Asian Legal Business (SE Asia) Jan 2010

ISSUE 10.1

WongPartnership MP speaks out Dilhan Pillay Sandrasegara looks beyond Singapore

Dubai World Restructuring Work comes from woes

ALB Special Report: Korea 2010 New developments shake up the industry

10 firms earmarked for big things in 2010 ALB Predictions 2010

Outlook for legal services, country-by-country n Lateral moves n Deals Roundup n Region-wide updates n debt & equity market intelligence ISSN 0219 – 6875 MICA (P) 215/07/2009

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ALB China Law Awards The Westin Hotel, Shanghai 16 April 2010 ALB Australasian Law Awards The Westin Hotel, Sydney 13 May 2010 ALB Japan Law Awards The Ritz Carlton, Tokyo 28 May 2010 ALB SE Asia Law Awards The Ritz Carlton, Millenia Singapore 4 June 2010 ALB Hong Kong Law Awards Conrad Hotel, Hong Kong 17 September 2010

Worldwide recognition for Asia’s legal excellence Asia’s premium law awards event series, ALB Law Awards returns to Asia and Australia in 2010. Each event is the culmination of months of intensive research and gathers hundreds of legal and industry professionals from all around the region. The biggest night on the industry calendar honours the achievements and successes of the past twelve months in a spirit of celebration and collegiality.

Everyone I spoke to enjoys the ALB Awards dinner. The black tie dinner, the style of the awards is all fantastic.

Partner – Conyers Dill & Pearman, Hong Kong The event is very well organised and a big success!

General Counsel – COSCO Pacific It is a great event and I am proud to be a part of it.

Partner – Milbank, Tweed, Hadley & McCloy Official publication

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Philippines Founded in 1945, SyCip Salazar Hernandez & Gatmaitan is one of the most-established law firms, and the largest, in the Philippines. Principally based in Makati City, the country’s financial and business center, the firm also has offices in Cebu City, Davao City and the Subic Bay Freeport. SyCip’s practice covers all fields of law and the broad range of the firm’s expertise is reflected in its client base, which includes top local and foreign corporations, international organizations and governments. SyCip combines traditions of professional integrity and excellence with a time-tested ability to break new ground.

Singapore Loo & Partners was founded in 1985 as a niche practice, handling mainly banking, corporate, securities and commercial work. With the support of a comprehensive network of correspondent law firms, the firm serves its clients in their regional needs. Loo & Partners has been regularly noted for its IPO, M&A and general corporate work.

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Vietnam Indochine Counsel is a commercial law firm focusing on business law practice in the Indochina region. Our areas of practice include: Foreign Investment, Corporate & Commercial, M&A, Securities & Capital Markets, Banking & Finance, Property & Construction, Taxation, Intellectual Property, Information Technology & Internet, International Trade, Outward Investment & Offshore Incorporation, and Dispute Resolution.

Malaysia Wong & Partners is a Malaysian law firm dedicated to providing a quality and solution-oriented legal services to its clients. Wong & Partners has grown steadily with international standards of quality and experience and the Firm has a solid commitment to training its lawyers, and invests in training, professional development and quality management programs with the aim of producing lawyers of global standard.

Practice area and industry editors

The Regulatory Updates section is sponsored by the following firms:

Environmental law / Intellectual property ATMD Bird & Bird is a dynamic and progressive firm with an established IP, corporate & commercial, competition and dispute resolution practice. The firm also has an extensive regional experience advising both domestic and foreign clients on cross-border transactions. ATMD Bird & Bird has been voted as Singapore’s Intellectual Property Firm of the Year at the 2005 and 2006 ALB Awards and the 2005 AsiaLaw (IP) Awards.

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Islamic Finance Azmi & Associates is reputably known as one of Malaysia’s leading firms in the areas of Mergers & Acquisitions, Capital & Debt Market, Corporate & Commercial, Energy & Utilities, Restructuring, Projects, Construction, Privatisation and Financing, Litigation and Arbitration and is also rapidly building its reputations in the areas of Intellectual Property and information technology.

IT

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EDITORial >>

‘Big law’ legacies

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009 was predicted as a tumultuous year for the legal profession by one legal consultant, who said the gathering storm clouds from the US subprime crisis would “severely test law firms in every area from practice development to recruitment and the retention of clients.” Perhaps drawing inspiration from the well-tested ‘12 steps’, the consultant asserted that “only law firms that admitted to having serious strategic problems and were prepared to deal with these creatively” would stave off imminent decline.

And yes, last year was a tumultuous and transformative one for legal services markets across the globe. It was a year of success for few and decline for many and one in which the rather prescient words of that legal consultant (and for that matter, many others) went largely unheeded. Rather than attending to the gathering clouds, many lawyers preferred to bask in the glory of the heady transactional days of ‘07.

The result was a year in which many law firms fell off the wagon in the US and Europe, but was the same true for their largely domestic counterparts in Asia? Last year was certainly tough for firms here, but it certainly wasn’t the annus horribilis it was for big law. While there were layoffs, staff contractions and badly-hit bottom lines, the pain was never as intense as on the other side of the globe.

It turned out that Asia was sufficiently decoupled from the global economy to go relatively unharmed. Law firms with a well-rounded domestic client base continued to prosper. But for how long can this last?

As much as the global story of the past year has been about the inexorable decline of big law, it has also been about the inevitable rise of Asia. As Asia’s ascension into the global business community diminishes the anonymity of its economies, so too will lawyers and law firms here find their fortune even more closely tied to global economic trends. Just how domestic firms deal with this, and their increasing scale and profile, will be their challenge for the next few years.

Perhaps they may be well served by taking some of the consultant’s prior advice: map out ‘12 steps’ of their own to ensure they don’t fall off the wagon when the next crisis comes along.

IN THE FIRST PERSON “The restructuring of Dubai World ... should result in a renewed effort to structure Islamic products from a genuine Shariah base, given the potential enforceability of issues if this is not done” Oliver Agha, Agha & Shamsi (pg 16)

“We’re currently investigating whether we should get more involved in [the Vietnam] market by looking at the possibility of opening an office there” Dillan Pillay Sandrasegara, WongPartnership (pg 50)

“It’s a lesson to firms to have a diversified portfolio. It requires foresight on the side of the partners to see trends in the market and to position the practice against the downturn” Paul Ng, Stephenson & Harwood (pg 83) Cover photos L-R: Frances Woo; Kim Doo-Sik; Joe Field; Peter Martyr; Wang Zhongde; Park Sang-Il; Graeme Hall; Guy Harles; Quentin Lowcay; Nasser Ali Khasawneh

Just as Asia’s ascension into the global business community will diminish the anonymity of its economies, so too will lawyers and law firms here find their fortune even more closely tied to global economic trends 2

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News | deals>> >> CONTENTS

contents

ALB issue 10.1

54

COVER STORY 34 ALB Watchlist 2010

ALB singles out those firms most likely to dominate headlines in 2010 and the ones to keep a close eye on

ANALYSIS 12 Indonesia: the Carrefour affair Indonesia’s competition laws are under scrutiny following the controversial Carrefour decision 13 Securitisation Asia’s securitisation market is finally starting to see the ‘green shoots’ of recovery 15 Double agents Maintaining good client relationships is critical – but when two of Linklaters’ managing partners left to join clients last year, was this the start of a new strategy in law firm CRM? 16 Dubai World The company’s US$26bn restructuring sent shockwaves around financial markets, but savvy firms are benefiting

FEATURES 44 2010 Predictions A country-by-country look at what this year holds in store for Asia’s legal markets and law firms 50 ALB Managing Partner series WongPartnership’s Dilhan Pillay Sandrasegara has his eyes set on the region 54 ALB Special Report: Korea 2010 Legal market liberalisation, new government measures and the reshuffling of law firm rankings make Korea one of the region’s most dynamic markets

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66 Banking & finance What goes down must always come up – law practices await the return of big-ticket deals 70 In-house Perspective: Alibaba Group ALB meets the in-house legal team at this pioneering TMT behemoth 72 ALB Law Awards 2009 A complete at-a-glance summary of all the ALB Law Awards winners across the region in 2009 80 Asset finance and aviation A whole new world of opportunity in regulatory work awaits for diversified law firms

Regulars 6 DEALS 18 NEWS • DLA’s former Gulf head launches new office for Al Tamimi • Mallesons loses litigation partner to Allen & Overy, gains arbitrator • Simmons and Al Busaidy win contract for US$2bn Omani coal projectform a new firm 18 20 84 86

UK Report US Report M&A deal update Capital markets deal update

80

50

INDUSTRY UPDATES 22 Intellectual property ATMD Bird & Bird 23 International Tax Azure 25 Islamic Financial Azmi & Associates 27 IT Guidance Software 28 REGIONAL UPDATES • China Paul Weiss • Philippines Sycip Salazar Hernandez & Gatmaitan • Singapore Loo & Partners • Vietnam Indochine • Malaysia Wong & Partners

PROFILES 8 32 39 42 59 61 63 65 68

DFDL Mekong K&L Gates Khasawneh & Associates BT Partnership Bae, Kim & Lee Lee & Ko Shin & Kim Yulchon Loo & Partners Asian Legal Business ISSUE 10.1

FINANCIAL INSTITUTIONS • ENERGY • INFRASTRUCTURE AND COMMODITIES • TRANSPORT • TECHNOLOGY

700 lawyers, 13 offices, one team Norton Rose Group in Asia Pacific

Norton Rose Group has always served the needs of clients with interests in the Asia Pacific region. But now that Norton Rose Australia has joined forces with us, we’ll be even better placed. The move will create a major legal practice across the region. 700 lawyers in 13 offices to be precise. Our clients right around the world will benefit from a new wealth of resources, knowledge and contacts. www.nortonrose.com/asiapacific

NEWS | deals >>

| CHINA |

deals in brief

►► Yuzhou Properties Company IPO Value: US$209m Firm: Skadden Lead lawyers: Jon Christianson, Dominic Tsun Client: Yuzhou Properties Firm: Paul Hastings Lead lawyers: Raymond Li, Sammy Li Client: Morgan Stanley

| JAPAN/NETHERLANDS | ►► Canon – Océ NV acquisition Value: US$1bn Firm: De Brauw Blackstone Westbroek Client: Océ NV Firm: Herbert Smith Lead lawyer: James Robinson Client: Canon Firm: Stibbe Lead lawyer: Björn van der Klip Client: Canon • Canon proposes to acquire Dutch printing company Océ NV • Alliance between Herbert Smith and Stibbe allowed firms to operate as one team to provide cross border advice. Lawyers worked together on antitrust issues, submissions and consultations to meet a tight deadline for EU/US filings

HEADLINE DEAL

• Stibbe provided 24 hour local advice on the EU filing while Herbert Smith Tokyo team supplemented with on-the-ground advice to Canon. Herbert Smith’s Robinson relayed due diligence progress and results directly to Canon’s board members in Japanese • Deal illustrates the Japanese outbound M&A trend of companies taking advantage of low market prices and strength of yen

Jon Christianson Skadden

Raymond Li Paul Hastings

• Skadden also advised CRIC in its US$248m IPO on the NASDAQ, along with its US$775m merger with SINA • Fourth IPO completed in 2009 for Paul Hastings, follows from October roles advising Glorious Property on HK$9.9bn raising and China Vanadium on HK$2.1bn raising

Value: US$2.4bn

• Herbert Smith to utilise Stibbe alliance on further instructions from Canon; also advising another Japanese manufacturer on its business combination with European counterpart

Firm: Allen & Overy Lead lawyer: Yvonne Ho Client: Noble Group Firm: Clifford Chance Lead lawyer: Andrew Hutchins Client: Bookrunners • Supply chain manager Noble Group borrowed US$2.4bn from 63 banks. This was the largest number of participants in any globallysyndicated loan since the GFC • Largest Asia-Pacific syndicated US dollar corporate loan in 2009

| SINGAPORE | ►► Pfizer – Wyeth Pharmaceuticals merger (Asia) clearances Value: US$68bn

• Clifford Chance obtained conditional clearance for Pfizer under China's Anti-Monopoly Law – the firm’s second since introduction of AML in August 2008 (only four cases to date)

| SINGAPORE |

►►Noble Group syndicated loan James Robinson Herbert Smith

Firm: Clifford Chance Lead lawyers: Ninette Dodoo, Emma Davies, Tony Reeves Client: Pfizer • Rajah & Tann advised on all Singapore environmental law aspects regarding groundbreaking merger between pharmaceutical giants Pfizer and Wyeth

| SINGAPORE |

“A significant challenge when working across multiple jurisdictions is the cultural differences of parties. The alliance team is familiar with cultural nuances and worked to minimise any differences to focus parties on the legal issues rather than the differences in style of negotiations and business approach” James Robinson, Herbert Smith 6

• Third Hong Kong IPO for Skadden following Wynn Macau deal

Firm: Rajah & Tann Lead lawyer: Kala Anandarajah Client: Pfizer

►► Sincere Watch takeover Value: US$71m

Firm: Clifford Chance Lead lawyer: Lee Taylor Client: Sincere Watch Firm: Lovells Lead lawyer: Neil McDonald Client: Lenders • Singapore watch brand Sincere Watch acquired by investor consortium • First Singapore law-takeover for Cliffords since obtaining QFLP licence in 2009

| KUWAIT | ►► Kuwait Energy Company Shariah financing Value: US$50m Firm: Fulbright & Jaworski Lead lawyers: Andrew Hart, Michael McMillen, David Moroney Client: IFC Firm: Lovells Lead lawyers: Matthew Andrews, Rustum Shah Client: Kuwait Energy • Kuwait Energy loaned US$50m in Shariah-compliant financing from International Finance Corporation (IFC) towards oil and gas assets exploration • First financing provided by IFC to a Kuwaiti oil and gas company and represents dedication of all Asian Legal Business ISSUE 10.1

NEWS | deals >>

parties involved to ensure that commercial requirements for this financing was compatible with Shariah principles

►► your month at a glance

Andrew Hart Fulbright &

• Lovells/Fulbright Jaworski cross-border London/Dubai offices advised on English law and Shariah structuring

►► Nasdaq OMX – Kuwait Stock Exchange JV Value: Undisc Firm: Bader Saud Al Bader and Partners Lead lawyer: Kevin Burke Client: Kuwait Stock Exchange

Firm

Jurisdiction

Deal name

Adnan, Sundra & Low Advogados & Notários Allen & Gledhill Allen & Overy

Malaysia China/ Hong Kong Singapore/US Hong Kong Singapore UAE China Indonesia

Maxis Berhad IPO Sands China IPO Temasek financial notes offering Noble Group syndicated loan Ezra Holdings bond issue Government of Dubai inaugural sukuk CAX Holdings – Pera Global PE financing PT Buma debt issue and loan facility/PT Delta equity placement

India/US India India/Singapore China/ Hong Kong India India India Kuwait Korea India/US UAE China/ Hong Kong China Korea Hong Kong India Hong Kong Singapore Hong Kong Indonesia China

Singapore/US China/Hong Kong Singapore China/ Hong Kong India/US Kuwait China/Hong Kong China/Hong Kong Korea

ICICI Bank bond offering Subex bond issue HCL Infosystems qualified institutional placement Ming An Holdings privatisation Tata Power – SN Power JV Larsen & Toubro bond offering Subex bond issue Nasdaq OMX – Kuwait Stock Exchange JV Woori Financial – Woori Asset Management divesture Scripps Networks – NDTV Lifestyle acquisition Shuweihat 2 project financing Mingfa Group IPO China Tontine Wines IPO STX Pan Ocean Convertible Bond offering Stark Investments Asian operation acquisition Subex bond issue Noble Group senior notes offering PT Bukit Makmur Mandiri Utama senior loan Noble Group syndicated loan Delta Dunia Makmur equity placement Affinity Equity Partners – Beijing Leader & Harvest Electric Technologies acquisition Hai Tong – Taifook Securities acquisition Noble Group senior notes offer China Minsheng Maxis Berhad IPO PT Buma debt issue and loan facility/PT Delta equity placement Affinity Equity Partners – Beijing Leader & Harvest Electric Technologies acquisition Noble Group senior notes offering China Tontine Wines IPO Noble Group senior notes offering Alliance Tire Group – GPX International Tire Corporation acquisition of US operations Temasek Financial notes offering Longfor IPO Noble Group senior notes offer Sands China IPO ICICI Bank bond offering Nasdaq OMX – Kuwait Stock Exchange JV Shenguan IPO Peak Sports IPO Shinhan Mortgage second securitisation RMBS issue

China India/Singapore China/ Hong Kong China Thailand Hong Kong Hong Kong China/Hong Kong China/Hong Kong China/Hong Kong Hong Kong Kuwait China China/Hong Kong China/Hong Kong Hong Kong Singapore Singapore China Hong Kong/US China Malaysia India India Korea Korea Korea Korea Hong Kong

