MCI (P) 004/02/2024 ISSN 0219 – 6875 KDN PPS 1867/10/2015(025605) + SINGAPORE’S UP-AND-COMERS MAKING THEIR MARK REFORMS SUPERCHARGE JAPAN’S CAPITAL MARKETS HIGHLIGHTS FROM THE SE ASIA LAW AWARDS
FOR PROGRAM AND SPEAKING ENQUIRIES, PLEASE CONTACT: Marianne Tocmo marianne.tocmo@tr.com FOR SPONSORSHIP OPPORTUNITIES, YOU MAY REACH OUT TO: Amantha Chia amantha.chia@tr.com / (+65) 6973 8258 Engage with Asia’s Leading Legal Professionals at the 21st ALB Hong Kong In-House Legal Summit 2024. We are thrilled to invite you to be part of the premier event for legal professionals in Asia. This year’s summit will have 2 STREAMS OF CONTENT featuring unparalleled insights from legal experts and more networking opportunities, taking place live in person on 12 September. Support us and amplify your brand visibility among legal professionals, industry leaders, and government officials. OVERVIEW *Complimentary passes are available exclusively to in-house counsels and general counsels from corporations only. All confirmed participants will be notified via email. ALB reserves the right to cancel any registrations at any time if they do not meet the profile stated above. Representatives from law firms and legal service providers are welcome to contact our sponsorship team. Photos taken during the ALB Hong Kong In-House Legal Summit 2023 last 21 Sept 2023 at JW Marriot HK. 12 SEPTEMBER – HONG KONG ALB HONG KONG IN-HOUSE LEGAL SUMMIT 2024 AGENDA AT A GLANCE • Mastering Compliance Risks Presented By Geopolitical Tensions • Top 3 Regulatory Updates And Trends: Managing Risks. Meeting Regulatory Expectations. • Hong Kong-Mainland China Reciprocal Enforcement Regime: Updates And Considerations • Cross-Border Data Transfers: Impact Of China Cybersecurity and Data Protection Regulations • Talent Management And Succession Planning For Legal Leaders • Preparing For Emerging Litigation In The Crypto Space • Latest Trends In Harnessing AI: Balancing Potential And Legal Boundaries • Structuring Your Due Diligence To Capture Third-Party ESG Risks • Country/Regional Legal Update • USA And China/Asia: Unique Considerations Impacting Your Compliance Program • US Sanctions Regime: Developments For 2024 And Practical Implications • Building Deal Protection Mechanisms Into Your M&A Agreements *Please note that the agenda is subject to change PROUDLY PRESENTED BY TO REGISTER FOR THE ALB HONG KONG IN-HOUSE LEGAL SUMMIT 2024 PLEASE CLICK THE LINK BELOW: www.gevme.com/HKIHLS24 FOR THE SPEAKER DETAILS AND OTHER EVENT UPDATES, SEE THE EVENT WEBSITE BELOW: www.legalbusinessonline.com/HKIHLS2024 PRESENTATION SPONSOR PANEL SPONSORS SPONSORS
1 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM COVER STORY 14 ALB Asia Super 50 Disputes Lawyers 2024 In its fourth annual list, ALB spotlights the region’s top dispute lawyers, recognized for their outstanding client service. These lawyers were rigorously selected based on client recommendations directly submitted to ALB. List by Asian Legal Business, Text by Bingqing Wang With contributions from: • Jun He Law Offices • Zhong Lun Law Firm FEATURES 12 Nikkei’s new dawn Japan’s strategic reforms have sparked record foreign investment and a Nikkei 225 surge, as cost-conscious management and market-friendly policies transform the country into an attractive global investment hub. With contributions from: • Atsumi & Sakai 22 Merger momentum Despite global uncertainties, India’s M&A landscape remains robust, with domestic deals driving growth and diverse sectors attracting investments. Experts predict a positive outlook for H2 2024, bolstered by policy continuity and abundant dry powder. 24 ALB Singapore Rising Stars 2024 In its third edition, ALB continues its tradition of identifying the country’s most promising legal talents. These exceptional lawyers demonstrate remarkable potential and have earned consistent client praise. 32 Korea on the horizon As the historic economic partnership between the UAE and South Korea takes effect, lawyers in both countries are building capabilities across multiple practice areas to help clients navigate unfamiliar regulatory environments through specialised practice groups and strategic alliances. 36 Convertible craze Convertible bonds have become the go-to financial instrument for Chinese companies seeking to raise capital. This trend is breathing new life into Hong Kong’s capital markets and offering a unique blend of low-cost financing and potential equity upside for investors. 38 ALB SE Asia Law Awards 2024 Winners, photos, interviews and more. With contributions from: • Rajah & Tann BRI EFS 3 The Briefing 4 Forum 6 Explainer 7 Deals 9 Q&A 10 Appointments CONTENTS 12Nikkei’s new dawn Image: REUTERS/Toru Hanai
2 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM Asian Legal Business is available by subscription. Please visit www.legalbusinessonline.com for details. Asian Legal Business has an audited average circulation of 11,402 as of 30 September 2016.Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business can accept no responsibility for loss. MCI (P) 004/02/2024 ISSN 0219 – 6875 KDN PPS 1867/10/2015(025605) Thomson Reuters Alice @ Mediapolis, 29 Media Circle, #09-05, Singapore 138565 / T (65) 6775 5088 10/F, Cityplaza 3, Taikoo Shing, Hong Kong / T (852) 3762 3269 www.thomsonreuters.com THE VERDICT IS IN In today’s rapidly evolving business landscape, uncertainty is the only constant. Economic fluctuations, geopolitical tensions, and regulatory changes create a complex web of challenges for companies operating in Asia and beyond. It is in this context that we the annual ALB Super 50 Disputes Lawyers, a showcase of legal professionals who are instrumental in helping businesses thrive amidst uncertainty. These 50 exceptional individuals have been selected by clients as some of the leaders of dispute resolution in Asia. Their expertise extends far beyond the courtroom, encompassing a deep understanding of business operations, risk management, and strategic decision-making. In an era where a single dispute can make or break a company’s future, these lawyers serve as indispensable advisors and problem-solvers. Clients highlighted not only the lawyers’ track records in high-stakes litigation and arbitration but also their ability to provide proactive counsel that helps businesses avoid disputes altogether. These professionals are as adept at crafting watertight contracts as they are at arguing cases before international tribunals. Beyond individual accomplishments, this list reflects broader trends in the business-legal interface. It highlights the increasing importance of alternative dispute resolution methods in facilitating smoother business operations, the role of technology in enhancing legal services, and the growing demand for lawyers who can provide holistic, business-oriented solutions. As we celebrate these exceptional professionals, we recognise their crucial role in fostering a more stable and