Legislation

New Acts

Securities and Futures Act (A42/2001): Final Implementation

Pursuant to the Securities and Futures Act (Commencement) (No 2) Notification 2002 (S454/2002), the remaining provisions of the Securities and Futures Act (the ‘SFA’) which are not yet in force will come into operation on 1 October 2002.

This final phase brings into operation the following parts of the SFA:

• Markets (Part 2);
• Clearing Facilities (Part 3);
• Capital Markets Services Licence and Representative’s Licence (Part 4);
• Accounts, Customer Assets and Audit (Part 5);
• Conduct of Business (Part 6);
• Disclosure of Interest (Part 7);
• Investor Compensation Scheme (Part 11); and
• Market Conduct (Part 12).
  

The MAS has also issued the following subsidiary legislation to give full effect to the SFA:

• Securities and Futures (Revocation) Order 2002 (S460/2002);
• Securities and Futures (Market Conduct) (Exemptions) Regulations 2002 (S459/2002);
• Securities and Futures (Exemption from Requirement to Hold Capital Markets Services Licence) Regulations 2002 (S458/2002);
• Securities and Futures (Licensing and Conduct of Business) Regulations 2002 (S457/2002);
• Securities and Futures (Clearing Facilities) Regulations 2002 (S456/2002); and
• Securities and Futures (Markets) Regulations 2002 (S455/2002).
  

The new SFA subsidiary legislation is also operative from 1 October 2002 save for regulation 54 of the Securities and Futures (Licensing and Conduct of Business) Regulations 2002.

Regulation 54 will come into force on 1 April 2003. Regulation 54 relates to the application of the Securities and Futures (Licensing and Conduct of Business) Regulations 2002 to banks, merchant banks and finance companies.

Following the full implementation of the SFA, the Securities Industry Act (Cap 289) and the Futures Trading Act (Cap 116) will be repealed with effect from 1 October 2002.

Financial Advisers Act (A43/2001) Comes Into Force

Save for s 106 (transitional provisions), the Financial Advisers Act (the ‘FAA’) is presently not in force yet.

Pursuant to the Financial Advisers Act (Commencement) Notification 2002 (S461/2002), the remaining provisions of the FAA will come into operation on 1 October 2002.

The MAS has also issued the following subsidiary legislation to give full effect to the FAA:

• Financial Advisers (Insurance Broking Premium Accounts) (Transitional and Savings Provisions) Regulations 2002 (S464/2002);
• Financial Advisers (Appeals) Regulations 2002 (S463/2002); and
• Financial Advisers Regulations 2002 (S462/2002).

The new FAA subsidiary legislation is also operative from 1 October 2002.

Following the full implementation of the FAA, the Insurance Intermediaries Act will be repealed with effect from 1 October 2002.

Insurance (Amendment) Act 2001, Section 20 Comes Into Force

With the repeal of the Insurance Intermediaries Act, the regulation of insurance intermediaries (with the exception of direct life insurance brokers) will be dealt with under the Insurance Act (Cap 142).

Section 20 of the Insurance (Amendment) Act 2001 inserts a new Part IIB (new ss 35M to 35ZO) into the Insurance Act. The new provisions relate to insurance intermediaries and the conduct of insurance broking business. Section 20 comes into force on 1 October 2002.

The MAS has also issued the following subsidiary legislation:

• Insurance (Exemption) Regulations 2002 (S471/2002);
• Insurance (Appeals) Regulations 2002 (S470/2002);
• Insurance (Exemption and Provisions Applicable for Direct Life Insurers) Regulations 2002 (S469/2002);
• Insurance (Protection and Indemnity Clubs) Regulations 2002 (S468/2002);
• Insurance (Accounts and Statements) (Amendment No 2) Regulations 2002 (S467/2002); and
• Insurance (Amendment No 2) Regulations 2002 (466/2002).
  

The new subsidiary legislation is also operative from 1 October 2002.

Singapore Broadcasting Authority (Amendment) Act 2002 (A19/2002)

The Singapore Broadcasting Authority Act has been amended with effect from 2 September 2002 primarily for the following purposes:

• to strengthen the provisions relating to shareholdings in, and the control and management of, broadcasting companies and their holding companies; and
• to extend Part X of the Act (relating to ownership and control of broadcasting companies) to apply to broadcasting holding companies.
  

