Business law digest

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Business Law Digest May Jun 2022

HONG KONG

SCHEME TO PREVENT ‘ROLLING BAD APPLES’

The Hong Kong Monetary Authority announced the Mandatory Reference Checking Scheme and its implementing guidelines, which aim to tackle the “rolling bad apples” problem, a term referring to people who commit misconduct at a financial institution but can get a new job without disclosing it. The new regime will require authorised institutions to conduct mandatory reference checks before hiring. For in-scope positions, authorised institutions must contact a prospective employee’s former and current employers for conduct-related information up to seven years before the application. The misconduct information to be reported includes violations of legal or regulatory requirements, incidents that cast doubt on an individual’s honesty and integrity, and internal or external disciplinary action arising from conduct matters.

Scheme to prevent rolling bad apples

SOUTH KOREA

DIGITAL ASSET LAWS PLANNED

South Korea’s new government is rushing to introduce digital currency legislation that could be enforced in 2024. A report by Korean news site Kookmin Ilbo indicated that incoming President Yoon Suk-yeol plans to introduce the Digital Asset Basic Act in 2023. These laws would include digital assets and related activities, such as non-fungible tokens and initial coin offerings, into the institutional system to boost investor confidence. The government will also evaluate the Bank of Korea Act, which lays out the plan for a central bank digital currency.

SEOUL FINANCIAL CRIME TEAM RESTORED

Seoul’s Southern District Prosecutors Office reorganised its financial crime division into the Financial and Securities Crime Joint Investigation Team. The predecessor of the investigation team was founded in February 2014 and disbanded in January 2020 as part of then-justice minister Choo Mi-ae’s efforts to reduce direct investigations by prosecutors under the outgoing president Moon Jae-in’s prosecution reform drive. The team now includes seven prosecutors, 29 prosecution investigators and 12 officials from the Financial Services Commission, Financial Supervisory Service, Korea Exchange, and the National Tax Service, which will track illegal funds and capital transfers, collect evaded taxes, analyse companies, collect and analyse transaction data, and seize criminal proceeds.

IN THE NUMBERS

137cases of personal information leaks from listed Japanese firms were reported in 2021, which was a record high and an increase of 30% on the previous year, according to corporate research agency Tokyo Shoko Research. See more here

JAPAN

JPX TO INITIATE CARBON MARKET

Japan Exchange Group (JPX) and Japan’s Ministry of Economy, Trade and Industry (METI) will create the country’s first carbon emissions trading market. JPX plans to start a demonstration project for an exclusive market inside the Tokyo Stock Exchange in September, and aims to launch full-scale in April 2023. JPX and the METI expect market openness to encourage more enterprises to trade emissions. Companies would set 2030 emissions reduction goals and the government would validate carbon credits. Those that miss their emissions objectives could buy credits.

THE PHILIPPINES

BSP ISSUES GUIDELINES FOR RURAL PROGRAMME

The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), has released guidelines for the three-year implementation of the Rural Bank Strengthening Programme to improve the operations, capacity and competitiveness of rural banks due to their vital role in promoting rural development and inclusive economic growth. The programme has four key elements: a strengthened capital base; a holistic menu of five time-bound tracks; incentives and capacity building interventions; and review and enhancement of existing regulations.


This is the first time since 1986 that the [new Philippine] administration which won [the election] had the president and the vice president as a team

Gilbert Raymund Reyes
Founding Partner of Poblador Bautista & Reyes in Manila

See more here


SINGAPORE

NFT TRANSFER BLOCK TESTS LEGAL OVERSIGHT

In one of the first cases of its kind, the High Court of Singapore issued a freezing injunction against the sale of a non-fungible tokens (NFTs) from the Bored Ape Yacht Club series, which forbade the token to be sold until an ownership dispute is resolved. The law recognises fungible and non-fungible tokens as property to which court injunctions can attach, and the NFT case is a consistent application of that principle that implies investors have rights that can be protected. The claimant frequently borrows on NFTfi, a platform that uses NFTs as collateral for crypto loans, while the defendant’s identity and location are unknown.

THAILAND

SEC PROPOSES STRICTER IT RULES

Thailand’s Securities and Exchange Commission (SEC) will revise its 2016 rules and guidelines on establishing an IT system. The proposed changes aim to: keep up with changing IT usage in business practices and increasingly sophisticated cyber threats; revise preventive measures for addressing security pitfalls that caused IT incidents in the capital market; and update IT rules and guidelines issued by other financial regulators. The goal is to achieve the SEC’s strategic priority of building cyber resilience and ensuring licensed corporations have efficient IT systems that are resilient to cyber threats, and that can efficiently comply with governing rules.

MALAYSIA

REGULATOR, FSA INK AGREEMENT

The Securities Commission Malaysia (SC) and the Labuan Financial Services Authority (FSA) have signed a memorandum of understanding (MoU) to enhance a 2004 agreement between the two agencies in light of changing business and regulatory landscapes. The memorandum covers the development and regulation of capital market operations in Malaysia. It would allow the Malaysian financial watchdog and the Labuan FSA to increase collaboration in mutually beneficial areas such as risk monitoring and capital market stability, as well as improve technical support, capacity building and information exchange.

VIETNAM

DRAFT LAW TARGETS DIGITAL PLATFORMS

On 4 May, the Ministry of Information and Communication of Vietnam released a draft law on e-transaction for public comment, due 4 July. The draft effective date is undetermined. The 104 articles and 11 chapters of the draft will replace the existing Electronic Transaction Law and propose new digital signature, digital identity, trusted services and e-contract regulations for companies serving Vietnam. Chapter VII of the draft regulates digital platforms and is Vietnam’s adoption of the EU’s Digital Services Act and Digital Markets Act.