APAC Monthly Private Wealth Legal Developments – December 2021

Welcome to Herbert Smith Freehills’ monthly private wealth industry updates in Asia.

Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format.  The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.

Hong Kong

Revised Code on Pooled Retirement Funds comes into effect

On 1 December 2021, the Code on Pooled Retirement Funds came into effect. The code provides guidance in relation to the authorisation of a collective investment scheme that is a pooled retirement fund. It applies to new schemes with new operators with immediate effect, while existing schemes and existing operations will have a 12-month transitional period from 1 December 2021 to comply with the code unless otherwise specified.

SFC publishes its 2021 Q3 report

On 7 December 2021, the Securities and Futures Commission (SFC) published its latest Quarterly Report which summarises the key developments from July to September 2021, including the consultation conclusion on amendments to the Fund Manager Code of Conduct to require fund managers to consider climate risks when making investment and risk management decisions, and to make appropriate disclosure to investors. Other highlights in the report included the consultation conclusions on an investor identification regime and an over-the-counter securities transactions reporting regime for the local securities market.

HKMA launches the Enhanced Competency Framework on Fintech

On 3 December 2021, the Hong Kong Monetary Authority (HKMA) announced the launch of the Enhanced Competency Framework on Fintech (ECF-Fintech), which aims at establishing common and transparent competency standards for developing a strong Fintech talent pipeline and enhancing the professional competence of banking practitioners involved in technological innovation for financial services. In particular, the HKMA expects authorised institutions to adopt appropriate measures to monitor and maintain the competence of their staff, such as by supporting staff to attend training and take examinations that meet the ECF certification. 

Singapore

MAS consults on proposed amendments to the Business Trusts Act

The Monetary Authority of Singapore (MAS) is consulting on proposed amendments to the Business Trusts Act. The proposed amendments aim to align the Act with other regimes such as the regulatory regime for real estate investment trusts, and to clarify the regulatory requirements in response to industry feedback. The consultation period closes on 27 December 2021.

MAS releases the 2021 Financial Stability Review

MAS released its Financial Stability Review 2021, which assesses the risks and vulnerabilities arising from developments in Singapore and the global economy, and their implications for the soundness and stability of the financial system in Singapore. An annex in the Review sets out the impact of the recent regulatory revisions on the banking sector. It highlights the revisions to MAS Notice 610 to banks and MAS Notice 1003 to merchant banks (MAS 610/1003), and the removal of the Domestic Banking Unit – Asian Currency Unit (DBU-ACU) divide. MAS explained the goals of the revised reporting requirements, which include to keep pace with international accounting standards and reporting requirements.

China

China FX regulatory body holds the eighth work conference

China Foreign Exchange Market Self-Regulatory Framework (SRF) held its eighth work conference. In the conference, it adopted the China Foreign Exchange Code (Revised) and the Proposal on Remaining Risk Neutral on Exchange Rate, and the member institutions exchanged their views on works on risk neutrality. The conference highlighted the SRF's efforts in urging the banks to promote the concept of risk neutrality on exchange rate and help enterprises to improve their exchange rate risk management.

India

RBI issues statement on developmental and regulatory policies

On 8 December 2021, the Reserve Bank of India (RBI) issued a statement setting out various developmental and regulatory policy measures relating to (i) regulation and supervision, (ii) financial markets, and (iii) payment and settlement systems. The statement highlights a number of recent and forthcoming developments, including the recent instructions which enable banks meeting the regulatory capital requirements to infuse capital into their overseas branches and subsidiaries, retain profits in these centres, etc.

SEBI clarifies amendment to SEBI (Alternative Investment Funds) Regulations, 2012

The Securities and Exchange Board of India (SEBI) released a circular outlining the amendments to the SEBI (Alternative Investment Funds) Regulations 2012 which, inter alia, allow Category III Alternative Investment Funds (AIFs), including large value funds for accredited investors of Category III AIFs, to calculate the concentration norm based on Net Asset Value of the fund for investment in the listed equity of an investee company.

SEBI issues Master Circulars on Infrastructure Investment Trusts and REITs

SEBI issued two Master Circulars on Infrastructure Investment Trusts and real estate investment trusts (REITs), both of which are compilations of relevant circulars issued by SEBI up to 31 October 2021, which remain operational on the date of the Master Circulars. Circulars that provide temporary relaxation of compliance requirements in the wake of Covid-19 are not included in the Master Circulars.

Malaysia

BNM releases Discussion Paper on hajah

Bank Negara Malaysia (BNM) outlined in a Discussion Paper proposals relating to the application of hajah (i.e. needs) by Islamic financial institutions in the conduct of their businesses. The Discussion Paper contained discussions on the definition of hajah in the context of Islamic Finance and its scope, the proposed set of requirements and guidance to facilitate Shariah deliberation, etc. It is expected that a clear interpretation of hajah will ensure the Islamic financial institutions continue to operate within the safe boundaries of Shariah. Feedback is requested by 31 January 2022.

Thailand

SECT exempts fees related to REIT buy-back unit offering

The Securities and Exchange Commission, Thailand (SECT) announced an exemption of fees related to submitting applications and filing for unit offerings of REITs with the buy-back condition. The intention is to support the liquidity of businesses affected by Covid-19 by reducing their costs in funding. The application and filing is open until 31 December 2023. 

Philippines

SECP encourages corporations to strengthen cybersecurity

​On 6 December 2021, the Securities and Exchange Commission, Philippines (SECP) issued a notice to all corporations under its supervision regarding cybersecurity. In anticipation of the holidays and an expected surge in digital transactions, and in light of the rise of cyber financial crimes and scams, including ransomware hacking incidents, the SECP encourages corporations to assess their cyber risks and strengthen their cybersecurity measures.

The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.