Legislation Update

New Acts

Securities Industry (Amendment) Act (A2/2000)

The Securities Industry (Amendment) Act 2000 makes various amendments to the Securities Industry Act. Most notably, new provisions will be inserted to provide for civil penalty and compensation in relation to insider dealing. The amendments came into force on 6 March 2000.

Highlights of the amendments are as follows:

1. The classes of persons excluded from the definition of ‘investment adviser’ are extended to include the following:

• A person who owns, operates or provides an information service through an electronic, broadcasting or telecommunications medium (provided certain conditions are satisfied).
• A person who provides credit rating services, where any analysis or report issued or promulgated by the person is issued or promulgated solely as incidental to the conduct of that person’s business of providing credit rating services, and does not contain any specific recommendation with respect to the acquiring of, disposing of, subscribing for, or underwriting of, any securities.

2. The definition of ‘stock market’ has also been amended.
3. A new section 33A has been inserted pursuant to which the MAS may issue notices to any holder of a dealer’s licence, an investment adviser’s licence or a representative’s licence to direct such holder to comply with the requirements specified in the notice. A holder who contravenes or fails to comply with any of the requirements specified in the notice shall be guilty of an offence.
4. A new section 43A has been inserted to provide the places at which a Register of Interests in Securities shall be kept. Where the Register of Interest in Securities is kept in electronic form, it must be fully accessible at the places at which the Register is required to be kept.
5. Section 53 has been amended to prohibit a dealer or investment adviser from granting any unsecured advance, unsecured loan or unsecured credit facility to any of its directors, employees or associated persons in certain circumstances. Presently, the prohibition is limited to unsecured credit and does not specifically cover directors.
6. A new section 55A has been inserted to introduce the definitions of ‘Custodian’, ‘Foreign Custodian’, ‘Property’ and ‘Trust Account’ for the purposes of Part VII of the Act.
7. Sections 58 and 65 have been amended and re-enacted respectively to require a dealer or investment adviser to pay or deposit any moneys or property held by him on trust for a client into a trust account, and to allow the dealer or investment adviser to establish and maintain trust accounts for any of his clients with a foreign custodian.
8. A new Part VIIIA (section 96A to section 96F) has been inserted to provide the legislative basis for the MAS to provide assistance to a regulatory authority in a foreign country for the purpose of the regulation of the securities industry in that country.
9. Section 104 has been re-enacted to enhance the penalties applicable to persons who contravene any of the provisions of Part IX of the Act, and to prevent a prosecution of a person for an offence under section 103 (insider trading) if a civil penalty order has been made against him under the new section 104A.
10. New sections 104A to 104G have been inserted to provide for civil penalty and compensation in relation to insider dealing. The effect of these new provisions were discussed in this column in the February 2000 issue of The Singapore Law Gazette.
11. Section 105 has been amended by excluding from its scope a contravention of section 103 (which is now dealt with under the new sections 104C and 104E) and by increasing the time bar from two years to six years.

Futures Trading (Amendment) Act (A3/2000)

The Futures Trading (Amendment) Act 2000, which came into force on 6 March 2000, makes the following changes to the Futures Trading Act:

1. To provide that where the name of the Singapore International Monetary Exchange Limited is changed pursuant to the Companies Act, the change of name shall not affect the identity of the body corporate formerly known by that name.
2. A new section 21A has been inserted pursuant to which the MAS may issue notices in writing to any holder of a licence granted under the Act to direct such holder to comply with the requirements specified in the notice. A holder who contravenes or fails to comply with any of the requirements specified in the notice shall be guilty of an offence.
3. Section 46 has been amended to provide references to a clearing house in view of the relevant provisions of the Exchanges (Demutualisation and Merger) Act 1999.
4. Section 49 has been amended to clarify that directions issued by the MAS are deemed not to be subsidiary legislation.
5. A new Part VIIA (sections 49Q to 49V) has been inserted to provide the legislative basis for the MAS to provide assistance to a regulatory authority in a foreign country for the purpose of the regulation of the futures industry in that country.

Development Investment Fund Act 2000 (A5/2000)

The Development Investment Fund Act 2000 establishes a new Government fund to be called the Developmental Investment Fund to facilitate the better accounting and management of public moneys invested for developmental purposes, and to allow loans to be raised for the purposes of the Fund. The Act is operative from 1 April 2000.

