September 2024 ASIA EDITION MCI (P) 004/02/2024 ISSN 0219 – 6875 KDN PPS 1867/10/2015(025605) Asia M&A Rankings 2024 The region’s best firms for deal work We showcase the leading general counsel Legal networks guide member firms on AI Thailand grows in significance as EV hub
1 Asian Legal Business | September 2024 COVER STORY 16 ALB Asia M&A Rankings 2024 Rankings by Asian Legal Business, text by Nimitt Dixit Asia’s markets, like the rest of the world, have seen a steep decline in dealmaking in the first half of the year. But macroeconomic trends, increase in asset quality and lucrative exit opportunities promise a better future for the region’s traditional and emerging markets. FEATURES 14 Network-powered AI Proactive legal networks are playing a unique role in the proliferation of the latest artificial intelligence within the legal industry. 28 Going electric While the surge in Chinese electric vehicles in Thailand is creating new opportunities for legal services, lawyers need to adapt quickly to grab their share of the work. 30 ALB Asia Top 15 GCs 2024 General counsel are emerging as key players in shaping corporate strategy. Contents September 2024 BRIEFS 3 The Briefing 5 Forum 6 Deals 8 Q&A 11 Appointments 12 Explainer Today, they’re at the forefront of innovation, building trust, and driving their organisations forward. 34 Eastern promise China’s economic ties with the Middle East have been rapidly expanding. Lawyers say that companies must carefully consider the business logic of their investments and navigate the unique cultural and legal landscape of the Middle East to ensure success. 37 ALB MENA Super 50 2024 ALB spotlights 50 remarkable lawyers from the MENA region who have demonstrated outstanding client service. These legal professionals were selected based on a client survey conducted by ALB. 38 Renewable roadblocks In Southeast Asia, where the transition to green energy is one of the primary focuses for governments, lawyers examine critical areas susceptible to disputes and identify best practices to avoid them. 14
2 Asian Legal Business | September 2024 From the editor 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 & 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 Navigating uncertainty In the dynamic landscape of Asian mergers and acquisitions, the importance of expert legal counsel has never been more pronounced. As we unveil our Asia M&A Rankings in this issue, it’s crucial to reflect on the current market dynamics and the pivotal role that law firms play in navigating these choppy waters. The first half of 2024 has been a sobering reminder of the challenges facing the M&A sector in Asia-Pacific. PwC’s analysis reveals a stark 23 percent decrease in deal volumes and a 35 percent drop in values compared to the same period last year. The private equity arena has not been immune to this downturn, with Asian funds raising a mere $100 billion in 2023 – the lowest in a decade, according to Bain & Company. However, as we often see in the business world, challenges breed opportunities. While the initial months of 2024 showed muted activity, there are encouraging signs of preparation for more favourable conditions. Amidst this cautious optimism, certain sectors continue to attract investor interest. Healthcare, technology, infrastructure, energy, financial services, and retail remain hotbeds of activity for domestic, regional, and international investors alike. Yet, the path forward is far from straightforward. The regulatory landscape across Asia is in flux, with some jurisdictions relaxing foreign ownership restrictions while others tighten competition regimes. Navigating these complex and often contradictory frameworks demands not just legal expertise, but a nuanced understanding of local business cultures and practices. In this context, the right legal counsel becomes not just advisable, but essential. The law firms featured in our rankings have demonstrated their ability to guide clients through these intricate terrains, balancing regulatory compliance with strategic business objectives. Ranajit Dam Managing Editor, Asian Legal Business, Thomson Reuters 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
3 Asian Legal Business | September 2024 TheBriefs (Reuters) Large U.S. law firms had strong financial performance in the first half of 2024, with the highest-grossing firms exceeding other segments of the legal market, analysts at Wells Fargo said. Revenue increased an average of 11.4 percent during the first six months of 2024 compared with the same period last year, driven by billing rate and demand growth, according to data from Wells Fargo’s Legal Specialty Group. The group’s survey of more than 130 firms included 66 of the 100 highest-grossing U.S. firms. That’s higher than the 4.4 revenue growth in the first half of 2023, when firms faced continued financial challenges after productivity declines. The new survey data shows the best first half since 2021, Wells Fargo said, as capital markets and M&A activity picked up and work in areas such as litigation, restructuring, antitrust and investment management continued to drive growth. The top 50 highest-grossing U.S. firms had the strongest revenue growth at 13.8 percent in the first half of 2024, according to the survey results. The second 50 firms had 7 percent and the next 100 firms had 8.8 percent revenue growth. The top-grossing U.S. law firm in 2023 was Kirkland & Ellis, with $7.2 billion in revenue. The top 50 firms are “significantly outperforming” the other two segments, mainly due to “a lot more rate growth and a lot better realization,” said Owen Burman, a senior consultant at Wells Fargo’s Legal Specialty Group. Billing rates, demand drive strong US law firm financial performance Your monthly need-to-know Slaughter and May has joined the London law firm salary war, increasing newly qualified (NQ) associate salaries by 20 percent to 150,000 pounds ($196,000), aligning with other Magic Circle firms, according to media reports This move, effective from Sept. 1, was made earlier than planned to keep pace with competitors and retain top talent. The salary race extends beyond the Magic Circle, with firms like Macfarlanes, Herbert Smith Freehills, DLA Piper, and HFW also raising NQ rates. However, U.S. law firms operating in London offer even higher salaries, with Quinn Emanuel and Gibson Dunn leading at 180,000 pounds for NQs. Other U.S. firms, including Paul Weiss, Akin, Fried Frank, Milbank, Sidley Austin, and Goodwin Procter, offer between 175,000 and 180,000 pounds. Firms like Vinson & Elkins, Kirkland & Ellis, Latham & Watkins, and others are close behind, offering 170,000 to 174,000 pounds. This intense competition for top legal talent in London has led to unprecedented salary levels. The sustainability of these high salaries and their impact on the broader legal market and client fees remains to be seen. For now, newly qualified lawyers in London are benefiting from this fierce competition. London salary war escalates as Slaughter and May joins fray