ABNR Amarchand & Mangaldas

Appleby AZB & Partners

Bader Saud Al Bader and Partners Bae, Kim & Lee Baker Hostetler Chadbourne & Parke Charltons Chiu & Partners Cleary Gottlieb Clifford Chance

Firm: Denton Wilde Sapte Lead lawyers: John Worthy, Mary Ann Sharp Client: Nasdaq OMX Group • NASDAQ OMX group forms joint venture with Kuwait Stock Exchange to develop Kuwaiti capital market • NASDAQ OMX will work with KSE to implement trading technology, market data and international compliance

Commerce & Finance Conyers Dill & Pearman Davis Polk & Wardwell

• DWS advised NASDAQ OMX on its Pan-European market launch in 2008

| UAE |

Denton Wilde Sapte DLA Piper

►► Government of Dubai inaugural sukuk Value: US$2bn Firm: Maples and Calder Client: Dubai DOF ukuk Firm: Taylor Wessing Client: Government of Dubai Firm: Allen & Overy Lead lawyers: Anzal Mohammed, Roger Wedderburn-Day Client: National Bank of Abu Dhabi international counsel

Dorsey & Whitney Freshfields

Fulbright & Jaworski GFE Law Office Grandall Legal Group Harneys Harry Elias Partnership Herbert Smith Hogan & Hartson Jingtian & Gongcheng Kadir Andri & Partners Khaitan & Co

• Through Dubai DOF Sukuk the Government of Dubai issued sukuk in two tranches under new Trust Certificate Issuance Program

Kim & Chang

• Listed on both London Stock Exchange and Dubai Financial Market

King & Wood

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Hong Kong Singapore China/ Hong Kong Malaysia Indonesia China Hong Kong China Hong Kong US/Hong Kong

Value (US$m) 3,300 2,500 1,500 2,400 100 2,000 42 983

Deal type Equity market Equity market Equity market Finance Equity matket Islamic finance Debt market Capital markets

750 98 102 239 Undisc 200 98 Undisc Undisc 55 2,700 284 66 200 Undisc 98 850 285 2,400 383 200

Debt market Equity market Equity market Equity market Corporate Debt market Equity market Corporate M&A M&A Project finance Equity market Equity market Debt market M&A Equity market Equity market Debt market Finance Equity market M&A

234 488 3,900 3,300 983 200

M&A Debt market Equity market Equity market Capital markets M&A

850 66 850 Undisc

Equity market Equity market Equity market M&A

1,500 916 488 2,500 750 Undisc 246 160 400

Equity market Equity market Debt market Equity market Debt market Corporate Equity market Equity market Structured finance

CAX Holdings – Pera Global PE financing HCL Infosystems qualified institutional placement Mingfa Group IPO GGV Capital – Qunar investment Moong Pattana IPO Eldorado Gold – Sino Gold stake acquisition Trinity IPO China Minsheng Sands China IPO Sany Heavy IPO Evergrande Real Estate Group IPO Kuwait Energy Company Shariah financing China Tontine Wines IPO Mingfa Group IPO

42 102 284 15 1 200 110 3,900 2,500 308 729 50 66 284

Debt market Equity market Equity market Private equity Equity market M&A Equity market Equity market Equity market Equity market Equity market Islamic finance Equity market Equity market

China Minsheng Innovate Holdings share offer Barclays Singapore open agreements Equinox Offshore accommodation bonds issue China Agri-Industries syndicated loan Duoyuan Printing China Tontine Wines IPO Maxis Berhad IPO Global Environment Fund – Greenko investment Mindtree – Kyocera Wireless Corp acquisition Shinhan Mortgage second securitisation RMBS issue Woori Financial – Woori Asset Management divesture Dangjin industrial gas facility project financing Standard Chartered First Bank Korea – Eugene Corporation stock subscription Evergrande Real Estate Group IPO

3,900 500 Undisc 34 250 55 66 3,300 46 6 400 Undisc 160 25 729

Equity market Equity market Sports/Media Debt market Debt market Equity market Equity market Equity market Private equity M&A Structured finance M&A Project finance M&A Equity market

7

Regional legal firm DFDL’s counsel on US$ 421m Mobitel deal

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8

lthough 2009 is likely to be a blip on an otherwise faultless recent economic scorecard, the Greater Mekong Subregion is due to rebound in 2010 as strongly as any region in the world.

And with Mekong DFDL legal team and tax team providing counsel on Cambodia’s biggest-ever financing deal in November – local firm Royal Group’s Mobitel buyout in a US$421million deal – the region looks to be regaining its economic appetite.

Both Cambodia and Laos plan to establish stock exchanges in the second half of next year, Vietnam looks set for GDP growth of around 7 percent (low by its own standards but an economic miracle in the developed world), and Myanmar will ramp up offshore oil production in the Gulf of Martaban.

Thailand, the second-largest economy in the region, is facing an uncertain 2010, but with a population of a combined 325 million people and GDP that is expected to triple by the end of next year on 2006 levels, the Greater Mekong Subregion remains a market of extraordinary economic potential.

Cambodia’s hyper competitive mobile phone market – which has attracted nine operators – is a case in point.

In a year when financing and credit have been in short supply, Cambodian company Royal Group managed to leverage capital from international lenders led by Standard

Bank and ANZ, showing that the Kingdom looks ready for big ticket financing.

Although this transaction was by far Cambodia’s biggest to date – which saw Royal Group buyout Millicom’s 61.5 percent stake in market leader Mobitel – the country’s graduation to the large investment community has been in the pipeline for some time.

The December opening of the first phase of the Kamchai Dam in the southern province Kampot marked progress on a $400 million hydropower project financed

by China Exim Bank. Coal power plants in nearby Sihanoukville are in negotiation for financing of around $200 million, and investment funds are pouring millions of dollars into numerous sectors in Cambodia, notably Leopard Capital which has injected capital into transmission lines, breweries and commercial land concession during its short stint identifying viable opportunities to do business in the country.

Recent financial milestones represent the extent of Cambodia’s economic development, says DFDL Mekong’s Martin Desautels, who worked with the firm’s Director of Tax Practice Edwin Vanderbruggen as legal counsel and tax counsel on the recent Mobitel deal.

“It is the first time that international lenders have provided a facility of this size for this jurisdiction,” he says. “So we knew from the outset that this would become an

CAMBODIA: Phnom Penh 45 Suramarit Boulevard (PO Box 7) Phnom Penh, Cambodia Tel: +855 (0) 2321 0400 Fax: +855 (0) 2342 8227 E-mail: Cambodia@dfdlmekong.com

LAO: Vientiane Unit 01, House 004 Phai Nam Road Sisaket Village, Chanthabouly District (PO Box 2920)Vientiane, Lao PDR Tel: +856 (0) 21 242 068-70 Fax: +856 (0) 21 218 422 E-mail: Laos@dfdlmekong.com

Asian Legal Business ISSUE 10.1

Firm Profile

DFDLMekong

the latest sign of mainland Southeast Asia’s economic promise “battery of Asia” through its rising number of hydropower dams – many of which have involved consultation by DFDL – the Mekong region will see power production surge over the next decade.

This dramatic rise in energy production will also include Myanmar where Australianbacked Twinza Oil Ltd plans to start pumping crude in the Yetagun East Block off the west coast next year. Such a level of development is unlikely to change the region’s reputation as a legal minefield, particularly for outside investors. But the region’s increasing attractiveness economically means that legal and tax services around the Mekong look certain to be in high demand.

exceptional transaction which would require a large legal team.”

Desautels, who also worked on the Kamchai hydro deal and Cambodia’s airports as DFDL Mekong’s Regional Managing Partner, says the country’s legal environment is progressing in tandem with the rising level of financing the Kingdom is starting to attract.

“As part of Cambodia’s WTO accession, the country has in recent years much improved its legal framework for secured transactions, and now clients can reap the benefits of the improvements.”

While DFDL has years of experience in the five Greater Mekong countries, the firm had to consider the implications of multiple other jurisdictions in the Mobitel deal, says Vanderbruggen.

“It was a big advantage that we were able to provide the tax structuring as well as the legal representation,” he says. “Getting the tax structure of the deal right proved quite a challenge … we had to integrate the tax and legal implications over several jurisdictions.

“All the parties in such a transaction need to be comfortable with the tax structure,” he adds.

Having operated in Cambodia and Laos since 1994 – ahead of later expansion into Thailand, Vietnam and Myanmar – DFDL has seen the legal environment change

relentlessly in the past 15 years, a fact that has often proved daunting for investors.

Major sectors such as energy and finance remain heavily regulated in the majority of the Greater Mekong markets, says DFDL, one of the largest law firms in the region, but foreign investors have been able to gain access through the appropriate legal channels.

In other cases, some sectors are so under regulated that challenges confronting investors become even greater, meaning conducting business in such circumstances often devolves into an appreciation of the local customs or commercial practice.

In some ways the region is integrating, with huge benefits for potential investors as the ASEAN Free Trade Agreement continues to slash tariffs.

The ADB-sponsored Asian Railway linking Kunming in southwestern China right down to Singapore will feature the Mekong region at its core, a line running from Hanoi via Ho Chi Minh City to Phnom Penh then Bangkok and south through Thailand.

A similarly ambitious road project – the Asian Highway – promises to link Myanmar and Laos as well a route taking in Cambodia, Thailand and Vietnam that will connect all five Mekong countries north to China and south to Malaysia, and on to Singapore.

Infrastructure investment is expected to hit $12 billion.

With Laos angling to establish itself as the

MYANMAR: YANGON Myanmar Thanlwin Legal Services, Ltd. (in association with DFDL Mekong) 8c Bogyoke Museum Road Bahan Township (Box 729 GPO) Yangon, Myanmar Tel: +95(0) 1 540 995

+95 (0) 1 557 896,

+95 (0) 1 441 2580 Fax: +95 (0) 1 548 835 E-mail: Myanmar@dfdlmekong.com

THAILAND: Bangkok 9th Floor, The Dusit Thani Building 946 Rama IV Road, Silom Bangkok, 10500 Thailand Tel: +66 (0) 2636 3282 Fax: +66 (0) 2636 3290 E-mail: Thailand@dfdlmekong.com

VIETNAM: HANOI 9th floor, Melia Hanoi Office Building 44B Ly Thuong Kiet Street Hanoi, Vietnam Tel: +84 (0) 4 3936 6411 Fax: +84 (0) 4 3936 6413 Email: Vietnam@dfdlmekong.com

Samui 115/49 Moo 6 Bophut, Koh Samui, Suratthani 84320 Tel: 66 (0)77 484 510 Fax: 66 (0)77 427 686 E-mail: Samui@dfdlmekong.com

HO CHI MINH CITY 3rd floor, PetroVietnam Tower, 1-5 Le Duan Street, District 1 Ho Chi Minh City, Vietnam Tel: +84 (0) 8 3910 0072 Fax: +84 (0) 8 3910 0073 Email: Vietnam@dfdlmekong.com

157/21 Moo 1 T.Bophut, Koh Samui, Suratthani 84320 Tel: 66 (0)77 246 081 Fax: 66 (0)77 246 082 E-mail: enquiries@crawshaws.com

About DFDL Mekong Tax and Legal Advisers DFDL Mekong has been established in the Mekong Region since 1994, The Firm’s regional network in five Mekong countries (Cambodia, Laos, Myanmar, Thailand and Vietnam), provides integrated legal services to foreign invested companies, local companies and international institutions.

Across the region, the firm’s team of more than 190 employees, 30 foreign lawyers and advisers’ working closely with more than 60 local lawyers, advisers and legal assistants, providing personalized and cost-effective legal, tax and consulting services.

Phuket 100/208-210 Moo 3 Kamala Beach, Kathu, Phuket 83150 Tel: 66 (0)76 279 921-4 Fax: 66 (0)76 279 925-6 E-mail: Phuket@dfdlmekong.com www.legalbusinessonline.com

9

NEWS | deals >>

• Both largest sovereign sukuk ever and largest international sukuk from the Middle East in 2009 • Follows recent Tourism Development & Investment Company’s US$1.45bn sukuk trust certificate issuance program in the UAE • Allen & Overy has advised both Emirate of Abu Dhabi and Emirate of Ras Al Khaimah on their respective international capital markets issues in 2009

| Indonesia | ►► Indo Integrated Energy senior notes due 2016 Value: US$230m Firm: Conyers Dill & Pearman Lead lawyers: David Lamb, Andrew Lee Client: PT Indika Energy Firm: Melli Darsa & Co Lead lawyers: Melli Darsa, Elizabeth Silalahi Client: PT Indika Energy Firm: Sidley Austin Client: PT Indika Energy Firm: Assegaf Hamzah & Partners Client: Citigroup Global Markets Firm: Allen & Overy Client: PT Indika Energy Firm: Davis Polk & Wardwell Lead lawyers: William Barron, John Paton Client: Citigroup Global Markets • Offering by Indo Integrated Energy II B.V (an Indika Energy subsidiary) of its 9.75% senior notes due 2016 • Melli Darsa provided advice on due diligence, review of various transaction agreements, drafting corporate approvals and security documents • Firm is long-term advisor to PT Indika Energy – advised on its PT Indika Energy/PT Petrosea share acquisition in 2009 • DP&W have advised Citigroup Global Markets on several capital markets in 2009

| QATAR | ►► Commercial Bank of Qatar global bond offering Value: US$1.6bn Firm: Simmons & Simmons Lead lawyers: Samer Eido, Jason Majid, Anthony Traboulsi Client: Commercial Bank of Qatar Firm: Clifford Chance Client: Commercial Bank of Qatar Firm: Appleby Client: Commercial Bank of Qatar Firm: Davis Polk & Wardwell Clients: Morgan Stanley; Credit Suisse Firm: Slaughter & May Clients: Morgan Stanley; Credit Suisse • Global bond offering by Commercial Bank of Qatar is the first public subordinated bond issuance, and first-ever global lower Tier II offering from the Middle East • Simmons advised on Qatar law matters, structuring issue to comply with local and regulatory requirements. Firm previously advised the bank on its US$900m GDR listing in 2008 • Global coordinator was Morgan Stanley who also acted as joint bookrunner with Credit Suisse

| OMAN | ►► Salalah Independent Water and Power Project Value: US$1bn Firm: Shearman & Sterling Lead lawyers: Andrew Ruff, Nick Wang, Joseph Tong, Simon Thomson Clients: China Development Bank, Bank of China

• Construction of Salalah Independent Water and Power Project in Oman, to begin operation in 2012 • Expected to be largest and most energy-efficient power/water plant in Dhofar (Southern Oman). Will increase power capacity in region to 766 megawatts, where demand is expected to double by 2016 • DWS has longstanding association with Oman government. Advised on privatisation policies for electricity/water sectors (which affected this deal) in 1999 • SASLO currently advising project’s founder shareholders with respect to certain undisclosed project matters – also working on a number of other water, power and infrastructure projects in Oman

| Indonesia | ►► PT Buma debt issue and loan facility/ PT Delta equity placement Value: US$983m

Firm: Melli Darsa & Co Client: Northstar Pacific Partners Firm: O'Melveny & Myers Client: PT Bukitmakmur Widya

Andrew Brereton Clifford Chance

• Two deals which launched Indonesian listed company, Delta, into the coal mining industry through its purchase of Indonesian coal mining contractor, Buma.

• Transactions immediately followed acquisition of Buma by Delta and the acquisition of a 40% stake in Delta by Northstar Pacific Partners • Combination of senior loan/highyield bond each sharing common security package was unusual.

