have to have some bright spots of business in the country in which you are investing,” says Yun. As it stands, the economic prospect is not improving, and many ** The Japanese translation is brought to you by Win-Win Language Service **
ASIAN LEGAL BUSINESS november 2012
く、比較的脆弱なポートフォリオしか持たなかったことから、重要 な特許訴訟が韓国で起こされることはありませんでした。しかし ながら、状況は変わりました。多くの米国企業が韓国国内で強固な 特許ポートフォリオを構築し、大きな力を持ったことから、韓国で 訴訟を起こすようになってきました。韓国知識財産保護協会による と、韓国企業が関わった国際特許訴訟の数は2009年の154件から昨 年は278件となり、80%以上増加したとコリア・タイムス誌は報じ ています。 現在、サムスンやLGといった韓国の著名企業の多くは、国内で 多国籍企業と争っています。最も顕著なものでは、最大のライバル 同士であるアップルとサムスン電子が、盛況な携帯市場の支配をめ ぐり、10か国で特許紛争で対立しています。最近最も注目された米 国での訴訟では、陪審団がiPhone（アイフォーン）の主な特徴を サムスンが模倣したと判断し、アップルが勝利しました。アップル に対する10億5,000万米ドルの損害が認められ、サムスンには大き な打撃となりました。ただし、最近はサムスンに有利な方向に振れ
つつあります。10月に、英国の裁判所の判断により、サムスンがタ ブレット型端末の登録意匠を模倣したとするアップルの訴えは退け られました。ロイターの報道によれば、英国控訴院は、いくつかの 類似点はあるが、サムスンの商品は「アップルほど洗練されていな い」ため、サムスンのギャラクシー・タブレットはアップルのデザ インを侵害していない、とする同国の高等法院の判断を支持しまし た。この決定は欧州全域で有効なため、今後、欧州地域でのタブレ ット型端末の登録デザインをめぐる2社の法的紛争は避けられるで しょう。 米国においても、高等裁判所がサムスンのスマートフォン、ギ ャラクシー・ネクサスの販売差し止めの仮処分を破棄したことで、 アップルはさらなる後退を強いられました。 知的財産ポートフォリオの活用にあたり、企業はますます訴訟
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
South Korea Country Report
31
Friend and foe; Samsung, Apple won’t want to damage parts deal By Miyoung Kim, REUTERS
W
hile Samsung Electronics is reeling from a patent pounding by its smartphone rival Apple Inc, this is unlikely to damage the other part of their relationship - where Samsung is the sole supplier of Apple-designed chips that power the iPhone and iPad. At an emergency meeting in Seoul early in August following the damning U.S. legal defeat, the South Korean group’s post mortem was led by vice chairman Choi Gee-sung and the head of the mobile business JK Shin, rather than by CEO Kwon Oh-hyun, whose primary role is in charge of the components business. The clear message from Samsung is that a strict internal firewall between its handset business and its components operations remains intact. While Samsung plans to appeal the U.S. verdict, and a damages bill for $1.05 billion for copying critical features of Apple’s popular mobile devices - a sum that could be trebled - Samsung will not want to put at risk its Apple supply contract which is worth billions of dollars. As well as being the only supplier of micro processors for the iPhone and iPad, Samsung also supplies DRAM and NANDtype memory chips and flat screens used in the popular Apple gadgets. Samsung products comprise 26 percent of the component cost of the iPhone, Samsung’s lead counsel Charles Verhoeven was quoted as saying in the media. Samsung’s component sales could hit $13 billion next year and bring in $2.2 billion in operating profit, according to a recent estimate by Morgan Stanley. That’s nearly 8 percent of estimated group operating profit for next year. TOO IMPORTANT Experts and analysts said the symbiotic business relationship between Samsung and Apple is too important for either to put at risk. “Apple needs Samsung to make the iPhone and iPad. Period. Samsung is the sole supplier of Apple’s processing chips and without Samsung, they can’t make these products,” said James Song, an analyst at KDB Daewoo Securities in Seoul. “Samsung
might be considering lots of options to leverage its components business’ importance and pressure Apple, and Apple could be also well aware of this.” With that in mind, Samsung had sought to resolve the patent dispute with Apple which Apple first brought up shortly after Samsung launched its first Galaxy model in 2010 - through negotiation rather than in the courtroom. “We initially proposed to negotiate with Apple instead of going to court, as they had been one of our most important customers,” Samsung said in an internal memo sent to employees and released to the media in August. “However, Apple pressed on with a lawsuit, and we have had little choice but to counter sue.” While Samsung has been found to have copied innovative features of the iPhone and iPad, the Korean group’s lawyers have emphasised that its own innovative components and wireless technology patents, which the U.S. jury ruled that Apple did not violate, made Apple’s products a reality. “Apple isn’t that stupid (to risk its Samsung parts deal). Apple’s agreements with Samsung will ensure that Samsung has no choice but to comply and supply,” Florian Mueller, an intellectual property consultant, posted on his blog. “Also, Samsung’s other customers would lose faith if it turned out unreliable. And since Apple threatened Samsung with litigation two years ago, it’s had plenty of time to identify alternatives.” SHARP SELL-OFF Samsung itself shrugged off market concerns that its component contracts were at risk due to the litigation. “(The) supply contract remains a separate issue from the litigation and there’ll be no change to it going forward,” said an executive who took part in the August meeting, which was not attended by Jay Y. Lee, chief operating officer and heir apparent to Samsung Chairman Lee Kun-hee, according to the executive. Kwon was promoted to CEO in June, with J.K. Shin and B.K. Yoon leading the tele-
communications and consumer electronics divisions respectively so as to avoid potential conflicts of interest, as Samsung supplies parts to its main rivals such as Apple, Nokia, HTC Corp, and Sony Corp. As demand for mobile gadgets has soared, Samsung announced just last week a $4 billion investment to boost output at its U.S. chip plant, where it makes chips for the iPhone and iPad. That comes on top of $2 billion of spending Samsung unveiled two months ago to build a new chip plant and the conversion of existing chip lines to make logic chips to power mobile gadgets. SUPPLY CHAIN Apple has been looking to spread its supply chain to reduce its reliance on Samsung. The U.S. firm frequently faces a supply crunch when a new product is launched, triggering a consumer stampede that drives demand far in excess of supply and production capability. Earlier this year, a source told Reuters that Japan’s Elpida Memory Inc was selling more than half of its mobile DRAM chips to Apple. Samsung mainly competes with Toshiba Corp and Korean rival SK Hynix in supplying memory chips for Apple, and LG Display in flat-screen panels. Samsung has around 70 percent global market share in mobile DRAMs, but Apple sources only 40 percent of its mobile DRAM chip requirement from Samsung, a boon to the likes of Elpida and SK Hynix, analysts say. “For its part, Samsung is also diversifying its customer base to reduce its reliance to Apple - adding new ones like Qualcomm, and that’ll prove to be a good strategy longer term as Apple component margins are generally low due to its huge bargaining power,” said Daewoo’s Song. “Other suppliers may benefit from a worsening Apple/Samsung relationship in the short term, but in terms of margins, I’m doubtful they can make good money from any Apple cookie crumbs that Samsung throws away.”
32
South Korea Country Report
ASIAN LEGAL BUSINESS november 2012
“There could be a significant change in economic policy, and a significant amount of legal work following to either defend or support the policy. For example, the competition law may be more forcefully enforced against many big companies.” Sai Ree Yun, Yulchon
Asia-Pacific *announced M&A first half 2012 Most targeted nations - Top 10 Value $ billion
Year to date percent change China Australia S. Korea India Indonesia Hong Kong Malaysia Singapore Taiwan Philippines
0
10
20
30
40
50
60
70
80
-60 -50 -40 -30 -20 -10 0
10 20 30 40
Note: * ex Japan, breakdown based on target Asia-Pacific M&A volume Source: Reuters reuters graphic/Catherine Trevethan 21/06/12
practitioners do not expect any marked increase in the number of deals for the year ahead. Some lawyers note that there could be more work to be found in fields involving distressed assets, or dispute-related work related to defaulting contracts and projects. In an effort to encourage market growth, the Financial Services Commission submitted an amendment to the Financial Investment Services and Capital Markets Act to the National Assembly in June. The amendment includes the lowering of the equity capital requirement for securities and investment advisory firms, the consent for prime brokers to offer their services to a wider range of qualified institutional buyers, and reforms to the trust regulatory system. Spotlight on antitrust A lot of legal work has resulted from the push by the Korean Fair Trade Commission (FTC), the country’s antitrust watchdog, to tackle abuse of market-dominant positions by large conglomerates. Small ** The Japanese translation is brought to you by Win-Win Language Service **
を用いるようになっていますが、世界景気の減速は、韓国での特許 および商標の出願数に影響を与え始めています。キム氏によれば、 日本と欧州の景気低迷により、海外からの韓国での出願は減少して います。「近い将来、出願数は減るか、または現状維持となるでし ょうが、訴訟は増えると思います」と同氏は言います。 2012年3月の韓米FTAの発効にともない、韓国の知的財産に関す る法律にいくつかの変更がありました。韓国商標法の改正により、 音と匂いによる非視覚的な標章が商標に含まれることになったほ か、商標権侵害に対する法定損害賠償に関する変更され、登録商標 に対する申請者の純粋な利用意思に関する精査が強化されました。 持ち堪えるために 韓国は、世界経済の混乱を比較的うまく乗り切りました。国内 企業に対するM&A活動は大幅に減りましたが、相当数の外国企業に 対するクロスボーダーのM&Aが行われていることが、韓国企業の今 の強さを表しています。「外国企業に対するM&Aの増加は顕著で
South Korea Country Report
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
33
The Songdo International Business District in Incheon, west of Seoul, is seen in this aerial photo. REUTERS/Lee Jae Won
and medium enterprises (SMEs) are suffering as the large Korean companies gobble up a growing slice of the pie. Over the past several years, the FTC has aimed to foster the growth of SMEs by implementing new policies restricting large companies, and have ramped up investigations and sanctions on companies deemed to be abusing their dominant position. The regulator has also stepped up the monitoring of multinational corporations that are suspected of abusing their patents in Korea. The FTC reports a growing number of cases where MNCs abuse their intellectual property rights. In another feud between the two technology giants, the FTC is investigating complaints filed by Apple that Samsung Electronics is unfairly competing in the market by abusing its dominant position in wireless technology patents, the FTC said to Reuters. “For the past five years, the Korean Fair Trade Commission has acted to increase the free competition via cartel investigation or to ** The Japanese translation is brought to you by Win-Win Language Service **
すが、今後、韓国企業が景気の影響をさらに受け、将来の経済の見 通しへの自信が低下した場合には、その傾向は変わるかもしれませ ん。結局のところ、投資を行う国について、何らかの明るい材料が なくてはならないからです」とユン氏は言います。 現状、経済の見通しは改善しておらず、多くの実務家は、この 先1年間にM&Aのディール数が大きく増えるとは予想していませ ん。何人かの弁護士は、ディストレスト資産や、契約またはプロジ ェクトの債務不履行に関連した分野の業務が増える可能性があると 指摘しています。 6月、市場の成長を促すために、金融サービス委員会（FSC） は、金融投資サービスおよび資本市場法の改正案を国会に提出しま した。改正案には、証券会社と投資顧問会社に対する自己資本必要 額の引き下げ、プライム・ブローカーによる適格機関投資家に対す る幅広いサービス提供の承認、信託規制制度の改革が含まれていま す。
34
South Korea Country Report
direct large conglomerates to share and cooperate with the SMEs. That kind of direction could be maintained through the FTC under the coming new government,” says Kim. A new leader What lies ahead for the legal sector, now that a change of government is around the corner? December will mark the end of incumbent President Lee Myung-bak’s term and usher in a new leader. Like with any government election, the outcome will have an impact on the market and direct the nation’s course for the next few years. “There could be a significant change in economic policy, and a significant amount of legal work following to either defend or support the policy.