Section 20 has been amended principally to prohibit any person from providing any licensable broadcasting service in or from Singapore without a broadcasting licence granted under the section or a class licence granted under s 21.

Section 43 has been amended by providing for exemptions from Part X of the Act to be made by the Minister of Information and the Arts instead of the Singapore Broadcasting Authority (the ‘Authority’), to extend the definition of ‘broadcasting company’ to include broadcasting holding companies, and to define the terms ‘appointed day’, ‘broadcasting holding company’ and ‘holding company’.

Further, s 44 has been amended to require broadcasting companies (including their holding companies) to apply for the Authority’s approval to appoint any person as chief executive officer, director or chairman of the board of directors, and to provide that any broadcasting company which contravenes the section commits an offence.

Section 45 has been repealed and re-enacted. New ss 45A to 45H have also been inserted. The new provisions will have the following effect:

1. replace the 3% shareholding limit based on beneficial ownership of shares with a limit based on substantial shareholding within the meaning of the Companies Act (Cap 50);
2. introduce a new 12% limit on shareholding or control of voting power in broadcasting companies;
3. require the Minister’s approval to be obtained before a person becomes a substantial shareholder, 12% controller or an indirect controller of a broadcasting company;
4. prescribe the criteria which an applicant must satisfy to obtain the Minister’s approval;
5. empower the Minister to serve a written notice of objection on an existing shareholder or controller, or a party to an existing agreement or arrangement to control the shareholding or voting power in a broadcasting company, in accordance with the prescribed procedure;
6. empower the Minister to take certain actions to ensure compliance with the restrictions introduced;
7. provide that non-compliance with certain provisions on ownership and control of broadcasting companies is an offence; and
8. provide defences for persons who were not aware that they had contravened certain provisions, or who were not in a position to prevent such contravention, subject to their notifying the Minister of the contravention and compliance with the Minister’s directions.
   

Section 46(8) has been amended to increase the fine prescribed therein from a maximum of S$10,000 to a maximum of S$50,000. Section 46 has been further amended:

1. to empower the Minister to declare, by notification in the Gazette, certain specified bodies corporate, unincorporated associations or other bodies constituted under any law in Singapore as a ‘foreign source’ for the purposes of the section (which prohibits the receipt of funds from a foreign source for the purposes of financing any broadcasting service owned by the broadcasting company other than for commercial purposes); and
2. to make it clear that funds from a foreign source includes funds provided by a foreign source indirectly through any agent of the foreign source.
   

Section 47 has been re-enacted to empower the Authority to refuse to grant a relevant licence to a company, or to cancel the licence, if not less than 49% of the shares or voting power in the company or its holding company is held or controlled by one or more foreign sources, or if all or a majority of the officers of the company or its holding company are accustomed or under an obligation to act in accordance with the directions, instructions or wishes of any foreign source.

Newspaper and Printing Presses (Amendment) Act 2002 (A20/2002)

The Newspaper and Printing Presses Act (Cap 206) has been amended with effect from 2 September 2002 to strengthen the provisions relating to shareholdings in, and control of, newspaper companies.

Previously, s 10 of the Newspaper and Printing Presses Act imposed an obligation to obtain the approval of the Minister for Information and the Arts before a single shareholder may increase his shareholding in a newspaper company above the 3% threshold.

Following the amendment to the Act, s 10 has been repealed and new ss 10A to 10H inserted. The new sections achieve the following:

1. replace the 3% shareholding limit based on beneficial ownership of shares with a limit based on substantial shareholding within the meaning of the Companies Act;
2. introduce a new 12% limit on shareholding or control of voting power in newspaper companies;
3. require the Minister’s approval to be obtained before a person becomes a substantial shareholder, a 12% controller or an indirect controller of a newspaper company. It is worth noting that a shareholder who attains the 5% or 12% threshold, or is an indirect controller, before the proposed changes come into force cannot continue to be such a shareholder or controller unless he applies to the Minister within six months from the effective date of the Newspaper and Printing Presses (Amendment) Act 2002 for approval to continue to be a substantial shareholder;
4. prescribe the criteria which an applicant must satisfy to obtain the Minister’s approval;
5. empower the Minister to serve a written notice of objection on an existing shareholder or controller, or a party to an existing agreement or arrangement to control the shareholding or voting power in a newspaper company, in accordance with the prescribed procedure;
6. empower the Minister to take certain action to ensure compliance with the restrictions introduced;
7. provide that non-compliance with certain provisions on ownership and control of newspaper companies is an offence; and
8. provide defences for persons who were not aware that they had contravened certain provisions, or who were not in a position to prevent such contravention, subject to their notifying the Minister of the contravention and compliance with the Minister’s directions.
   