4 Asian Legal Business | September 2024 $170 bln Deal volume in the private equity secondaries market reported by Kirkland & Ellis between November 2022 to October 2023. It was the top legal advisor, followed by Ropes & Gray ($150 billion) and Morgan, Lewis & Bockius ($98 billion). £1.3 bln Amount of income made by UK law firms in the form of interest on client money in 202223, according to a study by personal finance website Finder. It found that some firms kept the first 250 pounds of interest, while others paid a “miserly” 0.3 percent to clients. 69% Proportion of in-house attorneys in the U.S. who report working on ESG issues in some capacity, according to Bloomberg Law’s most recent State of Practice Survey. However, for U.S. law firm attorneys, the figure is only 44.2 percent. The Briefs QUOTE UNQUOTE “We will close your business transactions here… If you don’t like India, please don’t work in India.” Delhi High Court Justice Navin Chawla warns Wikipedia for not complying with its order to disclose information about individuals who made edits to the page of news agency ANI. Singapore Big Four law firm WongPartnership says it has become the first in Southeast Asia to partner with Harvey, a legal artificial intelligence platform, to implement its generative AI solutions. WongPartnership announced it will test Harvey's generative AI solutions across different business units in a phased approach. The initiative aims to streamline operations and legal processes to improve productivity. The firm’s legal technology team, part of its Knowledge, Innovation & Technology department, will oversee the implementation. "Integrating generative AI technology is a key investment to strengthen our capabilities for our clients and further optimise our practice," said Ng Wai King, chairman and managing partner of WongPartnership, in a statement. Added: Winston Weinberg, CEO and co-founder of Harvey: "We are excited to be working with WongPartnership, a firm that shares our vision for innovation and leadership in the legal field.” Harvey, an AI-powered legal technology startup, recently achieved unicorn status with a valuation exceeding $1 billion after securing $100 million in Series C funding led by Google Ventures. This move reflects a growing trend of law firms and corporate legal departments in Asia embracing AI to enhance efficiency and service delivery. Singapore’s WongP inks deal with AI startup Harvey
5 Asian Legal Business | September 2024 The Briefs Innovation imperative FORUM How has your firm’s approach to staffing and investment in library, research and IT support roles changed in recent months, particularly in response to emerging technologies like generative AI? As a result of emerging technologies like generative AI, we have had to heavily evolve many of our library and research functions. For example, we have transitioned from print to digital resources, enhanced research capabilities through AI-integrated legal databases, reduced our physical library size while improving access to legal resources, and shifted our focus to strategic, high-value research as routine tasks become automated. Overall, our emphasis has been on enhancing human expertise with technology rather than replacing staff, with a clear trend towards building more technologically adept teams. A key component of our firm’s AI strategy is the adoption of Copilot, facilitated by Dentons’ participation in Microsoft’s early access program (EAP). This early adoption allows us to develop policies and training programs to prepare our lawyers for AI integration ahead of the market. Our IT team excels in evaluating AI tools with distinct advantages, enabling us to implement innovative solutions tailored to our firm’s needs. For example, by integrating our data and precedents to train Copilot, we enrich the AI’s content and provide valuable knowledge and resources for the firm. Additionally, the firm is enhancing enterprise integration by leveraging machine learning and AI to streamline connections. This approach not only drives significant business value but also upholds rigorous security standards. MAJEED RAHMAN head of legal resources department, Dentons Rodyk The transformative potential of generative AI and other emerging technologies within the legal sector is undeniable. From workflow automation to sophisticated knowledge management systems, these technologies are poised to profoundly transform the industry and augment the expertise of legal professionals. Tilleke & Gibbins has long been home to strong teams of knowledge and technology professionals, including a dedicated in-house team of ten software developers. These teams regularly design and implement innovative technologies for storing, extracting, and sharing legal knowledge; conducting legal research; and improving business processes more generally to empower our lawyers to provide exceptional client service. In light of recent and rapid developments in generative AI, Tilleke & Gibbins has expanded our capabilities to tackle increasingly complex cross-functional innovation projects - both internally and in collaboration with third-party providers. To ensure the success of these projects, we’ve recently created a new full-time role within the firm focused solely on managing innovation and strategic initiatives. To ensure swift adoption and optimal use of these technologies, we also deliver regular training programs designed to upskill our employees, equipping them with the knowledge and skills