ASIAN LEGAL BUSINESS november 2012
独占禁止法に対する注目の高まり 韓国の独占禁止法の監視機関である韓国公正取引委員会 （FTC）が、大手コングロマリットによる市場での支配的地位の乱 用に対する監視を強めていることから、大量の法律業務が発生して います。韓国の大手企業が、成長するパイの取り分を奪い尽くそう としているのに対し、中小企業（SME）は危機感を強めています。 過去数年間、FTCは、大手企業の活動を制限する新しい政策を導入 し、支配的地位を乱用しているとみなされる企業に対する調査と制 裁を強化することにより、SMEの成長を促そうとしてきました。 規制当局は、韓国国内で特許権を乱用している疑いのある多国 籍企業に対する監視も強めています。FTCは、多国籍企業が知的財 産権を乱用する事例が増加していると報告しています。 また、FTCがロイターに語ったところによれば、技術 大手2社間で新たな争いとなっている、サムスン電子が無 線技術関連特許での支配的地位を乱用して、市場で不公 正な競争を引き起こしているとするアップルの訴えにつ いて、FTCによる調査が行われています。 「韓国公正取引委員会は、過去5年間に、カルテルの 調査や、大手コングロマリットに対し、中小企業と協力 し、仕事を分け合うように指示することなどを通じて、 自由競争を高めるために努力してきました。こうした FTCの方向性は、新しい大統領のもとでも維持されるで しょう」とキム氏は言います。
“For the past five years, the Korean Fair Trade Commission has acted to increase the free competition via cartel investigation or to direct large conglomerates to share and cooperate with the SMEs. That kind of direction could be maintained through the FTC under the coming new government.” Jae Hoon Kim, Lee & Ko For example, the competition law may be more forcefully enforced against many big companies,” While the three presidential candidates have battled one another, all have voiced their commitment to the de-monopolisation of Korea’s chaebols, or family-owned conglomerates, to nurture small and medium business, encourage healthy competition, reduce unemployment, and reduce income inequality. “The so-called ‘democratisation of the economy’, the buzz word for the presidential campaign, will bring about new regulation and matters which may have very complicated legal issues,” says Yun. Hughes agrees: “I think what we’ll see is more breaking-up of the chaebols into different businesses. The way they are structured now, many of them are in basically every industry. For the sake of corporate governance and legal compliance, and the continued development of the Korean economy, I think they will have to be separated. They are already spinning things off, and each new entity will need its own corporate counsel. For law firms, the pie will get bigger as the companies get smaller.” Watch and wait There is no doubt that the road ahead will be an exciting one for South Korea. International firms are pouring in, and a lot can happen over the next five years before they are allowed to practice local law. This, coupled with a shroud of uncertainty surrounding the global economy, is prompting the legal community to adopt a cautious wait-and-see approach. One thing is for sure: South Korea is a lucrative prospect for economic growth and legal development. But, whether all the newest law firms on the block will reap rewards remains to be seen. “In the long term the entry of foreign firms into the Korean market will be a positive development. But in the short term the number of mouths to feed in terms of law firms may be growing faster than the pie,” says Hughes. “It will be interesting to see where this goes.” ** The Japanese translation is brought to you by Win-Win Language Service **
新しい指導者 大統領の交代が間近に迫る中で、法律市場にはこの先何 が待ち構えているのでしょうか。現職の李明博（イ・ミョンバ ク）大統領の任期は12月で終了し、新しい指導者が生まれます。あらゆ る選挙と同様に、今回の選挙結果は市場に影響を与え、今後数年間にわ たる国家の方向性を決定づけます。 「経済政策が大きく変わる可能性も あり、政策に対して反論する、または政策を支持するための大量の法律 業務が発生する可能性があります。例えば、大企業に対し、競争法がさ らに強力に施行されるかもしれません」とユン氏は言います。 3人の大統領候補者は互いに論争をしていますが、いずれの候補者 も、家族・同族所有のコングロマリットである韓国の財閥（チェボル）に よる独占体制の解消、中小企業の育成、健全な競争の推進、失業率の 引き下げ、および所得不均衡の是正を進めることを約束しています。経 済の民主化は、新しい規制や、非常に複雑な法律問題につながるでしょ う」とユン氏は言います。 ヒューズ氏も同じ意見で「この先、事業ごとにチェボルの解体がさら に進むと思います。今のチェボルの形態では、どの産業にもチェボルの 存在があります。企業統治と法務コンプライアンス、および、産業の発 展のためには、チェボルは分割されなければならないと思います。チェ ボルが分社化を進めるにしたがい、双方にそれぞれの弁護士が必要に なります。企業が小さくなるにつれ、法律業務のパイは拡大します。さら に、これらの企業もまだ成長を続けます」とヒューズ氏は言います。 注視して待つ姿勢 この先の韓国の道のりが面白いものになることは疑いようもありま せん。外国法律事務所の流入が進んでおり、それらに韓国法の業務が認 められるまでの今後5年間に多くのことが起きるでしょう。このことは、 世界経済を覆っている不確実性とあいまって、法曹界に慎重な様子見姿 勢をとらせています。確かなことが一つあります。韓国は、経済成長と法 律市場の発展の面で、潜在的な魅力のある市場です。しかしながら、新 しく進出する法律事務所が報われるかどうかはまだわかりません。ヒュ ーズ氏は「市場の拡大よりも、法律事務所の数が増加するペースの方が 早いように思います。これからどこに向かうのか、非常に興味がありま す」と述べています。
FOLLOW US ON TWITTER! @ALB_Magazine With its portfolio of leading titles, online services, Law Awards and In-House Legal Summits, ALB provides authoritative and unbiased insights, and unmatched networking and business development opportunities, to legal professionals throughout Asia Pacific and the Middle East.
ALB twitter ad HP_final.indd 1
31/5/12 10:33 AM
36
Sponsored Profile
ASIAN LEGAL BUSINESS november 2012
Cadwalader, Wickersham & Taft LLP PARTNERS
Rocky T. Lee, Asia Managing Partner, Head of Greater China Corporate Practice E: rocky.lee@cwt.com
Jiannan Zhang, Beijing, Corporate E: jiannan.zhang@cwt.com
Jeffrey H. Chen, Hong Kong, Capital Markets E: jeff.chen@cwt.com
Cadwalader, Wickersham & Taft LLP A: Beijing 2301 China Central Place Tower 2, No. 79 Jianguo Road, Beijing 100025 China T: +86 10 6599 7200 F: +86 10 6599 7300
A: Hong Kong 27th Floor, 100QRC 100 Queen’s Road Central Hong Kong T: +852 2946 1100 F: +852 2946 1200 W: www.cadwalader.com
Foreign Exchange and Repatriation of Renminbi One of the biggest differences between the Chinese economy and other economies around the world is China’s maintenance of strict control over all foreign exchange entering or exiting the country. A paramount concern among foreign investors is the ability to transfer capital into and out of China. Foreign investors typically invest in China by establishing Foreign-Invested Entities (“FIEs”), including Wholly Foreign-Owned Enterprises (“WFOE”) and Sino-Foreign Joint Ventures (“JV”). However, in order to repatriate money earned by these entities, foreign investors are subject to a lengthy, difficult and highly complex regulatory regime. Repatriation of Renminbi (“RMB”) is hindered by China’s strict rules regulating the conversion of currency. Currency exchange controls promulgated by the State Administration of Foreign Exchange (“SAFE”) restrict foreign companies from repatriating investments, profits, or dividends offshore. Foreign investors can employ the following methods to repatriate their funds out of China: (1) issuing dividends; (2) charging services fees; and (3) charging royalty payments and technical services fees. Repatriation Through Dividends In order to issue dividends, an FIE must meet the following requirements: i) pay its registered capital in full and on time; ii) pay all applicable taxes; and iii) obtain the relevant tax certificate or declaration form. Notably, there are two additional statutory requirements unique to China that make it difficult to repatriate dividends out of the country, especially when an FIE is newly established: i) the current year’s profits must cover any and all losses from the previous year; and ii) ten percent (10%) of the FIE’s annual profits must have been contributed to the FIE’s statutory “common reserve,” unless the FIE has already set aside an amount equal to fifty percent (50%) of its registered capital. After all of these requirements have been satisfied, the FIE must then apply with a designated foreign exchange bank (the “Forex Bank”) supervised and administered by the People’s Bank of China (“PBOC”) and by SAFE, to have the fund repatriation application reviewed and approved. Once approved, the Forex Bank will convert and remit the funds accordingly. Alternative Means Of Repatriation FIEs have sought alternative means to repatriate their onshore RMB due to tax considerations and
the strict limitations on repatriating dividends out of the country. Accordingly, FIEs commonly reallocate profits through the payment of service fees, technology royalties, and other similar fee arrangements. In spite of the attendant risks associated with these payments, FIEs employ these methods because they enable FIEs to repatriate profits earned in China with greater speed and flexibility. Repatriation Through Service Fee Contracts To remit service fees offshore, an FIE must first pay in advance any and all withholding and applicable business taxes due on the service fees, and then remit the service fees to the relevant services provider through a designated Forex Bank supervised and administered by the PBOC and by SAFE. Taxation of the Service Fees Before any funds can be remitted, the FIE is responsible for withholding all income tax to be paid by the offshore entity, which is usually levied at the rate of ten percent (10%). For entities that are set up in both the PRC and Hong Kong, double taxation can be avoided because income taxes paid in the PRC are deductible in Hong Kong. After paying the required income taxes, the FIE must then submit copies of its service contracts, invoices, and proof of tax payment to the local tax authorities for approval before any service fees may be remitted to the service provider. Payment of Service Fees through Forex Banks Before service fees can be paid, the FIE needs to provide the service agreement, the tax clearance certificate, and the invoice to the Forex Bank. Repatriation Through Royalties and Technical Service Fees Technology imported into China falls into one of three categories. The first two categories include those technologies that are prohibited, and those whose importation is restricted. All other technologies not falling into these two categories may be imported freely. Taxation of Royalties and Technical Service Fees Income from royalty payments and technical service fees may be taxed at ten percent (10%). If the beneficial owner of the royalty payment is located in Hong Kong, the total tax levied upon income from such royalties shall not exceed seven percent (7%). Once taxes have been fully paid, an FIE will still need
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Sponsored Profile
37
PARTNERS
to register its technology licensing agreement with the relevant regulatory department by submitting an application, copies of contracts substantiating that technologies are being imported, and documents verifying the legal status of the parties to the licensing agreement. Payment of Royalties and Technical Service Fees through Forex Banks The FIE then needs to provide the technology licensing agreement signed with the licensor, the tax clearance certificate, the invoice, as well as any approval or registration certificates issued by the relevant PRC authorities to a Forex Bank. Possible Adjustment by the Local Tax Authority Local tax authorities have the power to review contracts made between related parties, i.e. service agreements and licensing agreements, to help ensure that such contracts were entered into for a “reasonable commercial purpose.” These tax authorities have considerable discretion and may freely adjust any contract whose price they find unreasonable. A direct risk arising from this scenario is that the FIE’s income tax may be increased by the local tax authority, while withholding taxes paid in contemplation of the repatriation cannot be reimbursed. Moreover, fines and other punishments may be imposed by the local tax authority if the authority finds the contract unreasonable. Conclusion Although China’s rapid growth and market potential continue to entice investors, due to the unique and complex nature of China’s laws on foreign exchange, we strongly encourage enterprises considering whether to enter the PRC to first consult with their financial advisors and legal counsel in order to establish an optimal strategy for repatriating investment profits. About Cadwalader, Wickersham & Taft LLP Cadwalader, Wickersham & Taft LLP, established in 1792, is one of the world’s leading international law firms, with offices in New York, London, Washington, Charlotte, Houston, Beijing, Hong Kong and Brussels. Cadwalader serves a diverse client base, including many of the world’s top financial institutions, undertaking business in more than 50 countries in six continents. The firm’s Asia practice offers legal expertise in: Antitrust Cadwalader offers counseling on antitrust and competition matters for multinational clients
operating in China, helping them to navigate the nation’s evolving antitrust regimes and guiding companies in complying with China’s foreign antitrust laws as they expand into Asia. Capital Markets With unparalleled experience in fixed income and equity capital markets, structured finance, synthetic and hybrid products, and derivatives, clients call upon us to help develop new products and structures, coordinate international securitizations, devise crossborder structures, and assist in managing risk caused by troubled securitized loans and financial products. Corporate Mergers and Acquisitions China’s specific commercial, regulatory and cultural environment add layers of complexity to cross-border mergers & acquisitions in China. Cadwalader is consistently recognized as a leading mergers and acquisitions firm, having compiled an impressive record of transactions that includes some of the largest and most complex deals in the marketplace. Corporate Venture Capital and Private Equity Cadwalader has represented clients, including domestic and international, and public and private companies ranging from entrepreneurial start-ups to mature multinational corporations in virtually every type of financing deal. Our team of practitioners provides market intelligence and insight to sponsors that focus on leveraged buyouts, structured equity investments, mezzanine investments, real estate investments, and growth capital investments. Foreign Corrupt Practices Act (FCPA) and SEC Compliance Cadwalader helps our multinational corporate clients achieve business objectives in their worldwide operations, while ensuring compliance with the FCPA and regulations promulgated by the SEC. Foreign Direct Investment Cadwalader oversees the entire life-cycle of our clients’ investments in China and assist them with the formation of offshore and onshore cross-border corporate structuring, the flow of funds into and out of the PRC, corporate governance, taxation issues, and the evaluation of potential business partners and locations. More information about Cadwalader can be found at www.cadwalader.com.