The penalties under the Newspaper and Printing Presses Act have also been generally enhanced.

Bills of Exchange (Amendment) Act 2002 (A22/2002)

The Bills of Exchange (Amendment) Act 2002 (the ‘Amendment Act’) amends the Bills of Exchange Act for the purposes of implementing a cheque truncation system in Singapore. Although gazetted, the Amendment Act is not yet in force.

The following are highlights of some of the amendments:

• s 49 is amended to deem presentment of an image return document to the drawer or an indorser as a sufficient notice of dishonour;
• s 86 is amended to provide that ss 87A, 87B (except sub-s (5)) and 87C apply to an instrument referred to in s 85(2)(b) and that ss 87A and 87C apply to an instrument referred to in s 85(2)(c); and
• three new sections will be introduced, namely ss 87A, 87B and 87C, relating to cheque truncation:
  
  • new s 87A allows a banker to present a cheque for payment to the banker on whom it is drawn by transmitting, by electronic means, an image and the electronic payment information of the cheque instead of the cheque itself, but preserves the right for a banker on whom the cheque is drawn to demand that the cheque itself be presented instead.
  • new s 87B requires a banker to whom the cheque was first presented by the holder to issue to the holder an image return document, where the cheque is dishonoured by non-payment, unless the banker returns the cheque itself or the holder requests the return of the cheque itself. The image return document may be presented for payment by the holder to the banker which issued that document as if that document were the cheque to which it relates. The image return document will be deemed to be a cheque for the purpose of such presentment.
  • new s 87C relates to the making of regulations in respect of any matter or thing relating to cheque truncation.
    

Industrial Relations (Amendment) Act 2002 (A23/2002)

The Industrial Relations Act (Cap 136) has been amended with effect from 1 September 2002 to allow limited representation of employees in managerial and executive positions by trade unions the majority of whose membership consists of employees in non-managerial and non-executive positions. Related amendments will also be made to the Trade Unions Act.

A new Part IIIA (containing ss 30A to 30F) has been inserted whereby trade unions, the majority of whose membership consists of employees in non-managerial or non-executive positions, will be allowed to represent an executive employee individually for limited purposes.

The new s 30A contains definitions of the words ‘executive employee’ and ‘recognised trade union’ which appear in the new Part IIIA and the new s 31(ca).

The new s 30B allows a recognised trade union to represent an executive employee individually, and not as a class for all or any of the following purposes only:

1. to make representations to the Minister under s 35(2);
2. upon the retrenchment of the executive employee, to negotiate with the employer with a view to resolving any dispute relating to the retrenchment benefit payable to the employee;
3. to negotiate with the employer with a view to resolving any dispute relating to a breach of contract of employment by the executive employee or the employer; and
4. to represent the executive employee in proceedings before the Industrial Arbitration Court (the Court) in respect of the dismissal or reinstatement of the employee in circumstances arising out of a contravention of s 82 or any matter referred to in para (b) or (c).
   

An employer may, however, object to the representation of an executive employee by a recognised trade union on the ground that the employee performs or exercises any function, duty or power specified in s 30B(2). The functions, duties and powers specified in s 30B(2) are essentially those which may give rise to a real or potential conflict of interest if the executive employee is represented by the trade union.

The new s 30C provides that a recognised trade union representing an executive employee under s 30B or the employer may serve on each other, as the case may be, an invitation to negotiate setting out proposals for resolving any dispute relating to the issue of retrenchment benefit payable to the executive employee upon his retrenchment or a breach of contract of employment by the executive employee or the employer.

The new s 30D provides that an employer or a recognised trade union upon whom an invitation to negotiate has been served may, within seven days of service of the invitation, serve an acceptance to negotiate on the other party.