they need. In recent months, our firm has strategically adapted its approach to staffing and investment in library, research, and IT support roles, particularly in response to the rise of AI and other emerging technologies. As a century-old firm with a commitment to blending tradition with innovation, we have prioritised enhancing our technological infrastructure while maintaining our core values of confidentiality and client-centric service. To this end, we’ve not only expanded our investment in advanced research tools and IT systems but also recalibrated roles within our library and research teams to incorporate AI-driven solutions. Generative AI has proven to be a valuable complement to our research and drafting processes, aiding in error detection, concept understanding, and ideation. Recognising this, we’ve developed clear policies to govern AI use, ensuring data protection and compliance. We’ve also invested in training programs to upskill our team, enabling them to harness these tools effectively while preserving the depth and rigour of our legal work. On the IT side, we’ve bolstered our support structure, implementing secure cloud-based platforms like Microsoft Copilot and integrating these systems with existing workflows. Our IT team is increasingly focused on ensuring these technologies operate seamlessly alongside traditional research methods, thereby enhancing overall efficiency. ANDREW STOUTLEY chief operating officer, Tilleke & Gibbins: SANTOSH VIKRAM SINGH senior partner, Fox Mandal & Associates
6 Asian Legal Business | September 2024 $4 bln KKR’s management buyout of Fuji Soft Deal: M&A Firms: Mori Hamada & Matsumoto; Nishimura & Asahi; Simpson Thacher & Bartlett Jurisdictions: Japan, U.S. $2.4 bln Japan Tobacco’s acquisition of Vector Group Deal: M&A Firms: Freshfields Bruckhaus Deringer; Sullivan & Cromwell Jurisdictions: Japan, U.S. JT Group has agreed to buy cigarette-maker Vector Group for about $2.4 billion to expand in the U.S. The deal will boost Japan Tobacco’s U.S. market share from 2.3 percent to about 8 percent and give it ownership of two of the top 10 U.S. cigarette brands. Japan is experiencing a huge outbound M&A boom as the country’s corporate giants come under pressure to boost capital efficiency, and the central bank moves towards ditching policies that depressed the currency. The Briefs $1.3 bln Formation of SeaTown Holdings’ second private credit fund Deal: Funds Firm: Clifford Chance Jurisdiction: Singapore DEALS $1.24 bln Itochu Corp’s offer to acquire Descente Deal: M&A Firms: Anderson Mori & Tomotsune; Mori Hamada & Matsumoto; Nagashima Ohno & Tsun-ematsu Jurisdiction: Japan $1.2 bln Ambuja Cement’s acquisition of Penna Cement Industries Deal: M&A Firms: Cyril Amarchand Mangaldas; Tatva Legal Hyderabad Jurisdiction: India $1.1 bln EQT AB’s offer to acquire PropertyGuru Deal: M&A Firms: Freshfields Bruckhaus Deringer; Latham & Watkins; Ropes & Gray Jurisdictions: Singapore, Sweden, U.S. $1.08 bln Whitehaven Coal’s sale of stake in Black-water mine to Nippon Steel, JFE Steel Deal: M&A Firms: Allens; Clayton Utz; Nishimura & Asahi Jurisdictions: Australia, Japan
7 Asian Legal Business | September 2024 The Briefs Pharma provides Japan M&A shot in arm as drugmakers hunt for growth Shackled by a shrinking population and weak domestic demand, corporate Japan has been looking overseas for inorganic expansion as anaemic domestic fundamentals curtail growth prospects and investor confidence. And pharmaceutical companies are the key players in one of the hottest dealmaking scenes in Asia’s second largest economy. A flurry of recent deals includes Japan’s Otsuka Pharmaceutical’s $1.1 billion agreement to acquire Boston-based Jnana Therapeutics. That followed Ono Pharma’s announcement of the acquisition of U.S.- based cancer drugmaker Deciphera for $2.4 billion, joining the likes of Takeda Pharmaceutical and Astellas Pharma in putting up bids for U.S.-based drugmakers. Masaki Noda and Yoko Kasai, partners at Nishimura & Asahi, believe the heightened cross-border M&A activities in Japan’s pharmaceutical industry are being prompted by patent cliffs for blockbuster drugs in the near future. For these companies, M&A could prove a pragmatic strategy to strengthen their portfolios and maintain growth. Amid the hunt for global targets, U.S. companies appeared to be the crown jewels for many Japanese investors. Noda and Kasai have observed growing interest from global contract development and manufacturing organisations (CDMOs) in pharmaceutical manufacturing sites in Japan. This momentum could be the legislative fruit bore by the U.S. Biosecure Act which aims to rein in China’s advancement in biotech services. “If enacted, the Act could necessitate changes in manufacturing outsourcing practices for global pharmaceutical companies, potentially limiting their ability to outsource to Chinese CDMOs or manufacturing sites located in China. As a result, global CDMOs may need to seek alternative partners in Asia, including Japan,” they add. Another major driver to the pharma M&A momentum is unique to the Japanese market itself, namely supply system issues for generic drug manufacturers. Some generic drug manufacturers have been experiencing difficulties in maintaining a stable supply of their products following manufacturing scandals discovered amongst two major manufacturers in late 2020, including violation of the applicable Good Manufacturing Practice (GMP). The series of scandals has led to shortages of the more affordable alternatives to brand-name medicines. “Faced with this situation, the Ministry of Health, Labor and Welfare has expressed concern about the current supply system for generic drugs, as we have too many small to mid-sized generic manufacturers in Japan,” note Noda and Kasai. In a report released in May, the Japanese government emphasised the need for reorganisations, including M&As, in the Japanese generic drug industries to ensure a stable supply of generic drugs to the market. “While the report suggests some potential means to support these reorganisations, further information is needed to understand the full extent of the drivers for M&A transactions in the generic drug sector,” say Noda and Kasai. In addition, Japan’s subdued drug pricing