Jeffrey Maddox, Hong Kong, Capital Markets E: jeffrey.maddox@cwt.com
David Neuville, Hong Kong, Capital Markets E: david.neuville@cwt.com
Joseph Lee, Hong Kong, Capital Markets E: joseph.lee@cwt.com
38
hong kong in-house legal summit
ASIAN LEGAL BUSINESS november 2012
Hong kong 2012 In-house legal summit
A forum for exchange and connection ALB once again drew crowds of nearly 200 in-house counsel in late September for the annual ALB Hong Kong In-House Legal Summit. Engaging sessions on a range of topics were hosted by legal experts heralding from China, Vietnam, Cambodia and Hong Kong – including a presentation from Gall entitled “Fraud & Insolvency: Partners in Crime”, a brief on the risks of investing in China from Duan & Duan, and an overview of the regulatory framework and doing business in Cambodia from Bun & Associates. “The ALB In-House Summit represents a focused opportunity for lawyers working in an in-house environment to share the latest legal developments and practices in the Asian region as well as catching up with colleagues across the legal community. You always leave the summit with new knowledge and new acquaintances,” says Jeremy Lee, the Asia general counsel of Dragages. Over the course of the day, there were
seven workshops on a broad range of issues across the region. One of the first workshops of the day was an engaging panel discussion led by IP experts sponsored by Thomson Reuters IP & Science. Areas covered included general counsel as strategic business partner, building and protecting core assets and developing a “best in class” IP management infrastructure as well as delving into a variety of IP issues in corporate transactions. Partner Gary Gao of Chinese firm Duan & Duan, gave an insightful presentation on investment risks in China and forms of dispute resolution on the Mainland. His previous tenure as a judge allowed him to share interesting anecdotes on how China’s courts work. The risks of investment, he noted, can sometimes be caused by the ambiguity of the legal language and meanings. “In practice, the competent government agencies often hold too much power in legal interpretation. If the foreign investor’s behaviour goes against the
government agencies’ understanding of laws and regulations, it could be risky”, he said during his talk. In Duane Morris’ Vietnam workshop, a hearty debate ensued between delegates and the panellists on the merits of doing business in Cambodia versus Vietnam. Energy, infrastructure, real estate and retail were hot sectors in Vietnam that Duane Morris lawyers Giles Cooper, Oliver Massmann and Denny Cowger focussed on. In addition, they said that “Vietnam’s legal framework is considered investor-friendly and one of the most liberal in Asia. Even ‘sensitive’ sectors like education, health care and telecommunications are open to foreign investment.“ Holman Fenwick Willan capped off the event with lawyer Nick Luxton explaining the recent and proposed changes to commercial litigation in Hong Kong after recent Civil Justice Reforms. www.asianlegalbusinessevents.com
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
hong kong in-house legal summit
39
Workshop Sponsors Bun & Associates Bun & Associates is an independent leading full-service law firm in Cambodia, which provides innovative and high quality legal services to domestic and international clients. Its three founding principles, Commitment, Professionalism and Quality, have consistently been the root of its excellent reputation. Bun & Associates advises on diverse areas such as banking and finance, insurance, corporate, tax, real estate, commercial contracts and litigation, agro-business, and intellectual property. The firm benefits from a local and international management structure, identity and approach; while taking pride in its integrated, multi-disciplinary and multi-lingual legal experts from renowned universities in Asia, Europe and North America. Contact details Add: 29 St. 294, P.O. Box 2326 Phnom Penh, Cambodia Tel: +855 (0) 23 999 567 +855 (0) 12 817 817 Fax: +855 (0) 23 999 566 Email: info@bun-associates.com
BUN Youdy Tel: +855 (0) 12 817 817 Email: bun@bun-associates.com FONTAINE Antoine Tel: +855 (0) 95 555 123 Email: fontaine@bun-associates.com ING Sophealeak Tel: +855 (0) 12 884 656 Email: ing@bun-associates.com
Duan & Duan Law Firm For over 20 years, Duan&Duan Law Firm has been recognized has a prestigious medium size PRC law firm practicing law in accordance with international standards and focusing on PRC related legal issues involving foreign businesses. Its unique approach entitles Duan&Duan to navigate through out different legal systems and cultures flawlessly and to design for its clients creative legal solutions adapted to their needs. Duan & Duan has over the years always been holding a dominant market share of the PRC legal industry, providing comprehensive legal services to numerous Fortune 500 enterprises and to leading Chinese companies.
Holman Fenwick Willan Holman Fenwick Willan is an international law firm advising businesses engaged in all aspects of international commerce. With offices in Asia-Pacific, the Middle East, Europe and South America, the firm has built a reputation worldwide for excellence and innovation and has focused the development of its capabilities in the following core sectors: Aviation; Construction, Engineering & Infrastructure; Commodities; Energy; Financial Institutions; Insurance & Reinsurance; Logistics; Mining; Ports & Terminals; Real Estate: Shipping; Space; Superyachts and Travel, Cruse and Leisure . We have over 125 years experience of working with other law firms in jurisdictions throughout the world. Established in 1978, our Hong Kong office has been serving international and domestic clients in China and the Asia region for 34 years. Contact details Add: 15th Floor, Tower One, Lippo Centre, 89 Queensway, Admiralty, Hong Kong Paul Hatzer Tel: +852 3983 7788 Email: paul.hatzer@hfw.com
Thomson Reuters Intellectual Property & Science The Intellectual Property & Science business of Thomson Reuters, the world’s leading source of intelligent information, is committed to helping clients accelerate research, scientific discovery and innovation. Our content and services support researchers, scientists, law firms, intellectual property (IP) specialists and professionals in the academic, government, pharmaceutical, and corporate sectors. Thomson Reuters Intellectual Property Solutions helps professionals worldwide drive innovation, protect and manage intellectual assets, and create maximum value from their ideas by providing solutions that power the intellectual property lifecycle.
Contact details Add: 88 Zun YiNan Road, 17th Floor, Shanghai, P.R. China, 200336 Tel: +86 21 62191103 Fax: +86 21 62752273 E-mail: webmaster@duanduan.com Website: www.duanduan.com
Contact details Add: 18 Science Park Drive Singapore 118229 Tel: +65 6870 3216 Fax: +65 6223 2634 Email: vivien.chia@thomsonreuters.com Website: ip.thomsonreuters.com
Duane Morris LLP Duane Morris LLP is a global law firm with more than 700 attorneys in offices across the United States and around the world. In 2007, Duane Morris opened offices in Vietnamís capital Hanoi and its largest city and business center Ho Chi Minh City, serving clients throughout Vietnam and the greater Southeast Asia region. Duane Morris Vietnam LLC represents a range of clients, including multinational corporations with operations in Asia as well as mid-sized businesses seeking to establish a presence in Vietnam, in a variety of mergers and acquisitions, real estate, company formation, and infrastructure projects. We offer international law firm services at competitive, boutique prices. Our attorneys are fluent in Vietnamese and possess decades of practice experience in Vietnam.
Jun He Law Offices Jun He is a leading legal service provider in China. Recognized by clients, professionals and peers, Jun He provides services and, more importantly, solutions to clients. One true partnership law firm in China, Jun He has the sound structure to ensure efficient deployment of resources in six China offices (Beijing, Shanghai, Guangzhou, Shenzhen, Dalian and Haikou) and three overseas offices (Hong Kong, New York and Silicon Valley). With a large pool of experienced professionals ( 156 partners and over 330 other fee earners), Jun He is committed to deliver sound judgment to handle complex commercial, structural and cultural issues involved in domestic projects and major cross-border transactions.
For more information on our firm and its services, please visit: www.duanemorris.com. Gall Gall is one of Hong Kong’s leading independent firms and is entirely focused on litigation. Gall has extensive experience in handling highly complex litigation and is frequently engaged in multi-jurisdictional disputes. The partners are all City-trained, but have practised in Hong Kong for many years. Gall has a broad portfolio of institutional, corporate and private clients, both domestic and foreign. Gall is a resultsdriven firm that regularly works alongside many of the world’s leading law firms. As one of Hong Kong’s most active litigation practices, Gall is frequently engaged by foreign law firms on major cases and has established strong working relationships throughout the global legal market. The firm has become a key point of reference for law firms and companies that would otherwise have no representation in Hong Kong. Contact details Add: Unit 302, 3rd Floor, Dina House, Ruttonjee Centre, 11 Duddell Street, Central, Hong Kong Tel: +852 3405 7658 Fax: +852 2801 7202 Website: www.gallhk.com
Contact details Add: China Resources Building 20th Floor, Beijing 100005, P.R.China (Headquarters) Tel: +86 10 85191300 Fax: +86 10 85191350 Email: junhebj@junhe.com Website: www.junhe.com
VIP Networking Luncheon Partner
ALB supports
Sponsors
Supporting Organisation
40
hong kong law awards
ASIAN LEGAL BUSINESS November 2012
Winners announced Award
Winner
Synmax Translation Award Wealth Management Law Firm of the Year
Withers
Dispute Resolution Law Firm of the Year
Herbert Smith
Insolvency & Restructuring Law Firm of the Year
Mayer Brown JSM
BDO Limited Award Matrimonial Law Firm of the Year
Withers
Insurance Law Firm of the Year
Clyde & Co
Intellectual Property Law Firm of the Year
Bird & Bird
Investment Funds Law Firm of the Year
Clifford Chance
IT/Telecoms Law Firm of the Year
Baker & McKenzie
Real Estate Law Firm of the Year
Mayer Brown JSM
Shipping Law Firm of the Year
Award
Winner
Pinsent Masons Award Construction In-House Team of the Year
Leighton; MTR Corporation
Samsonite Award Banking & Financial Services InHouse Team of the Year
Citigroup Global Markets
Holman Fenwick Willan
Insurance In-House Team of the Year
AIA
Construction Law Firm of the Year
Mayer Brown JSM; Pinsent Masons
Morgan Stanley
Boutique/Specialist Law Firm of the Year
Charltons
Lewis Sanders Award Investment Bank In-House Team of the Year
Haldanes
Paul, Weiss Award IT/ Telecoms In-House Team of the Year
Alibaba Group
Criminal Law Firm of the Year AzureTax Award Tax Law Firm of the Year
Baker & McKenzie
Paul, Weiss Award Media & Entertainment In-House Team of the Year
PCCW/HKT
Employment Law Firm of the Year
Mayer Brown JSM Maples and Calder
Holman Fenwick Willan Award Shipping In-House Team of the Year
COSCO Pacific
Offshore Law Firm of the Year Corporate Citizen/CSR Law Firm of the Year
Clifford Chance
Real Estate In-House Team of the Year
Hongkong Land
Taiwan Deal Firm of the Year
Lee and Li
Morgan Stanley
Withers Award PRC Firm, Hong Kong Office of the Year
Jun He
Hong Kong Corporate Counsel Association Award Innovative In-House Team of the Year
Kim & Chang
Korea Deal of the Year
Lone Start Funds-KEB Holdings Sale of Stake in Korea Exchange Bank to Hana Financial Group
The Macallan Fine Oak Single Malt Scotch Whisky Award Hong Kong InHouse Lawyer of the Year
Alibaba Group - Tim Steinert
Korea Deal Firm of the Year
IPP Wealth Advisers Ltd Award Hong Kong Dealmaker of the Year
Freshfields Bruckhaus Deringer Robert Ashworth
Managing Partner of the Year
King & Wood Mallesons - Stuart Fuller
The Macallan Highland Single Malt Scotch Whisky Award Hong Kong Law Firm of the Year
Linklaters
Debt Market Deal of the Year
The PRC Government (Ministry of Finance) Bonds Issuance
China Legal Career Award Equity Market Deal of the Year
HKT Trust Spin-off on the Hong Kong Stock Exchange
Synmax Translation Award M&A Deal of the Year
AIG Strategic Sell-down of Its Shareholding in AIA
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
I
t was a jubilant night for Linklaters and Mayer Brown JSM at The Macallan ALB Hong Kong Law Awards 2012 which drew a number of high-profile legal luminaries, including the Guest of Honour, Gordon Jones, HKSI Honorary Fellow, the former Registrar of Companies. Linklaters took home the coveted The Macallan Highland Single Malt Scotch Whisky Award Hong Kong Law Firm of the Year award, while Mayer Brown JSM won a slew of trophies that saluted four of its marketleading practices. For this year’s awards nominations process, we were pleased to introduce a new set of criteria that offered clarity, transparency, and efficiency for the judges. There was a value threshold for deals, team size minimums, new categories, and other criteria that would ensure the best firms and deals alone made the shortlist. In addition to bagging the top prize of the night, Linklaters was recognised for its work on three winning deals: The Korea Deal of the Year (Lonestar Funds-KEB Holdings Sale of Stake in Korea Exchange Bank to Hana Financial Group), the Debt Market Deal of the Year (the PRC Government [Ministry of Finance] Bonds Issuance), and the Synmax Translation Award M&A Deal of the Year (AIG’s Strategic Sell-down of Its Shareholding in AIA). Linklaters Hong Kong partner, Teresa Ma, said: “We are absolutely delighted to be named The Macallan Highland Single Malt Scotch Whisky Award ALB Hong Kong Law Firm of the Year. It is such an honour to have the work of our team recognised by clients and fellow professionals. This will spur us to be even better - more astute, more efficient, and always with an eye on contributing value to our clients’ strategic priorities.” Mayer Brown JSM was awarded for its insolvency and restructuring, real estate, construction, and employment practices. “We are delighted to have received the awards from ALB,” said Elaine Lo, senior partner and Asia chair of Mayer Brown JSM. “They are indeed testaments to the skills and the outstanding quality of legal services our lawyers have provided to our clients. We remain committed to developing our capabilities, and to continue delivering excellence going forward.” The event also singled out Hong Kong’s leading individual talents. On the in-house side, Tim Steinert of the Alibaba Group was named The Macallan Fine Oak Single Malt Scotch Whisky Award Hong Kong
Hong Kong law awards
41
In-House Lawyer of the Year. Stuart Fuller, the global managing partner of King & Wood Mallesons, scored a big win by taking home the Managing Partner of the Year prize. “I’m delighted to have received the award for MP of the Year in Hong Kong. King & Wood Mallesons is in a unique market position in Hong Kong following the full merger of our two firms. I’d like to acknowledge that leading our Hong Kong firm is the product of teamwork,” he told ALB. “This includes the terrific contributions made by David Bateson and Simon Yung to lead the practice, the partners for their focus on the client and market opportunities, and all of our people in responding so well to the big changes that we have made to the firm since March 1.” IPP Wealth Advisers Ltd Award The Hong Kong Dealmaker of the Year award went to Robert Ashworth of Freshfields Bruckhaus Deringer, who won the Managing Partner of the Year last year. He was delighted to be acknowledged by the legal community, and said: “ALB Law Awards is a great platform to showcase and recognise outstanding practitioners and firms, as well as exciting developments in the Asia legal market. In a year that has seen plenty of activity, particularly in cross border M&A and private equity across Asia, I am very honoured to be named the Dealmaker of the Year for 2012,” he said. In a first for any offshore law firm in the history of ALB, Maples and Calder managed a multijurisdictional sweep for its wins of the Offshore Law Firm of the Year in 2012 at all of ALB’s awards, namely China, Japan, Singapore, and Hong Kong. “September 2012 has been a month of firsts for us at Maples,” says Hong Kong Maples and Calder partner, Christine Chang. “We became the first ever firm to win ALB Offshore Law Firm of the Year in all four jurisdictions last Friday, and then on Monday, we proudly announced the opening of our first Southeast Asian office in Singapore. We look forward to celebrating with all our clients and friends, without whom this would not have been possible.” Other winners of the night included Withers, Herbert Smith, Baker & McKenzie, Clifford Chance, Morgan Stanley, Bird & Bird, Clyde & Co, Pinsent Masons, Holman Fenwick Willan, Charltons, Haldanes, Lee and Li, Jun He, Kim & Chang, Leighton, MTR Corporation, AIA, PCCW, Citigroup, Hongkong Land, and COSCO Pacific.