Defence Science and Technology Agency Act 2000 (A6/2000)

The Defence Science and Technology Agency Act 2000, which is operative from 15 March 2000, establishes and incorporates a new public corporation to be called the Defence Science and Technology Agency and transfers to the Agency the functions, property, assets, liabilities and employees of the following departments of the Ministry of Defence:

1. Command, Control, Communications and Computer Systems Organisation;
2. Defence Material Organisation;
3. Defence Medical Research Institute;
4. Defence Procurement Division;
5. Directorate of Research and Development;
6. Lands and Estates Organisation;
7. Resource Planning Office; and
8. Systems and Computer Organisation.

Singapore Management University Act 2000 (A7/2000)

The Singapore Management University Act 2000 provides for certain matters relating to the Singapore Management University (the university company). The university company was established as a company limited by guarantee incorporated under the Companies Act on 12 January 2000. Its main object is to provide undergraduates business education in Singapore. The provisions of the Act seek to achieve the following:

1. to state the function of the university company as including that of conferring and awarding degrees, diplomas and certificates;
2. to facilitate the provision of Government funds to the university company; and
3. to empower the Government to exercise certain controls over the management of the university company in the interest of the public.

The Act is operative from 1 April 2000.

Medical and Elderly Care Endowment Schemes Act 2000 (A8/2000)

This Act repeals and re-enacts the Medical Endowment Scheme Act as the Medical and Elderly Care Endowment Schemes Act 2000 for the following purposes:

1. to establish a new Government fund to be called the ElderCare Fund to subvent the recurrent costs of approved step-down care providers; and
2. to reconstitute the Medifund to provide grants to Medifund committees to defray hospital charges, fees and expenses incurred by any patient in approved health care institutions who is unable to pay such charges, fees and expenses and is approved by a Medifund committee.

The Act is operative from 27 March 2000.

New Subsidiary Legislation

Securities Industry (Amendment) Regulations 2000 (S107/2000)

Pursuant to section 65(1) of the Securities Industry Act, an investment adviser is obliged to make arrangements for a custodian to maintain a trust account in Singapore for his clients. Previously, the custodian with which the trust account is maintained must be:

• a financial institution appointed by the Investment Adviser with the prior written consent of that client; or
• a financial institution appointed by that client.

With effect from 6 March 2000, section 65 has been amended to extend the meaning of ‘custodian’ to the following:

1. a bank licensed under the Banking Act (Cap 19) of Singapore;
2. a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap 186) of Singapore;
3. a trust company registered under the Trust Companies Act (Cap 336) of Singapore;
4. a depository agent as defined in Division 7A of Part IV of the Companies Act (Cap 50) of Singapore; or
5. such other financial institutions or corporations as the MAS may prescribe.

However, section 65 also provides that an investment adviser may make arrangements to establish and maintain a trust account for any of his clients with a foreign custodian which is appointed by either the investment adviser with the prior consent of the client concerned, or the client himself. The phrase ‘foreign custodian’ refers to such financial institution or corporation, having a place of business outside Singapore, as may be prescribed by the MAS.

The Securities Industry Regulations have been amended with effect from 6 March 2000 to provide for the meaning of ‘foreign custodian’. Pursuant to regulation 50A, the phrase ‘foreign custodian’ refers to a financial institution or corporation which is licensed, registered or authorised to conduct banking business, or to act as a custodian, in its country or territory of operation.

The foreign custodian must also satisfy one of the following rating requirements:

1. an individual rating of at least ‘B’ by Fitch IBCA;
2. an issuer rating of at least ‘B’ by Thomson BankWatch;
3. a financial strength rating of at least ‘B’ by Moody’s; or
4. a long-term issuer credit rating of at least ‘AA-’ by Standard and Poor’s.

Property Tax (Non-Residential Buildings) (Remission) (Amendment) Order 2000 (S109/2000)

It was announced in the Budget Statement 2000 that the property tax rebate on commercial and industrial properties will be extended for another year, ie from 1 July 2000 to 30 June 2001, at the lower rate of 25%. The rebate was first introduced on 1 July 1998 at the rate of 55%.

The Property Tax (Non-Residential Buildings) (Remission) (Amendment) Order 2000 implements this announcement. The Order will come into operation on 1 July 2000.

Elizabeth Wong
Allen & Gledhill