environment has also contributed to the increased appetite for crossborder M&A amongst Japanese pharmaceutical companies. “In Japan, where pressure to reduce national medical expenses is strong, the National Health Insurance’s prices for prescription drugs tend to be set very low. This drug pricing environment gives many large pharmaceuticals a strong incentive to expand their businesses outside Japan,” say Noda and Kasai. Although the United States, being the largest market, has emerged as the primary target, there has been interests in other markets too. For example, Japan’s Asahi Kasei made a $1.1 billion offer to buy Swedish drugmaker Calliditas Therapeutics in June. “This means that cross-border, multi-jurisdictional pharmaceutical M&A transactions often require law firms to handle a wide range of specialised aspects, including FDA regulatory matters, intellectual properties, data privacy, antitrust issues, drug pricing and reimbursement, national security, and AI-related regulations,” note Noda and Kasai. The Blackstone-MBK Partners deal over drugmaker Alinamin Pharmaceuticals has also highlighted the important role played by global buyout firms behind the scenes. Increasing attention from Japanese listed companies on capital efficiency has led to strategic carve-outs of various business units, giving private equity funds a good investment opportunity amidst weak performance outlook elsewhere in Asia. “These developments present many opportunities for private equity funds, including in the pharmaceutical sector,” say Noda and Kasai. “Additionally, under the current monetary policy of the Bank of Japan, the interest rate in Japan is still quite low, which benefits private equity funds by reducing the funding costs in Japan.”
8 Asian Legal Business | September 2024 The Briefs ‘Technology is key to assisting the evolution of arbitration’ Q&A ALB: In what ways do you believe the new collaborative platform will improve the attractiveness of the Greater Bay Area for arbitration? Thomas So: The platform launch is an important milestone for aligning mechanisms, rules, and talents in the GBA, under one country, two systems and three jurisdictions. With this platform, clients and parties can easily access and compare information from different arbitration institutions all in one place, helping them to choose the most suitable arbitration or mediation institutions, participants and rules for their cases. The platform also sets the stage for further sharing of resources and talents among the institutions, such as jointly recommending registered arbitrators, mediators, and neutrals, and arranging periodic personnel exchanges to support the training of international legal talents in the GBA. Looking forward, it is necessary to not only nurture legal talents but also train technology developers and legal professionals well-versed in using legal technology and familiar with PRC law, Hong Kong common law, and international law. ALB: What strategies is eBRAM implementing to realise the objective of standardising arbitration rules and systems? So: eBRAM’s vision has always been to “assist law firms, commercial enterprises and other dispute resolution institutes to enhance productivity with the aid of our state-of-the-art technology.” The main intention and objective of establishing the GBA Online Dispute Resolution Collaborative platform, is through the electronic platform, to link up GBA institutions for the sharing of knowledge, and best practices in the dispute resolution arena, and to promote interaction and close networking between the arbitration practitioners, thereby improving the efficiency of resource and demand integration and systematically advancing research, talent training, and professional exchanges within GBA. Going forward, eBRAM is continuing the journey to invite other arbitration and mediation institutions in the region to join the platform. Furthermore, eBRAM will organise cross-jurisdictional training for legal and dispute resolution practitioners on managing online dispute resolutions, with a view to enhancing the overall standard and aligning the professional standard across the regions. ALB: What trends do you anticipate in the evolution of arbitration within the GBA? So: As the GBA continues to undergo deep integration, coupled with Hong Kong’s strategic alignment with the national development plan to establish itself as the Asia-Pacific international legal and dispute resolution services center, the exchange of information and talent within the region will become increasingly frequent. There will be more government measures to promote arbitrations in the region, for example, the Chief Executive’s 2023 Policy Address promoted the “Wider Use of Hong Kong Law and of Hong Kong as Seat of Arbitration in GBA,” the implementation of the measures of allowing Hong Konginvested enterprises to adopt Hong Kong law and to choose Hong Kong as the seat of arbitration. By enabling users to select suitable arbitration institutions for their specific cases. Furthermore, the mutual recognition of judgment arrangements between mainland China and Hong Kong will, all these measures, over time, promote deeper integration of arbitration institutions across the GBA. Technology is also the key to assisting the evolution of the arbitration landscape. eBRAM is taking advantage of emerging technologies like AI for translating and transcribing documents and online meetings, Blockchain for document registry to ensure they can’t be tampered with, and cloud services to develop its LawTech facilities. These technologies will support arbitration participants in handling and managing their arbitration cases in GBA and other regions. Hong Kong-based online dispute resolution platform eBRAM recently collaborated with 11 ADR institutions and arbitration commissions to establish the Greater Bay Area (GBA) Online Dispute Resolution Collaborative Platform. Thomas So, the Chairman of eBRAM, discusses the role of technology in enhancing arbitration development within the GBA and the region. “It is necessary to not only nurture legal talents but also train technology developers and legal professionals well-versed in using legal technology and familiar with PRC law, Hong Kong common law, and international law.”