42
hong kong law awards
ASIAN LEGAL BUSINESS November 2012
Synmax Translation Award Wealth Management Law Firm of the Year
Winner Withers Finalists
(L-R) C. Katie Graves; Erik Wallace and team, Withers; Kevin Lu, Synmax Translation
Dispute Resolution Law Firm of the Year
• Baker & McKenzie • Herbert Smith • Stephenson Harwood
Insolvency & Restructuring Law Firm of the Year
Insurance Law Firm of the Year
(L-R) John M. Hickin, Mayer Brown JSM; Paul Abfalter, Telstra International Group
(L-R) Richard Kwok, ING Asia/Pacific Limited; Gloria Jones; Michael Parker, Clyde & Co
(L-R) Gareth Thomas, Herbert Smith; Andrew Goldner, ALB
Winner Herbert Smith • Baker & McKenzie • Clifford Chance • Clyde & Co • DLA Piper • Freshfields Bruckhaus Deringer • Gall • Hogan Lovells • King & Wood Mallesons
Winner Clyde & Co
Winner Mayer Brown JSM
Finalists • Latham & Watkins • Linklaters • Mayer Brown JSM • Simmons & Simmons • Stephenson Harwood • Vivien Chan & Co • Wilkinson & Grist
Finalists
Finalists
• Baker & McKenzie • Gall • Hogan Lovells • Latham & Watkins • Linklaters
• O’Melveny & Myers • Stephenson Harwood • Tanner De Witt
• Baker & McKenzie • Herbert Smith • Kennedys • Mayer Brown JSM
BDO Limited Award Matrimonial Law Firm of the Year
Intellectual Property Law Firm of the Year
Winner Bird & Bird (L-R) Ted Chwu; Victor Tse, Bird & Bird
Finalists • Baker & McKenzie • Freshfields Bruckhaus Deringer • Hogan Lovells
• Simmons & Simmons • Stephenson Harwood
• Mayer Brown JSM • Simmons & Simmons • Vivien Chan & Co • Wilkinson & Grist
Johnson Kong, BDO Limited; Marcus Dearle; Sharon Ser and team, Withers
Winner Withers
Finalists • Boase Cohen & Collins • Haldanes
Hong Kong law awards
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Investment Funds Law Firm of the Year
IT/Telecoms Law Firm of the Year
43
Real Estate Law Firm of the Year
(L-R) Donna Wacker, Clifford Chance; Mark Hunsaker, Citigroup Global Markets Asia Limited; Crawford Brickley, Clifford Chance
Winner Clifford Chance Finalists • Baker & McKenzie • Debevoise & Plimpton • King & Wood Mallesons • Kirkland & Ellis • Linklaters • Mayer Brown JSM • Sidley Austin
(L-R) Catherine Chang, Asia Satellite Telecommunications; Poh Lee Tan, Baker & McKenzie
• Simmons & Simmons • Simpson Thacher & Bartlett • Stephenson Harwood • Weil, Gotshal & Manges • White & Case
Winner Baker & McKenzie Finalists • Freshfields Bruckhaus Deringer • Herbert Smith • Hogan Lovells
(L-R) Alan Yip; Cindy Au, Mayer Brown JSM; David Lamb, Hongkong Land
• King & Wood Mallesons • Paul, Weiss • Vivien Chan & Co
Winner Mayer Brown JSM Finalists • Baker & McKenzie • Paul Hastings • Stephenson Harwood
Teamwork wins awards. Great clients and Mayer Brown JSM. It’s a dynamic team that creates award-winning work. That’s the power of teamwork. We are pleased to have been named the 2012 Asian Legal Business Hong Kong Law Awards for: Construction Law Firm of the Year Employment Law Firm of the Year Insolvency and Restructuring Law Firm of the Year Real Estate Law Firm of the Year Thank you to our clients and colleagues for their continued support.
Americas | Asia | Europe | www.mayerbrownjsm.com Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions. © 2012. The Mayer Brown Practices. All rights reserved.
hong kong law awards
44
ASIAN LEGAL BUSINESS November 2012
Shipping Law Firm of the Year
Winner Holman Fenwick Willan
Finalists • Clyde & Co • Ince & Co • Mayer Brown JSM • Stephenson Harwood Michelle Hung, COSCO Pacific; George Lamplough and team, Holman Fenwick Willam
Construction Law Firm of the Year
dual Winners Mayer Brown JSM Pinsent Masons
Finalists
(L-R) Peter Clayton, Pinsent Masons; Jeremy Lee, Dragages Hong Kong Limited; Vincent Connor; Nicholas Brown, Pinsent Masons; Menachem Hasofer; Elaine Lo, Mayer Brown JSM
Boutique/Specialist Law Firm of the Year
• Baker & McKenzie • Clyde & Co • DLA Piper • Haley & Co in association with Clayton Utz • Hogan Lovells • King & Wood Mallesons • Simmons & Simmons • Stephenson Harwood
Criminal Law Firm of the Year
(L-R) Julia Charltons and team, Charltons; Chi Wai Pang, Macquarie
Winner Charltons
Finalists
(L-R) Andrew Powner, Haldanes; Jane Lewis, Sweet & Maxwell; Warwick Haldane, Haldanes
• Gall • Haley & Co in association with Clayton Utz • So Keung Yip & Sin
Winner
Finalist
Haldanes
• Boase Cohen & Collins
We are very pleased to have been voted once again as the Criminal Law Firm of the Year. Much of our work comes from referrals from other law firms. You entrust your clients to us for the purpose of utilizing our expertise before we return them to you after the work is completed. We appreciate your trust and support. 7/F Ruttonjee House, 11 Duddell Street, Central, Hong Kong Telephone: (852) 2868 1234 Facsimile: (852) 2845 1637 Website: www.haldanes.com
Email: info@haldanes.com
Hong Kong law awards
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Azure Tax Award Tax Law Firm of the Year
Employment Law Firm of the Year
45
Offshore Law Firm of the Year
(L-R) Jenny Nip; Christine Chan; Greg Knowles; Anthony Webster, Maples and Calder; Royford Yeung, Alibaba Group
(L-R) Gary Seib, Baker & McKenzie; Debbie Annells, AzureTax Ltd
Winner
(L-R) Elaine Lo; Hong Tran, Mayer Brown JSM; Gillian Meller, MTR Corporation
Finalists
Mayer Brown JSM
• Appleby • Conyers Dill & Pearman • Ogier • Walkers
Finalists • DLA Piper • Withers
Maples and Calder
Winner Baker & McKenzie
Finalists
Winner
• Baker & McKenzie • Herbert Smith • Linklaters
• Simmons & Simmons • Stephenson Harwood
hong kong law awards
46
Corporate Citizen/CSR Law Firm of the Year
(L-R) Dongwei Liu, Thomson Reuters Foundation; Donna Wacker; Crawford Brickley, Clifford Chance
ASIAN LEGAL BUSINESS November 2012
Taiwan Deal Firm of the Year
Withers Award PRC Firm, Hong Kong Office of the Year
(L-R) Benjamin Y. Li, Lee and Li; Philana Poon, PCCW/HKT
(L-R) Erik Wallace; Rita Ku, Withers; Xiaojun Wang, Jun He Law Offices
Winner Clifford Chance
Winner
Winner
Lee and Li
Jun He
Finalists
Finalist
• Baker & McKenzie • Jones Day Taipei • LCS & Partners • Tsar & Tsai
• Zhong Lun
Finalists • Baker & McKenzie • Freshfields Bruckhaus Deringer • Hogan Lovells • King & Wood Mallesons
• Linklaters • Skadden, Arps, Slate, Meagher & Flom
Korea Deal Firm of the Year
Korea Deal of the Year
(L-R) Klaus Pfeifer, Thomson Reuters North Asia, Legal Asia; Hee Gang Shin; Tongeun Kim, Bae, Kim & Lee; Teresa Ma; Craig Dally, Linklaters; Young-Jay Ro; Anthony Choi, Kim & Chang
Winner (L-R) Anthony Choi; Young-Jay Ro, Kim & Chang
Winner
Lone Start Funds-KEB Holdings Sale of Stake in Korea Exchange Bank to Hana Financial Group Firms: Bae, Kim & Lee; Kim & Chang; Linklaters Banks: Credit Suisse; Hana Daetoo Securities
Kim & Chang
Finalists Finalists • Bae, Kim & Lee • Lee & Ko • Shin & Kim • Yulchon
• Asiana and Daewoo Sale of Korea Express Shares • Fila Korea Acquisition of Acushnet Company • Jinro - Hite Merger • NACF Debt Liability Reorganisation • Negotiations of KNOC Oil and Gas Concessions in Abu Dhabi • Restructuring of Novelis Term Loan Agreement
• Sale of Hyundai Engineering & Construction to the Hyundai Motor Group • Sales of KB Financial Group Shares • Samsung Electronics America Debt Offering • Samsung Electronics Sale of Its Hard Disk Drive Business to Seagate Technology • SK Telecom Acquisition of Hynix Semiconductor • Spin-off of Shinsegae business into E-Mart
Hong Kong law awards
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Suite 2008, 20/F, Jardine House 1 Connaught Place, Central HongKong Tel: +852 2167 0000 Fax: +852 2167 0050
Website: www.junhe.com Email: junhehk@junhe.com
Debt Market Deal of the Year
(L-R) Alexandra Bidlake; Jelita Pandjaitan, Linklaters; Maureen Gleeson; Som Leung; Lesli Ligorner; Tom Fyfe; Fiona Loughrey, Simmons & Simmons; Andrew Smart, ALB
Winner The PRC Government (Ministry of Finance) Bonds Issuance Firms: Haiwen & Partners; Linklaters; Simmons & Simmons
Finalists • Bank of China Commercial Paper Programme • China Resources Gas Group MTN Programme • CITIC Pacific Bond Offering • CNOOC Finance Notes Offering • CNPC (HK) Overseas Capital Bond Offering
• HKSAR iBonds Offering • Hutchison Whampoa $1.5 bln Investment Grade Notes Offering • Mega Advance Investments Senior Notes Offering • Yanzhou Coal Mining Company Notes Offering
47
hong kong law awards
48
ASIAN LEGAL BUSINESS November 2012
China Legal Career Award Equity Market Deal of the Year
Synmax Translation Award M&A Deal of the Year
(L-R) Candy Chan, King & Wood Mallesons; Frazer Xia, China Legal Career; Royce Miller, Freshfields Bruckhaus Deringer; Winnie Wong, Conyers Dill & Pearman
(L-R) Sandy Xie, Synmax Translation; Rebecca Peckham; Pamela Ng; Morgan Stanley; Teresa Ma; Jelita Pandjaitan; Craig Dally, Linklaters
Winner
Winner
HKT Trust Spin-off on the Hong Kong Stock Exchange Firms: Anderson Mori & Tomotsune; Conyers Dill & Pearman; Freshfields Bruckhaus Deringer; GW & Associates in association with Gibson, Dunn & Crutcher; Haiwen & Partners; King & Wood Mallesons; Nagashima Ohno & Tsunematsu; Reed Smith Richards Butler Banks: CICC; DBS Bank; Deutsche Bank; Goldman Sachs; HSBC; J.P. Morgan; Mizuho; Standard Chartered Bank Accountant: PwC
AIG Strategic Sell-down of Its Shareholding in AIA Firm: Linklaters Bank: Morgan Stanley
Finalists
• CITIC Securities Global Offering • Alibaba Group Private Secondary • Glencore International IPO Sale of Shares • Hui Xian RMB REIT IPO • Bank of Communications Share • MGM China IPO Placement • New China Life Insurance IPO • Beijing Jingneng Clean Energy IPO • Prada IPO • Chow Tai Fook Jewellery Group Hong • Shanghai Pharma H-share IPO Kong IPO • Sun Art Retail Group IPO
Pinsent Masons Award Construction In-House Team of the Year
(L-R) Julian Lo; Rodney Chen, MTR Corporation; Brandon Yap, Leighton; Vincent Connor, Pinsent Masons
Finalists
China’s National Pension Fund • AXA SA Acquisition of the Asian • Joy Global Acquisition of Shares Insurance Businesses Previously Held in International Mining Machinery by AXA Asia Pacific Holdings Holdings • Charoen Pokphand Food Acquisition • Northumbrian Water Group Takeover of a Controlling Interest in CP by UK Water Pokphand • Ping An Selling Stake to Chow Tai • China Petroleum & Chemical Fook Corporation and ENN Energy • Yunfeng Capital investment in Holdings Pre-Conditional Voluntary Alibaba Group Cash Offer for China Gas Holdings • Cinda Selling Stake to UBS, Standard Chartered, Citic Capital Holdings and
Samsonite Award Banking & Financial Services In-House Team of the Year
(L-R) May Szeto, Samsonite Asia Limited; Amy Weich and team, Citigroup Global Markets
DUAL WINNERS
Winner
Leighton MTR Corporation
Citigroup Global Markets
Finalists Finalists • Dragages • Gammon
• Bank of America Merrill Lynch • Deutsche Bank AG, Hong Kong Branch • HSBC
• ICBC • Standard Chartered Bank
Hong Kong law awards
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
49
ALB Hong Kong Law Awards Construction Law Firm of the Year 2012
Pinsent Masons congratulates all ALB Hong Kong Law Award winners
Pinsent Masons is a full service international law firm with lawyers that understand the Infrastructure Sector. Construction is core to our business and we are proud to work on a number of high value projects being constructed by our clients across Asia and beyond. www.pinsentmasons.com © Pinsent Masons LLP 2012
Insurance In-House Team of the Year
Lewis Sanders Award Investment Bank In-House Team of the Year
Paul, Weiss Award IT/Telecoms In-House Team of the Year
(L-R) Morgan Stanley team; Lindsey Sanders, Lewis Sanders Legal Recruitment (L-R) Kevin Brocklehurst, AIA; Huen Wong, Hong Kong International Arbitration Centre
(L-R) Elsa Wong; Royford Yeung, Alibaba Group; Corinna Yu, Paul, Weiss
Winner Morgan Stanley
Winner AIA
Finalists • Aon/Essar • AXA • Chubb/Federal • Prudential
Winner Finalists • Bank of America Merrill Lynch • Citigroup • Deutsche Bank AG, Hong Kong Branch • Goldman Sachs (Asia) • J.P. Morgan Securities (Asia-Pacific) • Nomura International (Hong Kong) • UBS AG, Hong Kong Branch
Alibaba Group
Finalists • Hutchison Telecom • PCCW/HKT • SunGard
50
hong kong law awards
ASIAN LEGAL BUSINESS November 2012
Holman Fenwick Willan Award Shipping In-House Team of the Year Paul, Weiss Award Media & Entertainment In-House Team of the Year
(L-R) George Lamplough and team, Holman Fenwick Willan; Michelle Hung, COSCO Pacific
Winner
Finalists
COSCO Pacific
• Hutchison Port • Maersk
• Noble Group • Pacific Basin
(L-R) Jack Lange, Paul, Weiss; Michael Fagan, PCCW/HKT
Winner PCCW/HKT
Hong Kong Corporate Counsel Association Award Innovative In-House Team of the Year
Finalists • Microsoft • News Corp • Yahoo!
