CAMBODIA
Deadline approaching for foreign worker permits
As the deadline for the 2024 foreign employee work permits from the Ministry of Labour and Vocational Training (MLVT) looms closer to 31 March 2024, employers in Cambodia are reminded of their obligation to comply, according to a DFDL report.
As outlined in the report, this requirement extends to all entities, including representative offices, branches, private or public limited companies, non-governmental organisations, and associations. Failure to adhere to the foreign employee work permit regulations may result in penalties of up to KHR12.6 million (USD3,136) imposed by the MLVT, and/or up to KHR18 million by a court.
According to the firm, by Guideline 517 on Administrative Fines for Enterprises Employing Foreign Employees without Work Permit issued on 17 January 2023, the MLVT can impose administrative fines based on the actual number of foreign employees without valid work permits if fewer than five are found. For enterprises with five or more foreign employees working without work permits, a maximum administrative fine of KHR63 million, five times the MLVT’s fine, may be imposed.
Repeated offences could lead to triple fines. The Labour Law further stipulates potential imprisonment ranging from six days to one month for individuals hiring or retaining foreign employees without work permits.
CHINA
China’s Company Law amendments
On 29 December 2023, the Standing Committee of the National People’s Congress of China promulgated the amended Company Law, after its deliberation of four versions of draft amendments in the past three years. The new Company Law will come into force on 1 July 2024.
The new Company Law not only governs new companies established after its effective date, but also has significant implications on existing companies. Yet, the implementation of many articles is still subject to further interpretation and/or guidance from the Chinese authorities and courts.
Therefore, foreign companies, investors and other stakeholders should pay close attention to this new legislation and the pertinent regulations, judicial interpretations and other official guidelines that may be issued concerning its implementation in the near future.
It is advisable for foreign companies and their investors to revisit the companies’ governance structure and assess: (1) If any mandatory adjustment is required in view of the new company law requirements (e.g. number of supervisors or alternatives, applicability of mandatory employee representation, board meeting quorum and resolution); and (2) If the governance structure can be improved (and if a streamlined governance structure would be preferable) in view of the greater flexibility introduced by the new Company Law and based on the specific needs of firms.
Considering the increasing exposure to personal liabilities of directors, supervisors and senior management, companies may consider including indemnification clauses in the articles of association, and/or purchasing (director) liability insurance to give more protection to directors acting in good faith and with due care. That said, whether local company registration authorities will accept filing of amended articles of association with such special clauses (including indemnification clauses) is to be tested in practice.
Turnover standards raised for M&A anti-monopoly filing
The State Council published in full its revised Provisions on Thresholds for the Filing of Concentrations of Undertakings on 26 January 2024, and the standards came into force on the same day.
Under the revised turnover filing provisions, transactions that meet the following filing standards will trigger the anti-monopoly filing obligation in China:
(1) The combined worldwide turnover of all undertakings participating in the concentration exceeds RMB12 billion (USD1.7 billion – RMB10 billion before the revision), or the combined turnover in China exceeds RMB4 billion (RMB2 billion before the revision); and
(2) At least two undertakings have turnover in China of more than RMB800 million (RMB400 million before the revision).
In addition to raising the turnover standard significantly, a draft of the provisions for comment, published by the State Administration for Market Regulation in June 2022, also proposed a new hybrid filing standard that could take into account both turnover and market value (or valuation) of the parties, so as to strengthen the supervision over startup acquisitions characterised by a relatively high transaction amount but low turnover of the target company.
However, the provisions ultimately do not incorporate this hybrid filing standard, and continue to determine whether a transaction should be filed based on the worldwide and domestic turnover of the undertakings involved.
One of the most significant penalties for the non-disclosure of a cyberattack involved the credit reporting agency Equifax. In September 2017, the company disclosed a massive data breach that had exposed the personal information of about 147 million people
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PHILIPPINES
IP office opens patent applications for public review
The Intellectual Property Office of the Philippines (IPOPHL) has started notifying the public through its website of the publication of patent, utility model and industrial applications for community review pursuant to rules 802 and 1700 of the amended patent rules, Rouse has advised. Notifications will also be sent by the IPOPHL to the concerned industries.
This publication is separate from the publication of applications in the Official Gazette. The aim is to enhance transparency in granting patents and improve the quality of patents, utility models and industrial design registrations. The IPOPHL website invites concerned communities or any third party to submit observations or adverse information, if any, within one month from publication.
The IPOPHL has officially announced its intention for the Philippines to join the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs in 2024.
INDONESIA
EIT LAW AMENDMENTS RATIFIED
On 2 January 2024, Indonesia’s president signed the second revision of Law No. 11 of 2008 regarding Electronic Information and Transactions (EIT Law), SSEK Law Firm advised.
The new revision modifies existing clauses, introduces additional articles, and makes subtle changes to phrasing. The amendments generally broaden the scope of government oversight of electronic system providers (ESPs), facilitate mutual recognition of electronic certificates, expand the services electronic certification providers (ECPs) can offer, and introduce safeguards for child protection, SSEK said.
The updated EIT Law also delineates stricter regulations for electronic signatures in high-risk electronic transactions and formalises protocols for international electronic contracts. Notably, the law now includes criminal penalties for defamatory statements aimed at damaging a person’s reputation, as well as for the deliberate and illegal use of violence or defamation to coerce individuals into relinquishing property or settling debts.
VIETNAM
INCENTIVE PLANS FOR FOREIGN INVESTMENT IN PHARMA FIRMS
The Ministry of Health in Vietnam has proposed a draft amendment to the Pharmacy Law of 2016, aiming to enhance the rights and responsibilities of foreign-invested pharmaceutical companies, according to a Dezan Shira and Associates report.