predictable business environment in Asia. Their work not only resolves conflicts but also enables companies to pursue bold strategies with confidence. RANAJIT DAM Managing Editor, Asian Legal Business, Thomson Reuters HEAD OF LEGAL MEDIA BUSINESS, ASIA & EMERGING MARKETS Amantha Chia amantha.chia@thomsonreuters.com MANAGING EDITOR Ranajit Dam ranajit.dam@thomsonreuters.com ASIA JOURNALIST Sarah Wong sarah.wong@thomsonreuters.com ASIA WRITER Nimitt Dixit nimitt.dixit@thomsonreuters.com RANKINGS AND SPECIAL PROJECTS EDITOR Wang Bingqing bingqing.wang@thomsonreuters.com COPY & WEB EDITOR Rowena Muniz rowena.muniz@thomsonreuters.com SENIOR DESIGNER John Agra john.agra@thomsonreuters.com TRAFFIC/CIRCULATION MANAGER Rozidah Jambari rozidah.jambari@thomsonreuters.com SALES MANAGERS Hiroshi Kaneko Japan, Korea (81) 3 4520 1192 hiroshi.kaneko@thomsonreuters.com Jonathan Yap Indonesia, Singapore (65) 6973 8914 jonathan.yap@thomsonreuters.com Krupa Dalal India, Middle East, Singapore (91) 22 6189 7087 krupa.dalal@thomsonreuters.com Romulus Tham Southeast Asia (65) 6973 8248 romulus.tham@thomsonreuters.com Simon Wan Hong Kong (852) 3462 7730 simon.wan@thomsonsreuters.com Steffi Yang South and West China (86) 010 5669 2041 qifan.yang@thomsonreuters.com Steven Zhao China Key Accounts (86) 10 6627 1360 s.zhao@thomsonreuters.com Yvonne Cheung China Key Accounts, Hong Kong and Korea (852) 2847 2003 yvonne.cheung@thomsonreuters.com SENIOR EVENTS MANAGER Julian Chiew julian.chiew@thomsonreuters.com SENIOR EVENTS MANAGER, AWARDS Tracy Li tracy.li@thomsonreuters.com
3 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM THE BRIEFING: YOUR MONTHLY NEED-TO-KNOW LONDON LAW FIRMS LOCKED IN NQ SALARY BATTLE 1 IN THE NEWS DLA Piper has represented Timor-Leste pro bono in securing a crucial ITLOS climate ruling. The decision affirms governments’ duty to regulate greenhouse gas emissions and obliges developed nations to support developing states through various measures. “THEY’LL BE SORRY.” QUOTE UNQUOTE Top Australian law firms are questioning the usefulness of artificial intelligence in legal practice, according to a recent report by the Australian Financial Review. A benchmark study conducted by Allens, one of Australia’s leading law firms, found that AI models currently available are inconsistent and prone to “hallucinations,” failing to demonstrate basic competencies expected of a junior lawyer. The study tested four large language models on 30 legal questions across 10 practice areas. Only one model, OpenAI’s GPT-4, barely passed with a score of 5.27 out of 10. Herbert Smith Freehills’ emerging technology head, Susannah Wilkinson, told the AFR that AI is “not good for understanding nuances in context, it’s not good for understanding a client’s risk appetite, and it’s not good for the broader legal reasoning.” Miriam Stiel, Allens’ intellectual property practice lead, added. Number of companies that listed on the SGX in H1 2024, making Singapore the worstperforming market in Southeast Asia for IPOs. Malaysia came first with 21 companies. AUSSIE LAW FIRMS UNIMPRESSED BY AI IMPACT: REPORT Several top law firms in London have announced salary increases for newly qualified lawyers, intensifying the ongoing competition for junior talent in the legal sector. Herbert Smith Freehills (HSF) has raised its newly qualified (NQ) lawyer pay to 135,000 pounds ($170,000), a 12.5 percent increase from its previous 120,000 pounds. The firm will also boost trainee salaries from September. DLA Piper and HFW have also announced pay hikes, with NQ salaries rising to 110,000 pounds and 100,000 pounds, respectively. These moves come as UK-based firms strive to compete with their U.S. counterparts, who often offer higher compensation packages. UK firms have also had to wrestle with issues such as Brexit and a lower value of the pound versus the dollar. As a result, the five Magic Circle firms have lost their place at the top of the London legal market they held a decade ago. The salary war shows no signs of abating, with U.S. firm Paul Weiss set to offer £180,000 to NQs in its new UK training programme. Percentage of Yale law students who picked law firm culture as a top consideration when deciding which firms to join. Only 56 percent said compensation. Former Hong Kong Secretary for Justice Teresa Cheng tells the South China Morning Post that foreign law firms leaving the city will regret their decision. Arcadia Finance, a new litigation finance firm that launched recently, has secured access to over $100 million in capital to fund lawsuits. It will invest broadly in U.S.-based commercial and patent litigation, as well as U.S. and international arbitration. IN THE NEWS
4 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS JOONKI YI, managing partner, Bae, Kim & Lee At BKL, succession planning is managed by two key committees: the Recommendation Committee and the Management Committee. This process is characterised by its democratic and dynamic nature. The Recommendation Committee at BKL is a group of approximately 15 members, comprised of individuals from various practice areas and job roles, with a historical preference for young partners. This composition is integral to BKL’s succession planning, as the committee, under the leadership of these young partners, is responsible for electing the next managing partner and management committee members. The primary duty of this committee is the selection of the next managing partner, and, subsequently, in collaboration with the newly elected managing partner, the appointment of management committee members. A notable tradition at BKL is the committee’s endeavour to achieve unanimity in their decisions, a process that often necessitates multiple rounds of meetings. The Management Committee at BKL is selected with a careful balance across different generations and practice areas. The managing partner holds the responsibility of appointing heads of practice groups and committee chairs, always keeping in mind the concept of “next-generation succession.” In essence, BKL’s succession planning is rooted in a transparent partnership that prioritises the greater good. This process involves elements of persuasion, concession or restraint, consensus or unanimity, inclusivity, and forward-thinking leadership. SRIDHAR GORTHI and NISHANT PARIKH, partners and management committee members, Trilegal Trilegal is unique in the Indian context for its allequity lockstep model, founded on principles of meritocracy and democracy. The firm has an elected Management Committee and a structure that allows for periodic review to ensure continuity as well as change. The next generation of leaders serve as practice group heads, office heads, committee members, etc., to hone their management skills in preparation for election to the Management Committee, should they so choose. Our firm’s philosophy is of stewardship, whereby leaders hold the goodwill of the firm in trust for the