Winner Morgan Stanley
Finalists
Real Estate In-House Team of the Year
(L-R) Derek Fong; Pamela Ng, Morgan Stanley; Jasmine Karimi, HKCCA; Coach Asia; Rebecca Peckham; James Bidlake, Morgan Stanley
The Macallan Fine Oak Single Malt Scotch Whisky Award Hong Kong In-House Lawyer of the Year
(L-R) David Lamb, Cissy Leung, Hongkong Land; Poh Lee Tan, Baker & McKenzie
Finalists • Cheung Kong • Hutchison Whampoa • MTR Corporation • Shun Tak
IPP Wealth Advisers Ltd Award Hong Kong Dealmaker of the Year
(L-R) Robert Ashworth, Freshfields Bruckhaus Deringer; Ian Pryor, IPP Wealth Advisers Limited
Winner
Winner Hongkong Land
• Alibaba Group • COSCO Pacific • Hongkong Land • MTR Corporation
(L-R) Elsa Wong, Alibaba Group (receiving the trophy on behalf of Tim Steinert); William Chan, Edrington HK Ltd
Winner Alibaba Group - Tim Steinert
Finalists • Bank of America Merrill Lynch - Peter Siembab • COSCO Pacific - Michelle Hung • Credit Suisse - Patricia Sindel • Morgan Stanley - James Bidlake
Freshfields Bruckhaus Deringer Robert Ashworth
Finalists
• Baker & McKenzie - • Linklaters William Liu Dorothea Koo • Paul, Weiss • Clifford Chance Jeanette K. Chan Amy Lo • Davis Polk & • Simpson Thacher & Bartlett - Celia Lam Wardwell • Stephenson Harwood - Eugene Gregor Voon Keat Lai • Kirkland & Ellis - Nicholas Norris
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
sponsored profile
51
THE MACALLAN
BREAKS WORLD RECORD
FOR MOST EXPENSIVE WHISKY SOLD AT AUCTION
G
uinness World Records™ has awarded The Macallan the accolade of ‘most expensive whisky sold at auction’. Now a definitive world record holder, The Macallan’s 64 Year Old in Lalique, Cire Perdue sold at auction for US $460,000 (£291,125), with 100 percent of the proceeds benefitting charity: water, an organisation that provides access to clean, safe drinking water to people in developing nations. Coveted by bidders, the one-of-a kind Lalique crystal decanter housed the oldest and rarest Macallan ever bottled by the distillery, a 64 Year Old single malt whisky. The historic auction which took place at Sotheby’s in New York in November 2010 was the culmination of a 12-city “tour du monde” of the decanter. David Cox, Director of Fine and Rare Whiskies for The Macallan commented: “We are absolutely thrilled to have been awarded the Guinness World Record™ for the most expensive whisky sold at auction. This major accolade from such a world-renowned and respected organisation, proves once and for all that The Macallan is the world record holder.” He continued, “We had a phenomenal response around the world to this very special and rare decanter and I feel it is a fitting tribute to the inspiring project which managed to raise a staggering US $600,000 overall for charity: water.” Silvio Denz, President and CEO of Lalique, commented: “ We are enormously proud of this world record we share with our friends at The Macallan, with whom we have successfully collaborated since 2004. Over the years our crystal decanters, which are entirely handcrafted by our glassmakers, have proved hugely admired and sought af ter by w hisk y consumer s and connoisseurs, as well as collectors of
Lalique crystal and lovers of beautiful ‘objets d’art’. This latest achievement, which was realised through the lostwax moulding technique, is testament to the exceptional quality, artistry and longstanding tradition that is shared by both Lalique and The Macallan.” The Macallan and Lalique global fundraising tour raised more than US $600,000 (£375,000) for charity: water to provide clean water to over 30,000 people (www.charitywater.org/ themacallan). About The Macallan: Founded in 1824, The Macallan is one of the world’s most admired and awarded single malt whiskies. The reputation of The Macallan is based on a product of outstanding quality and distinctive character, founded upon a set of guiding principles, the Six Pillars. An obsession with quality has been the hallmark of The Macallan since its founding by Alexander Reid on a plateau above the river Spey in north-east Scotland. The distillery is surrounded by a 150 hectare estate, with Easter Elchies House, a Highland Manor built in 1700, at its heart. Traditionally known for maturation in Spanish oak, sherry seasoned casks, The Macallan’s range of outstanding single malts includes: Sherry Oak, matured in Spanish oak casks seasoned with sherry; Fine Oak, matured both in sherry casks of Spanish and American oak and in American
oak casks seasoned with bourbon; the 1824 range, exclusive to Global Travel Retail. In addition, The Macallan is well known for its great range of vintage whiskies, dating back to 1926, and is considered the most sought after of all single malts among collectors and connoisseurs at auction. www.themacallan.com
hong kong law awards
52
ASIAN LEGAL BUSINESS November 2012
We are pleased to have been awarded the 2012 Asian Legal Business Hong Kong Award for:
Equity Market Deal of the Year We thank our clients for their continued support. Reed Smith Richards Butler 20th Floor, Alexandra House, 18 Chater Road, Hong Kong Phone: +852 2810 8008 Fax: +852 2810 0664 Website: www.reedsmith.com Hong Kong • Beijing • Shanghai • London • Paris • Munich • Greece • Abu Dhabi • Dubai • New York • Chicago • Los Angeles • Washington, D.C. • San Francisco • Philadelphia • Pittsburgh • Princeton • Northern Virginia • Wilmington • Century City • Richmond • Silicon Valley
Managing Partner of the Year
The Macallan Highland Single Malt Scotch Whisky Award Hong Kong Law Firm of the Year
Stuart Fuller, King & Wood Mallesons
Winner King & Wood Mallesons - Stuart Fuller
Finalists • Baker & McKenzie - Poh Lee Tan • Davis Polk & Wardwell - William Barron • Freshfields Bruckhaus Deringer - Robert Ashworth • Gall - Nick Gall • Hogan Lovells - Allan Leung • Li & Partners - Robin Li • Mayer Brown JSM - Y. M. Elaine Lo • Stephenson Harwood - Voon Keat Lai • Vivien Chan & Co - Vivien Chan • Weil, Gotshal & Manges - Akiko Mikumo
(L-R) William Chan, Edrington HK Ltd; Alex Bidlake; Iris Yeung; Jelita Pandjaitan; Teresa Ma and Craig Dally, Linklaters
Winner Linklaters
Finalists • Baker & McKenzie • Clifford Chance • Freshfields Bruckhaus Deringer • King & Wood Mallesons
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Event Partner
Hong Kong law awards
53
BDO Limited
BDO Limited is the Hong Kong member firm of BDO International Limited, a global accountancy network with over 1,100 offices in more than 130 countries and over 48,000 people providing advisory services throughout the world. BDO Limited is served by 50 directors and a staff of over 1,000. Since our establishment in 1981, we have committed ourselves to facilitating the growth of businesses by advising the people behind them. Our professional services include assurance, taxation, business recovery, forensic accounting, litigation support, matrimonial advisory, risk advisory and business services. We possess comprehensive knowledge of accounting standards, tax and investment regulations prevailing in Hong Kong , China and other major countries, and conduct ourselves with the highest professional standards. Contact details Tel: +852 2218 8288 Fax: +852 2815 2239 E-mail: info@bdo.com.hk Website: www.bdo.com.hk
The Macallan
The Macallan is one of the world’s most awarded and admired Single Malts. This peerless reputation has been built by the commitment of The Masters of Spirit and Wood, those craftsmen at the heart of The Macallan for almost two centuries. Their obsessive pursuit of perfection has ensured the consistent quality that has characterized The Macallan since it was legally licensed in 1824. The Macallan Fine Oak The Macallan Fine Oak is Triple Cask Matured in a unique, complex combination of Exceptional Oak Casks; Spanish oak seasoned with sherry, American oak seasoned with sherry, and American oak seasoned with bourbon. This Triple Cask combination delivers an extraordinarily smooth, delicate yet complex Single Malt. American oak casks, which have previously held bourbon or sherry, impart a subtle, delicate colour with hints of apple, floral, vanilla and sweet citrus aromas and flavours. European oak casks, which have previously held sherry, impart a deep, rich colour with aromas and flavours of dried fruit, spice and chocolate orange. The Macallan Sherry Oak Over many years, The Macallan became synonymous with a sherry oak style. Its character is driven by oak sherry casks from Spain. The long journey from acorn to glass begins in the forests of northern Spain. In these ancient forests grow the mighty European oaks that will become the predominant casks to mature The Macallan Sherry Oak. From this rich timber are the casks hand fashioned in Cadiz, Spain, where traditional toasting changes the chemistry of the wood and adds yet another vital ingredient to the maturing process. The casks will then be filled with aged sherries and left to season for up to two years in Jerez, before they are deemed ready to begin the 2,000 mile journey to The Macallan distillery in Speyside in Scotland. Here they will receive The Macallan ‘new make’ spirit that will slowly mature into the satisfying complex Single Malt. Website: www.themacallan.com
Award sponsors AzureTax Ltd
AzureTax is exclusively dedicated to high-level global tax planning and wealth protection and spearheads a transparent, strategic and ethical approach to tax advice. Answering the increasing need for tax planning to be a discipline in its own right, AzureTax provides independent, innovative and rigorous solutions which deliver both results and long term accountability. Our professionals bring clarity to the often complex and ever changing world of tax. We are committed to each client and their individual needs. This gives AzureTax its distinct edge. Contact details Tel: +852 2123 9370 Fax: +852 2122 9209 Website: www.azuretax.com
China Legal Career
CLC is a leading legal executive search firm with offices in Beijing, Shanghai and Hong Kong to cover the whole Greater China legal market. We work with top US and UK law firms for their partner and associate placements, and with multinational corporations for their senior legal talent placements. We differentiate ourselves by our depth and width of our local connection, specialization in legal search and focusing on the high echelon of the market. Our recruiting consultants all come from international and legal background who adhere to the highest ethical standards and conduct searches in strict compliance with professional codes. Contact details Beijing: +86 10 6510 2236 Shanghai: +86 21 6360 7270 Hong Kong: +852 2545 5907 Email: clc@chinalegalcareer.com Website: www.chinalegalcareer.com
Holman Fenwick Willan
Holman Fenwick Willan is an international law firm advising businesses engaged in all aspects of international commerce. With offices in Asia-Pacific, the Middle East, Europe and South America, the firm has a built a reputation worldwide for excellence and innovation and has focused the development of its capabilities in the following core sectors: Aviation; Construction, Engineering & Infrastructure; Commodities; Energy; Financial Institutions; Insurance & Reinsurance; Logistics; Mining; Ports & Terminals; Real Estate: Shipping; Space; Superyachts and Travel, Cruse and Leisure . We have over 125 years experience of working with other law firms in jurisdictions throughout the world. Established in 1978, our Hong Kong office has been serving international and domestic clients in China and the Asia region for 34 years. Contact details Paul Hatzer, Partner Tel: +852 3983 7788 Email: paul.hatzer@hfw.com
IPP Wealth Advisers Ltd
Founded in 1983, IPP originates from Singapore where it is the oldest and most established financial advisory, with client Assets Under Advice of around $2 Billion, making us one of the largest in Asia. Already with an office in Kowloon, this year IPP has expanded with a new office in Central, offering dedicated expat and international financial advice. With a subsidiary registered with PIBA and another approved by the SFC (Type 1 and Type 4), IPP is uniquely placed to offer our clients a full range of services. Contact details Tel: +852 3713 7188 Email: expat@ippfa.com.hk Website: www.ippfa.com/eag or www.ippfa.com.hk Contact person: Ian Pryor
54
hong kong law awards
ASIAN LEGAL BUSINESS November 2012
Lewis Sanders Legal Recruitment
Synmax Translation
Contact details Lindsey Sanders, Managing Director +852 2537 7409 lsanders@lewissanders.com Emily Lewis, Managing Director +852 2537 7408 elewis@lewissanders.com Tel: +852 2537 7410 Fax: +852 2537 7412 Email: recruit@lewissanders.com
Contact details Kevin Lu, Director Toll: 400 888 1072 Direct: +86 21 3823 0421 Mobile: +86 134 8204 1399 Email: kevinlu@synmaxtrans.com Website: www.synmaxtrans.com
Lewis Sanders is a specialist legal recruitment consultancy offering a full range of recruitment solutions. Using our extensive market knowledge, and expertise we place lawyers at all levels with international law firms, global financial institutions and multi-national companies across Asia. We provide detailed marketspecific knowledge and up to date information on job opportunities, salaries and market trends. Lewis Sanders has built its reputation on its core values of integrity, trust and professionalism. This approach has enabled us to establish and maintain long standing relationships with candidates and clients and has positioned us as one of Hong Kong’s leading legal recruiters.