9 Asian Legal Business | September 2024 Brought to you by Helmsman LLC Restructuring in the maritime sector: A Singapore perspective ALB: What are the primary challenges in shipping and oil-related insolvencies or restructurings in Singapore over the past decade? Matthew Teo, Helmsman LLC: The maritime industry presents unique challenges in insolvency and restructuring scenarios. A significant hurdle is the complex corporate structure typical of shipping conglomerates. The industry standard of incorporating special purpose vehicles for individual vessel ownership, while beneficial for risk management, significantly complicates the restructuring process. This practice, designed to insulate other vessels from potential arrests, necessitates separate court applications for each entity to secure statutory protections during restructuring. Moreover, the inherently mobile nature of maritime assets introduces jurisdictional complexities. Vessels traversing international waters are subject to various maritime laws and arrest risks in different jurisdictions. This mobility demands a coordinated, multi-jurisdictional legal approach to asset protection during restructuring, requiring seamless collaboration among legal professionals across borders. Another critical factor is the diverse array of stakeholders in the maritime sector, each with distinct interests and objectives. The capital-intensive nature of the industry means secured creditors, such as financing banks, often hold extensive security over group assets, including vessel mortgages and earnings assignments. Simultaneously, we must consider the interests of charterers, shareholders, employees, and various other creditors. Balancing these competing interests requires exceptional negotiation skills and strategic foresight to achieve a viable restructuring plan. ALB: In your experience, what are the critical determinants of successful restructuring versus insolvency? Teo: The viability of restructuring hinges on several pivotal factors. Primarily, the As a major trade and finance centre, Singapore must safeguard against potential abuse of its restructuring processes by insolvent companies engaging in forum shopping. The challenge lies in fostering genuine business restructurings while preserving the integrity of our financial ecosystem. Any future reforms should aim to enhance efficiency and effectiveness without compromising the rights of creditors or the overall stability of the business environment. ALB: What advice would you offer companies facing financial difficulties or contemplating restructuring? Teo: My foremost recommendation is to engage external advisors - legal counsel and independent financial experts - at the earliest signs of distress. This proactive approach enables companies to address issues swiftly and leverage appropriate legal protections before the situation deteriorates. Early intervention often provides a wider range of restructuring options and increases the likelihood of a successful outcome. Equally critical is maintaining transparent communication with creditors. Opacity breeds mistrust, leading creditors to assume worst-case scenarios and take defensive actions that can jeopardise restructuring efforts. Open dialogue fosters an environment of cooperation, which is essential for any successful restructuring endeavour. Companies should conduct a thorough and honest assessment of their financial position and business prospects. This evaluation should inform a realistic restructuring plan that addresses the root causes of financial distress while capitalising on the company’s strengths and market opportunities. Furthermore, companies should familiarise themselves with the available legal tools and protections under Singapore’s restructuring framework. Understanding these options allows for more strategic decision-making and can provide crucial leverage in negotiations with creditors. Lastly, time is often of the essence in restructuring scenarios. Swift, decisive action coupled with clear communication can make the difference between a successful turnaround and insolvency. Companies should be prepared to make difficult decisions and implement necessary changes promptly to maximise their chances of recovery. company must possess a sustainable value proposition. Entities in declining industries face insurmountable odds unless they can successfully pivot their business model or demonstrate exceptional value in their assets. The presence of valuable assets can attract external investment, significantly enhancing restructuring prospects. The root cause of financial distress is equally crucial in determining outcomes. Temporary downturns due to exogenous factors are more amenable to restructuring than systemic operational issues. Companies experiencing short-term difficulties due to external market conditions often have a higher probability of successful reorganisation. Furthermore, the support of major creditors is indispensable to the restructuring process. While modern restructuring laws may allow for creditor cramdowns, securing majority creditor backing remains fundamental to a successful reorganisation. Without this support, even the most well-crafted restructuring plans may falter. ALB: How do Singapore’s restructuring and insolvency laws compare internationally, and what improvements could enhance the country’s position? Teo: Singapore has significantly modernised its restructuring and insolvency framework with the introduction of the Insolvency, Restructuring and Dissolution Act 2018. This comprehensive legislation consolidates and enhances previous reforms, incorporating debtor-friendly features that position Singapore as a leading restructuring hub. Key provisions include automatic moratoriums on creditor actions, which provide crucial breathing space for distressed companies. The ability to obtain extra-territorial moratoriums for schemes of arrangement is particularly noteworthy, offering protection beyond Singapore’s borders. Additionally, the Act introduces simplified restructuring procedures, streamlining the process for eligible companies. These progressive features set Singapore apart from other prominent restructuring jurisdictions such as the UK and Australia, potentially making it a more attractive venue for complex international restructurings. However, in considering further improvements, we must carefully balance debtor protection with maintaining Singapore’s reputation as a stable business jurisdiction. Matthew Teo Director, Head of Employment matthew.teo@helmsmanlaw.com Helmsman LLC www.helmsmanlaw.com