next generation of partners. We believe that every young partner who aspires to one day lead the firm should get a fair opportunity to do so. JOSEPH KWAN, head of litigation and dispute resolution, Deacons As one of the largest law firms in Hong Kong, we have the advantage of being locally based. This allows us greater flexibility and autonomy, as we are not bound, for example, by programs that international firms apply across their offices. Our approach may not be formal, but we believe that it is effective and adaptable. Good lawyering skills do not necessarily encompass management and leadership qualities. In recognition of management and leadership qualities, we actively seek to identify partners with leadership potential at an early stage through their practice and by involving them in various firm committees. We are transparent about our intentions to develop them and will provide coaching and empowerment to help them grow. We encourage these emerging leaders to engage in management activities, allowing them to observe current leaders and participate in decision-making processes. They will be given opportunities to lead initiatives and address operational issues, with clear explanations of the rationale behind our decisions FORUM THE NEXT GENERATION As the Asia legal market continues to evolve on the back of shifting political and market forces, law firms are being challenged on multiple fronts. A well-structured succession plan is necessary to facilitate a smooth transition and introduce new perspectives. Law firms across the region discuss how they are preparing the next generation of leaders to guide their firms into the future. WHAT FORMAL SUCCESSION PLANNING PROCESSES DOES YOUR FIRM HAVE IN PLACE TO IDENTIFY AND DEVELOP THE NEXT GENERATION OF FIRM LEADERS AND RAINMAKERS? JOONKI YI SRIDHAR GORTHI NISHANT PARIKH JOSEPH KWAN
5 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS to ensure that they understand the significance and delicacy of the issues. The next generation of leaders is expected to uphold and build upon our firm’s culture, vision, and values. To achieve this, it is crucial that these principles are clearly and consistently communicated to them. We will observe and ensure that our shared values are reflected in their behaviour and decisions. Given the time and dedication required for leadership development, we aim to begin this process early. Despite our busy legal practice, the continued success of the firm would depend on our investment in developing our future leaders. AHMAD LUTFI ABDULL MUTALIP, managing partner, Azmi & Associates At Azmi & Associates, we recognise the critical importance of formal succession planning in ensuring the firm’s sustained success and stability. Our robust succession planning process is meticulously designed to identify and cultivate the next generation of leaders, management committees, and rainmakers. We begin with a comprehensive evaluation of our current talent pool, assessing individuals based on their performance, potential, and alignment with the firm’s core values. This rigorous assessment enables us to identify high-potential candidates with the capacity for future leadership roles. Our progression pathway includes clearly defined stages: From pupillage programs to associates, managing associates, senior associates, and ultimately, partners. For those identified as highpotential candidates, we develop tailored growth plans focused on enhancing their leadership capabilities, technical expertise, and business acumen. This development includes mentoring, coaching, and practical leadership experiences. We emphasise continuous professional development, encouraging participation in local and international advanced training programs and industry conferences to stay abreast of the latest legal trends and practices. Our Governance Committee plays a pivotal role in the succession planning process, actively engaging in talent review sessions and succession discussions during its monthly meetings. This collaborative approach ensures a diverse and dynamic pipeline of future leaders ready to assume key roles as needed. Through these structured and proactive measures, Azmi & Associates is committed to fostering a culture of excellence and sustainability. By investing in our people, we ensure our ongoing growth and success, securing the firm’s legacy for generations to come. AHMAD LUTFI ABDULL MUTALIP Image: Dragon Images/Shutterstock.com Beijing-headquartered Grandall Law Firm and Malaysian law firm Richard Wee Chambers (RWC) have entered into a collaboration agreement. Following the signing of the agreement, the Chinese-language trade name of the Malaysian firm will change to “国浩律师（马来西亚）事务所” but retain its English name as “Richard Wee Chambers - A Member of Grandall Law Firm,” said a statement from the PRC outfit. This marks 36th branch globally for Grandall, which was founded in 1998. The Malaysian team now has 12 senior lawyers focusing on areas such as technology, telecommunications, new energy, green projects, semiconductors, logistics and property management. RWC was founded in 2019 in Kuala Lumpur by Richard Wee. It is known for expertise in sports and esports, technology, environmental, social and governance (ESG) issues, labour, real estate, and e-commerce law. And earlier this year, corporate lawyer and Grandall partner Will Fung joined RWC as a principal partner after being among the first batch of foreign legal counsels registered with the Beijing Municipal Bureau of Justice. Fung, who joined Grandall’s Beijing office in 2007, has practiced as an international counsel assisting clients globally, primarily in corporate mergers and acquisitions, the statement said. His previous employers include Malaysia’s Shook Lin & Bok and Arthur Wang Lian & Partners. Another RWC partner, Kee Shao Yee, is also a foreign counsel at Grandall. She had earlier worked at ZICOLaw. “The collaboration brings together the expertise and resources of both sides and marks another solid step in the firm’s international development,” Grandall said. CHINA’S GRANDALL LAW FIRM, MALAYSIAN LAW FIRM RWC ENTER INTO COLLABORATION