Lawyers on the deal had to overcome challenging intercreditor issues to close transaction

| MALAYSIA |

Firm: ABNR Client: Joint financial arrangers

►► Maxis Berhad IPO

Firm: Clifford Chance Lead lawyers: Alex Lloyd, Andrew Brereton Client: Joint financial arrangers

Firm: Linklaters Client: Underwriters

Firm: Susanto & Partners Client: Buma Firm: K&L Gates Client: Delta, Buma Firm: Milbank Tweed Hadley McCloy Lead lawyer: Jacqueline Chan Client: Northstar Pacific Partners

Value: US$3.3bn

Firm: Clifford Chance Lead lawyer: Crawford Brickley Client: Maxis Berhad Firm: Adnan, Sundra & Low Client: Underwriters Firm: Zul Rafique Client: Maxis Communication Berhad Firm: Kadir Andri & Partners

Firm: Denton Wilde Sapte Lead lawyer: Christopher McGeeOsborne Client: Government of Oman Firm: Said Al Shahry Law Office Lead lawyers: Alastair Neale, Taimur Malik Client: China Development Bank Firm: Century-link Law Office Client: China Development Bank

10

Asian Legal Business ISSUE 10.1

NEWS | deals >>

Lead lawyers: Samuel Hong, E Sreesanthan Client: Maxis Berhad • Maxis Berhad’s, Malaysia’s biggest mobile phone company, in US$3.3bn IPO on the Bursa Malaysia • Largest Malaysia IPO seen in Asia in 2009, biggest telco public offering seen in Asia-Pacific since 2000

►► your month at a glance

Samuel Hong Kadir Andri & Partners

Firm

Jurisdiction

Deal name

Kochhar & Co Latham & Watkins

India/US Singapore/India Singapore/India China/Hong Kong Singapore/US India/US China/Hong Kong China Malaysia India Kuwait

Scripps Networks – NDTV Lifestyle acquisition Sesa Goa bond offering Sterlite Industries bond offering Ming An Holdings privatisation Temasek Financial notes offering ICICI Bank bond offering Sands China IPO China Agri-Industries syndicated loan Maxis Berhad IPO Larsen & Toubro bond offering Kuwait Energy Company Shariah financing

Bahrain/Dubai China

71 55 729 Undisc 2,000 284 400 230 983 983 2500 350 2,700

Project finance

Undisc 284

M&A Equity market

Leonel Alves Law Firm Linklaters Linklaters Allen & Gledhill Lovells

• Clifford Chance advised Maxis on its first IPO in 2002 and sale of 25% equity interest to Saudi Telecom in 2007

• Latest deal for Asian telco industry follows China Unicom’s US$1.3bn share buyback from Korea’s SK Telecom and its US$1bn alliance with Spain’s Telefónica

“Strong regional companies, such as Maxis, are taking advantage of stable home markets and recovering liquidity to further their regional and international strategies” Crawford Brickley, Clifford Chance

Deal type M&A Debt market Debt market Equity market Equity market Debt market Equity market Debt market Equity market Debt market Islamic finance

Milbank Tweed Hadley McCloy MWE Law Firm Nishith Desai Associates Norton Rose

UAE

IFC Hilal sukuk Affinity Equity Partners – Beijing Leader & Harvest Electric Technologies acquisition Sincere Watch takeover Scripps Networks – NDTV Lifestyle acquisition Evergrande Real Estate Group IPO Senrigan Master Fund establishment Government of Dubai inaugural sukuk Mingfa Group IPO Shinhan Mortgage second securitisation RMBS issue Indo Integrated Energy senior notes due 2016 PT Buma debt issue and loan facility/PT Delta equity placement PT Buma debt issue and loan facility/PT Delta equity placement Sands China IPO Aditya Birla India Real Estate Vision Fund establishment Shuweihat 2 project financing

O’Melveny & Myers

Bahrain China/ Hong Kong

Unicorn Investment Bank – Bahraini consortium acquisition Mingfa Group IPO

Orrick Herrington & Sutcliffe

Indonesia China/Hong Kong

PT Buma debt issue and loan facility/PT Delta equity placement Comtec Solar Systems IPO

983 67

Capital markets Equity market

China Korea China Korea China/Hong Kong India/US China/Hong Kong

China Tontine Wines IPO Shinhan Mortgage second securitisation RMBS issue Yuzhou Properties Company IPO STX Pan Ocean Convertible Bond offering Longfor IPO Scripps Networks – NDTV Lifestyle acquisition Longfor IPO

66 400 209 200 916 55 916

Equity market Structured finance Equity market Debt market Equity market M&A Equity market

Singapore UAE Oman Korea Hong Kong China/Hong Kong Qatar Hong Kong China Hong Kong Singapore Indonesia/ Singapore Indonesia/ Singapore Singapore/Taiwan Singapore Singapore Singapore Singapore Indonesia UAE UAE China/ Hong Kong China/ Hong Kong Korea China Malaysia

Perennial Katong Retail Trust – Katong Mall acquisition Aabar/Daimler – Brawn GP team acquisition Salalah Independent Water and Power project Shinhan Mortgage second securitisation RMBS issue Evergrande Real Estate Group IPO Sands China IPO Commercial Bank of Qatar global bond offering Meadville Holdings –TTM Technologies acquisition Yuzhou Properties Company IPO Agile Property Holdings offering Ezra Holdings bond issue PT Adaro Indonesia senior notes offering

S247m Undisc 1,000 400 729 2,500 1,600 521 209 300 100 800

Real estate M&A Construction Structured finance Equity market Equity market Debt market M&A Equity market Debt market Equity market Equity market

Luthra & Luthra Maples and Calder

E Sreesanthan Kadir Andri & Partners

Value (US$m) 55 500 500 239 1,500 750 2,500 250 3,300 200 50

Mayer Brown JSM Melli Darsa & Co

Paul Hastings

Pepper Hamilton Richards Butler Rodyk & Davidson Shearman & Sterling Shin & Kim Sidley Austin Simmons & Simmons Skadden

Stamford Law Corporation

Susanto & Partners & L Gates Taylor Wessing Vinson & Elkins Walkers Woo Kwan Lee & Lo Yulchon Zhong Lun Zul Rafique

Singapore India/US Hong Kong Hong Kong UAE China/Hong Kong Korea Indonesia Indonesia Indonesia China/Hong Kong

100 200

PT Adaro Indonesia loan facility

500

Oceanus Group Taiwan depository share listing Oceanus Group PE financings Novena Holdings – Viking Airtech acquisition C2O Holdings – Swissco proposed takeover Sino-International Heavy Industry Technology – Sinwa stake acquisition PT Buma debt issue and loan facility/PT Delta equity placement Government of Dubai inaugural sukuk Lime Rock Partners – Expert Petroleum SRL investment Sands China IPO Ming An Holdings privatisation Standard Chartered First Bank Korea – Eugene Corporation stock subscription CAX Holdings – Pera Global PE financing Maxis Berhad IPO

Undisc 41 31 124 25 983 2,000 25 2,500 239 25 42 3,300

Islamic finance M&A M&A M&A Equity market Corporate Islamic finance Equity market Structured finance Equity market Capital markets Capital markets Equity market

Debt market Debt market Private equity M&A M&A M&A Capital markets Islamic finance Private Equity Equity market Equity market M&A Debt market Equity market

Does your firm’s deal information appear in this table?

Please contact

alb@keymedia.com.au

61 2 8437 4700

CORRECTIONS#

• In ALB issue 9.12 on page 9, the following information was incorrectly reported on the PT Adaro Indonesia notes issuance and loan facility deal. Latham & Watkins advised the underwriters and consortium of lenders, with the lead lawyers being Clarinda Tjia-Dharmadi, David Miles, John Otoshi and Eugene Lee. DLA Piper did not advise on this deal.

• In ALB issue 9.11 on page 36 of the Hong Kong 2009 ALB Law Awards, Cleary Gottlieb was inadvertently omitted from the list of firms acting on the Equity Market Deal of the Year. The firm acted as US counsel to Hutchison Telecommunications. www.legalbusinessonline.com

11

NEWS | analysis >>

Analysis >>

Behind the Carrefour ruling

I

ndonesia’s anti-trust watchdog, the Business Supervisory Competition Commission (KPPU), has ordered the French company Carrefour to sell its subsidiary PT Retailindo. Coming more than two years after Europe’s largest retailer purchased a 79% stake in its Indonesia subsidiary, the order is in addition to a US$2.6m fine. The decision has attracted criticism from investors, the business community, lawyers and almost everyone in between.

Yet such decisions are not entirely unexpected – in fact the anti-trust watchdog has an impressive track record scuttling foreign investment into the country. The bad news for Indonesia is that foreign investors’ tolerance for its opaque and often conflicting competition laws is wearing thinner by the day.

Context

In January 2008 PT Carrefour Indonesia acquired a 79% equity interest in PT Retailindo from its majority shareholders, Prime Horizon and PT Sigamartan Alfindo, for US$71.3m. The deal formed not only an important part of the company’s expansion beyond home markets in Europe but also increased its market share in Indonesia.

This market share, according to the watchdog, exceeded that which is allowed under the law. KPPU alleged that the acquisition led to monopolistic practices by the company at both upstream and downstream levels of hypermarket and supermarket operations – which it subsequently used to force unfair trading terms on its suppliers.

Carrefour was investigated for violation of Articles 17, 20, 25 and 28 of Law No 5/1999, also known as the law on monopolies and unlawful business practices. “The dominating market share has given Carrefour a strong bargaining power which has been misused to 12

pressure suppliers to agree with their offered trading terms,” said Anna Maria Tri Anggraini, one of the KPPU’s commissioners.

Yet of the alleged breaches, only Article 17 has been pursued by the KPPU, as, according to Anggraini, no government regulations explained how the statute was supposed to be implemented. This is a statement that for many, seems to typify the current state of the country’s competition laws.

According to a UNCTD voluntary peer review on the country’s competition policy. “The competition law [in Indonesia] contains ambiguous language that contributes to uncertainty. It also contains language inconsistent with its own stated objectives.”

Uncertain precedent

Existing laws are seen as unnecessarily complicated, overlapping with other regulations and conflicting and contradicting with other laws. Add to this the regulatory uncertainty provided by the as-conspicuous spectre of official corruption and the result is a hostile environment. Foreign investors may soon forgo their activities on the archipelago in favour of calmer and more predictable South-East Asian markets.

“Many of the decisions made by KPPU have contradicted the capital markets regulations,” said Indra Safitri, a lawyer who specialises in consulting on M&A and capital markets transactions.

“Laws governing the KPPU, competition and the capital markets all need to be harmonised to ensure legal certainty for investments into this country.”

Carrefour’s recent experience is not the first time a foreign company has run afoul of the country’s competition laws.

In 2007 the KPPU fined Singapore’s sovereign investment arm Temasek Holdings US$3.8m for breaching its anti-trust laws. On this occasion, the watchdog ordered Temasek to divest the interest it held in either of the country’s largest cell phone operators.

At the time SingTel held 35% of the capital in PT Telekomsel and 41.9% of the capital in PT Indosat. Singtel sold its interest last year after its appeal against KPPU’s decision was rejected.

Chris Kaster, deputy chairman for investment at the Indonesian Chamber of Commerce and Industry, said that despite what one may think of the country’s competition laws or the role KPPU plays enforcing them, the onus is on foreign investors to ensure they comply with the legislation. “Foreign investors in the future should be better

“We have made mistakes in the past and it won’t be easy to change things” gita Wirjawan, chairman, indonesia investment coordinating board informed about investment rules such as the existing negative investment list and the monopoly law, the tax law and the limited company law,” he said.

The question is, however, at what point investment will be affected. Andrew Christopher, who is a partner with Baker Asian Legal Business ISSUE 10.1

NEWS | analysis >>

& McKenzie, said this is the ‘64 billiondollar question.’ “At the moment the vague competition laws make Indonesia an avoidable place for foreign investors ... while regimes in India and China aren’t always clear foreign investment is less likely to be affected there, because they are such hot markets.”

This is something the Indonesian government is well aware of. “We have made mistakes in the past and it won’t be easy to change things,” said chairman of the official Indonesia Investment Coordinating Board, Gita Wirjawan. “It won’t be a matter of days or months. But I have faith that the new laws will set the foundation for an easier and more transparent framework for foreigners doing business in Indonesia.”

Analysis >>

Regional harmonisation

The current state of Indonesia’s competition laws mirrors that of other countries in South-East Asia. In Vietnam, the Philippines and Thailand, competition law regimes are also renowned for their vague language and ineffective and patchy enforcement.

The difficulties that this presents for foreign investors have hastened calls for the harmonisation of competition laws in the ASEAN region. But this is something more easily said than done – despite the fact that there is already a high level of convergence. “Over the last decade, competition laws have become ubiquitous and are all pretty common in terms of features,” said Baker’s Christopher.

“Harmonisation is occurring and regulators won’t be looking to wind back the clock ... but there are hurdles.”

These hurdles were recognised by the ASEAN Experts Group Committee on Competition Law and Policy earlier this year. Not all member countries have competition laws – and even fewer effectively enforce them. And most governments have expressed little interest in ceding power over their ant-trust regimes to a supranational regulator, meaning uniform competition law for ASEAN may be some time away.

The fact that a dialogue regarding these issues has been established means it may not be far-fetched, but the challenge facing competition law practitioners is profound. While navigating the region’s competition law regimes, lawyers will need to stay as close to regulators across the region as they now do with their clients. ALB www.legalbusinessonline.com

Securitisation: the silver lining

T

he old banking adage that “a rolling loan gathers no loss” – once the mantra of arrangers, originators, borrowers, investors and structured finance lawyers throughout the world – has been well and truly destroyed by a financial crisis tracing much of its origin to the US securitisation market. The result, of course, has been the decimation of that market and a high number of structured finance lawyers left twiddling their thumbs.

Despite a number of similarities, however, the situation in Asia is a little different. Domestic and cross-border asset-backed securities (ABS) and mortgage-backed securities (MBS)

issuances are down in all markets across the region.

Yet ALB spoke to lawyers who are looking to proactive regulatory action and slowly-returning investor appetite as signs that a recovery here may be just around the corner.

TALF

Statistics are staggering: since the collapse of Lehman Brothers and the nationalisation of Fannie Mae and Freddie Mac, securitisation issuances in the US and Europe have almost come to a complete halt.

SIFMA figures indicate that MBS fell by more than a third, ABS by more than half, and private label issuances 13

NEWS | analysis >>

by more than 70%. CMOs were down by a quarter while issuance backed directly by the federal agencies fell by a third. In an effort to halt this downward spiral, regulators launched the Term Asset-backed Securities Loan Facility (TALF) – a $US200bn lending program providing financing for US entities that purchase newly issued ABS, including credit cards, automotive loans and (possibly) commercial mortgages.

And early signs are positive, according to Michelle Taylor, a Hong Kongbased partner with Orrick who has been actively involved with the program as an advisor. “[The new measures] are aimed at kick-starting Michelle Taylor and energising the Orrick market in the US and encouraging investors to come back,” she said. “At the moment the demand is not there but TALF is helping to restore this demand by getting things to a level where investors are comfortable.

“There is nothing of the US-type in Asia … which means there is not a huge amount of activity occurring at the moment,” Taylor said. “Issuers can issue but many are looking for that right point on that supply-demand curve to make an issuance worthwhile and many haven’t found that yet.”

Despite the lack of a TALF-like initiative in Asia, markets here (especially in structured finance strongholds like Japan and Korea) are now tipped for a faster-than-expected turnaround.

Japan

Hiroaki Takahashi, a partner at Japanese firm Atsumi & Partners, said while the global downturn has rendered Japan’s CMBS market “almost dormant”, the country’s ABS and RMBS markets are still active. Of course, the size of the deals is much smaller.

Deal flow in these areas may be attributed to the measures being taken by regulators in the country. Although they are perhaps not as groundbreaking or as comprehensive as TALF in the US, they are proving just as effective in stoking domestic demand.

“Since September 2008, we have seen similar measures taken by Japanese 14

regulators. For instance, deregulation of the eligibility criteria for collateral which banks are allowed to offer to the Bank of Japan in order to obtain funds [and] deregulation of application of the accounting standards,” Takahashi said.

“Also the so-called ‘public-private relief fund’ for J-REITs is to be put in place soon so that the government and major banks could make financial contribution for the refinancing of J-REIT entities.”

Further measures may be just around the corner. “[The] new government led by the Democratic Party of Japan is reported to be considering implementing a new plan assisting small-size businesses, which may include SPCs in structured finance deals, with their funding or refinancing.”

recently transferred its mortgage loan assets to its securitisation arm, subsequently issuing US$400m in notes to foreign investors.

While Korea’s relatively buoyant cross-border securitisation landscape may surprise some, to others it is proof of the pressure to securitise placed on many of the country’s leading banks.

Recent reports from the FSC have revealed that most of the country’s domestic banks depend too heavily on deposits and other costly debt sales. These are primarily used to fund home-backed loans which have mushroomed since 2000.

The FSC is predicting much more activity of this kind to continue over the next 12 months, especially as economic conditions and investor

“There is nothing of the US-type in Asia ... which means there is not a huge amount of activity occuring at the moment.

Issuers can issue but many are looking for that right point on that supply-demand curve to make an issuance worthwhile and many haven’t found that yet ” Michelle taylor, partner, orrick

Korea

Meanwhile, in Korea investor appetite for securitisation seems to be returning, on the back of equally-prudent regulatory action, of which covered bonds is perhaps the most notable.