Paul, Weiss
Paul, Weiss is an international law firm with one of the world’s leading Communications and Technology practices. In Asia, our team consistently wins Asia’s top “IT/Telecommunications Law Firm of the Year” awards in recognition of our M&A, private equity and regulatory efforts in the telecommunications and IT sectors. The firm represents a wide variety of providers and users of communication goods and services, as well as other entities with interests in communications and technology businesses and regulatory decision making. Contact details Jeanette K. Chan, Partner Tel: +852 2846 0300 Email: jchan@paulweiss.com
Pinsent Masons
Pinsent Masons is a full service global law firm with over 1500 lawyers worldwide. It provides a full range of legal services to major international corporations, institutions and public bodies. The firm specialises in providing legal advice to the Infrastructure, Energy & Natural Resources, Advanced Manufacturing & Technology Services, and Financial Services Sectors.
Founded in 2007, Synmax Translation has since been fully committed to providing high-quality legal translation services to international and domestic law firms, investment banks, PE/VC funds and MNCs. Most of our translation professionals have legal education in U.S./U.K. as well as in China and boast years of working experience in translating legal documents in the area of capital markets, PE/VC investments and cross-border M&A transactions. Synmax Translation seeks to be your reliable business partner and most preferred go-to service provider in addressing your needs for legal translation.
Thomson Reuters
Thomson Reuters is the world’s leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the legal, tax and accounting, financial, science and media markets powered by the world’s most trusted news organization. Thomson Reuters employs more than 55,000 people in over 100 countries worldwide.
Sweet & Maxwell
Sweet & Maxwell, a proud part of Thomson Reuters, has more than 200 years of heritage in legal publishing and content development. Sweet & Maxwell delivers detailed and specialist knowledge, understanding and commentary across a wide range of essential subjects reflecting the very latest issues in Hong Kong law and business in traditional an innovative formats. From trusted print works such as the Hong Kong White Book and Archbold Hong Kong to the leading, online legal research tool, Westlaw HK, we are committed to developing comprehensive and substantive local content for lawyers and related professionals in Hong Kong. Contact details Eric Vogt, Senior Regional Marketing Manager Tel: +852 3762 3200 Email: eric.vogt@thomsonreuters.com
Pinsent Masons has been active in Asia for 30 years and has offices in Hong Kong, Shanghai, Beijing, Singapore, Doha, Dubai, Munich and throughout the UK. Contact details Tel: +852 2521 5621 Vincent Connor, Head of Hong Kong Office: vincent.connor@pinsentmasons.com Brian Scott, Business Development Executive: brian.scott@pinsentmasons.com
Samsonite Asia Limited
Samsonite, created in 1910 by entrepreneurial Colorado native Jesse Shwayder, is the world’s leading luggage brand. Inspiring travel worldwide, Samsonite helps global travellers to cover miles and create memories with revolutionary travel solutions. Preserving the brands longstanding history of breakthroughs in research and development, Samsonite has embedded its place at the forefront of the travel world with a number of industry firsts. Samsonite maintains a worldwide vision that continues to enable the traveller to travel further, with always lighter, stronger and innovative products at his side.
Withers
Withers is the world’s only international law firm dedicated to providing fully integrated local and cross-border advice in relation to the business and personal interests of successful people. With 107 partners and over 270 other lawyers, we have unparalleled expertise in tax law, trusts, estate planning, family law and other legal issues facing individuals and their families. Withers now has a top ranking for Private Client/Wealth Management in Chambers Asia and won the Asian Legal Business Matrimonial Law Firm of the Year award in 2011. Today, the firm has ten offices in Asia, US and Europe. Contact details Marcus Dearle Tel: +852 3711 1600 Email: Marcus.dearle@withersworldwide.com
Contact details Customer hotline: +852 3753 6711
Supporting Organisations
proudly presented by
TV
YOUR CONTENT ON THE ALL-NEW ALB TV RAISE YOUR PROFILE Increase the visibility of your organization or an individual, through your own programming.
DEMONSTRATE YOUR EXPERTISE Distinguish your organization’s capabilities through multimedia programming.
OPTIMIZE REACH Leverage our tagging functionality to ensure your programs are found by the right people at the most relevant time.
PROMOTE YOUR BRAND Brand your video content with a descriptive overlay.
Quickly and easily engage with the legal community in a compelling and direct way. Reach new and existing clients with differentiated insights and analysis, unlike ever before. By joining the ALB TV network, you can distribute your own video content directly to the desktops of private practice attorneys and corporate counsel. If you don’t yet have your own video capabilities, our multimedia solutions can help you create webcasts, webinars and online video presentations to increase the reach, engagement and measurability of your communications programs across marketing, business development, and public relations.
ENGAGE YOUR AUDIENCE Supplement your video with additional elements such as PDFs, firm profiles, partner bios, podcasts and hyperlinks back to your website.
Technical Requirements - ALB TV supports the following import formats: AUDIO CODECS • PCM, MP3, DTS • AAC, AMC, AMR-NB • WM Audio, RealAudio
MEDIA CONTAINERS • HDV • MXF (including D-10/IMX) • MPEG-2 PS, MPEG-2 TS • GXF, LXF, QuickTime • WMV, ASF, AVI, VOB • 3GPP, 3G2 • WMA, WAV, Broadcast WAV
SYSTEMS • Leitch VR, Nexio • Grass Valley Profile, K2 • Omneon Spectrum • Quantel sQ • Avid Editing Systems • Apple Final Cut Pro • Adobe Premiere Pro • Grass Valley Edius
56
Sponsored REGIONAL UPDATES
ASIAN LEGAL BUSINESS november 2012
SPONSORED UPDATE: CHINA Draft Amendments to NDRC Tentative Measures for the Approval of Foreign Invested Projects
CHINA
On August 16, 2012, eight years after it publishing the Tentative Measures for Administration of Approval of Foreign Invested Projects (“Tentative Measures”), the National Development and Reform Commission (“NDRC”) have finally published the Draft Amendments (“Draft Amendments”), demonstrating its strengthened authority over foreign investment in China. Under the Draft Amendments: • two additional types of projects will be subject to NDRC Approval:
PHILIPPINES
Malaysia
SINGAPORE
1. reinvestments by foreign- invested enterprises in China (“FIE Reinvestment”); and 2. projects involving foreign invested partnerships. Instead of merely filing with the NDRC after their establishment, RMB funds will be subject to NDRC approval prior to their establishment. • NDRC will be empowered to approve projects invested by foreign investors by using RMB. This, together with NDRC’s authority of approving FIE Reinvestment, authorizes NDRC to approve projects invested by RMB funds with foreign general partners. This is consistent with NDRC’s response to Shanghai Development and Reform Commission in April 2012 in respect of treating investment by an RMB fund with a foreign general partner as foreign investment.
SPONSORED REGIONAL UPDATES
• NDRC will have the authority to approve projects where the investment amount is US$500 million or above, which currently requires State Council’s confirmation. Additionally, local DRCs will be authorized to approve “encouraged” or “permitted” projects with an investment amount under US$300 million (a USD 200 million above the limit under the Tentative Measures). • sustainable development and energy conservation are emphasized, and applicants are required to include the following additional analysis in their application:
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Sponsored REGIONAL UPDATES
SPONSORED UPDATE: SINGAPORE
(i) (ii)
exploration and comprehensive utilization of resources; and an energy saving plan.
• in connection with M&A of domestic enterprises by foreign investors, where the production capability and investment amount of the target is not increased, the application report may be simplified to include: i) ii) iii) iv) v) vi)
basic information of the target, acquirer and the transaction; post transaction operation plan; business scope; shareholding structure; financing plan ; the use of proceeds, etc.
Additionally, M&As relating to national security should be approved under the relevant regulations. This is consistent with the joint initiative between NDRC and MOFCOM in implementing a scheme of national security review announced last year. • public consultation may also be conducted if the NDRC considers a project as impacting public interest. The time period of consultation is in addition to the 20 working days statutory time limit on the approval by NDRC.
Written by Jeanette Chan, Partner Zuolong Wu, Associate Paul, Weiss, Rifkind, Wharton & Garrison Hong Kong Club Building, 12th Floor 3A Chater Road, Central Hong Kong E: jchan@paulweiss.com T: +852 2846 0300
RECENT CASE UPDATE: VALIDITY OF AGREEMENT TO “NEGOTIATE IN GOOD FAITH” Introduction In HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) (“Landlord”) v Toshin Development Singapore Pte Ltd (“Tenant”) [2012] SGCA 48, the Singapore Court of Appeal upheld a contractual clause which requires the parties “to negotiate in good faith”. In its judgment, the Court of Appeal also elaborated on the scope of “good faith” obligation during negotiation. Background This case involved a dispute between the Landlord and the Tenant over a contractual rent review mechanism (“Rent Review Mechanism”) in the 20-year term lease agreement between them, which is divided into separate rental terms. Under the Rent Review Mechanism, the new rent for each new rental term is determined through a three-stage process as follows: (1) the parties would first “in good faith endeavour to agree” on the prevailing market rental value; (2) if the parties fail to agree on the market rental value, the parties shall jointly appoint three international firms of licensed valuers to determine on the same; (3) if the parties fail to agree on the selection of valuation firms, the President of the Singapore Institute of Surveyor and Valuers would nominate such firms. Before the last rental term, the Tenant, without notifying the Landlord, unilaterally obtained a few valuation reports on the market rental value. During the rental review exercise, the Landlord discovered the Tenant’s action and thus alleged that the Tenant had breached their agreement by acting in bad faith. Issues The main issue of this case was whether the Tenant had breached its duty to “in good faith endeavour to agree” on the new rent. The Court of Appeal also discussed whether the contractual clause directing the parties to “in good faith endeavour to agree” is valid in law and if valid, what is the scope of the parties’ obligation of good faith during negotiation.