6 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS Since the enactment of China’s Company Law in 1994, the country’s corporate landscape has taken off in a phenomenal way. To date, more than 40 million companies have been established, and almost 10,000 public companies are listed on the three major stock exchanges. However, the law has not been majorly updated since 2005, drawing criticisms that the legislation being outdated and inadequate in the wake of China’s economic take-off in the past decades. In response, the revised Company Law entered into force on July 1. Marking the most comprehensive overhaul in two decades, its sweeping changes encompass various aspects of corporate operations, including company capital rules, governance structures, liquidation procedures, and shareholder rights. Lawyers say the new law will modernise China’s corporate landscape and align it more closely with global best practices, as it offers increased flexibility in areas such as share issuance and corporate structure while simultaneously strengthening shareholder protections. WHAT ARE THE MAJOR UPDATES AND WHY DO THEY MATTER? Yuxin Shen, a Beijing-based partner at Freshfields Bruckhaus Deringer, notes that the latest amendments to the Company Law are designed to bring it more into line with global best practices and strike a better balance between state regulation and market autonomy. “As the Company Law is a fundamental law for business entities and given the comprehensiveness of the 2023 amendment, all stakeholders in China Inc. need to carefully review and assess the implications of the amendment to ensure that they comply with the new Company Law but also take advantage of the opportunities it offers,” Shen adds. The updated law has brought a spate of changes, including changes to companies’ corporate governance structure, capitalisation system, and shareholder liability. Companies now have more flexibility in setting up their corporate governance structures. “For instance, if the relevant conditions are met, a joint stock company (JSC) may now have a sole director, and both limited liability companies (LLCs) and JSCs may have no board of supervisors or supervisor at all,” explains Shen. Other important changes include elevated fiduciary duties and personal liabilities facing directors, supervisors, and senior officers. Additional rules have also been introduced to prevent and deter illegitimate interference by controlling shareholders and actual controllers of a company. Furthermore, the new Company Law introduces stricter capitalisation requirements, enhanced protection for minority shareholders, and greater emphasis on the interests of employees, notes Shen. “All these changes will enhance the integrity and vibrancy of Chinese companies,” he adds. WHO WILL THE NEW LAW IMPACT THE MOST? The latest version of the Company Law will impact all companies incorporated in China, including foreigninvested companies. Shen believes the most immediate changes will be observed in existing companies, which, at the minimum, need to review their current capital commitments, corporate governance structures, and internal documents (such as articles of association, shareholders’ agreements, and employment contracts). Also, “Any structures or provisions that no longer comply with the mandatory provisions of the new Company Law should be amended, and additional details that the new Company Law leaves to the discretion of companies need to be included in the articles of association or shareholders’ agreements to avoid potential confusion or even disputes,” Shen adds. Foreign-invested companies, meanwhile, are advised to improve corporate governance by the end of this year as required by the Foreign Investment Law. On a positive note, Shen believes the new legislation could serve as a confidence boost to foreign investors doing business in China by stipulating improvements Image: YP_Studio/Shutterstock.com HOW WILL THE UPDATED COMPANY LAW HELP CORPORATE CHINA? EXPLAINER u u
7 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS in corporate governance structure, the incorporation and liquidation procedures, and share capital structure for joint stock companies (JSCs). The stricter capitalisation requirements and strengthened creditor protection are also highlighted as beneficial in facilitating business dealings between foreign investors and Chinese companies under the new law. “That being said, foreigninvested companies also need to make adjustments, particularly regarding shareholders’ capital contributions, corporate governance practice, and duties of directors, supervisors, and senior officers,” adds Shen. As such, it’s crucial for companies to familiarise themselves with these new opportunities and requirements while gearing up for a lengthy transition. “This will involve considerable investment of time and resources, including engagement with specialist legal counsel,” Shen says. WILL THE LAW HELP CHINA’S ECONOMY? Even though some see the transitional period as lengthy, Shen is DEALS $3 BLN Hyundai Motors India’s planned IPO Deal Type: IPO Firms: Cyril Amarchand Mangaldas; Latham & Watkins; Shardul Amarchand Mangaldas & Co; White & Case Jurisdiction: India $1.7 BLN Blackstone’s offer to take Infocom private Deal Type: M&A Firms: Anderson Mori & Tomotsune; Simpson Thacher & Bartlett; TMI Associates Jurisdictions: Japan, U.S. $1.4 BLN Kirin Holdings’s offer to acquire Fancl Corp Deal Type: M&A Firms: Nagashima Ohno & Tsunematsu; Uryu & Itoga Jurisdiction: Japan $1.4 BLN Funding for Adani Enterprises and EdgeConneX’s data centres Deal Type: Project Finance Firms: A&O Shearman; Cyril Amarchand Mangaldas; Milbank; Saraf and Partners Jurisdiction: India confident that China’s economy will gain from the modernised Company Law in the long run. Take changes to share capital as an example. Under the new law, shareholders of an LLC are now required to pay their entire subscribed capital contribution within five years, while a JSC can issue multiple classes of shares with differentiated shareholders’ rights. Shen believes the new rules will turn JSCs into a more popular corporate form by bringing the capital structure of JSCs in line with international practice. u $1.3 BLN KKR-led consortium’ acquisition of STT GDC Deal Type: M&A Firms: Freshfields Bruckhaus Deringer; Latham & Watkins; WongPartnership Jurisdictions: Singapore, U.S. $1.1 BLN Asahi Kasei’s offer to buy Calliditas Therapeutic Deal Type: M&A Firms: Cleary Gottlieb Steen & Hamilton; Gernandt & Danielsson Advokatbyrå; DLA Piper Jurisdictions: Japan, Sweden $1 BLN OCBC’s offer to buy out Great Eastern Holdings Deal Type: M&A Firms: Allen & Gledhill; WongPartnership Jurisdiction: Singapore $870 MLN CMC’s acquires 40 percent stake in HKT Trust & HK Deal Type: M&A Firm: Clifford Chance Jurisdictions: China; Hong Kong