10 Asian Legal Business | September 2024 Malaysia offers investors cooling IPO respite during sluggish summer In a year when global IPO markets have wilted under the economic heat, Bursa Malaysia has stood out as a surprising oasis of activity. The country led the 10-nation ASEAN region with 21 listings in the first half of this year, raising around $450 million according to Deloitte. These included a fertility care specialist and a business trust that raised US$94 million each. And in early September, 99 Speed Mart Retail the country’s top mini-market chain retailer raised 2.36 billion ringgit ($542.8 million) in the country’s biggest domestic listing in seven years. In a show of heightened investor confidence, the shares jumped as much as 16.4 percent in its market debut on Monday after the listing. The group is expected to have a market capitalisation of 13.86 billion ringgit, making it also the biggest IPO in Southeast Asia in over one year since Amman Mineral International’s listing in Indonesia last July. Wan Kai Chee, a partner at Rahmat Lim & Partners, says the general economic environment in Malaysia for capital markets and investment is positive and are likely to stay so in the near future due to a backlog of prospective proposals during the COVID pandemic. Ong Eu Jin, managing partner at newly founded capital markets boutique Ong Eu Jin Partnership, also believes the IPO pipeline will keep pumping. “Some business owners may be motivated by the higher valuation and pricing the market is now willing to accept or the performance of the stock price of recent IPOs,” says Ong. “Others may jump on board the IPO bandwagon simply because they do not wish to lose out or lose face in response to their competitors’ sudden increase in prestige and brand visibility in their sector with their transformation into a publicly traded company,” he adds. Despite the promising number of companies seeking to list in Malaysia, However, Wan notes that Malaysia’s IPO landscape in recent times has been dominated by companies with growth prospects, including start-ups and new companies run by entrepreneurs. Out of the 33 listings the Malaysian stock exchange has seen to date, 26 are on the ACE Market, which has been favoured by entrepreneurs looking to push for more capital by taking their companies public. Ong agrees, noting the Malaysia IPO market will continue to be dominated by mid-cap companies but with a few large listings from time to time. “The typical narrative for a company seeking to be listed is to raise funds from the investing public for its expansion. A mid-cap company fits into the picture as it uses the IPO as a means to accelerate its expansion and facilitate its transformation to a larger company whilst the IPO investors will expect to see the value of their shares grow in tandem with the company’s growth,” says Ong. The listing of 99 Speed Mart as a result might turn out to be an exception rather than the rule. “99 Speed Mart does not exactly fit into this description as it is well established with around 2,600 outlets throughout the country. A large chunk of the proceeds raised in the IPO is not for the company’s expansion but pursuant to an offer for sale with the CEO and his wife expected to receive 1.7 billion ringgit,” notes Ong. But while the IPO of 99 Speed Mart may not be representative in terms of its size, but it sheds a light on the sectors that are looking at brighter prospects for fundraising, lawyers say. “The 99 Speed Mart example mentioned, as well as other past IPOs and proposals, demonstrate that there are advantages and good prospects for IPOs that are based on strong retail business,” says Wan. “Retail investors may also be incentivised to invest in businesses which they themselves are customers of and regularly keep in close contact with.” And Malaysia’s strong fundamentals have generated more investment confidence. In September, Malaysia’s central bank has maintained the overnight policy rate at 3 per cent amidst the country’s positive economic outlook. Going forward, a lower ringgit may make investments into Malaysia more attractive, where the revenue and costs of the business invested in are not adversely affected by the prevailing exchange rates, say lawyers. “This may represent better opportunities and increased IPO suitability for companies that fit into this category. This is likely to continue to substantial extent,” says Wan. Ong expects to see more law firms in Malaysia undertaking their maiden IPO as due diligence solicitors due to the large number of IPOs recently. “It is only sensible to make hay while the sun still shines,” he adds. The Briefs