According to the firm, the amendment seeks to address issues and difficulties in the pharmaceutical industry, outlining changes in terminology, policies, regulations, drug registration, export and import procedures, recalls, advertising, clinical trials, quality management and price management.
The firm reported that the draft amendment focuses on incentivising the pharmaceutical industry by proposing changes to article 7 of the Pharmacy Law. It outlines various types of incentives, expanding eligible pharmaceutical fields. The incentives include tax policies, land leasing, capital borrowing, administrative support, certificates for pharmaceutical business qualifications and drug circulation, support for raw materials and encouragement for scientific research in pharmaceutical technology and biotechnology for new drug production.
SINGAPORE
Court precedent on transnational issue estoppel
The Singapore Court of Appeal, in the case of The Republic of India v Deutsche Telekom, has established the applicability of transnational issue estoppel in the realm of international commercial arbitration, WongPartnership reported.
According to the firm, this doctrine prevents litigants from relitigating points previously adjudicated by the seat court in the context of enforcing arbitral awards. The majority of the apex court, in an obiter statement, tentatively introduced the “primacy principle” as a prospective norm in Singapore arbitration law.
The principle states that when the enforcement court is not barred by transnational issue estoppel from scrutinising issues related to the validity of an arbitral award, it might be deemed appropriate to accord precedence to the seat court’s prior decision. This presumption can be rebutted only by specific considerations, such as public policy concerns relevant to the jurisdiction of the enforcement court.
Singapore GST increase warrants monitoring
Singapore has increased its goods and services tax (GST) rate – levied on most supplies of goods and services as well as on imported goods – by 1% from 1 January 2024. Singapore’s 2022 budget raised the rate in two steps of 1%, to 8% in 2023, and to 9% in 2024.
Asia Briefing Weekly and Dezan Shira & Associates advised GST-registered businesses to address areas including: (1) Updatig accounting and invoicing systems to accommodate the new GST rate; (2) Updating any pricing schedules made available to customers and the public, such as on websites; (3) Updating cash register systems; (4) Reviewing contracts and agreements with suppliers or customers to accommodate the new rate; (5) Equipping employees with the relevant GST knowledge so that they are aware of its impact; and (6) Seeking the help of professional advisers who can assist in applying for any relevant GST schemes from the government.
SOUTH KOREA
Notification obligation for stock-based compensation
The Income Tax Act and its Enforcement Decree were recently revised to introduce a requirement for local subsidiaries or branches of foreign companies in South Korea to file information concerning stock-based compensation issued to their executives and employees by foreign firms, Herbert Smith Freehills has advised. The requirement was effective from 1 January 2024 to stock-based compensation received or exercised on or after this date.
From 1 January 2024, where executives or employees of a local subsidiary or branch of a foreign company receive or exercise stock-based compensation granted by the foreign parent company, the local subsidiary or branch must submit the following information to the South Korean tax authority: (1) Details of the grant, exercise and payment schedules of the stock-based compensation; (2) Profits arising from such exercise and payment; and (3) Personal information of the relevant executive or employee.
The information must be submitted by 10 March of the year following the tax year in which the exercise or payment of the stock-based compensation occurs. HSF advised employers who have issued or are intending to issue stock-based compensation to ensure they comply with the filing obligation if it is granted by a foreign parent company.
THAILAND
New disclosure rules for e-platforms
Since 1 January 2024, Thailand’s Revenue Department has required electronic platforms such as e-commerce and e-marketplaces to disclose their revenue from the business operators on their platforms.
The Revenue Department hopes that it can aid more accurate and efficient tax collection and develop fair competition between local and international sellers, Asia Briefing reported.
Under the notification, electronic platforms must open a special account containing data on the revenues received from each business operator and submit the data through the Revenue Department’s electronic reporting system within 150 days of the fiscal year. Only electronic operators registered in Thailand with annual revenue exceeding THB1 billion (USD28 million) must submit the report. Electronic operators under the supervision of the Bank of Thailand or the Office of the Securities and Exchange Commission are exempted from the requirement.
IN NUMBERS
10The amount in USD trillions that India’s economy will be worth by 2035, according to London-based consultancy the Centre for Economics and Business Research
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VIETNAM
Key amendments to credit institutions law
The Amended Law on Credit Institutions 2024 was approved by Vietnam’s National Assembly on 18 January 2024 and is effective from 1 July 2024, DFDL reported, highlighting key provisions.
Shareholders owning 1% or more of the charter capital of a credit institution are required to provide information about themselves, related persons and their ownership ratios and publicly disclose this information.
There is a reduction in the ownership percentage limitation for shareholders who are entities (including indirect shareholders) from 15% to 10% and for shareholders and related persons from 20% to 15%. This amendment includes a transitional provision, that shareholders who exceed prescribed ownership limitations can maintain their current shareholding, but will not be permitted to increase their shares until they comply with limitation requirements.
Credit institutions may not sell non-compulsory insurance products in conjunction with providing banking products and services. Also, the governor of the State Bank of Vietnam has the authority to define the scope of insurance agency activities for credit institutions.
Additional categories of related persons are introduced, including: “(1) Subsidiaries of credit institutions; and (2) Grandparents, great-grandparents, grandchildren, great-grandchildren, aunts, uncles, nephews, nieces, cousins and vice versa.” The law further defines which individuals are authorised to represent shares/capital contribution in the credit institution.