“During the second half of 2008, many Korean financial institutions [had] been considering the issuance of covered bonds for the first time as an alternative source of funding,” explained Han Wonkyu, a partner at Korean firm Lee & Ko. “The Korean regulatory authority, the Financial Services Commission (FSC), support[ed] covered bonds – in particular ‘structured’ covered bonds – as a new and attractive source of funding.”

The necessary regulatory amendments were made and the bonds proved attractive. In an Asia-Pacific first, Kookmin Bank sold US$1bn in covered bonds in May. Korea Housing Finance (KHF) is said to be eyeing off a US$1bn issuance of its own and Woori Bank plans to sell at least US$500m in RMBS.Shinhan Bank

appetite improves. This is good news for structured finance lawyers.

Yet despite this positive outlook appearing in both Japan and Korea, there remain problems which government action can’t alleviate.

“Our clients handling existing CMBS deals have had trouble with serious issues resulting from the difficulties in refinancing and the disposition of underlying real estate at a favourable price, and financial problems regarding involved parties such as asset managers, property managers or other types of service providers,” said Lee & Ko’s Han. Such uncertainty gives rise to disputes in the area, which lawyers in both countries agree are on the rise.

“Some of those deals are currently in default and we are assisting clients as investors, trustees, arrangers and originators in dealing with these issues, both in and out of the courts,” said Atsumi’s Takahashi.

Ironically, having a practice that is capable of handling both the front-end and back-end areas seems to be key to keeping busy in inclement conditions. ALB Asian Legal Business ISSUE 10.1

NEWS | analysis >>

Analysis >>

Double agents: Does your firm have one?

Are senior-level lateral transfers becoming an important part of the CRM strategies of international law firms in Asia? ALB investigates

T

he announcement last December that Zili Shao, who was Linklaters’ Asia managing partner, would step down from the position he assumed only six months ago to head up the Chinese business of US investment bank JPMorgan, made headlines across the region. For Shao, this may be a move considered long overdue. One in-house lawyer told ALB that “[he] is an excellent operator and a very experienced banker who knows Chinese business like the back of his hand.” And while the firm he’s leaving may be losing a rainmaker without peer in Asia, Linklaters stand to gain much more in return.

The move

Regardless of the motives behind Shao’s departure, one can’t help feeling that this may be the start of a trend. In his new role as JPMorgan’s chairman and CEO, Shao will help increase the bank’s burgeoning operation on the mainland, a big part of which will be helping the bank find a JV partner to trade domestic stocks. He is also expected to broaden the company’s business lines in China.

“JPMorgan has immense scope to grow its China franchise, based on its major achievements in recent years and the firm’s high reputation,” he said.

“I’m excited by the firm’s potential in China and by the commitment of the management to a longterm investment plan.”

There is no denying that this is a prudent move.

Zili Shao Since incorporating on Linklaters the mainland last year JPMorgan has racked up an impressive deal list, including roles on China Oilfield’s acquisition of Awilco Offshore and Chinalco’s failed bid for a stake in Anglo-Australian miner Rio Tinto.

These deals saw the bank crowned the “Investment Bank In-house Team of the Year” at ALB China’s 2009 Law Awards.

The move is also a fortuitous one for Linklaters, as the firm was cut from the www.legalbusinessonline.com

bank’s list of preferred legal advisors midway through 2008, following a row over its role in action brought by Barclays against Bear Stearns. But the relationship has improved lately and Linklaters has been reinstated on the bank’s list of preferred legal advisors.

Shao will no doubt play a role in galvanising links between the two players in his new role. “We look forward to working closely with Zili as a client,” said Linklaters’ firm-wide managing partner Simon Davies.

Double-agents: the missing link in your CRM strategy?

Shao’s departure from Linklaters marks the second time that the firm has lost an Asia managing partner to a client. In April 2009 Giles White left to take up an in-house post at Jardine Matheson.

Is the sending of senior emissaries to high-profile clients set to become a plank in the CRM strategies of the region’s international law firms?

Robert Sawhney, the founder and managing director of SRC Associates, a professional services consulting firm, says that such arrangements are more trouble than they’re worth, both for law firms and their clients. “I don’t think that it [law firms transferring partner to clients] will be a big thing because the larger organisations taking these people in-house will not subject their own objectives over the longer-term to choosing a law firm just because of a former relationship,” he says.

“Corporate governance and the issues of multi-million dollar bills for the law firms – for example in Lehman’s case – means that public companies cannot risk being seen to do favours.”

For those law firms who are affected, Sawhney urges caution, saying that while partner transfers solidify a relationship in the short term they may have a disastrous effect over the longer term, especially when it comes to issues such as reputation. “I don’t see the advantages over the long term and I would advise law firms making such moves to take care in managing their reputations,” he says.

“The most sustainable efforts we are seeing are those that see [law firms] becoming more client-oriented, whether this means alternative fee arrangements, discounts for long-term work, creating collaborative working relationships such as sending staff to work in-house with clients over certain periods... certainly [we have] noticed a rise in project management and in-house counsels demanding such efforts from their firms.”

In-house lawyers, by their own admission, could add plenty more to Sawhney’s list above; an indication perhaps of the need for a balanced CRM strategy. “We really want law firms to be creative in their approach; to mix things up a little,” said one Hong Kongbased in-house lawyer who did not want to be named. “Discounting fees, delaying payments or capping costs are important, but generally not the only thing we look for in a good tender of EOI. We really need them to think innovatively about how they can help us get around the difficulties that a lot of in-house legal teams are experiencing at the moment.” ALB 15

NEWS | analysis >>

Analysis >>

Work comes from Dubai World woes Dubai World’s restructuring is no ordinary matter, with many law firms across the Middle East affected in some way. Firms are either directly involved in advising creditors or the debtors on the restructuring issue, or are indirectly tested as local restructuring & insolvency laws face serious review

S

hockwaves were felt around the world’s financial markets in November 2009, with the US$26bn restructuring of the government-owned company Dubai World, owner of some of Dubai’s prime real-estate and construction developments. As a key source of work for some of the region’s law firms, the restructure surprised many. But another surprise was forthcoming – the silence of the big law firms involved.

At the top of the list is Clifford Chance, who is advising Dubai World on the current restructuring but declined to comment on the matter. In 2006 the firm advised Dubai World and its subsidiary Nakheel on a US$3.5bn sukuk – now at the centre of the restructuring affair as the sukuk was due in December 2009.

of different members of the Dubai World group” and Ashurst for “a group currently forming among holders, which accounts for over 25% of the nominal value of certificates.”

Allen & Overy is said to be working for the commercial banks Nakheel owes but also declined to confirm its involvement. The firm recently advised the Dubai government on its inaugural sukuk issue. Local firm Al Tamimi also declined to comment on the current matter, citing a conflict of interest. It is not known whether this is in reference to the firm’s former partner Abdul Wahid Al Ulama, who is the vice chairman of Dubai Natural Resources World, or whether the local firm is representing parties on the restructure.

According to a lawyer from a

“The restructuring of Dubai World … should result in a renewed effort to structure Islamic products from a genuine Shariah base, given the potential enforceability of issues if this is not done” OLIVER AGHA, AGHA & SHAMSI Dubai World has previously said that Nakheel’s sukuk had US$6bn in debt to be paid. “We were delighted to work with Dubai World and Nakheel on what is a landmark transaction for many reasons, not just because of its size,” said Robin Abraham, Clifford Chance’s partner leading the Dubai team at the time of the deal.

On the other side of this restructuring are Ashurst and Denton Wilde Sapte. Both have confirmed they are advising bondholders and creditors – Dentons for “a number of creditors 16

prominent Omani firm, work from the restructure will increase as exposure to Dubai World stretches across the Gulf. The lawyer (who declined to be named) said his firm has been receiving calls and instructions from Omani banks looking to assess their position. “HSBC and Standard Chartered have a considerable presence in Oman as well; in fact their Dubai office deals with a lot of Omani project companies. Indirectly there may be an effect in respect to the project financings,” the lawyer said.

One major reason why firms are remaining quiet may be the politics surrounding the restructuring. “This is a very sensitive issue – you’re talking about a company (Nakheel) that the Dubai government owns as its major shareholder. The issue is highly politically charged and has garnered worldwide attention,” said a highprofile lawyer working in the region.

“It’s affected sharemarkets around the world and the reputations of a lot of important institutions and governments are on the line,” the source added “You can be very sure that the law firms would be extremely circumspect in making any comment about this.”

Silver lining: restructuring insolvency laws

Beyond political issues, Dubai World’s restructuring could bring in more business for the region’s firms, since it is the first time that Dubai restructuring laws and Islamic finance have faced serious tests. “It will generate a fair amount of finance-based work for law firms in the region and also in London and New York,” said the head of Denton Wilde Sapte’s restructuring and insolvency practice, Mark Andrews.

Earlier in 2009 Middle East lawyers were struggling to find any precedent cases to test the UAE’s insolvency & restructuring laws. The UAE has no Chapter 11-style system for bankruptcy petitions and some have called for reform to existing insolvency laws. A report released earlier in 2009 scored the UAE at only 74 out of 155, on a scale measuring the strength of insolvency regimes. Some lawyers in the region Asian Legal Business ISSUE 10.1

NEWS | analysis >>

expect the scale of Dubai World’s restructuring could eventually lead to these long-awaited developments.

“Particularly given the magnitude of the amounts at stake, restructuring of Dubai World will stress the nascent governing legal infrastructure,” said Oliver Agha of Agha & Shamsi, an Islamic finance firm. “It may result in initiatives to develop or fill in gaps in the law that are highlighted once major restructurings like this test the existing legal framework.”

Oliver Agha Islamic finance “This is not the first restructuring exercise in the Gulf, but it is the biggest,” said Denton Wilde Sapte’s Andrews, which is representing creditors of Dubai World.

“It will test the local business culture very severely.” However, the likelihood that Dubai World will reach the litigation stage test is complicated by the uniqueness of the circumstances.

Dubai World may be exempt from action since it is state-owned and could

be subject to sovereign immunity.

Actions against the Dubai government (and, perhaps, its entities) are not permitted without the Ruler of Dubai’s consent. Although at press time reports indicated that some creditors may be mobilising into action, the complexities of the case may deter them – for now.

“Creditors are naturally keen to understand their legal position, as these matters can be quite complicated,” said Philip Abbott, a partner at Simmons & Simmons. “Each creditor will have their own motivations in terms of a restructuring process, but I would expect parties will attempt for consensus rather than litigation.”

There’s also the issue of the various laws the companies in question may be subjected to. For example, Nakheel is incorporated in the Jebel Ali Free Zone and is subject to those laws; but its controversial sukuk which is due in mid-December is listed in the Dubai International Finance Centre (DIFC) and is governed by English laws. Dubai World is subject to UAE laws, since it is incorporated as a UAE public company.

At least Nakheel’s sukuk won’t be subject to the laws governing Dubai World. “The choice of law contained in a finance document will only be relevant to that document,” Abbott said. “It would not be relevant to a corporate or debt restructuring where the laws of the UAE or free zones in which members of the Dubai World group are incorporated will be relevant.” Regardless of what happens with Dubai World, he added that it’s largely up to the government as to whether the laws can be developed.

“The UAE has restructuring & insolvency laws; the issue is that all laws are open to interpretation and the lack of any major corporate insolvency in the UAE means there is uncertainty in the law,” he said.

“Most commentators agree the legal system would benefit from some clarity and improvement in the law. Whether this happens and the speed at which it happens will very much depend on the degree of government support for such a process. The laws would have to be changed at a UAE federal level, all Emirates would need to approve.” ALB

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www.legalbusinessonline.com

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middle east >>

DLA’s former Gulf

uk report Allen & Overy adopt LPO Allen & Overy (A&O) recently became the first Magic Circle firm to outsource legal work, adoptig legal process outsourcing (LPO) in a bid to reduce their overheads. The firm has partnered with LPO provider Integreon to outsource basic litigation document review to teams in New York and Mumbai, to generate a 30-50% cost saving.

Although rivals Clifford Chance and Linklaters have both outsourced support functions, this is the first time that a Magic Circle firm has outsourced legal work. A&O have confirmed that they will only be working with Integreon on a case-by-case basis, rather than signing a deal for a dedicated team.

Magic Circle firms avoid over-specialisation Linklaters may soon introduce a number of schemes to counter over-specialisation, where junior lawyers will spend time in different practice areas in the first few years post-qualification. The new training program, currently under discussion with senior managers at Linklaters, will see associate

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versatility become a core part of each lawyer’s career path. Time spent in other departments will also be an essential requirement for promotion/ moving from associate to managing associate.

Slaughter & May already operates a system where associates spend time in a given practice area and in a variety of groups.

Lovells/ Hogan & Hartson merger go-ahead Lovells and Hogan & Hartson will soon join forces, with reports that the two firms’ partnerships recently voted in favour of the union. The merger will see Lovells managing partner David Harris and Hogan’s chairman Warren Gorrell heading up the new firm as joint CEO’s.

Although regulatory approval is still required for the new firm, it is anticipated that it will comprise a US LLP, an international LLP, a Swiss Verein and the various businesses that are affiliated to these structures.

Lovells will become part of Hogan’s existing US LLP, which will be rebranded Hogan Lovells, while the reverse will happen in Europe and Asia. The merger will come into effect from May 2010.

ROUNDUP • Watson Farley & Williams (WFW) recently launched an office in Spain following the recruitment of a fivelawyer team from Lovells, as part of what the firm refers to as a pan-European focus on renewables energy • Pinsent Masons has seen its half-year revenues drop by 7% during the first six months of 2009-10 compared with revenues last year, with £98m brough in this year compared to £105m for the first six months of 2008-09.

• Freshfields Bruckhaus Deringer will implement its revamped associate career development model in London from spring 2010 with the system to be rolled out globally from 2011. This will make Freshfields the latest firm to move away from using post-qualification experience (PQE) to assess lawyers’ development • Linklaters has suffered a 9.5% reduction in turnover at the half-year stage, attracting £591m in revenue compared with £653m during the same period last year • Clyde & Co may be in preliminary talks to tie up with construction firm Shadbolt, enabling the firms to compete on a level playing field with larger firms operating in the construction, projects and infrastructure spaces • Allen & Overy, Herbert Smith, Simmons & Simmons and Slaughter and May have won roles on a new government panel to handle the sale of its stake in banks bailed out during the financial crisis. Slaughters had been sole adviser to United Kingdom Financial Investments (UKFI) since September 2007 • Routledge Modise – Eversheds’ alliance partner in South Africa since 2008 – was recently embroiled in a legal row with the local law society over rebranding associated offices. The firm changed its name to Eversheds in July 2009 but the Law Society says dropping reference to the local partners contravenes both the Attorneys Act and its own rules and has ordered a name reversal • Legal Sector Alliance (LSA) revealed that many of the UK’s major law firms have reduced their carbon footprints over the last financial year, in a report launched to coincide with the Copenhagen negotiations for the next stage of the Kyoto protocol

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former Middle East managing partner of DLA Piper who resigned from the firm in June 2009 has re-emerged to launch Gulf firm Al Tamimi & Co’s new Kuwait office.

Alex Saleh spearheaded DLA’s opening in Kuwait in October 2008 but left in June last year, shortly after he was appointed head of DLA’s new Bahrain office. He has since been appointed by Al Tamimi to lead its new Kuwait office, which has been established via a joint venture with local lawyer Yacoub Al Munayae. The JV has also allowed Al Tamimi Kuwait to acquire the local firm Dawliya.

Alex Saleh Al Tamimi & Co Saleh has brought on board longstanding colleague Philip Kotsis from DLA Piper. Both had worked together as far back as 2005 at Saleh’s old Michiganbased firm, Saleh & Associates.

Saleh later moved to Kuwaiti firm Al Wagayan, Al Awadhi & Al Saif.

Last October DLA Piper partnered with Al Wagayan to launch an office in Kuwait and appointed Saleh as its Middle East managing partner.

Al Tamimi said that it was driven to launch in Kuwait as it became an increasingly important investment jurisdiction for its clients, especially those in Jordan but also in the US, hong kong >>

Mallesons loses litigation

M

allesons Stephen Jaques’ Hong Kong office is set to lose litigation partner Simon Clarke to Allen & Overy, but the firm is already one step ahead in gaining leading arbitration figure Neil Kaplan as an advisor.

Under his partnership agreement Clarke will be with Mallesons until June 2010. He has been a partner in the firm since 2004, when Mallesons merged with Kwok & Yih. However Mallesons has already gained a regional arbitration figure in Neil Kaplan, who is a member of the Asian Legal Business ISSUE 10.1

NEWS >>

head launches new office for Al Tamimi Europe, India and Asia. “Kuwait is a natural extension of the firm’s presence in the key markets in the Middle East, in particular Jordan and the GCC region where there are significant cross-border business activities with Kuwait,” Saleh said in a statement.