Pursuant to the new s 30F, if an agreement has not been reached between a recognised trade union and the employer upon whom an invitation to negotiate was served within 14 days of service as to all the matters set out in the invitation, any party to the negotiations may notify the Commissioner. Upon receipt of such notification, the Commissioner may consult, or direct a conciliation officer to consult, with the employer and trade union in an endeavour to reach a settlement by conciliation.

Section 31 has been amended by inserting a new paragraph (ca) to empower the Court to take cognisance of a trade dispute which relates to the retrenchment benefit payable to an executive employee who is represented by a recognised trade union under the new s 30B or a breach of contract of employment by the employee or his employer where the employer or the trade union representing the employee makes a request in writing to the Registrar that the trade dispute be submitted to arbitration.

Section 27 has been amended mainly to provide that where the majority of the membership of a registered trade union consists of members who are employed in non-managerial or non-executive positions:

• the trade union and its members are prohibited from commencing, promoting, organising, financing, participating or acting in furtherance of any strike or industrial action in connection with a trade dispute between members employed in managerial or executive positions and their employer;
• its members employed in managerial or executive positions are prohibited from commencing, promoting, organising, participating or acting in furtherance of any strike or industrial action taken by the trade union, whether or not such strike or industrial action is in connection with a trade dispute between those members and their employer; and
• the consent of its members employed in managerial or executive positions shall be disregarded in ascertaining whether the consent of the majority of the members of the trade union has been obtained for the purposes of commencing, promoting, organising or financing any strike or industrial action affecting the whole or any section of its members.
  

New Bills

International Arbitration (Amendment) Bill 2002 (B28/2002)

In the recent decision of Dermajaya Properties Sdn Bhd v Premium Properties Sdn Bhd [2002] 2 SLR 164, the Singapore High Court held that where parties to international commercial contracts have agreed to refer disputes to arbitration in Singapore under UNCITRAL Rules, the UNCITRAL Rules ‘do not apply, but it is open to the parties to agree that such rules will apply to fill any vacuum in the UNCITRAL Model Law (the ‘Model Law’) and Part 2 [of the International Arbitration Act] (Cap 143A) or to apply such rules on an ad hoc basis’.

This is because, in the view of the judge, the UNCITRAL Rules may be inconsistent with Part II of the International Arbitration Act (that applies to international arbitration held in Singapore) and the Model Law, and to the extent that Part II of the International Arbitration Act and the Model Law applies and have not been excluded, there is no place for incompatible rules such as the UNCITRAL Rules.

Arising from the decision, the International Arbitration (Amendment) Bill 2002 proposes to introduce a new s 15A to clarify, for the avoidance of doubt, the application and effect of rules of arbitration agreed to or adopted by the parties.

Section 15A(1) restates for the avoidance of doubt that a provision of rules of arbitration agreed to or adopted by the parties shall apply and be given effect to the extent that such provision is not inconsistent with a provision of the UNCITRAL Model Law on International Commercial Arbitration and Part II of the Act (‘Part II’) from which the parties cannot derogate. It does not matter if the rules are adopted before or after the commencement of the arbitration.

Section 15A(2) provides that the new sub-ss (3) to (6) provide non-exhaustive guidance on whether a provision of rules of arbitration is inconsistent with the Model Law or Part II.

Section 15A(3) provides that a provision of rules of arbitration is not inconsistent with the Model Law or Part II merely because it provides for a matter on which the Model Law and Part II is silent.

Conversely, s 15A(4) provides that rules of arbitration are not inconsistent with the Model Law or Part II merely because the rules are silent on a matter covered by any provision of the Model Law or Part II.

Section 15A(5) also provides that a provision of rules of arbitration is not considered inconsistent merely because it provides for a matter which is covered by a provision of the Model Law or Part II which allows the parties to make their own arrangements by agreement but which applies in the absence of such agreement.

Section 15A(6) provides that the parties may make arrangements by agreeing to the application or adoption of rules of arbitration or by providing any other means by which a matter may be decided.

Section 15(2) will be amended to replace the term ‘rules of an arbitral institution’ with the expression ‘rules of arbitration’ for consistency with the new definition of ‘rules of arbitration’ introduced in the new s 15A(7).

Elizabeth Wong
Allen and Gledhill