8 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS On May 30, South Korea’s newly elected National Assembly met for the first time after the April local elections altered the composition of the country’s 300-seat legislature. President Yoon Suk-yeol’s administration was dealt a heavy blow as the ruling conservative People Power Party, and its satellite party clinched only 108 seats. The main opposition Democratic Party and allies notched a landslide victory, scoring a majority of 176 seats. The spotlight of this election has been centred on a range of socio-economic difficulties facing South Korea’s voters, who have used their ballots to revolt against issues ranging from rising inflation to perceived shortcomings in welfare under Yoon’s governance in the past two years. “The recent election results highlight a shift towards left-leaning policies in South Korea, altering the business and legal environment,” says Saemee Kim, a partner at South Korean law firm Lee & Ko. “The ruling People Power Party aims for tax cuts and pension reforms, while the opposition Democratic Party focuses on higher corporate taxes, stronger pension benefits, pro-labour union laws and stronger punishment of companies for workplace injuries,” Kim adds. The electoral setback of Yoon’s party could scupper the conservative president’s domestic agenda, likely miring Asia’s fourth-largest economy in three years of political deadlock and economic uncertainty. However, the main opposition forces have failed to muster the supermajority of 200 seats that could give them legislative powers to pass bills vetoed by a president and even launch impeachment bids against key administration figures, including the president. With nobody having an absolute say on legislative matters, the parties may reach for compromises on some issues, Kim says. For example, “The opposition might support a property tax cut, believing it could weaken the ruling party’s support among wealthier voters, thus aiding their chances in the next presidential election,” notes Kim. Historically, conservative governments in South Korea were known as stalwarts of market liberalism. But Yoon’s administration has outlined domestic policies ranging from increasing housing supply and implementing major infrastructure projects to boost people’s living standards and the country’s overall competitiveness. Yoon, a former top prosecutor, has also held no punches when it came to corporate behaviour and market malfeasance. Under his watch, regulators have imposed tens of millions of dollars in fine on companies for wrongdoings, and once temporarily banned short selling in the stock market. Now, with the National Assembly controlled by the liberal opposition forces, lawyers believe the Yoon administration, even with its pivot away from the conservative laisses-faire economic approach, will be under more pressure to enhance social welfare and regulate corporate misdemeanour. Take criminal investigations on workplace injuries as an example. The introduction of the Serious Accidents Punishment Act, or SAPA, in January 2022, has given rise to a significant number of criminal investigations of serious workplace accidents. “Before the introduction of SAPA, only direct supervisors of injured employees faced criminal responsibility. Now, a company’s management may face criminal charges for workplace injuries if the management did not take reasonable measures to ensure workplace safety,” Kim explains. She expects the number of criminal charges stemming from the SAPA to climb with the parliament now dominated by the liberal opposition. “The opposition Democratic Party earlier this year refused President Yoon’s proposal to postpone the enforcement of SAPA on small- and medium-sized enterprises. Smaller companies are considered to be more susceptible to SAPA claims as they lack safety measures,” explains Kim. On the foreign policy front, Seoul has been pushing hard to boost economic and security cooperation with the United States and Japan since Yoon took office, as the rise of China unnerved the Blue House and cast a shadow on South Korea’s policymaking. But with the U.S. presidential elections approaching in November, Korean exporters might still be subject to tightening scrutiny regardless of Seoul’s painstaking efforts to warm ties. The situation is unlikely to be materially influenced by a potential shift of ruling party in the White House amid rising bipartisan consensus in Washington on adopting protectionist trade regimes, even against allies including South Korea. All in all, these potential changes are likely to present significant challenges for businesses operating in South Korea, but at the same time, they will enhance legal access for the public, says Kim. “They will present opportunities for domestic and international law firms operating in the Korean market, in both disputes and advisory practices alike,” she adds. KOREAN COMPANIES FACE LEFT-LEANING AGENDA FOLLOWING ASSEMBLY ELECTION People vote at a polling station during the 22nd parliamentary election in Seoul, South Korea, April 10, 2024. REUTERS/Kim Hong-ji
9 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS Q&A ‘A TRANSFORMED ECONOMY WITH DECARBONISATION AT ITS HEART’ Matthew Gingell, general counsel of Oxygen House, established The Chancery Lane Project in 2019 with the aim of promoting significant advancements in decarbonisation through the integration of climate protection measures into international commercial agreements. In an interview with ALB, Gingell discusses his efforts to drive positive change within the legal industry in terms of environmental impact, as well as his vision for the future of the project. ALB: Where do decarbonisation and legal work intersect, and how are you looking to make use of it? MATTHEW GINGELL: There are four legal levers that intersect decarbonisation and the law. Climate Laws, Climate Litigation, Climate Governance and Climate Contracts. Laws and Litigation take significant time, which we do not have. The Chancery Lane Project supports businesses to decarbonise using their contracts. Our open-source content includes eight guides, a glossary of climate-defined terms and a library of core clauses that support lawyers and other business professionals. We want to ensure that the contracts being written today protect the world of tomorrow. We believe that if the legal community changes how it manages contracts with respect to reducing emissions, the result will be a transformed economy with decarbonisation at its heart. The legal community is just 1 percent of the economy, but it governs the other 99 percent. The law is a vital component of change across markets. When we speak to companies, they tell us that climate change poses a significant risk to their business, not just in terms of the impact it can have on future profits, but also in terms of preparing for incoming regulation. Our content helps businesses mitigate that risk, which is why the Law Society, International Bar Association, and various other industry guidelines and toolkits recommend climate contracting as a way of meeting net-zero targets. ALB: The project’s Malaysian chapter was recently established. What are the plans for it? GINGELL: We’re proud of the fact that our content has motivated lawyers internationally. Across the world, we’ve worked with lawyers to transpose our content for their jurisdictions. We have transposition teams across Asia, including Japan, China, Singapore, Hong Kong, India, and Pakistan. Malaysia is the latest of our transposition teams to be set up, and we are excited to see what business professionals will do with the transposed content. We’re in the process of trialling publishing international content, so watch this space. ALB: How would you evaluate the appetite for decarbonisation efforts within the legal community, and how do