Kotsis, Saleh, and Dawliya’s Wassim Sassia – who the firm said will later be joined by additional fee earners – will advise on corporate and commercial matters and on Shariah-compliant banking & finance transactions.

Although foreign lawyers are not allowed to practice locally, the JV with Al Munayae – who can appear before Kuwaiti courts – will allow the office to handle litigation matters.

The firm said it expects the office’s growth to be driven by work from longstanding clients, most of whom have been brought on by Saleh.

However, the fast-growing firm is not stopping there. Al Tamimi is considering opening a second office in Saudi Arabia – supplementing its existing Riyadh office with one in Jeddah. “Part of our strategy is to expand throughout the Middle East,” said the firm’s founder, Essam Al Tamimi. “We currently support operations across the Kingdom of Saudi Arabia from our office in Riyadh office.

However, we are evaluating options to open an office in Jeddah but we have nothing firm to date.”

►► Al Tamimi & Co Location Abu Dhabi Amman Baghdad Doha Dubai (three offices) Riyadh Sharjah Kuwait Total lawyers: 164 Partners: 27

Lawyers 20 3 5 12 107 8 5 3

partner to Allen & Overy, gains arbitrator International Committee for Commercial Arbitration and was a former chairman of the Hong Kong International Arbitration Centre.

Kaplan will be an international arbitration Simon Clarke Allen & Overy adviser, working with the Mallesons Hong Kong team and bringing his network of contacts developed over 14 years spent in arbitration. Mallesons partner David Bateson said that even before www.legalbusinessonline.com

Clarke’s notice of resignation, the firm had already been looking to boost its capability in those practices.

“Most firms have identified international arbitration and regulatory work as two growth areas – especially with the recent financial scandals and the minibond affairs in Hong Kong,” he said. “We were [already] actively looking to recruit senior lawyers to expand further because it’s such a growth area here, but now with Simon’s departure we will certainly be looking at a strong partner-level replacement.”

news in brief >> A&O’s half year revenues drop by 7% According to Allen & Overy’s latest financial results for October 2009, revenues decreased to US$840m compared to the US$866m for the same period in 2008.

Over half the firm’s revenues came from outside the UK. Managing partner Wim Dejonghe said A&O is starting to see an increase in activity. The firm’s work on the US$4.4bn Abu Dhabi government’s bank bailouts was noted as a highlight deal. “Now we have our capacity right and have improved cost controls, our increased activity levels mean we are cautiously optimistic about what lies ahead,” he said.

“We have made significant strategic investments, such as the recent lateral hires in high-yield and litigation, and where we see further opportunities to improve our position we will continue to invest.”

European firm targets investment funds with new Hong Kong office Luxembourg-based firm Arendt & Medernach has opened a representative office in Hong Kong to focus primarily on public and private funds and direct investment in Asia. The office will mark the firm’s first foray into the Asia-Pacific market and follows its launch in Dubai this time last year.

The firm said it will work alongside law firms it has established relations with in the region, aiming to capture the Guy Harles growth market for investment Arendt & funds in Hong Kong. “As outward Medernach investment funds from Asia are likely to increase fairly dramatically over the short term, and given the changes and reforms that are being implemented in multiple jurisdictions, the need for up-to-date advice …is likely to grow,” said partner Claude Niedner, who is one of three lawyers based in the new office.

Niedner will be supported by senior associate Stéphane Karolczuk who will head the office, and founding partner Guy Harles.

New partners and mid-cap clients boost Global’s growth PRC firm Global has reported a 25% revenue growth for the financial year to 31 December 2009. Liu Jinrong, newly elected to the role of managing partner in May 2009, attributes the growth to a number of strategic lateral moves and a strong flow of mandates from its mid-cap clients.

Global has added 11 partners to its Beijing and Shanghai offices. “Due to the impact of the GFC, many large corporate clients who are more exposed in the global market have significantly reduced their budget for external counsel and have been slow in making transactions,” said Liu. “On the contrary, many small and mid-sized businesses remain active in the current market and we have received a solid stream of new mandates from these clients.”

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CHINA >>

Winston & Strawn

us report Ashurst redefines US strategy Ashurst has recently established a six-firm referral network that will operate independently of the firm’s own US offices. Where the firm previously worked with a much larger range of firms on US matters, it has now drawn up the six-strong list and made a small number of people responsible for relationships.

Akin Gump Strauss Hauer & Feld, Davis Polk & Wardwell, Paul Weiss Rifkind Wharton & Garrison, Ropes & Gray, Schulte Roth & Zabel and Quinn Emanuel Urquhart Oliver & Hedges have all been confirmed as Ashurst’s main US referral firms.

Although partners have been encouraged to forge relationships with others, Ashurst singled out these six for their expertise in various practice areas.

London partner Ed Sparrow and Madrid partner Jesus Almoguera have overall responsibility for the referral network, while all US-related deals must be recorded with Ashurst New York business development manager Hilary Becker.

Changes in store for first-year associates US-based first-year associates at Reed Smith recently had their pay slashed. Responding to feedback from clients and concerns about driving down the cost of legal services, the 20% reduction will see junior lawyers starting at the firm in January in major markets (New York, Chicago, California and

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Washington DC) take home US$130,000 rather than US$160,000.

Orrick, Herrington & Sutcliffe also announced it would be implementing a new pay model for associates. Although it has confirmed that starting salaries for first-year associates in major markets (New York, Washington DC, San Francisco, Los Angeles, Silicon Valley and Orange County) will not be reduced, changes to the way it awards bonuses will occur.

First-year associates will not be eligible for year-end bonuses, only qualifying when they reach the next salary level, determined by their performance rather than the traditional lockstep model.

US firms cautious about partner promotions Promotion season has seen many US firms opting for a more conservative approach, despite confidence in a recovery remaining. Firms are still reluctant to go back to the partner numbers seen in pre-downturn days.

Weil Gotshal has been the most cautious, with partner promotions down by more than half on last year (seven down to three). Latham & Watkins cut promotions by seven this year from 30 to 23. Kirkland & Ellis added 51 staff to its partnership compared to 67 last year.

Milbank Tweed Hadley & McCloy however, has bucked the trend and upped its partner promotions, adding five compared to four seen in 2008.

ROUNDUP • Jeffrey Hammes, a corporate specialist in PE deals, will soon take over the chairmanship of Kirkland & Ellis’ 15-lawyer management committee. He replaces Thomas Yannucci, a Washington, DC-based litigator • Sidley Austin is set to launch a 12-lawyer office into Palo Alto, led by longtime Wilson Sonsini partner Thomas DeFilipps with three corporate attorneys from Howard and eight lawyers from Sidley’s San Francisco office • Cravath Swaine & Moore revealed cutbacks in bonuses for associates with a year’s experience, and no bonus at all for those starting less than a year ago. Second-year associates will receive a bonus of US$7,500, a drop of 57%, while senior associates will receive US$30,000, the same amount they were awarded a year ago • Davis Polk and Skadden recently secured lead roles in Exxon Mobil’s decision to acquire the Texas-based natural gas company XTO Energy for $31bn, the biggest energy deal seen since 2006 • Ropes & Gray IP associate Brien Santarlas has been identified as the second key player in the Galleon Group insider trading probe. The first – former Ropes associate Arthur Cutillo – was charged last month for providing traders with inside tips about three PE transactions on which Ropes was advising • Panasonic Corporation recently announced that it had successfully secured a majority stake in Sanyo Electric, creating one of the world’s largest electronics makers. Both companies used Japanese counsel for M&A advice, with Panasonic tapping into Nagashima Ohno & Tsunematsu, and Sanyo relying on Mori Hamada & Matsumoto

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inston & Strawn has launched two separate offices in Beijing and Shanghai, after opening an office in Hong Kong in 2008 and acquiring the China Ge Xiangyang assets from the dissolved Winston & Strawn Heller Ehrman. “China clearly plays an important role and we are excited about the opportunity to provide more comprehensive service to our clients in China,” said Thomas Fitzgerald, Winston & Strawn’s managing partner.

There are currently five partners working across offices in Hong Kong, Beijing and Shanghai. The firm intends to boost its international trade practice across the full range of trade remedy cases, including anti-dumping, INDIA >>

FoxMandal Little N

ot only did FoxMandal Little lose four partners last year, the firm has also gained a new competitor. Ravi Bishnoi and Rajan Gupta left to establish SRGR Law with Saroj Jha and Gaurav Bhatia, both of whom resigned from the firm early in 2009.

Despite receiving offers from leading law firms and requests from in-house legal teams, the four partners decided to join together to execute a long-term vision of driving their own firm into the top league in India. “Right now the immediate vision is that by the end of March 2011, we will be among the Top 10 law firms [in terms of revenue] in Delhi, not nationally,” said Rajan Gupta, a corporate partner at SRGR Law. The partners hope to achieve this by building a full-service law firm. “At present, among the four of us, we cover almost all fields of law, except for a few areas like IP and IT, which we are not able to cover,” said Gupta. “Going forward we will add new capabilities when we need them.” SRGR Law currently employs six associates who have between three to five years of experience and the firm plans to recruit four more associates shortly.

Asian Legal Business ISSUE 10.1

NEWS >>

news in brief >>

makes splash in China countervailing duties and safeguard proceedings.

The Beijing and Shanghai offices are currently led by Ge Xiangyang, who recently joined from Baker & McKenzie where he was a partner. At Winston & Strawn, he will continue to assist large Chinese companies seeking opportunities overseas, focusing on cross-border M&A transactions, specifically in the natural resources industry. He has worked on numerous high-profile transactions including the IPOs of PetroChina Company and Chalco, West-East Pipeline Project and PetroChina’s US$2.5bn acquisition of oil and gas assets.

The increases seen in Chinese outbound M&A over the past year has triggered keen interest from many US law firms. Collectively they

►► US firms opening China offices July 2008 – November 2009 Firms

Location

Date

Covington & Burling

Beijing

July 08

Dechert

Beijing

August 08

Loeb & Loeb

Beijing

October 08

Miller, Canfield, Paddock and Stone

Shanghai

October 08

Morris Manning & Martin

Beijing

April 09

Kirkland & Ellis

Shanghai

September 09

Winston & Strawn

Beijing/ Shanghai

November 09

are reporting an increasing clientele of Chinese businesses seeking legal advice about listing, acquiring, trading, distributing or settling disputes in the West. ALB

lawyers break away to form new firm

Each of the four founding partners will take an equal equity share in the new firm and contribute their expertise in the areas of corporate advisory and M&A, infrastructure projects, real estate and litigation. The partners are in the process of establishing engagement agreements with clients. “There are a few large clients, both domestic and international, who have agreed to come on board,” said Gupta, while declining to name them.

It is also expected that SRGR Law will benefit from existing relationships with international law firms. “We also have considerable experience handling crossborder transactions and we have working relationships with many international www.legalbusinessonline.com

law firms both in the UK and the US. We expect referral work from them as well,” said Gupta.

However, SRGR does not anticipate establishing an exclusive alliance with any one particular international law firm; preferring the freedom of working with several firms. “We are not going to have any exclusivity with any firms right now. We would be available for work with all firms,” he added.

Gupta didn’t provide other reasons for his decision to leave FoxMandal Little but the firm made headlines in 2009 as a result of cash flow problems, delaying salary payments to its Delhi-based lawyers as a result of late payments from overseas clients. ALB

DLA Piper advises on first thai IPO DLA Piper has completed its first IPO project, listing baby-care manufacturer Moong Pattana International Public Company (MPI) on the Market for Alternative Investment (MAI) established by the Stock Exchange of Thailand (SET) in 1998. The firm was the Chanvitaya only law firm to be instructed on Suvarnapunya DLA Piper the deal, advising on Thai law issues relating to MPI’s conversion into a public company, including facilitating the IPO with respect to the SET, Office of the Securities and Exchange of Thailand, the Ministry of Commerce and other related authorities.

Partner and head of the corporate practice, Dr. Chanvitaya Suvarnapunya, has a well-established relationship with MPI, as the company has been his client for over 20 years. The timing of this IPO was particularly important for the company given the uncertain economic climate. This was a challenge as the legal team had to return to due diligence and the prospectus several times as timing for the listing changed, said Suvarnapunya. He anticipates MPI will raise further funds through another public offering.

“The economy is picking up,” he said. “This [IPO] is a good sign for things to come.”

New Conyers alliance launches Cyprus service Offshore firm Conyers Dill & Pearman has launched a Cyprus practice by forming an alliance with Cypriot firm Antis Triantafyllides & Sons (ATS). ATS will transfer a lawyer to Conyers’ Moscow office where the practice will be based. Both firms will exchange work across their joint offshore offices.

Competition between offshore firms heated up in 2009 and this practice launch comes only a few months after both Conyers and Appleby opened a Mauritius office in July. The alliance also comes one year after Harneys formed a similar arrangement with Cyprus’ Aristodemou Loizides Yiolitis LLC. Conyers said that its new practice will be a differentiating factor for the firm and is part of its strategy for targeting BRIC markets. “Cyprus is a … preferred jurisdiction for Russian investment. [We] are already receiving instructions from clients,” said the Moscow managing partner, Caroline O’Hare.

The firm is hoping to capture work from growing investment and trade relations between Russia and Cyprus. Cyprus is the third-largest investor in Russia and both countries enjoy a favourable tax treaty.

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NEWS >>

Update >>

korea >>

Korean lawyers wary of new

Intellectual Property ASM Assembly Automation Ltd v Aurigin Technology Pte Ltd and Others [2009] SGHC 206 Facts

O

n 16 September 2009, the Singapore High Court granted judgment in favour of Aurigin Technology Pte Ltd (“Aurigin”) against ASM Assembly Automation Ltd (“ASM”), dismissing ASM’s claim that Aurigin had infringed ASM’s patent.

ASM’s patent related to an apparatus and method for automatically placing an array of solder balls onto a substrate, such as a BGA substrate. Aurigin’s flagship product, the AU800, is an automated ball-grid array (“BGA”) solder ball placement machine which houses a key solder ball placement module. ASM claimed that Aurigin had infringed ASM’s Singapore patent and that its two directors had directed, authorised, counselled or procured Aurigin to infringe the patent.

The court found that ASM’s patent was invalid for lack of novelty and inventiveness and allowed Aurigin’s counterclaim by revoking ASM’s patent and granting an injunction to restrain ASM from making groundless threats of infringement proceedings against Aurigin and its customers.

The Decision The Court heard testimony from expert witnesses and reviewed the state of the prior art. In general, the Court preferred evidence provided by Aurigin and agreed with Aurigin that ASM’s invention was not novel and did not involve an inventive step, and accordingly revoked ASM’s patent and dismissed their claims for patent infringement.

In respect of Aurigin’s counterclaim for groundless threats of legal proceedings, the Court noted that the UK position had changed after 2005 because of the inclusion of s 70(2A) of the UK Patents Act. The Court noted that the present position in the UK (as a result of the inclusion of s 70(2A)) is that even if the patent of the party making the threats is shown to be invalid, that party may avoid liability for making the threats by showing that when the threats were made, he did not know, and had no reason to suspect, that the patent was invalid. However, as there was no modification to Section 77 of the Patents Act, the UK position did not apply in Singapore.

The Court therefore granted an injunction to restrain ASM from continuing to threaten Aurigin, its customers, directors, officers, employees and agents with any legal proceedings for infringement of ASM’s patent. An inquiry as to damages suffered

by Aurigin as a result of ASM’s groundless threats of infringement was also ordered.

The decision is currently under appeal.

Edmund Kok patent attorney Intellectual Property and Technology Group ATMD Bird & Bird LLP Phone +65 6534 5266 Email: Edmund.Kok@twobirds.com

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Edmund Kok

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number of new measures intended to revamp and improve Korea’s legal industry have initiated debate among those working in the profession. A governmentcommissioned report by research firm Korea Development Institute (KDI) has made a number of recommendations designed to boost the competitiveness of the country’s legal industry. Among the measures recommended are that the number of newly qualified lawyers be raised; advertising restrictions on lawyers and firms be removed; ‘multidisciplinary’ firms that offer legal, accounting and patent services be created; and the power of supervision and disciplinary action be shifted from the Korean Bar Association to a government authority.

The most controversial of all the initiatives, however, is the proposal to allow non-lawyers to own stakes in law firms.

“If these proposals come into law, the [implications] will be huge,” said Bae Kim & Lee partner Jeong Han Lee. “It will really affect the Korean legal market.”

The Korean Bar Association has said it opposes the measures on the grounds that it will reduce the quality of legal services. Local lawyers said they are opposed to proposals to allow non-lawyers to own law firms because, in a similar sentiment to the Indian legal industry, the legal profession is not a business. “I personally think that it will be difficult for lawyers … to accept the idea that non-lawyers can share the profits and both own a business,” said Shin & Kim partner Beomsu Kim. Traditionally the Korean legal profession has not been perceived as a business, so those changes will take a lot of time and effort to get through.”

