APAC Monthly Private Wealth Legal Developments – January 2022

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

HKMA issues discussion paper on crypto-Assets and stablecoins

On 12 January 2022, the Hong Kong Monetary Authority (HKMA) issued a discussion paper setting out its thinking on the regulatory approach for crypto-assets, particularly payment-related stablecoins, after taking into account international recommendations, local and foreign market and regulatory landscapes, and the characteristics of stablecoins. HKMA invites the public to submit their views by 31 March 2022.

HKMA issues circular on reform of interest rate benchmarks

The HKMA issued a circular to authorised institutions (AIs) noting their substantial progress in migrating from the London Interbank Offered Rate (LIBOR) to alternative reference rates, and the fact that AIs remediated the vast majority of contracts referencing the LIBOR settings. AIs were reminded to keep up the momentum in transitioning away from the remaining LIBOR settings in good time before 30 June 2023.

SFC revises FAQs relating to REITs

The Securities and Futures Commission (SFC) updated questions 19 and 60, and added question 53A to its frequently-asked questions (FAQs) relating to real estate investment trusts (REITs). The FAQs aim to provide basic information to market practitioners concerning the authorisation of REITs under the Code on Real Estate Investment Trusts (REIT Code). The changes relate to whether SFC-authorised REITs are required to comply with the Corporate Governance Code and publish ESG reports under the listing rules, and whether an accountants' report prepared pursuant to 7.6 of the REIT Code is required for circulars for all notifiable or connected party transactions involving a special purpose vehicle.

IA formalises the green light process for assessment of ILAS products and ushers in PLPs

The Insurance Authority (IA) issued a Note on the Green Light Process for Assessment of Investment-Linked Assurance Scheme (ILAS) Products against Standards in Guideline on Underwriting Class C Business (GL15), and ushered in Protection Linked Plans (PLPs), a new category of ILAS with embedded high levels of insurance protection. The note aims to formalise the process by which the IA assesses an ILAS product against certain requirements in GL15, before the authorised insurer may apply for authorisation of the ILAS product from the SFC.

HKEX releases second Compliance Bulletin

The Hong Kong Exchanges and Clearing Limited (HKEX) released its second issue of Compliance Bulletin to offer the industry a better understanding of their enforcement work and regulatory expectation. It covers (i) Investor Eligibility Requirement, (ii) Dealings with Suspended Exchange Participants, and (iii) Stock Connect Northbound Trading. The HKEX strongly advised the Exchange Participants to review their current set-up and implement measures to strengthen the relevant controls. 

Singapore

MAS responds to Parliament on proposed opt-in cooling off period for cross-border fund transfers

On 10 January 2022, the Monetary Authority of Singapore (MAS) responded to a Parliamentary question as to whether it has considered instituting mandatory or default opt-in cooling-off periods for large, potentially anomalous transactions involving cross-border fund transfers. The MAS reflected on the strengthened coordination that addressed threats of scams and frauds through the Inter-Ministry Committee on Scams, and stated that it is considering a cooling-off period as well as other measures even further upstream in the chain of transactions. There will be a public consultation on the recommended measures.

MAS revises FAQs on the SF(RDC)R

On 10 January 2022, the MAS published a revised edition of the FAQs on the Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013 (SF(RDC)R). These FAQs are to aid implementation of the reporting obligations and elaborate on MAS’s intent behind some of the requirements set out under the SF(RDC)R.

MAS announces initiatives to expand financial cooperation with China

The MAS announced in a media release its initiatives to expand and strengthen financial cooperation with China, including the recently signed Memorandum of Understanding between Singapore Exchange (SGX) and Shenzhen Stock Exchange (SZSE) for establishing an Exchange-Traded Fund (ETF) Product Link that enables eligible fund managers to offer ETF products to Chinese and Singaporean investors, and the discussions between SGX and China Foreign Exchange Trade System (CFETS) to establish connectivity between the bond trading platforms.

MAS revises guidelines on REITs and fund managers

The MAS issued an updated version of its Guidelines to All Holders of a Capital Markets Services Licence for Real Estate Investment Trust Management [SFA 04-G07], which sets out the minimum licensing criteria for REIT managers and the additional guidance on corporate governance arrangements.

In addition, the MAS issued an updated version of its Guidelines on Licensing, Registration and Conduct of Business for Fund Management Companies [SFA 04-G05], which sets out the eligibility criteria and application procedures for licensed fund management companies, venture capital fund managers, and registered fund management companies.

China

SSE confirms the Stock Connect inclusion arrangements for eligible ETFs

The Shanghai Stock Exchange (SSE) reached an agreement with the HKEX, SZSE and China Securities Depository and Clearing Corporation (CSDC) on the Stock Connect inclusion arrangements for eligible ETFs. The inclusion of ETFs will provide investors with more options to the existing Stock Connect. The Mainland and Hong Kong partners expected another six months to work on the details of inclusion, including amendments to the relevant rules.

MOF and STA extend preferential tax policies

The PRC Ministry of Finance (MOF) and the State Taxation Administration (STA) jointly issued two bulletins ([2021] No. 422 and 433) to extend the preferential treatment for annual bonus and expatriates’ allowances for two years, and for equity incentive income for one year. The policies aim to reduce the taxpayers' burden.

India

SEBI approved new provisions in LODR

The Securities and Exchange Board of India (SEBI) approved in its board meeting a proposal to introduce provisions in the Securities and   Exchange   Board   of   India   (Listing   Obligations   and   Disclosure Requirements)  Regulations,  2015  (LODR) relating to appointment or re-appointment of persons who fail to get elected as directors at the general meeting of a listed entity. Appointment or a re-appointment of any person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders.

Malaysia

SCM liberalises unit trust framework

The Securities Commission Malaysia (SCM) highlighted the key amendments to the Guidelines on Unit Trust Funds, including the expansion of the list of permissible investments by unit trust funds and the enhancement of operational processes in managing a fund. The amendments will take effect on 1 March 2022. As a consequence, there will also be amendments to the Guidelines on Private Retirement Schemes and Guidelines on Exchange-traded Funds, with appropriate modifications.

Thailand

SECT revises investment rules on cross-investing funds

The Securities and Exchange Commission, Thailand (SECT) announced its revisions of the rules related to investment in mutual funds under management of the same asset management company (AMC). Under the revised rules, mutual funds may invest in other mutual funds under management of the same AMC up to three tiers, which will enable AMCs to manage asset allocation more efficiently and develop more versatile investment types or strategies.

Philippines

BSP launches Open Finance Framework

​The Bangko Sentral ng Pilipinas (BSP) announced the launch of the Open Finance Framework to promote collaborative partnerships and digital transformation. Open Finance is the extension of data sharing principles, assigning greater control to customers over their own data and enabling them to allow third party providers access to their data across multiple financial products and services. In order to establish a more defined programme to implement Open Finance, BSP also adopted the three-year Open Finance Roadmap 2021-2024 to outline the priority actions and the implementation of a robust and scalable framework.

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.