you plan to raise awareness further? GINGELL: There is a range across different jurisdictions. During the course of our work in Europe, we’ve observed a market shift away from lawyers merely being climate conscious to recognising that it is impossible to give trusted and competent advice to clients without considering climate risk. This is evident in the Law Society of England and Wales climate change guidance, for example, which other law societies and bar associations globally may replicate. Responding to elements of the Law Society’s guidance, I published a whitepaper in September 2023 as general counsel of the Oxygen House Group, proposing an innovative approach for lawyers on advised emissions (being the impact of the advice given, rather than the operational footprint of the firm). The paper reflected a growing understanding that climate change is the responsibility of business and law to address as much as it is that of governments and civil society. In terms of raising further awareness, our guides support lawyers and other business professionals in using climate contracting in their companies. The guides are a way to help lawyers and other professionals create the right conditions for climate clauses to be used by their clients and companies; they are also a gateway for raising awareness of the principles of reducing emissions via contracts. ALB: How is TCLP planning to harness the power of emerging technologies in advancing its purpose and goal? GINGELL: We have two areas we’re focusing on at the moment. First, we are making sure our content is used in training data. With the growing popularity of Large Language Models (LLMs), we’ve quickly realised that we’re the centre of the most valuable and difficult part of the data ecosystem; the creation of quality reliable content. AI companies are currently fighting over this to use as training data, so we’re making sure it’s easily available to them. If our content is informing these data sets, the potential is huge. The second is finding opportunities for climate-aligned clauses. With the help of a data scientist, we’re soon going to explore how we can use LLMs to review huge, publicly accessible repositories of contracts and spot opportunities for climate-aligned clauses. We can then look at the length and value of these contracts and determine engagement activities to help the department implement the right clauses. MATTHEW GINGELL
10 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS APPOINTMENTS TONY CHOW LEAVING King & Wood Mallesons JOINING Freshfields Bruckhaus Deringer PRACTICE Insolvency LOCATION Hong Kong LIJUN CHUI LEAVING Bird & Bird JOINING Simmons & Simmons PRACTICE Disputes LOCATION Singapore DIO INOUE LEAVING Guardant Health JOINING Atsumi & Sakai PRACTICE Corporate/M&A LOCATION Tokyo MATT GORMAN LEAVING Reed Smith JOINING Addleshaw Goddard PRACTICE Corporate LOCATION Singapore AKIKO HOSOKAWA LEAVING Baker McKenzie JOINING Atsumi & Sakai PRACTICE Banking & Finance LOCATION Tokyo BEN JOLLEY LEAVING Mitsubishi Heavy Industries JOINING Herbert Smith Freehills PRACTICE Construction Disputes LOCATION Tokyo DESSY TAMPI LEAVING N/A JOINING AVYA Law Firm PRACTICE Innovation and Technology LOCATION Jakarta Macau law firm LS Lawyers has entered into a one-year cooperation agreement with Lisbon-headquartered litigation boutique Melo Alves, which will provide the Macau outfit with training in various legal fields in Portugal. The agreement was formalised by Jorge Cheng, partner at Melo Alves and head of its Asian desk, and LS partners Liu Xiaocui and Song Xiaoyong. Under the terms of the agreement, the two firms will engage in mutual legal support, facilitate the exchange of legal insights and documentation, and foster commercial collaborations between lawyers in Portugal and Macau, Melo Alves said in a statement. “The aim of signing this agreement is to strengthen the partnership, further improve services and client experience, and provide high quality, comprehensive and convenient professional services to clients in Macau and Portugal in need of legal services,” according to Melo Alves’ statement. The 15-partner Melo Alves focuses on criminal and regulatory litigation, compliance, and internal investigations. The firm’s Asian desk advises Portuguese clients on their investments in China and the rest of Asia, and provides Asian clients with legal services in Portugal and Angola in areas including immigration, real estate, joint ventures, employment, and litigation and investigation. LS Lawyers, a five-lawyer firm, provides legal services across various practice areas, including civil, commercial, criminal, administrative, and intellectual property law. CHANAKA KUMARASINGHE LEAVING HFW JOINING Addleshaw Goddard PRACTICE Construction LOCATION Singapore PAUL MOLONEY LEAVING Mayer Brown JOINING CMS PRACTICE Funds LOCATION Hong Kong PORTUGAL’S MELO ALVES, MACAU’S LS LAWYERS IN COOPERATION AGREEMENT
11 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BRI EFS (Reuters) The resignations of two British judges from China-ruled Hong Kong’s highest court not only raise concerns about the rule of law, some lawyers and experts say, but will further undermine confidence in the city’s broader commercial legal sector. Hong Kong’s legal industry, which has long helped define the territory as an international financial hub, is already facing pressure from a downturn in capital markets, competition from other judicial centres and growing tensions between China and the U.S. Fresh questions about the independence of the judiciary and the strength of the rule of law will add to concerns for foreign companies about the legal protections they can expect in Hong Kong, lawyers and experts say. “Some people think that you can divide or separate commercial cases as a phenomenon from political or human rights cases, but I think that’s kind of a perilous path, because what happens is the politics of repression creeps into the commercial area as well”, Michael Davis, an international law professor and global fellow at the U.S.