11 Asian Legal Business | September 2024 APPPOINTMENTS Ang Lip Kian Leaving: Morrison Foerster Going to: Baker McKenzie Wong & Leow Practice: Corporate/M&A Location: Singapore Position: Principal Lavie Daramarezkya Leaving: MRP Law Office Going to: GHP Law Firm Practice: Corporate Location: Jakarta Position: Partner Dutsadee Dutsadeepanich Leaving: Clyde & Co Going to: Pisut & Partners Practice: Disputes Location: Bangkok Position: Partner Shirin Tang Leaving: Morrison Foerster Going to: Baker McKenzie Wong & Leow Practice: Corporate/M&A Location: Singapore Position: Practice co-head Parveet Singh Gandoak Leaving: King & Spalding Going to: Jones Day Practice: Corporate Location: Singapore Position: Partner Dani Indrawan Leaving: Indrawan, Heisky, Fachri & Partners Going to: ARKO Practice: Banking & Finance Location: Jakarta Position: Partner Ke Huang Leaving: Morrison & Foerster Going to: Jingtian & Gongcheng Practice: Capital Markets Location: Hong Kong Position: Partner Anthony Vassey Leaving: White & Case Going to: Herbert Smith Freehills Practice: Corporate Location: Hong Kong Position: Partner Alex Wong Leaving: Gibson, Dunn & Crutcher Going to: Karas So Practice: Disputes Location: Hong Kong Position: Partner Alfred Wu Leaving: Norton Rose Fulbright Going to: Dentons Practice: Disputes Location: Hong Kong Position: Partner Shinsuke Yakura Leaving: Orrick, Herrington & Sutcliffe Going to: White & Case Practice: Disputes Location: Tokyo Position: Practice Head Eunice Yao Leaving: Dentons Rodyk & Davidson Going to: Virtus Law Practice: Corporate Location: Singapore Position: Partner Vivian Yiu Leaving: Morrison & Foerster Going to: Jingtian & Gongcheng Practice: Corporate Location: Hong Kong Position: Partner Shirin Tang was previously the managing partner of Morrison Foerster’s Singapore office and a member of the firm’s global executive committee. She joins Baker McKenzie Wong & Leow with a team of M&A attorneys including partner Ang Lip Kian. Tang will co-head Baker McKenzie Wong & Leow’s Singapore M&A practice alongside Boo Bee Chun. She has over two decades of experience in cross-border mergers and acquisitions and private equity transactions across Asia and the U.S, particularly in the institutional real estate, technology, life sciences, and consumer sectors. Her previous roles include counsel at Shearman & Sterling in New York and Singapore, and associate at Drew & Napier. In recent years, Tang has led transactions totalling over $35 billion. The additions of Tang and Ang mean that Baker McKenzie Wong & Leow now has 55 principals and local principals. The Briefs
12 Asian Legal Business | September 2024 Can Vietnam’s updated telecom law help attract foreign investment? EXPLAINER Vietnam, one of the fastest-growing countries in Southeast Asia in recent years, has been eager to bring its economy to the forefront of the latest technological evolution. Apart from a concerted effort to attract semiconductor companies with incentives, Vietnam has also rolled out plans to overhaul its telecommunication regulations to keep up with the rapid digitalisation of the economy. In November last year, Vietnam’s National Assembly revamped its 2009 telecommunications system with Law No. 24/2023/QH15 on Telecommunications. The new telecommunications law has entered into effect from July this year except for certain provisions that will come into force on January 1, 2025. Duyen Ha Vo, senior partner at Vietnamese law firm VILAF, believes Vietnam is poised for urgent regulatory reform as the country hastens its pace for market access liberalisation. “In response, Vietnam has introduced a new Telecommunications Law designed to align with the evolving digital landscape and attract foreign investment in the telecommunications sector, while fulfilling its global commitments,” she says. 1 What are the key changes? One of the most significant reforms under Vietnam’s new telecom regime is that certain services, including Internet-based basic telecom services, cloud computing services, and data centres, can now be owned by foreign investors completely. Notably, these “non-traditional telecom services”, in particular data centre and cloud services, are defined and regulated under Vietnam’s telecommunication framework for the first time. The telecoms licenses, which are required for the operation of telecommunications companies, will not apply to the new services including data centres, cloud computing and “over the counter” (OTT) communication services, with certain registration or notification obligations. “The registration requirement may apply to data centres while the notification requirement may apply to Internet-based basic telecom services and cloud computing services,” notes Duyen. Under the new law, the licenses may have a term no longer than 10 years (renewable) in the case of nonfacilities-based telecom services. That is a shift from the 2009 Law, which provided for a license for the establishment of telecommunications networks (infrastructure) and a license for the provision of telecommunications services.. 2 What is the approach towards digital services? As Vietnam intends to catch the technological fast train and modernise its digital infrastructure while bolstering innovation, the new law has been striking a balance between preventing digital services from running afoul without suffocating technological advances. As such, regulators have subjected Internet-based basic telecom services and cloud computing services under “light regulation.” “This classification is generally in line with Vietnam’s international treaty classifications,” says Duyen. “Pursuant to Vietnam’s international commitments, Vietnam will remove all foreign ownership restrictions on non-facilities-based telecom services by January 2024 under the CPTPP and will remove all foreign ownership restrictions on non-facilities-based value-added telecom services by August 2025 under the EVFTA.” Additionally, “Only businesses with telecom service licenses are required to pay telecom operation fees, therefore, Internet-based basic telecom services and cloud computing services will be exempt from these fees,” she adds. 3 In what ways can the new law contribute to Vietnam’s growth? In introducing reforms to the telecommunication sectors, which include industries pivotal in the global supply chain of critical technologies, lawyers are optimistic that the new telecoms law could bring relief to foreign investors looking to operate in the communist country often saddled with red tape and bureaucracy. “The new law is designed to establish a clear framework for emerging telecom services, including cloud computing services, Internet-based basic telecom services, and data centres, while opening these sectors to foreign investment and not imposing telecom service license requirements or telecom operation fees,” notes Duyen. “These important changes aim to accelerate the growth of Vietnam’s digital economy. However, it will be important to monitor forthcoming implementing sub-law regulations to assess the full impact of the new legal framework,” she adds. The Briefs