57
Court of Appeal’s Decision The Court of Appeal held that the Tenant had breached its “good faith” obligation. However, the Rent Review Mechanism had not been rendered inoperable due to the breach of the Tenant’s obligation of good faith as there is nothing to suggest that the Rent Review Mechanism would be irretrievably compromised as a result of the Tenant’s action. The Court of Appeal further held that an express term obliging the parties “to negotiate in good faith” is valid in law. The scope of “good faith” obligation was then elaborated by the Court of Appeal in the following ways: (a) It requires parties to act honestly and observe the accepted commercial standards of fair dealing in the performance of the identified obligations. (b) What constitutes “commercial standards of fair dealing” where there is an express contractual duty of good faith will depend heavily on the commercial nature and purpose of the contract in question. (c) It encompasses a duty to act fairly and honestly, having regard to the legitimate interests of the other party. Comments This case is significant as it is now a well settled principle of law in Singapore that “negotiate in good faith” clause or other clauses similar in nature can be valid and enforceable in law. Therefore, parties ought to be prepared to act fairly and honestly in ensuring that they observe the reasonable “commercial standards of fair dealing” in the performance of their obligations when they choose to incorporate such express clause into their agreement. Written by Ms Nicole Ong Hwee Koon Foreign Counsel Legal Associate (Corporate Practice) Tel: (65) 6322 2235 Fax: (65) 6534 0833 E-mail: nicoleong@loopartners. com.sg Ms Serene Sia Foreign Counsel Senior Legal Associate (Corporate Practice) Tel: (65) 6322 2205 Fax: (65) 6534 0833 E-mail: serenesia@loopartners. com.sg Loo & Partners LLP 16 Gemmill Lane Singapore 069254 www.loopartners.com.sg
58
Sponsored REGIONAL UPDATES
SPONSORED UPDATE: MALAYSIA
NEW GUIDELINES FOR COMPETITION LAW IN MALAYSIA Since the coming into force of the Malaysian Competition Act 2012 (“Act”) on 1 January 2012, the Malaysian Competition Commission (“MyCC”) has to date published 4 guidelines under the Act to assist in its administration and enforcement. They are: (a) Guidelines on Market Definition (b) Guidelines on Chapter 1 Prohibition (c) Guidelines on Chapter 2 Prohibition (c) Guidelines on Complaint Procedures (collectively, “Guidelines”). It is interesting to note that though the position taken by MyCC is largely in sync with the competition law regimes in other countries, in certain instances, MyCC’s position appears to be stricter. There is a safe harbour for agreements: (i) between competitors where their combined market share in the relevant market does not exceed 20%; and (ii) between non-competitors where the individual market share of each party in its respective market does not exceed 25% The notion of agreement is very broad. Malaysian business will probably be surprised to hear that “an agreement could be found where competitors attending a business lunch listen to a proposal for a price increase without objection”. Mere presence with competitors at an industry association meeting where an anti-competitive decision was made may also be sufficient to implicate an attendance at the meeting. The Guidelines states that businesses should be wary of simply following the prices of competitors unless the decision was made completely independently from all other competitors and there is a reasonable explanation for following each other. This position is stricter than the EU where a decision made unilaterally will fall outside the prohibition even if the decision was made without a reasonable explanation. Exchanging current price information may be deemed anti-competitive. Further, in the case
of vertical agreements, MyCC has indicated that it will take a strong stance against minimum resale price maintenance (“RPM”). Even maximum or recommended retail pricing which “serves as focal point” for downstream collusion may be deemed anti-competitive. This will have significant impact on most of the vertical agreements in Malaysia. Companies that possess dominant positions in their relevant market must be extra cautious in their business practices. Market share of above 60% would be indicative of dominance though market share alone is not conclusive. Other factors include the degree of product differentiation, barriers to new entry, collective dominance etc. To illustrate, an enterprise with new product and new features protected by patents could be considered dominant even though it has only 20%-30% market share which is rapidly growing as consumers switch to new technology. It is expected that more guidelines will soon be issued by MyCC. In fact, it was mentioned in the Guidelines that MyCC will issue a separate Guideline to address both intellectual property rights and franchise agreements. This article is for information purposes only. The contents do not constitute legal advice and should not be regarded as a substitute for detailed advice in individual cases. No decision to act or not to act in a particular way should be taken merely on the basis of this article, and detailed legal advice should always be sought at the earliest possible moment.
Written by Andre Gan Partner Tel: (603) 2298 7828 E-mail: andre.gan@wongpartners.com Chong Jing En Associate Tel: (603) 2298 7982 E-mail: chong.jing.en@ wongpartners.com Wong & Partners Level 21, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia Fax: (603) 2282 2669
ASIAN LEGAL BUSINESS november 2012
SPONSORED UPDATE: PHILIPPINES CYBERCRIME PREVENTION ACT OF 2012 The Cybercrime Prevention Act of 2012 was recently enacted in line with the State’s recognition of the vital role of information and communications industries in the nation’s overall social and economic development and the need to protect and safeguard computer systems and networks from all forms of misuse, abuse and illegal access. The Act punishes the following categories of “cybercrimes”: Offenses against the confidentiality, integrity and availability of computer data and systems – This category includes crimes such as illegal access of a computer system (or accessing a computer system without right), illegal interception of any non-public transmission of computer data to, from or within a computer system and cybersquatting or the acquisition of a domain name in bad faith to profit, mislead, destroy reputation and deprive others from registering the name. Computer-related offenses – This category includes computer-related forgery (committed by inputting, altering or deleting computer data without right resulting in inauthentic data), computer-related fraud (committed by the unauthorized input, alteration or deletion of computer data or program or interference in the functioning of computer system that causes damage) and computer-related identity theft (or the intentional acquisition, use, misuse, transfer, possession, alteration or deletion of identifying information belonging to another, without right). Content-related offenses – This category includes unsolicited commercial communications (except when certain conditions are present such as when the communication contains a way for the recipient to reject receipt of further communications from the source) and libel (by committing libel under the Revised Penal Code through a computer system). The Act also punishes any person who attempts, or willfully abets or aids in, the commission of any cybercrime. The Act also provides that all crimes defined under existing laws, if committed through and with the use of information and communications technologies shall be covered by the relevant provisions of
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
Sponsored REGIONAL UPDATES
59
the Act. Furthermore, a prosecution under the Act shall be without prejudice to any liability for violation of any provision of existing penal laws. The Act also provides for the creation of an Office of Cybercrime within the Department of Justice, to be the central authority in all matters relating to international mutual assistance and extradition, and a Cybercrime Investigation and Coordinating Center, which is empowered to, among others, formulate a national cybersecurity plan and extend immediate assistance for the suppression of real-time commission of cybercrimes.
CHINA
The Act took effect on October 3, 2012. The Philippine Supreme Court, however, upon petitions filed questioning the constitutionality of the Act, issued a temporary restraining order against its implementation for 120 days from October 9, 2012. Oral arguments on the petitions are scheduled to be held on January 15, 2013. Written by Jan Celine C. Aba単o-Ranada Senior Associate E-mail: jccabano@syciplaw.com SyCip Salazar Hernandez & Gatmaitan 7/F SyCipLaw Center 105 Paseo de Roxas, Makati City, Philippines Tel: (632) 982-3500, 982-3600, 982-3700 Fax: (632) 817-3145, 817-3896 http://www.syciplaw.com
PHILIPPINES Malaysia
SINGAPORE
SPONSORED REGIONAL UPDATES
60
SPONSORED UPDATES
ASIAN LEGAL BUSINESS november 2012
SPONSORED UPDATE
SPONSORED UPDATE
EMERGING MARKETS
international tax
INDONESIA UPDATE: NEW REQUIREMENTS ON FRANCHISING BUSINESS
2012 South African Tax Statistics: Less is more The South African Revenue Service (SARS) recently released the 2012 Tax Statistics bulletin. The bulletin provides an overview of South African tax revenue collections and tax return information for the 2008 to 2012 fiscal years. The report contains some impressive figures.
F
ranchising is increasingly becoming an appealing investment opportunity for entrepreneurs in Indonesia, not only because of the good chance of success, but more importantly because it provides an alternative investment method for rookie entrepreneurs who more often than not lack managerial, marketing and business startup knowledge. The Indonesian government also hopes that franchising enterprises will expand and grow to boost the demand for labour and increase productivity in general.
The Ministry of Trade of Indonesia recently issued Regulation No. 53/M-DAG/PER/8/2012 on Organizing Franchise Businesses (“New Franchise Regulation”). The key points in the New Franchise Regulation which were not otherwise covered under the previous regulation are as follows:
AzureTax Ltd
a. Franchise businesses will have to utilize and sell domestic goods/ services at a rate of 80% of the total goods/services required. b. Franchisors are to prioritize Small and Medium Enterprises (“SMEs”) as or to become franchisees or suppliers, if the SMEs are able to meet the franchisor’s terms and conditions. c. A franchisor may not appoint a franchisee that is directly or indirectly controlled by the franchisor. d. The franchise operation must not deviate from the scope of the business for which it is licensed. e. In the event of a dispute arising from a unilateral termination of the franchise agreement by the franchisor, the dispute must be settled before the franchisor can appoint a new franchisee. f. The government authorities that will process the relevant franchise permit applications have been designated as follows – (i) Surat Tanda Pendaftaran Waralaba (STPW) to become the Trade Services Office, which will process applications from franchisors and franchisees who are engaged with foreign franchisors; (ii) DKI Jakarta trade authority, which will process applications made in Jakarta by all other franchisees; and (iii) the Regency/Municipal trade authority, which will process applications made in other regencies or cities by all other franchisees. g. There is an obligation to display the Ministry of Trade of Indonesia “Certified Franchise” logo. Suite 1010 10/F 89 Queensway Lippo Centre Hong Kong
金鐘道89號力寶中心2座10樓1010室
Tower Two
As the New Franchise Regulation was issued only recently, it remains to be seen how the authorities will implement and/ or interpret its provisions/requirements, particularly on: (i) the obligation to use domestic goods/services (80% of the total requirement) for every franchise business; and (ii) the scope of direct or indirect control over a franchisee which triggers the prohibition as set out in item (c) above. These are expected to become clearer once additional implementing regulations are issued and as the New Franchise Regulation are implemented by the authorities in practice. Kelvin Chia Partnership in association with Martia & Anggraini Partnership Martianingrum T: +628129598602 E: martia.ningrum@kcpartnership.com
ANTONIA AYU ANGGRAINI T: +62816635784 E: ayuanggraini@kcpartnership.com
According to the report over the last 18 years SARS has made tremendous progress in raising the levels of tax compliance and in broadening the tax base. The number of registered individual taxpayers increased from 1.7 million in 1994 to more than 6 million in 2009/10. This number increased to 13.7 million individuals by 31 March 2012 due to a policy change that registered all individuals in the country who are formally employed. Revenue growth in the country has increased progressively over successive fiscal years from R113.8 billion in 1994/95 to R742.65 billion 2011/12. This represents total growth of almost 550% since 1994, at an average rate of 11.6% per year. According to a Business Day report SARS believes that the statistics showed the effects of the country’s progressive tax system, which ensured that lowerincome earners paid less tax than high earners. In 2011, the top 9.7% of assessed taxpayers were liable for 57% of personal income tax, whereas 42.4% of assessed taxpayers earning less than R120 000 only contributed 3.3% of the assessed tax. 221 corporate taxpayers with taxable income in excess of R200 million were liable for 50% of the company tax assessed in South Africa. However, only a third of assessed companies declared taxable income, the rest reported losses or zero taxable income. In contrast to these impressive figures the latest International Finance Corporation (IFC)-World Bank ‘Doing Business’ report, saw South Africa fall to 39th place out of 185 economies. The report is now in its 10th edition and measures business regulations especially for SME’s across 185 economies. One of the main findings of the report was that, unsurprisingly “Smarter business regulation supports economic growth. Simpler business registration promotes greater entrepreneurship and productivity, while lower-cost registration improves formal employment opportunities. An effective regulatory environment boosts trade performance.” South Africa’s 39th position is a decline compared to the 2011 position. The overall ranking is a composition of various subcategories and includes: starting a business (53th), dealing with construction permits (39th), getting electricity (150th), registering property (79th), getting credit (1th), protecting investors (10th), paying taxes (32th), trading across borders (115th), enforcing contracts (82th) and resolving insolvency (84th). It is characteristic of high income countries to have simple and inexpensive regulatory processes combined with strong legal institutions. From these statistics it is evident that the South African economy is horribly skewed. A small number of people pay most of the taxes. It is these same people that are the industrious part of the population yet they are also subject to complex and expensive regulations. The figure that is most interesting is that South Africa only boast 2 263 persons who earn more than R5m a year. This represents less than 0.005 percent of the population.
10
TH ANNIVERSARY 12-12-12 Debbie Annells, CTA (Fellow) Managing Director A: AzureTax Ltd – Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong T: +852 2123 9339 (direct line), +852 2123 9370 (main line) F: +852 2122 9209 W: www.azuretax.com, a member of AzureTax Group
Supervised by the UK Chartered Institute of Taxation for purposes of anti money laundering legislation.
62
SPONSORS
ASIAN LEGAL BUSINESS november 2012
Country / Regional editors
The Country / Regional Updates section of ALB is sponsored by the following firms:
China
Malaysia
Paul, Weiss, Rifkind, Wharton & Garrison LLP is a globally oriented, full-service law firm employing over 700 lawyers worldwide. Paul, Weiss is headquartered in New York and has offices in Tokyo, Washington, D.C., Wilmington, Beijing, Hong Kong, Toronto and London.
Wong & Partners is a Malaysian law firm dedicated to providing a quality and solution-oriented legal services to its clients. Wong & Partners has grown steadily with international standards of quality and experience and the Firm has a solid commitment to training its lawyers, and invests in training, professional development and quality management programs with the aim of producing lawyers of global standard.
The Philippines
Singapore
Established in 1945, SyCipLaw is the largest law firm in the Philippines, with its principal office in Makati City, the country’s financial and business center, and branches in Cebu, Davao and Subic Bay. SyCipLaw combines its tradition of professional integrity and excellence with a time-tested ability to break new ground. The broad range of the firm’s expertise is reflected in its client base, which includes top corporations, international organizations and governments.
Loo & Partners was founded in 1985 as a niche practice, handling mainly banking, corporate, securities and commercial work. With the support of a comprehensive network of correspondent law firms, the firm serves its clients in their regional needs. Loo & Partners has been regularly noted for its IPO, M&A and general corporate work.