-backed Wilson Center think tank said. The heightened concerns over Hong Kong as a legal centre were sparked by the resignations of two British judges, Jonathan Sumption and Lawrence Collins, a month ago. Both global authorities in commercial law, they quit Hong Kong’s Court of Final Appeal (CFA) following the convictions of 14 democrats under a sweeping China-imposed national security law. Collins cited the “political situation”, but in harder-hitting comments, Sumption said in a column for the Financial Times that Hong Kong was “slowly becoming a totalitarian state”. He also expressed concern that the rule of law was being profoundly compromised. Sumption referred to an “oppressive atmosphere” and calls for judicial “patriotism” that are difficult for judges to oppose. There are plenty of supporters who say the rule of law remains robust, including Hong Kong government adviser and barrister Ronny Tong, although he acknowledges the damage done by the resignations and the comments. He said the remarks “don’t help to improve our perception in the eyes of the world.” The Hong Kong government has long advocated the beneficial role of foreign jurists in improving local jurisprudence by sitting on cases alongside local judges. “Hong Kong’s ability to remain as an international financial centre is largely attributed to its stable environment with strong rule of law consisting of a robust legal system and a pool of diversified legal talents”, a spokesman for Hong Kong’s Department of Justice said in response to a Reuters request for comment. Six senior commercial lawyers with over a century’s combined experience said the resignations exacerbated longstanding concerns about Hong Kong’s future as a legal centre. They noted that firms drafting commercial contracts, joint ventures, or deciding where to arbitrate complex cases, are now increasingly opting for the likes of Singapore, Dubai or Delaware in the U.S., rather than Hong Kong, in contractual jurisdiction clauses, because they are seen as more neutral. “Sumption and Collins leaving is devastating for Hong Kong, in terms of the CFA’s powers as a commercial appellate court”, a commercial lawyer with three decades of experience told Reuters, declining to be identified given the sensitivity of the matter. Davis said any perceived diminution of legal protections affects the confidence of commercial entities over the enforcement of contracts. While cases involving national security laws have dominated headlines, the vast majority of lawyers in Hong Kong are engaged in commercial and corporate work. Hong Kong is ranked third in Asia for the rule of law by the World Bank Group, with 11,000 solicitors and 1,600 barristers. However, the number of foreign law firms registered in Hong Kong dropped to 74 in 2024 from 91 in 2019, according to the Hong Kong Law Society. This consolidation has seen U.S. law firm Winston & Strawn close its Hong Kong office in February, while Dechert is considering closing its Hong Kong and Beijing offices. The debate over the robustness of Hong Kong’s rule of law could also exacerbate difficulties in recruiting new judges to Hong Kong courts, lawyers say. Of the city’s 211 designated judicial posts, only 163 are currently filled, according to judiciary figures. Average wait times were 171 days for civil cases in the High Court and 111 days for the District Court in March 2024, both up from 2019. The staffing crunch has been severe enough for the judiciary to now recruit private lawyers as deputy judges for short stints of up to several months, according to a government report, noting the number of such external deputy judges had almost doubled from 23 in 2018 to 45 in 2022. “The recent criticism is likely to have a reputational impact and make it even more difficult to replenish judges from the private sector”, said a fourth commercial lawyer with over 40 years’ experience, referring to Sumption’s remarks. HONG KONG COMMERCIAL LAW HUB ALLURE DAMAGED BY FOREIGN JUDGES ROW REUTERS/Tyrone Siu
12 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM CAPITAL MARKETS Foreign ownership of Japanese stocks climbed to a record last year after significant reforms in the country’s capital markets that has led to record foreign investment and a surge in the Nikkei 225 index. The reforms were widespread and touched on various aspects of the country’s financial landscape, including changes to the Tokyo Stock Exchange (TSE) to promote cost-conscious management, revisions to tender offers and shareholding reporting systems, efforts to eliminate cross-shareholdings, and government support for foreign fund managers, all aimed at making Japanese capital markets more appealing to investors. These have all been part of a concerted push to make Japan a leading asset management centre, say Akio Kawamura and Yukihito Machida, partners at Atsumi & Sakai. The push has largely been successful, with 31.8 percent of total stock exchange value owned by foreign investors in the fiscal year that ended in March 2024, the highest since 1970. One of the most impactful of the many reforms came from the TSE on March 31 last year, when the exchange moved to require that all listed companies on the Prime and Standard markets take “action to implement management that is conscious of cost of capital and stock price.” This initiative encouraged companies to disclose a variety of information, including their policies, targets and any specific initiatives for improvement. “The trend to implement management that is conscious of cost of capital The shift in corporate culture, coupled with factors like the weak yen and low interest rates, have made the Japanese market increasingly attractive to foreign investors, with many entering the market in anticipation of positive effects arising from the new Nippon Individual Savings Accounts (NISA) program. The program, which offers an unlimited tax-saving period and allows Japanese retail investors to shift money into foreign equities, was designed to encourage Japanese households to move cash and savings into stocks and mutual funds. “An increased number of foreign investors are coming to the Japanese market in anticipation of (NISA’s) positive effects,” the partners says. About 12 trillion yen (US$74.3 billion) will flow into foreign equity investments through the new NISA in 2024, according to a new Barclays Securities estimate, bringing knock-on impacts on foreign investment. Other regulatory changes have also played a crucial role. In May this year, Japan’s National Diet passed amendments to the Financial Instruments and Exchange Act, revising both its Tender Offer System and the Large Shareholding Reporting System. The changes were driven by “the growing importance of constructive dialogue between companies and investors in Japan’s capital markets,” say Kawamura and Machida. “This is a part of efforts to promote constructive dialogue between companies and investors to enhance corporate value over the medium to long term.” Changes to the Financial Instruments and Exchange Act has also allowed companies to outsource their middle and back-office operations, which have not been common in the country. Regulators have also instituted a system to support foreign fund managers in obtaining necessary permits and licenses to do business in Japan. “Specific measures to implement these policies are expected to be further discussed in the future,” say Kawamura and Machida. is becoming more prevalent,” say Kawamura and Machida. This push for transparency has been complemented by other regulators. For instance, Japan’s Ministry of Economy, Trade and Industry (METI)’s “Guidelines for Corporate Takeovers, published in August 2023. The guidelines set out a code of conduct for M&As, stressing that acquisition of a corporation that enhances corporate value and secures shareholders’ interest would still be desirable, even if target companies do not approve. The guidelines also encouraged directors to seriously consider what would be the best approach to enhance corporate value, opening the door to dynamic market activity. “Such momentum encourages companies to reform by their own initiative,” added Kawamura and Machida. The combined effects of all these initiatives have been complex, drawing strong interest from global investors, many of whom have been frustrated with tactics aimed at blocking takeovers and entrenching management. NIKKEI’S NEW DAWN Japan’s strategic reforms have sparked record foreign investment and a Nikkei 225 surge, as cost-conscious management and market-friendly policies transform the country into an attractive global investment hub. BY ASIAN LEGAL BUSINESS REUTERS/Toru Hanai