The KDI’s proposal to boost the number of local lawyers may meet the incoming competition from better-resourced foreign law firms (with the ratification of free trade agreements with the US and EU), but some lawyers feel that the measure may not necessarily be beneficial. BKL’s Lee said that lawyer supply is already outstripping demand. “Ten years ago the annual number of lawyers passing the bar was 300, but that’s now been increased and currently we have around Asian Legal Business ISSUE 10.1

NEWS >>

legal industry measures

Update >>

International Tax G20 – Tax Haven Crackdown Update

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2,000 candidates,” he explained. “We don’t expect that such a large number of lawyers will be utilised or necessary given where the Korean market is presently – there is criticism already that the number of lawyers is too high.”

“The measures need to be carefully reviewed and discussed before implementation to reflect the public aspect of legal services” Jeong Han Lee, Bae Lee & Kim The measure could open the legal market to foreign firms in advance of the FTAs taking effect, since foreign law firms who don’t have a local licence may hire Korean lawyers, Lee added.

The KDI’s other proposal – to create multidisciplinary firms by removing regulations that separate patent and tax legal services – has also been received with some concern. Currently, lawyers qualified as patent and tax attorneys have different licences from general lawyers, but this measure will allow the creation of full-service firms in line with international practices. “If you take the incoming foreign law firms and this initiative together, this could allow all licence holders to form JVs in a very concentrated company where all kinds of professional services – from legal to accounting and others – can be provided by one firm,” said Kim. Lee said that the country’s Attorney’s Act must be amended, but that is only a formality and will go through other stages. Professor Chul Choi of Hankuk University of Foreign Studies said that relevant statutes need to be amended, which will itself require review by the Korean National Assembly. “A number of issues and oppositions will be raised and a long debate will follow,” he said. “In my view, having acknowledged the certain need for deregulation on the service markets, the measures need to be carefully reviewed and discussed before implementation to reflect the public aspect of legal services.” ALB www.legalbusinessonline.com

global crack down on tax evasion in financial centers is moving into a more difficult enforcement phase, an Organization for Economic Co-operation and Development official said recently.

Jeffrey Owens, director of the OECD’s center for tax policy and administration told delegates at a recent conference that progress made in implementing tougher disclosure requirements since the G20 summit in London in April amounted to a “revolution.”

World leaders agreed at the G20 summit in London to crack down on tax evasion and banking secrecy and asked the OECD to publish lists of tax havens.

There are now 59 countries on the OECD’s “white list” of jurisdictions that have implemented internationally agreed tax standards while 28 remain on the “grey list” having committed to the standards without having fully implemented them.

The grey list includes Malaysia, Uruguay and Chile though most other countries are tiny Pacific and Caribbean island nations.

There are now no financial centers surveyed by the OECD which have not committed to the standards.

“Listing is never a pleasant process but it worked. The combination of the list and the threat of sanctions are the reason why we have seen so much progress over the last 10 months. Anybody who tells you different, they’re wrong,” Owens said.

The OECD will now focus on assessing the extent to which the standards are met in practice, and seek to close loopholes in implementation.

“If we see a small jurisdiction which has 12 agreements (on information disclosure) with countries with which they have no economic ties at all, to me that is not playing the game,” he said.

Owens said the greater political will in G20 countries to curb banking secrecy in offshore financial centers for the purpose of tax evasion has led to more progress being made in the last 10 months than all the achievements of the previous decade.

He stressed however, that while the OECD is clamping down on jurisdictions seeking a competitive advantage through tax secrecy, it is not seeking harmonization of tax rates.

“There is no reason why Sweden should have the same tax system as the Cayman Islands. Setting minimum tax rates is not on our agenda, neither is impinging on national sovereignty.

Basically what it’s about is a level playing field,” he said.

Meanwhile, Dutch people keeping money in offshore accounts have reported more than 1 billion euros ($1.5 billion) in assets so far since steps were adopted this year to better track money held in tax havens. Some 4,400 people reported assets overseas before fines will be introduced from Jan. 1 for those who do not report assets abroad, Dutch Deputy Finance Minister Jan Kees de Jager reported.

This amounted to Euros 186,000 per case, on average.

By Debbie Annells, managing director, AzureTax Ltd, Chartered Tax Advisers Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong www.azuretax.com, a member of AzureTax Group (Tel) +852 2123 9339 (direct line), (Main Line) +852 2123 9370, (Fax) +852 2122 9209 Registered with the Chartered Institute of Taxation for purposes of anti money laundering legislation.

Debbie Annells

23

NEWS >>

news in brief >>

industry >>

News of DLA Piper’s partnership review leaked to media PricewaterhouseCoopers has been engaged by DLA Piper to conduct a review of its partnership model. DLA Piper was hoping to keep the review from the public until matters had been resolved but news of upcoming changes to its partnership structure was leaked to the media, said a spokesperson for the law firm.

The results of the review are expected to change the way partners are remunerated and will also determine how the partnership structure – currently split into three tiers – will be updated to reflect that the firm is now a global business. The spokesperson confirmed that DLA Piper was undergoing a review but would not be ready to make an official announcement on the review and any proposed changes until 2010.

Scarcity of M&As brings Linklaters’ halfyear revenues down

L

inklaters’ half-year revenue fell by almost 10%, which is a decline managing partner Simon Davies said reflected the lack of M&A deals in 2009. Half-year revenues as of 31 October fell by 9.5%, going down from £653m to £591m. “Our results are in line with our expectations and reflect the continuing challenging environment for our clients and, in particular, the subdued level of global M&A activity,” Davies said.

According to Thomson Reuters, the firm is leading the worldwide league table rankings in the year to date, having worked on 413 deals with a combined value of US$6.9bn. It is unknown whether the downturn was

also experienced in its seven Asian offices. Linklaters declined to provide a breakdown of revenues generated from its six Asian or its two Gulf offices.

Davies said the firm is positive about the markets in the Middle East and Brazil, Russia, India and China. “While we do not expect a rapid recovery in the market, we have seen an upturn in our activity levels on the second half of last year, particularly in the BRIC and the Middle East markets …” Linklaters will need to produce revenue of £707m in the next half of the year, in order to break even to match its 2007/08 revenues of £1.2bn announced earlier in July. ALB

MIDDLE EAST >> Shin & Kim launches international dispute resolution practice Shin & Kim has launched an international dispute resolution practice group by hiring former Shearman & Sterling associate Benjamin Hughes [see Appointments section]. Korea is increasingly becoming a centre for arbitration and Shin & Kim are looking to tap into work flowing from international commercial arbitration and cross-border litigation.

“There are a lot of Korean companies involved in disputes. Their market power is increasing and they will have more leverage to influence the venue of jurisdiction and the rules under which the arbitration will be conducted. [Korea] will increasingly become a place where arbitration disputes are heard,” said Hughes.

Economic Confidence over the next 12 years 44

25 19 12

1

Very confident Quite confident Neutral

24

i ba Du

gh ai an Sh

Yo r w Ne

ba um M

Lo

nd

on

i

k

50 47 47 45 45 45 41 40 35 31 30 28 26 % 25 25 20 20 15 10 10 9 7 7 6 5 2 0 2 1 1

Quite pessimistic Very pessimistic Source: Eversheds “Boom or Gloom” Dec 2009

Simmons and Al Busaidy win US$2bn Omani coal project

S

immons & Simmons and local Omani firm Al Busaidy, Mansoor Jamal & Co have beaten ten others to provide legal advice on the Middle East’s first imported coal-fired project, the Duqm IWPP. Simmons was awarded the legal advisory contract for the project after submitting a bid last April, alongside Denton Wilde Sapte, Gide Loyrette Nouel, Freshfields, Clifford Chance, DLA Piper, Norton Rose and Trowers & Hamlin.

Although Simmons has no offices in Oman it has retained local firm Al Busaidy on the project, using Al Busaidy’s founding partner Mansoor Jamal Malik and senior associate Ardeshir Patel as local counsel.

The firm was chosen based on the experience of the proposed project team, as the Omani government’s main criterion was prior experience on coal or IWPP-related projects.

The two firms will advise the government-owned Oman Power and Water Co. SAOC on agreements to procure project resources and

drafting of project documents. “Our contract is with Simmons and we look to the firm for complete opinion on any laws, regulations or licencerelated matters,” said project manager, Yousuf Al-Jahdhami. Al Busaidy’s Malik said both firms have worked together previously without any official associations or alliances. “We’ve had a very close relationship with Simmons & Simmons over the years and we’ve received instructions from them in the past,” he said. “All the projects we’re invited by international firms are based on a project-to-project base.”

Oman’s power project, expected to begin operations from 2016, has an estimated value of around US$2bn and is the first coal-fired power plant in the Gulf. The plant will allow Oman to generate its own energy instead of importing natural gas for power. “It’s the first of its kind in the region and depending on how it goes it may open opportunities across the [Gulf] for those [countries] looking to use alternative fuel or power projects,” said Malik. ALB Asian Legal Business ISSUE 10.1

NEWS >>

Update >>

middle east >>

Islamic Finance Options for Setting-up Business in Malaysia: Limited Company, a Representative Office or, a Branch Office?

I

n Malaysia, prospective investors, either local or foreign, can set up their businesses through three main types of legal structure, namely through the establishment of private limited company, representative or regional office and a branch office.

Dubai firm loses domain name case

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hat’s in a name? For Dubai law firm Bin Shabib & Associates, quite a lot, it seems. An arbitration hearing held in November found that the firm had engaged in reverse domain name hijacking, after it failed in an attempt to obtain the valuable domain name BSA.com from the owners, Hebei IT Shanghai.

In October the firm filed a complaint with the National Arbitration Forum seeking to have the domain name transferred to them, largely on the grounds that the term ‘BSA’ is more closely associated with their business, and that the firm had applied to trademark ‘BSA’ with the UAE government. But the owners claimed that ‘BSA’ is not exclusively associated with the law firm and that “the only evidence submitted in support of [their] claim is a blank piece of stationary and its website.”

The NAF panel found that the firm could not provide any evidence to support their higher rights over the BSA.com domain name, and that it had engaged in reverse domain name hijacking (see below). The disputed domain name was purchased at an auction this year for US$17,850, but could be worth a lot more since its short name has many potential uses. “Three-letter dot-com domain names have not been available for new registration for over 10 years and as such, they are exceedingly rare and valuable,” the panel heard.

In 2006 Bin Shabib & Associates (currently online at bsa. ae) was reportedly the first UAE firm registered to operate in the Dubai International Financial Centre. It started using the ‘BSA’ mark in 2007. ALB ►► domain names – facts

Domain name hijacking: what is it?

• Reverse domain name hijacking is defined as “using the Uniform Domain Name Dispute Resolution Policy in bad faith, to attempt to deprive a registered domain name holder of a domain name.”

To establish reverse domain name hijacking: • The respondent must show knowledge on the part of the complainant of the respondent’s right or legitimate interest in the domain name • Evidence of harassment or similar conduct by the complainant having such knowledge

Source: WIPO/National Arbitration Forum

www.legalbusinessonline.com

Limited Company The private limited company (“company”) is the most commonly adopted structure to do business in Malaysia. A company should have a minimum of two shareholders, except for a wholly owned subsidiary, which may have the holding company as its sole shareholder, and is managed by at least two directors. The liability of each of the shareholders is generally limited to the total par value of their shares.

In the event a multinational wishes to establish a subsidiary in Malaysia it will likely do so as a privately held company.

Similarly, individual investors who wish to establish a standalone business to generate income in Malaysia will most likely do so as a company.

Representative Office and Regional Office The representative office and regional office structures are very different from that of the limited company as they are not stand-alone legal entity and are not allowed to earn income. They merely serve as extensions of their head offices overseas. Representative office and regional office are also strictly regulated to performing specific functions, designated by the Malaysian Industrial Development Authority (“MIDA”), which is an agency under the Ministry of International Trade and Industry (“MITI”), on behalf of their head offices overseas.

As set out in the MIDA Guidelines on the Setting of A Representative Office or Regional Office, the approved activities to be undertaken by representative office and a regional office are: i. planning or coordination of business activities; ii. gathering and analysis of information or undertaking feasibility studies on investment and business opportunities in Malaysia and the region; iii. identifying sources of raw materials, components or other industrial products; iv. undertake research and product development; and v. acting as a coordination center for the corporation’s affiliates, subsidiaries and agents in the region. * This article provides only a general picture and is not intended as legal advise.

Professional legal and secretarial advise should be sought to establish a company in Malaysia. Give us a call or an e-mail and we will be happy to be of service.

Juhaida Mior Zulkifli, Associate Mergers & Acquisitions and New Venture Practice Group Azmi & Associates 14th Floor, Menara Keck Seng, 203 Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia.

Phone: +603- 2118 5000 ext. 5064 Fax: +603- 2118 5111 E-mail: juhaida@azmilaw.com

Juhaida Mior Zulkifli

25

NEWS >>

appointments ►► LATERAL HIRES Name

Leaving

Going to

Practice

Location

Masakata Kanayama Makoto Ono

Kawaguti & Partners

IP, life science & chemical

Tokyo

IP, life science & chemical

Tokyo

Narayan Iyer

Linklaters

Banking

Mumbai

Kunal Thakore

Linklaters

India

Mumbai

Soonsik Ju

Korea Fair Trade Commission N/A Mallesons Stephen Jacques N/A Shearman & Sterling

Anderson Mori & Tomotsune Anderson Mori & Tomotsune Talwar Thakore & Associates Talwar Thakore & Associates Yulchon

Anti-trust

Seoul

Indochine Counsel Allen & Overy

Foreign consultant/M&A Litigation & arbitration

Ho Chi Minh Hong Kong

Mallesons Shin & Kim

International arbitration International dispute resolution

Hong Kong Seoul

Samsung China Paul Hastings Linklaters UBS Korea Fair Trade Commission Shearman & Sterling

GoldenGate Orrick JP Morgan China White & Case Kim & Chang

Litigation & arbitration China corporate/ cap markets Head of Asia Investment funds Anti-trust

Beijing Hong Kong Hong Kong Singapore Seoul

Shin & Kim

International arbitration

Seoul

Allens Arthur Robinson J Sagar Associates

Kennedys

Construction

Singapore

Korea Fair Trade Commission

Khaitan & Co

Competition

New Delhi

Deloitte

Gide Loyrette Nouel

Tax

Vietnam

Korea’s Yulchon boosts anti-trust practice Yulchon has strengthened its anti-trust practice by hiring senior advisor Soonsik Ju, a former official from the country’s chief anti-trust watchdog, the Korea Fair Trade Commission (KFTC). Ju’s appointment follows the departure of partner Youngjin Jung for Kim & Chang in October. His experience in the KFTC included various high ranking positions including as standing commissioner of the KFTC and director of the Anti-Monopoly Bureau.

“Joining a law firm allows me to focus on the other side, to better understand why companies infringe on the anti-trust laws and to help them find and pursue better alternatives,” said Ju.

Steve Jacobs Simon Clarke Neil Kaplan Benjamin Hughes Tian Yongfu Phoebus Chu Zili Shao Emily Low Byungbae Kim Benjamin Hughes Gordon Smith Manas Kumar Chaudhuri Phan Thi Lieu

Kawaguti & Partners

►► PROMOtion Name

Firm

Title

Practice

Location

David Bickerton

Clifford Chance

Corporate

London

Stéphane Karolczuk Alan Yip Michael Loughney Mark Plenderleith Hiroki Kobayashi David Bills Karen Yam

Arendt & Medernach

regional managing partner UK and the Middle East Head of Hong Kong office

Corporate

Hong Kong

JSM Mayer Brown Royal Bank of Scotland

Partner General counsel, Asia-Pacific

Real estate Corporate

Hong Kong Hong Kong

Milbank

partner

Tokyo

Latham & Watkins

partner

Global project finance Corporate; M&A

Latham & Watkins Latham & Watkins

of counsel of counsel

Project finance Corporate

Singapore Shanghai

Anderson Mori & Tomotsune

Japan’s Anderson Mori grows IP practice Japanese ‘Big Four’ firm Anderson Mori & Tomotsune has boosted its IP and life sciences practices with two new patent attorneys, Masakata Kanayama and Makoto Ono, both from Kawaguti & Partners. Ono will handle patents and cases for the biochemistry and pharmaceutical industries while Kanayama will advise on patents to do with organic and inorganic chemistry Makoto Ono petrochemistry.