13 Asian Legal Business | September 2024 Reed Smith latest U.S. firm to scale back in China Pittsburgh-founded Reed Smith is planning to close its Beijing office, becoming the latest major U.S. law firm to shrink its footprint in China. It will leave the firm with just one branch on the mainland, in Shanghai. The firm has “decided to strategically consolidate our resources in our Shanghai office, which closely collaborates with our offices in Hong Kong and Singapore,” Reuters quoted a firm spokesperson as saying. “We remain deeply committed to the China market,” the spokesperson said. Reed Smith first entered the Greater China legal market in 2008, starting out with offices in Hong Kong and Beijing. It then opened an office in Shanghai in 2011. According to the firm’s website, the Beijing office currently employs seven legal professionals. Some people from the Beijing office will transfer to the Shanghai location, and the firm is offering assistance to others who are not relocating, according to a person familiar with the matter. Among the seven professionals are partners Barbara Li and Eric Lin, both of whom have undergone multiple career transitions over the past decade. Li joined Norton Rose from Baker McKenzie in 2013 and later moved to PwC’s affiliate firm Rui Bai in 2020, where she served as the head of corporate law in China. After Rui Bai’s deregistration in 2022, she joined Reed Smith. Lin, on the other hand, helped to establish Simmons & Simmons’ Beijing office in 2011, but later joined Reed Smith in 2019. Currently, Reed Smith’s Shanghai office employs seven lawyers, while the Hong Kong office, the largest in Asia, has 90 lawyers. In the past year, nine international law firms, including Latham, Akin Gump, Perkins Coie, Orrick, Weil Gotshal, Sidley Austin, MoFo, Eversheds Sutherland, and Dechert, have announced decisions to close or consolidate their Mainland China operations. Brought to you by PDLegal LLC Key maritime law issues arising from major oil spill in Singapore In June 2024, Singapore faced a significant environmental crisis when over 400 tonnes of oil leaked into Singapore waters when a Netherlands-flagged dredger, Vox Maxima, collided with a stationary Singapore-flagged cargo tanker, Marine Honour, in Singapore waters. This Q&A with Managing Partner of PDLegal LLC, Peter Doraisamy, explores the implications of the oil spill from Singapore’s legal framework. What are the statutes governing oil spills in Singapore’s maritime jurisdiction? In Singapore, oil spills in maritime jurisdiction are governed by several key statutes, namely: (a) Merchant Shipping Act 1995, which generally codifies the Convention on Limitation of Liability for Maritime Claims 1976. (b) Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act 1998 (the “Oil Pollution Act”), which generally codifies the International Convention on Civil Liability for Oil Pollution Damage 1992 (“CLC 92”). (c) Merchant Shipping (Civil Liability and Compensation for Bunker Oil Pollution) Act One of the unfortunate consequences of the allision was that Marine Honour collided with another stationary vessel, which also caused damage. Our firm is currently advising this vessel’s owners on Singapore matters. Give us an example of penalties and sanctions that can be imposed on individuals or companies responsible for oil spills which may be relevant for the highlighted case above. While the Oil Pollution Act concerns financial consequences of oil spills and managing the limitations and liability (through, for example, exclusions), the Prevention of Pollution of the Sea Act is the governing statute for the imposition of sanctions in the form of fines and imprisonment for polluters. To prevent any overlap, the provision in the Prevention of Pollution of the Sea Act pertaining to cleanup costs to be recovered from the polluter will not apply if the liability is covered under the Oil Pollution Act. An example of a penalty can be found in section 7 of the Prevention of Pollution of the Sea Act, which provides that if any discharge of oil or oily mixture occurs from a Singapore ship into any part of the sea or from any ship into Singapore waters, the master, the owner and the agent of the ship, shall be liable on conviction to a fine of between $1,000 and $1,000,000 and/or an imprisonment term of up to two years. 2008, which generally codifies International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (“Bunker Oil Pollution Convention”). (d) Prevention of Pollution of the Sea Act 1990, which enforces various international conventions aimed at the protection of the marine environment and to the prevention, reduction and control of pollution of the sea and pollution from ships. (e) High Court (Admiralty Jurisdiction) Act 1961, which allows for the right to invoke admiralty jurisdiction as extended by the Oil Pollution Act. The CLC 92 covers oil pollution damage from spills of oil cargo, while the Bunker Oil Pollution Convention addresses pollution from bunker oil spills, so the applicable statute would depend on the type of vessel and oil spilled. Interestingly, liability for oil pollution is strict. This means that the vessel owner is liable for all damage caused by the oil spill regardless of whether the vessel was blameless. However, if the polluting act was not caused by the vessel, the shipowner can make claims against other parties such as the party that caused the act resulting in the oil spill. This was the case for Marine Honour, the bunker vessel that carried oil cargo tanks which ruptured and released approximately 400 tonnes of low-sulphur fuel into the sea, due to an allision caused by a dredger, Vox Maxima, which lost engine and steering control. Peter Doraisamy Managing Partner pdoraisamy@pdlegal.com.sg PDLegal LLC www.pdlegal.com.sg
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