13 ASIAN LEGAL BUSINESS – JULY 2024 WWW.LEGALBUSINESSONLINE.COM BROUGHT TO YOU BY ATSUMI & SAKAI A conversation with Atsumi & Sakai Your firm advises foreign investors and fund managers investing in Japanese listed companies. Can you share a recent case where you helped a client navigate complex capital market regulations? We advise several financial institutions and investment funds on Japanese financial regulations, including (1) international hedge funds investing in Japan; (2) foreign companies managing assets in Japan; and (3) financial institutions selling foreign financial products to Japanese institutional investors. In recent years, we have been particularly active in advising activist funds on the Japanese market. The number of shareholder proposals made to Japanese listed companies reaches a new all-time high each year. Our legal support for activist funds includes negotiating with issuer companies and communicating with other shareholders, in addition to exercising minority shareholder rights and appraisal rights under the Japanese Companies Act. In addition, they control their market risk by short selling and derivatives trading, which requires the funds to pay attention to Japanese market regulations. Each activist has a variety of strategies to make engagement with their target companies and to make its positions. We have done our best to understand each activist’s strategy and provide the best advice on how to maximize the effectiveness of that strategy, while in addition providing legal advice that does not conflict with Japanese proxy regulations or other market regulations. When the number of shares to be acquired exceeds a certain number, it is required for investors to file a notification under the Large amendments will increase the number of foreign fund managers entering the Japanese market. Second, some notifications and filings will be followed by ongoing reporting requirements. For example, there is an exemption under the financial business registration whereby the use of a notification called “Business Operators, etc., Engaging in Specially Permitted Businesses for Qualified Institutional Investors, etc.” to collect money from Japanese investors to manage a fund can exempt the fund from the requirement to obtain a license. However, once notification is made, business reports must be submitted every year thereafter. Given your firm’s global reach and multilingual capabilities, how do you ensure effective communication and coordination when working on cross-border fund transactions involving multiple jurisdictions? We believe our strength lies in the fact that our team consists of lawyers with long-standing experience working for global financial institutions, who also understand market practices and economic perspectives. This enables us to understand investors’ strategies and support their business in Japan, not only from a legal perspective, but also in collaboration with PR firms and others professionals. In addition to having several foreign lawyers working in our head office in Tokyo, we also have overseas offices in London, New York, Frankfurt, Brussels, and elsewhere. We belong to several global networks of top-tier law firms. By leveraging these resources, we are able to provide well calibrated advice, while keeping up-to-date with the latest information. Shareholding Reporting Regulation, the Foreign Exchange and Foreign Trade Control Law and the Antitrust Law, as well as to comply with relevant tender offer regulations. We frequently assist clients on these tasks as well. In particular, the Foreign Exchange Law was substantially amended in 2019, increasing the number of situations in which filings are required prior to the acquisition of shares. We respond promptly and appropriately to these considerations, while negotiating with the authorities as necessary. When it comes to regulatory filings, including applications for licenses and filings to facilitate offerings to qualified institutional investors, what are some common pitfalls that foreign clients should be aware of when dealing with Japanese regulators? There are several pitfalls, but we would like to mention the following two points here. The first is that in Japan, registration for an investment management business requires that a company structure including human resources be in place to ensure compliance / legal observance and other middle-back office functions. Compared to other countries, it is not common in Japan to outsource middle and back office functions, and all organizational structures must be put in place. However, in order to realize its ongoing policy plan for promoting Japan as a “Leading Asset Management Center”, the Japanese government has recently made revisions to allow investment management firms to outsource middle and back office functions and to ease entry requirements for investment management firms. We expect that such Akio Kawamura, Partner, Head of Atsumi & Sakai’s Investment Fund Team Akio Kawamura, a Japanese-qualified attorney (Bengoshi) of over 40 years’ standing, leads the firm’s investment funds and asset management practice. He has extensive experience in regulatory counselling for financial institutions and fund managers, crossborder investments in Japanese companies, capital markets, together with investigations and enforcement. Yukihito Machida, Partner, Head of Atsumi & Sakai’s Venture Practice Team Yukihito Machida is a Japanese-qualified attorney (Bengoshi) with over 25 years’ experience and leads the firm’s venture capital and funds practice. He has significant experience advising both Japanese and international corporations on venture finance, asset management and investment funds. Sho Tsuzuki, Associate Sho Tsuzuki, an attorney admitted in Japan (Bengoshi) in 2014, has experience advising on asset management and investment funds, venture and acquisition finance and M&A. He co-authored a newsletter titled “Overview of Recent Policies and Measures to Attract Foreign Direct Investment into Japan”, issued by Atsumi & Sakai in June 2024. KEY PERSON BIO
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