26

partner at Bhaishanker Kanga & Girdharlal before establishing TTA. The partnership between Linklaters and TTA was established within months of TTA’s launch in 2007, with many questioning the strategy in light of current restrictions on foreign law firms. TTA now has around 21 lawyers with the newly announced appointments.

Linklaters

Tokyo

Talwar Thakore & Assocs

Linklaters duo moves to Indian best friend Two partners from Linklaters’ India group will join the firm’s referral partner in India.

Singapore-based partner Narayan Iyer and Hong Kong-based Kunal Thakore have joined TTA as equity partners. Thakore, who Kunal Thakore has worked at Indian firms Little & Co (now Fox Mandal Little) and Bhaishanker Kanga & Girdharlal, is the son of TTA founding partner Shobhan Thakore, who was a key

Clifford Chance

CC’s regional MP addresses revenue decline David Bickerton has been elected the new regional managing partner of Clifford Chance in the UK and the Middle East. He takes over from Jeremy Sandelson, who has become global head of the firm’s litigation practice.

Bickerton, who currently heads David Bickerton up the London capital markets practice, will have to address a 12.6% decline in revenue from CC’s UK and Middle East offices in 2009. The firm has invested in the development of its Middle East presence and has established offices in both Abu Dhabi and Dubai.

Wilson Sonsini

Yulchon

Kim & Chang

Kim & Chang hires competition lawyer Byungbae Kim, a former KTFC vice-chairman, joins Kim & Chang as a senior counsel in the anti-trust and competition practice group. Kim has also held positions at US firm Wilson Sonsini, public service roles in Korea’s Economic Planning Board Byungbae Kim and the Prime Minister’s office, as well as the Korea Development Bank. “As is the case in other countries, in Korea, experts with experience in the public sector often advance to law firms,” explained Kim. “

Asian Legal Business ISSUE 10.1

NEWS >>

Indochine

(United States)

Vietnam’s Indochine boosts international practice Vietnamese firm Indochine Counsel has boosted its international practice with the appointment of US-qualified lawyer Steve Jacobs. Jacobs has joined the firm as a foreign consultant and will provide advice on M&A and private equity-related transactions. He will also provide a link for clients with cross-border businesses in Vietnam. “The firm’s strategy is to expand to regional and international markets step by step,” said managing partner Dang The Duc.

GoldenGate

Samsung China

Partnership offer for head counsel Tian Yongfu, the head counsel for Samsung China, has joined the partnership at PRC firm GoldenGate. Tian will focus on commercial negotiations, litigation and arbitration, and corporate compliance issues.

GoldenGate has offices in Beijing, Shanghai and Munich and its list of long-term clients include CNMC, Si Fang Group, Ogilvy & Mather, Samsung China, Metso and Ritz.

Orrick

Paul Hastings

Paul Hastings partner joins Orrick in Hong Kong Orrick have recruited former Paul Hastings partner Phoebus Chu to join the China corporate and capital market practices. Chu, who has over fifteen years’ experience with cross-border corporate finance, capital markets and M&A transactions, will join Orrick as a partner. He will operate between the firm’s Beijing and Hong Kong offices.

Chu’s appointment brings the total number of partners in Orrick’s Beijing office to four. Earlier in 2009 the firm also Phoebus Chu appointed Tom Tobiason a partner in its Shanghai office, as part of its emerging companies group.

Shin & Kim

Shearman & Sterling

Shin & Kim hires Shearman lawyer Shin & Kim has hired former Shearman & Sterling associate Benjamin Hughes, who with Shin & Kim partner Beomsu Kim has launched an international arbitration practice in the firm.

Hughes was a senior associate in the international arbitration group at his former firm. Beomsu Kim and managing partner Doo Sik Kim were quick to invite Hughes to be co-chair, given his international arbitration experience, Korean language skills and past employment with Kim & Chang.

RBS

Loughney appointed GC for RBS Asia The Royal Bank of Scotland (RBS) has appointed Michael Loughney as its general counsel for the Asia-Pacific region. He will lead a 70-strong legal team and will continue to be based in Hong Kong, as he is currently the company’s head of group legal for its global banking & markets (GBM) group.

Loughney joined RBS in 1998 as head of legal and compliance for financial markets in New York. He moved to London in 2004 where he became deputy to the head of GBM legal, and head of group legal, where he was responsible for the credit trading and distribution areas of the bank.

CORRECTIONS #

In ALB issue 9.11 on page 22 of the Appointments section, it was stated that Pierre-Paul Saulou transferred from DLA Piper to join Stephenson Harwood.

This should have read ‘transferred from Soulié & Coste-Floret’. ALB wishes to clarify that PierrePaul Salou has never worked for DLA Piper. www.legalbusinessonline.com

Update >>

IT column

TM

Legal Must Stay Actively Involved in Selecting eDiscovery Solutions

M

any organizations have a committee of IT, Records Management, Information Security, and Legal professionals who are assigned the task of developing and improving eDiscovery processes. Typically, Legal is engaged in the initial stages of setting goals and requirements. However, once the task of evaluating, choosing, and implementing solutions begins, they often tend to disappear.

When this happens, organizations unknowingly embark on activities that result in unnecessary costs and delays. The danger of “scope creep” runs rampant, as narrowly-focused eDiscovery solutions projects become part of longer-term records management or compliance projects. The end-result is all too common: lots of time spent changing or re-arranging the proverbial haystacks of information sources, and scarce focus on determining ways to find and preserve the needles of relevant files within the existing haystacks. Most organizations understand the need to invest in technologies that enable them to gather electronically stored information (ESI) quickly and efficiently, while preserving chain of custody and metadata. While a number of technologies appear to give similar messages of being able to meet these criteria, a world of difference exists in how they work, the time required for implementation, and overall effectiveness.

In a recent meeting with an organization’s IT and Legal staff, I found that Legal asked IT to improve eDiscovery collection processes, with a mention of looking into email archiving solutions. IT then evaluated and invested in an archiving solution that was taking months to implement and complete.

When I asked how the organization dealt with collecting ESI stored locally on computer hard drives for desktops or laptops, IT looked over at Legal and asked, “Is this something you need to acquire as well?” Legal looked back at IT and said, “Yes.” Then, a moment of silence. Clearly, a disconnect existed between what Legal needed from a broader perspective for eDiscovery and the limited solution that IT had chosen.

Archiving and other records management initiatives are not a complete solution for eDiscovery. Discoverable ESI is much more than what exists in an archive, enterprise content management system, or other structured data source.

Moreover, eDiscovery is not simply extending an information management solution to manage more data sources.

What’s more important is to determine how best to collect and preserve ESI from existing sources for pending litigation— and information management solutions were not designed to do this. The name of the game for eDiscovery is acquiring what is potentially relevant from reasonably accessible sources as quickly and efficiently as possible at the time an organization anticipates litigation and in a defensible manner. Legal, stay involved when your organization is choosing an eDiscovery solution! Your partners in IT need your input because you know the legal requirements. Also, your success depends on IT’s ability to give you what you need, when you need it.

By Daniel Lim, Director & Assistant General Counsel, Guidance Software Inc. For more information, please contact: Carl Kimball, General Manager, Asia Pacific Guidance Software, Inc Phone: +65 6248 4527 Email: apac.sales@guidancesoftware.com

Carl Kimball

27

News | regional update >>

Regional updates

CHINA

28

CHINA

Paul Weiss

Philippines

SyCip Salazar Hernandez & Gatmaitan

SINGAPORE Loo & Partners

Vietnam

Indochine Counsel

MALAYSIA

Wong & Partners

Each month, ALB draws on its panel of country editors to bring readers up to date with regulatory developments across the region

New Regulations on Corporate Income Tax on Gains from Transfers of Equity Interest by Non Resident Enterprises In an attempt to strengthen regulation of corporate income tax (“CIT”) on gains from transfers (“Transfers”) by nontax resident enterprises (“NTREs”) of equity interest in tax resident enterprises (“CTREs”), on December 10, 2009, the State Administration of Taxation issued Guoshuihan [2009] No. 698 (the “Notice”). The Notice focuses on Transfers that potentially could be viewed as structured by NTREs to avoid CIT in China and grants Chinese tax authorities power to conduct substantive review of, and adjust CIT on, such Transfers.

Among other things, the Chinese tax authority (the “Authority”) will review indirect Transfers in which the offshore holding company whose equity interest is being transferred (the “Intermediary”) is subject to an effective tax rate of less than 12.5% in its jurisdiction of establishment. If a Transfer is found to be an abuse of organizational form arranged by the NTRE to avoid CIT and have no reasonable commercial purpose, the Authority may re-characterize the nature of the Transfer based on its economic substance and disregard the existence of the Intermediary. Moreover, for Transfers by an NTRE to its related parties, if the transfer price is found to be inconsistent with the arm’s length principle and results in reduction in CIT, the Authority may adjust such transfer price pursuant to reasonable methodologies.

The Notice imposes substantial disclosure burden on NTREs and does not specify what level of detail is required. Also, the standard for review by the Authority is subjective and vague. For example, it is unclear what

the tests are for determining “abuse of organization form” or the “arm’s length principle.” Neither does the Notice give any explanation for “reasonable methodologies” that sometimes could be applied to adjust relevant transfer prices in, and ultimately, CIT on, a Transfer. The test for “arm’s length principle” is particularly problematic because it is questionable whether the Authority should be involved in the substantive review of valuation of the relevant CTREs. In addition, no time limit for review and determination by the Authority or procedures for follow-up requests is provided in the Notice.

The Notice poses challenges to Transfers by increasing uncertainties over structuring, pricing and execution of such transactions. On any Transfer, NTREs should carefully consider issues such as structure, allocation of any additional CIT which may be imposed by the Authority, and communication with the relevant Authority in executing such transactions.

Written by Jeanette Chan, partner Catherine Ying, associate Paul, Weiss, Rifkind, Wharton & Garrison Unit 3601, Fortune Plaza Office Tower ANo. 7 Dong Sanhuan Zhonglu Chao Yang District, Beijing 100020 PRC Email: jchan@paulweiss.com Ph: (8610) 5828-6300 or (852) 2846-0300

Philippines

Recognition of Foreign Insolvency Proceedings in the Philippines On December 2, 2008, the Philippine Supreme Court promulgated the New Asian Legal Business ISSUE 10.1

News | regional update >>

Rules of Procedure on Corporate Rehabilitation (the “Rules”), which took effect on January 16, 2009.

Among the major amendments introduced by the Rules is the authority granted to domestic courts to recognize a foreign proceeding – i.e., a judicial or administrative proceeding in a foreign state, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision of a foreign court, for the purpose of rehabilitation or re-organization. The Rules on recognition of foreign proceedings is substantially patterned after the United Nations Commission on International Trade Law (UNCITRAL) model rule on cross-border insolvency.

Under the Rules, domestic courts may grant a petition for recognition of a foreign proceeding if (i) the proceeding is a foreign proceeding as defined, (ii) the applicant is a foreign representative – i.e., a person or entity, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or rehabilitation of the debtor or to act as a representative of the foreign proceeding, and (iii) the petition is accompanied by evidence of the existence of the foreign proceeding and appointment of the foreign representative. Domestic courts may deny the petition if to grant the same would be contrary to the public policy of the Philippines, or if the country of which petitioner is a national does not grant recognition to rehabilitation proceedings taking place in the Philippines.

Upon the filing of the petition, the courts may grant provisional reliefs where the same is urgently needed to protect the assets of the debtor or the interest of the creditors. Upon recognition of the foreign proceedings, the foreign representative acquires legal standing to intervene in any action or proceeding in the Philippines in which the debtor is a party, the commencement or continuation of actions concerning the debtor’s rights or obligations is stayed, and the debtor’s right to dispose of or encumber its properties is suspended.

Domestic courts may communicate www.legalbusinessonline.com

directly with, or request information or assistance directly from, foreign courts or foreign representatives.

Written By Marianne M. Miguel and Christine Joy K. Tan SyCip Salazar Hernandez & Gatmaitan 3rd Floor, SSHG Law Center 105 Paseo de Roxas 1226 Makati City Philippines T (632) 817 9811 to 20; 817 2001 to 09 F (632) 817 3896; 817 3567; 817 3145; 817 3570; 818 7562 E mmmiguel@syciplaw.com cjktan@syciplaw.com W www.syciplaw.com

SINGAPORE

Implementation of ASEAN and Plus Standards Scheme for Offer of Investments in Singapore The ASEAN and Plus Standard (the “Scheme”) for multi-jurisdiction offerings of securities in ASEAN has been effectively implemented on 19 June 2009 in Singapore. The Scheme is implemented via the Securities and Futures (Offers of Investments) (Shares and Debentures) Amendment Regulation 2009 (the “Amendment Regulations”).

The Scheme Under the Scheme, issuers making an “ASEAN Offering” of plain equity or debt securities will be required to comply with a set of common disclosure requirements developed

by ASEAN Capital Markets Forum (the “ASEAN Standards”) and a set

of limited additional standards (the “Plus Standards”) prescribed by the respectively jurisdictions. For example, a Singapore issuer making an offering in Singapore who is interested to also offer its securities to investors in Malaysia and Thailand will benefit from the Scheme by preparing a core prospectus based on ASEAN Standards and a wrap-around which complies with the Plus Standards of each jurisdiction.

The Scheme operates on an opt-in basis and ASEAN members adopt the Scheme as and when they are ready to do so. Singapore, Malaysia and Thailand are the first three ASEAN jurisdictions to implement the Scheme.

“ASEAN Offering” refers to an offer in at least two ASEAN member countries which have adopted the ASEAN Standards as part of their disclosure requirements for offers of equity.

The ASEAN Standards The ASEAN Standards are divided into ASEAN Equity Securities Disclosure Standards and ASEAN Debt Securities Disclosure Standards, which are based on the standards on crossborder offering set by International Organisation of Securities Commissions.

It also fully adopts the International Financial Reporting Standards and the International Standards on Auditing.

The Singapore Plus Standards The Plus Standards are the respective additional standards that may be prescribed by the individual ASEAN jurisdictions where harmonisation is not yet possible due to their individual market practices, laws or regulation.

The Singapore Plus Standards are found in the Amendment Regulations, which introduce the new Seventeenth and Eighteenth Schedules into the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005. The above mentioned schedules contain particulars which must be included in a prospectus for an offer of shares or debentures which is an ASEAN Offering.

Distribution Rules and Timelines In addition to the Scheme, the ASEAN Capital Market Forum also agreed

29

News | regional update >>

upon more closely harmonised distribution rules for offerings and timelines for approval registration of the prospectuses. The approval time for registration of prospectuses in many ASEAN jurisdictions will be shortened substantially. It also ensures that investors in all jurisdictions where the offerings are made will have access to the same information at the same point in time.

The Scheme seeks to bring efficiency and cost savings to the issuers. By doing so, the Scheme aims to facilitate fund raising activities within ASEAN, as well as to enhance the visibility of ASEAN capital markets as an attractive investment destination for global investors.

For more information on the Scheme, please refer to Monetary Authority of Singapore’s website at www.mas.gov.sg.

Written by Mr Nicholas Chang and Ms Lee How Fen Mr Nicholas Chang Corporate Finance Executive Ph: (65) 6322-2236 | Fax: (65) 6534-0833 E-mail: nicholaschang@ l o o p a r t n e r s . c o m . s g and Ms Lee How Fen Foreign Counsel, Legal Associate (Corporate Practice) Ph: (65) 6322-2205 | Fax: (65) 6534-0833 E-mail: leehowfen@loopartners. com.sg Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907

Vietnam

Trading and distribution sectors in Vietnam On 1 January 2009, Vietnam throws open its door to foreign invested

30

enterprises (“FIE”) as the last limitations on foreign investor equity lapses in the sectors of trading (import/export) and distribution (commission agents, franchising, wholesale, and retailing).

The implementation legislation (Decree 23/2007/ND-CP implementing the Commercial Law (“Decree 23”), Circular 09/2007/TT-BTM guiding the implementation of Decree 23 (“Circular 09”), as amended by Decree 05/2008/ TT-BTM (“Circular 05”) stipulates the licenses required in these sectors and outlines the procedures necessary to obtain them.

The licensing procedures for import and distribution are separated. An FIE can conduct activities in both areas, but must register for each one separately.

An FIE importer that has not registered the relevant distribution activities must seek another entity to distribute its imported goods.

FIEs wishing to conduct import/ export activities without engaging in distribution are required to either obtain an investment certificate (for newly-established FIEs) or amend their current investment certificate/license to include import/export in their approved business lines.

To conduct distribution activities, FIEs are required to meet more stringent application procedures.