Vietnam
Shanghai
Indochine Counsel is a commercial law firm focusing on business law practice in the Indochina region. Our areas of practice include: Foreign Investment, Corporate & Commercial, M&A, Securities & Capital Markets, Banking & Finance, Property & Construction, Taxation, Intellectual Property, Information Technology & Internet, International Trade, Outward Investment & Offshore Incorporation, and Dispute Resolution.
Victory Legal is a boutique legal practice in Shanghai, focusing on general corporate, corporate finance and capital markets matters. Its clients include governmental authorities, State-linked enterprises, banking and financial institutions, MNCs, SMEs and foreign law firms. The firm has extensive network across the region. It serves clients’ domestic and regional needs.
fUJIAN Sphere Logic Partners is a mid-sized business law firm known for its offering of value, sophisticated legal solutions in a leaner approach across a range of practice areas, critical to the success of clients. We maintain an established global network with numerous law firms and relevant service providers. Our seasoned and cultureready professionals assist clients in cross-border investment, M&A and financing, governance and daily operations, identification of business opportunities and solving of complex legal disputes.
PRACTICE AREA AND INDUSTRY EDITORS
tHE iNDUSTRY uPDATES section of ALB is sponsored by the following firms:
Emerging Markets Kelvin Chia Partnership is a commercial law firm headquartered in Singapore with strong regional capabilities. With offices in Hanoi, Ho Chi Minh City, Yangon, Bangkok and Phnom Penh, and extensive experience all throughout Asia, we provide localized legal solutions consistent with international standards in emerging markets in Asia.
Intellectual property / Energy & Resources / Employment ATMD Bird & Bird is a dynamic and progressive firm with an established IP, corporate & commercial, competition and dispute resolution practice. The firm also has extensive regional experience advising both domestic and foreign clients on cross-border transactions. ATMD Bird & Bird has been voted Singapore’s Intellectual Property Firm of the Year at the 2005 and 2006 ALB Awards and the 2005 AsiaLaw (IP) Awards.
International tax AzureTax Ltd provides transparent strategic and ethical tax advice. Through our professional corporate and International, tax advisory and trustee services your tax plan is comprehensively implemented. Our advice provides you with independent innovative and rigorous solutions which deliver results and long-term accountability. We are qualified UK, U.S., Hong Kong and PRC tax advisors and complete tax filings for UK, U.S. and Hong Kong tax returns.
Alliances
ALB enjoys alliances with the following organisations:
ACCJ
CCCJ
Established in 1948 by representatives of 40 American firms, the ACCJ, a fully independent chamber of commerce, has grown into one of the most influential business organizations in Japan, with more than 2,700 members representing more than forty countries and 1,000 companies.
Promoting the development of commerce between Canada and Japan since 1975, the Canadian Chamber of Commerce in Japan (CCCJ) is a private sector, not-for-profit business organization serving its members through communications, networking and advocacy. Representing some 33 business sectors, the CCCJ is a member-driven, member-focused organization and is the longest serving Canadian Chamber in Asia with over 300 members.
JICN
HKCCA
The Japan In-house Counsel Network (JICN) is a professional association for in-house counsel working in, or having other affiliations with, Japan. JICN offers a forum for communication between members, social and networking opportunities, legal seminars, roundtable member discussions and other activities, as well as events with other lawyer and in-house groups. Visit www.jicn.jp for more details.
The Hong Kong Corporate Counsel Association is the pioneer association run for in-house counsel by in-house counsel in Hong Kong. It provides an efficient and effective range of benefits and services for its members’ professional development, including continuing legal education, a platform for networking and the exchange of ideas, information and experiences that are unique to the in-house role.
ssca The Singapore Corporate Counsel Association or SCCA was set up in 2002. It is the pioneer association representing in-house lawyers in Singapore. http://www.scca.org.sg
Corporate SCCA Singapore Counsel Association
IPBA 2012 New Delhi - India
SUNDRIES
WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business
63
Compiled by RANAJIT DAM
LAW STUDENT SPARKS MORAL PANIC WITH
SEX BLOG Think law students spend all their time studying law? Not National University of Singapore (NUS) student Alvin Tan who, with his girlfriend Vivian Lee, hit the headlines last month for their "Sumptuous Erotica" blog, which featured photos and videos recording their intimate moments. After becoming a major talking point in Singapore, and in the couple’s native Malaysia, Tan apologised to NUS. But they were initially unrepentant. "What do we have to apologize for?” asked Tan in an earlier YouTube clip. “Hurting your soft, sensitive feelings?" We don’t know if the couple violated obscenity laws or merely ruffled the feathers of the moral police, but it certainly beats pictures of them hitting their books and cramming for exams.
SINGAPORE SUMMER Law firms that have announced office openings and reopenings in Singapore in the past six months MONTH
LAW FIRM
October
Morrison & Foerster
October
Reed Smith
September
Freshfields
September
Maples and Calder
August
Ryan Lawyers
July
Bedell Cristin
May
De Brauw Blackstone Westbroek
April
Squire Sanders
BATA, TATA SUE OVER BOLLYWOOD SONG Some of India’s most powerful corporate names recently kicked off legal proceedings to try and stop the release of a song in a new Bollywood political thriller that blames them for exploiting the poor. “Chakravyuh," a film about Maoist rebels in eastern India, includes a musical number that has the lyric "Be it Birla or Tata, Ambani or Bata, everyone has exploited the country to protect their own interests/ It is with our blood that their engines run smoothly," and it’s no surprise the companies are riled up. Tata Sons, the main holding company of the sprawling Tata conglomerate, joined the Birla and Bata groups in launching legal proceedings in the Delhi High Court to remove the references to them which they consider defamatory, said AFP. Too bad no one wants to sue Bollywood producers for poor quality cinema; that would give the industry the reality check it sorely needs.
S$16 MILLION — AMOUNT ALLEGEDLY MISAPPROPRIATED FROM FIVE HEWLETTPACKARD-LINKED COMPANIES BY SINGAPOREAN ACCOUNTANT EWE PANG KOOI, ACCORDING TO CRIMINAL PROCEEDINGS GOING ON AGAINST HIM.
QUOTE OF THE MONTH
“BASICALLY WHAT THE LAW IS SAYING [IS THAT] ANYBODY WHO USES COMPUTERS SHOULD BE PUNISHED MORE. BUT WHY?” Philippine Senator Teofisto "TG" Guingona III on a libel provision in the country’s cybercrime law that could make retweeting a comment on Twitter or clicking a Facebook "like" button punishable
REUTERS/Tim Chong
INDEX
64
ASIAN LEGAL BUSINESS november 2012
SEOUL 2012
WWW.ASIANLEGALBUSINESSEVENTS.COM
IN-HOUSE LEGAL SUMMIT JW MARRIOTT SEOUL – 4 DECEMBER | 12월 4일 JW 메리어트 호텔에서
ALB Seoul In-House Legal Summit on 4 December at JW Marriott Seoul is a special forum for in-house corporate counsel to meet and network with peers. The expert speaker line-up includes: Hwan Jeong- Partner - Lee & Ko Lewis McDonald- Partner Singapore- Herbert Smith Freehills James Chun- Counsel- Hong Kong International Arbitration Centre Justin D’Agostino- HKIAC Council- Hong Kong International Arbitration Centre Jungwook Kim- Director, Legal Operations & Business Development- GlaxoSmithKline Korea Limited Baek, Seung Jae- Director- Ernst & Young Korea Jae Hyun Kim Hana J. Kim- Counsel- The Walt Disney Company Topics include: An Overview of the International Cartel Enforcement in Korea (will be conducted in Korean) Energy M&A Auction Processes: Strategies for Success (will be conducted in English) Planning Ahead: Mitigating Risk in Case of Dispute (will be conducted in English) In-House Counsel’s Role in Creating and Communicating Value for the Organisation (will be conducted in Korean) And much more! More information including the agenda can be found at www.asianlegalbusinessevents.com Or by email to Lucinda at lucinda.maguire@thomsonreuters.com Free passes apply for in-house counsel but are not applicable to law firms, related legal service provider companies and vendors
WORKSHOP SPONSORS
SUPPORTING ORGANISATIONS
A-H
아시아지역 법률전문 미디어 ALB가 주최하고 2012년 12월 4일 JW 메리어트 호텔에서 열리는 ALB 서울 인하우스 변호사 법률 심포지엄 (ALB Seoul In-House Legal Summit)는 인하우스 변호사들이 한자리에 모 이고 네트워크를 구축할 수 있는 기회의 장이 될 것입니다. 발표자: 정 환 – 법무법인 광장 (Lee & Ko) Lewis McDonald – 싱가폴 허버트 스미스 프리힐 (Herbert Smith Freehills) 파트너 James Chun - 홍콩 국제중재센터장 (HKIAC) Justin D’Agostino - 홍콩 국제중재센터장 (HKIAC) 김정욱- 글락소스미스클라인 코리아 (GlaxoSmithKline Korea Limited) 법무 & 사업운영 이사 백승재 -언스트 앤 영 코리아 (Ernst & Young Korea) 김재현 Hana J. Kim- 월트디즈니 변호사 주제: 한국의 국제카르텔 처벌 고찰 (한국어 발표) 에너지 인수합병경매 절차: 성공전략 (영어발표) 사전계획 수립: 분쟁발생 시 위험 경감 (영어발표) 조직을 위한 가치 창출과 소통에 있어 인하우스 변호사의 역할 (한국어 발표) 그 외 다수! 행사와 관련된 자세한 내용은 웹사이트를 참조해 주시기 바랍니다. www.asianlegalbusinessevents.com Email lucinda.maguire@thomsonreuters.com
ASSOCIATE SPONSORS
ALB SUPPORTS
I-P 9
Adamas Akin Gump Strauss Hauer &
PROUDLY PRESENTED BY
Q-Z
Jones Day
9
Shin & Kim
Jun He Law Offices
4
Simpson Thacher & Bartlett
20-34 4
Skadden, Arps, Slate,
4, 9
Kelvin Chia Partnership
60
Allen & Overy
4
King & Wood Mallesons
4, 6-7
Meagher & Flom
4
Anderson Mori & Tomotsune
4
Lee & Ko
20-34
Slaughter and May
4
60
Linklaters
Sullivan & Cromwell
4
Feld
Azure Tax Cleary Gottlieb Steen & Hamilton
20-34
9
Loo & Partners
57
Luthra & Luthra
6-7
Clifford Chance
4
Mori Hamada & Matsumoto
Dechert
9
Morrison & Foerster
4 4, 9
Tsunematsu
4
Gibson Dunn & Crutcher
6-7
Neev Capital
6-7
Hogan Lovells
6-7
Norton Rose
4
Paul, Weiss, Rifkind, Wharton & Garrison
REUTERS/Bobby Yip
4, 16-19
Deringer
Gatmaitan United Phosporus Ltd Weil, Gotshal & Manges White & Case
Nagashima Ohno &
Freshfields Bruckhaus
SyCip Salazar Hernandez &
56-57
Wong & Partners Yulchon
59 9 16-19 9 58 20-34
a trusted legal resource for global business challenges
Premier Member Firms in the Asia/Pacific Region
Throughout Asia and the Pacific and around the world, Lex Mundi member firms can help you meet the challenges of doing business globally.
Australia, Clayton utz Bangladesh, amir & amir Law associates China, Jun He Law offices Guam, blair sterling Johnson & Martinez Hong Kong, Deacons India, amarchand & Mangaldas & suresh a. shroff & Co. Indonesia, ali budiardjo, nugroho, reksodiputro Japan, nishimura & asahi Korea, Hwang Mok Park, P.C. Malaysia, skrine New Zealand, simpson Grierson Pakistan, rizvi, isa, afridi & angell Philippines, romulo Mabanta buenaventura sayoc & De Los angeles Singapore, rajah & tann LLP Sri Lanka, F. J. & G. De saram Taiwan, tsar & tsai Law Firm Thailand, tilleke & Gibbins international Ltd.
When business crosses borders, you need trusted legal advisors to navigate you through the local legal and business landscape. You can confidently turn to Lex Mundi’s 160 premier member law firms for help with your transactions, matters and disputes wherever they arise. Lex Mundi provides you access to internationally experienced and locally-connected business lawyers with the necessary market knowledge and expertise to help you succeed.
Locate a Lex Mundi member firm or member firm lawyer at www.lexmundi.com/lexsearch4.
www.lexmundi.com 1 6 0 P r e M i e r M e M b e r L aW F i r M s
|
2 1 , 0 0 0 L aW Y e r s
|
120 Countries
|
600+ oFFiCes
Asian powerhouse seeks local heroes
As the largest law firm in South East Asia, Rajah & Tann is now aiming even higher and we’re in need of exceptional heavyweight talent to help us continue to raise our game. For a perfect fit with our requirements, you’ll be a proven performer with at least 10 years’ PQE and high calibre expertise in your specialist area. Ideally, you’ll be qualified in one or more SEA jurisdiction. And, most important of all, you’ll combine a truly global outlook with a firm instinctive grasp of local challenges and opportunities across Asia. We’re looking for star performers: ambitious lawyers on track for equity partnership or practice lead status, and ready to work with us to make a real difference to our clients across Asia from day one. If that sounds like you, and you’re ready to take your career to a higher level, let’s talk. Contact: Lee Eng Beng SC, Managing Partner (eng.beng.lee@rajahtann.com)
Rajah & Tann LLP SINGAPORE | CHINA | MALAYSIA* | LAO PDR | VIETNAM | THAILAND | INDONESIA* | CAMBODIA* * associate firm
www.rajahtann.com