Newly-established FIEs must first obtain written approval from the Ministry of Industry and Trade before they can obtain an investment certificate. Existing FIEs must obtain a separate license in addition to their investment certificate/license. This license is referred to as a business license. For newly-established FIEs, the approved investment certificate will act concurrently as their business license.

Economic Needs Test For retail activity, setting up a chain of retail outlets should play the key role in forming the retail network. However, the licensing for retail outlet opening appears to be tightly controlled. For the purposes of retail activities, FIEs must apply for a business license for their first retail outlet. This application process is fairly straightforward. Each additional retail outlet, however, requires a new license and as part of that application must undergo what is

called the Economic Needs Test.

The Economic Needs Test (“ENT”), as currently constituted, comprises an administrative review of (i) the number of existing retail sales outlets in a particular geographic area, (ii) the market stability, (iii) the population density, and (iv) the relevant urban development scheme. Approvals for satisfaction of ENT are made by the relevant provincial People’s Committee, on a case-by-case basis.

Putting the ENT criteria into practice, these criteria would not be sufficiently concrete, but seem to be inviting more interpretation by the relevant State bodies. This might contravene to the country’s commitments on enhancing transparency for its legal system, and eventually make lawyers in these areas work harder, to pave the way for trading and distribution investors.

Written By Tran Thi Bich Ngoc, Associate Indochine Counsel Unit 4A2, 4th Floor, Han Nam Office Bldg.

65 Nguyen Du, District 1 Ho Chi Minh City, Vietnam (Tel) +848 3823 9640 (Fax) +848 3823 9641 ngoc.tran@indochinecounsel.com www.indochinecounsel.com

MALAYSIA

Mergers and Acquisition MAC Clauses Material adverse change (“MAC”) clauses have become increasingly prevalent in acquisition agreements since the global economic downturn.

In the context of mergers and acquisitions, MAC clauses typically allow a buyer to terminate an Asian Legal Business ISSUE 10.1

News | regional update >>

agreement prior to its completion and can also be used as leverage for re-negotiations. While MAC clauses appear to be similar to force majeure clauses, they are in fact distinct.

MAC clauses apply where there has been a fundamental change to the target company’s affairs, although the acquisition can still take effect.

Conversely, force majeure clauses encompass acts of God beyond the parties’ control which cause the subject matter of the agreement to be incapable of performance.

While MAC clauses are common in mergers and acquisition deals across the US and the UK, closer to home, the use of these clauses are still generally rare especially in Singapore, and Malaysia. The rarity of MAC clauses in Malaysia can be attributed to the fact that our economy has not been as adversely affected by the global economic crisis. However, a study conducted by Stamford Law in Singapore illustrated that there has been a surge in the inclusion of MAC

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clauses in Hong Kong where in 2007 it was used in about 60% of public merger and acquisition deals.

If successfully invoked, a MAC clause would result in the buyer walking out without fearing the repercussions of a wrongful repudiation and make the seller bear the risk of a material event which transpired before completion of a deal. The onus of proving a MAC is on the buyer, seeking to rely on the MAC clause as an exit option.

This onus is often difficult to discharge and the courts in other jurisdictions have indicated that a short term hiccup in earnings does not suffice to constitute a MAC. An event may only amount to a MAC when it is viewed as a long term threat to the prospects of the target company.

In conclusion, given the continuing uncertainty in the global and local commercial climate, it is likely MAC clauses will become more ubiquitous in local public mergers and acquisitions, especially in the context of private equity where interests are not

proprietarial, and the investor intends to exit within a shorter investment period.

Written by Brian Chia, Partner Wong & Partners Suite 21.01, Level 21 The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia Tel:+603 2298 7888 Fax:+603 2282 2669 brian.chia@wongpartners.com

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NEWS | news >>

K&L Gates Asia Practice

K

&L Gates, a global law firm with one of the largest international practices in Asia, offers clients seamless service provided by more than 70 legal professionals across five established offices in Singapore, Beijing, Hong Kong, Shanghai, and Taipei. The firm’s commitment to the Asia region began more than a decade ago with the opening of its Hong Kong office. K&L Gates actively represents both international and local clients including public and private companies, governments, and state-owned enterprises on their activities across Asia and abroad.

Lawyers in the firm’s five Asia offices have substantial experience representing international and local clients across the Asia region and throughout the Indian subcontinent. K&L Gates Asia lawyers offer full-service capabilities in the following key practice areas: • Foreign direct investment • Government relations • Corporate and securities • Private equity and alternative investment funds • Intellectual property • International compliance, tax, and trade • International arbitration, cross-border litigation, and alternative dispute resolution • Operational issues • Private wealth advisory • Real estate K&L Gates has established strategic locations in Asia, Europe, the United States, and the Middle East to better serve current and future clients of the firm.

The Singapore office offers clients full integration into the K&L Gates network of 1,800 lawyers in 33 offices across three continents.

K&L Gates Singapore The K&L Gates Singapore office anchors the firm’s growing presence in South East Asia, while serving the firm’s international and local clients, in addition to other clients based in South East Asia and South Asia in particular. The firm’s Singapore office includes teams of corporate and commercial lawyers as well as international arbitration and commercial disputes lawyers. These lawyers serve clients in a wide range of

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industries including aviation and shipping, banking and financial services, construction and infrastructure, commodities, power and energy, oil and gas, manufacturing, media, technology, and telecommunications.

The K&L Gates Singapore office also acts as a platform for the firm’s broader capabilities in the Asia-Pacific region, and the K&L Gates lawyers on the ground in Singapore have extensive experience in operating and handling transactions and disputes across the region.

handling complex cross-border disputes in the following industry sectors: • Banking, finance, and investment funds • Commodities, natural resources, and the international sale of goods and services • Construction, infrastructure, and civil/ marine engineering • Power and energy, with a particular emphasis on offshore oil and gas matters • Shipping and marine insurance • Bilateral investment treaties and foreign investment disputes

Corporate/Commercial, Mergers & Acquisitions, and Securities The K&L Gates Singapore corporate team led by partner Kevin Murphy advises, negotiates, and concludes complex transactions for a wide cross-section of both international and local clients in a broad array of industries.

The firm’s corporate lawyers work with international and local clients on matters in the major markets across Asia and abroad.

This work spans the complete spectrum of corporate transactions including: • Mergers and acquisitions • Venture capital and private equity investments • Corporate reorganizations, debt restructurings, and debt buybacks • International and U.S. public and private financings • Project financings • Joint ventures/strategic alliances • Capital markets and securities

Singapore One Raffles Quay, Level #19-01, North Tower Singapore, 048583 Tel: +65.6507.8100 Fax: +65.6507.8111

International Arbitration and Commercial Disputes The K&L Gates international arbitration and commercial disputes lawyers in Asia are led by Raja Bose and provide a broad range of dispute resolution capabilities to the clients of the firm in Asia including handling complex international commercial arbitrations, mediations, adjudications, and other forms of alternative dispute resolution. The team also provides domestic litigation supervision, management, and control building on over two decades of litigation experience across Asia. Also, the team serves as the Asian component of the firm’s regulatory, compliance, and FCPA investigation network.

The team has particular experience in Asian Legal Business ISSUE 10.1

Firm Profile

NEWS | news >>

K&L Gates

K&L GATES SINGAPORE CONTACTS Kevin J. Murphy | Partner, Singapore Tel +65.6507.8110 kevin.murphy@klgates.com Kevin Murphy has more than 20 years of experience advising public and private companies, governments and state-owned enterprises across the region on their activities in Asia and abroad. Kevin concentrates his practice on international transactions, investments and acquisitions in Asia, debt restructurings, and international and U.S. public and private financings. He regularly represents foreign investors and funds in connection with their investment activities in Asia as well as Asian companies on their international transactions.

Raja Bose | Partner, Singapore Tel +65.6507.8124 raja.bose@klgates.com Raja Bose leads the firm’s international arbitration practice in Asia. He concentrates his practice in international commercial arbitration and cross-border litigation with particular emphasis on oil and gas, marine construction and engineering, and trade and transport disputes. Raja has more than 16 years of experience in the practice of law. He is dual qualified in the UK and Singapore and has worked in both London as well as Singapore where he is currently based. In addition to his experience in cross-border multi-jurisdictional private commercial disputes, Raja has also been involved in a number of high profile investor/state disputes and investment treaty arbitrations. Raja has experience conducting international arbitrations with seats in Asia and Europe under a variety of trade association and international arbitration centre rules.

ADDITIONAL K&L GATES ASIA PRACTICE CONTACTS David K.Y. Tang | Managing Partner, Asia Tel +86.8518.8528 david.tang@klgates.com David is the Managing Partner, Asia for the firm and his law practice concentrates in the areas of foreign investment, cross-border financings, mergers and acquisitions, and real property related transactions. He has more than 25 years of transactional experience in the Greater China market. David was managing partner of Preston Gates & Ellis LLP from 1995–1999. He is based in the Seattle and Beijing offices and speaks Chinese. David is a member of the American Law Institute and included in Best Lawyers and International Who’s Who of Business Lawyers. He served on the Board of the Federal Reserve Bank of San Francisco from 2002–2008 and as its Chair from 2006–2008.

Clifford Ng | Administrative Partner, Asia Tel +852.2230.3558 clifford.ng@klgates.com Clifford is the Administrative Partner for K&L Gates’ offices in Beijing, Hong Kong, Shanghai and Singapore. Clifford provides strategic advice to many companies and their major shareholders. His mandates often involve investments in China, Hong Kong and South East Asia for North American and European clients, and for Asian clients in their investments in North America and Europe. Clifford’s clients are active in a broad spectrum of sectors from agriculture to media to technology. He also advises corporate and private clients in planning and structuring transactions to address corporate, employment, securities, succession and tax issues.

James Jeng-Yang Chen | Administrative Partner, Taipei Tel +886.2.2326.5155 james.chen@klgates.com James represents a broad range of clients, including multinational corporations, private equity firms and industrial companies based in Singapore, Indonesia, Taiwan, and China, in their cross-border mergers and acquisitions. He also represents issuers, borrowers, lenders and underwriters in a variety of corporate finance transactions. His experience includes public offerings and private placements of equity, debt, convertible and other securities, export credit facilities, bank loans, securitization of accounts receivable, trade financing and derivative transactions. James has vast experience in the People’s Republic of China, having represented issuers and underwriters in several IPO and B share listings in the PRC. www.legalbusinessonline.com

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FEATURE | watchlist >>

►► ALB Watchlist: Firms at a glance Firm name

Home jurisdiction

o. of offices N worldwide

Appleby

Multiple

11

Arendt & Medernach

Luxembourg

7

China

33*

Hwang, Mok & Park

Korea

2

Kensington Swan

New Zealand

3^

Khassawneh & Associates

UAE

4^^

Marks & Clerk

UK

20

Norton Rose

UK

30†

Shin & Kim

Korea

2

UK

8

Dacheng

Withers

**Singapore office a joint law venture with Central Chambers LLP ^Abu Dhabi office to open late 2009/early 2010 ^^ Riyadh office to open in early 2010 † From January 2010 Deacons Australia and its six offices will join the Norton Rose Group

►► Last year’s Watchlist: Firms at a glance Firm name

Home jurisdiction

o. of offices N worldwide

Bird & Bird

UK

20

Cains

Isle of Man

3

British Virgin Islands

5

Jin Mao Partners

China

2

Jisung Horizon

Korea

3

Lister Swartz**

Hong Kong

1

Harney Westwood & Reigels

Navin & Co

Singapore

1

Nishith Desai & Associates

India

3

Phoenix Legal

India

2

V&T Law Firm

China

3

As the industry enters the New Year with a renewed sense of optimism, ALB singles out ten firms that are set to have a bigger 2010 than most.

The reasons for including some firms, such as the newly merged Norton Rose or the legal leviathan that is Dacheng, are obvious. The other names on the list might be not as familiar, but they are equally capable of distinguishing themselves with their own unique brand and philosophy. Keep an eye on these ten firms throughout 2010

*Firms listed in alphabetical order **Operates in association with Edwards Angell Palmer & Dodge (EAPD)

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Asian Legal Business ISSUE 10.1

FEATURE | watchlist >>

• APPLEBY Quick statistics Total number of partners: 74 Total number of lawyers (excluding partners): 213 Number of offices: 11 Location of offices: Bahrain, Bermuda, British Virgin Islands, Cayman Islands, Hong Kong, Isle of Man, Jersey, London, Mauritius, Seychelles, Zurich

The world’s largest offshore law firm is set to become even bigger in 2010

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Frances Woo

009 has been a busy year for Appleby by every measure: A merger, two new offices and an expansion of existing ones meant that the firm ended 2009 as the largest offshore law firm in the world by headcount. In June, the firm opened new offices in the niche, yet fastgrowing, Seychelles and Bahrain markets and in July became the first international law firm in Mauritius to obtain approval to practice both local and international law for the office it had opened in early 2007.

Arguably its crowning achievement was its merger with Isle of Man firm Dickinson Cruickshank. The merger, which was finalised in October, made Appleby only the second international offshore law firm to have a presence in what is widely known as a hub for investment into India (the other firm is Cains) and rounded off its already impressive suite of offshore jurisdictions — for the time being, at least. But further growth is on the cards for this aggressive offshore player. And while the firm has said that establishing a presence in Guernsey will be its number one growth objective for 2010, the bigger question is whether it will look to penetrate the lucrative South American market, like some of its fellow offshore firms.

“Appleby will be continuing to carefully watch developments in Asia, particularly Shanghai, Beijing and Singapore. We are not committing to new offices in the region, at this stage, but will reconsider that as the year wears on… Globally, we have one more major offshore jurisdiction in our sights, Guernsey, but we will keep our eyes open for new areas of business or new locations that our clients may benefit from,” said Peter Bubenzer, group managing partner.

• ARENDT & MEDERNACH Quick statistics Total number of partners: 30 Total number of lawyers (excluding partners): 240 Number of offices: 6 Location of offices: Luxembourg, Brussels, Dubai, Hong Kong, London, New York

A niche – yet in demand focus – make this Luxembourg firm one to watch in 2010

A

Guy Harles

www.legalbusinessonline.com

fter opening an office in Hong Kong in 2009, Arendt & Medernach became the first law firm from Luxembourg to have an office in Asia and the only to provide advice on its laws. Speaking to ALB earlier this year, Guy Harles, a founding partner of the firm and head of international development and strategy, said that the move was hastened by the increasing volumes of trade between Luxembourg and Greater China, especially in the areas of public and private funds and direct investment. “Hong Kong, due to its unique position as one of the global leading financial centres, is a centre that cannot be ignored in the global strategy of financial institutions and large and mid-sized companies of the industrial sector. Our clients in the region seek information on the Luxembourg financial centre, which helps them assist their contacts in the greater China region,” he said. The fact that Luxembourg is the world’s second largest investment fund centre and the second most active country in terms of concentration of financial and banking activity will ensure that Arendt & Medernach’s Hong Kong office will be busy in the year ahead, making it one to watch in 2010.

“As outward investment funds from Asia are likely to increase fairly dramatically over the short term, and given the changes and reforms that are being implemented in multiple jurisdictions, the need for up to date advice and expertise is likely to grow. We see this strategic move of ours as timely,” said the firm’s Claude Niedner.

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FEATURE | watchlist >>

• DACHENG Quick statistics Total number of partners: 383 Total number of lawyers (excluding partners): 893 Number of offices: 28

How much bigger can Asia’s biggest firm become?

2

009 was a momentous year for the firm one lawyer famously dubbed the ‘Baker & McKenzie’ of mainland China and Asia’s largest law firm. Dacheng not only opened 13 offices on the mainland in 2009, but also further strengthened its international network.

It sealed a joint law venture with Singapore’s Central Chambers which subsequently yielded a best-friends relationship with India’s Vaish Associates Advocates and an alliance with Malaysian firm Chris Chew & Co; opened an office in Taiwan; became the only Asian member of the World Service Group (WSG); and announced strategic alliances with Israel’s Shibolet & Co and US firm Matthews Wilson and Hunter out of which it has gained a Los Angeles office. It’s the firm’s commitment to further expansion in terms of both coverage and headcount that make it one to watch in 2010. We eagerly await the next installment in Dacheng’s already riveting growth narrative and ask what market is next for this aggressive Chinese law firm.

Watch for Dacheng to swallow niche players in the domestic PRC market and to open in the Middle East in the year ahead.

Wang Zhongde

• HWANG MOK PARK Quick statistics Total number of partners: 46 Total number of lawyers (excluding partners): 65 Number of offices: 4 Location of offices: Seoul, Gangwon-do, Gyeonggi-do, Shanghai

A merger, a mainland China presence and some big deals mean this firm has the momentum to shake the Korean legal services hierarchy in 2010

H

Park Sang-Il

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wang Mok Park may have been flying under the radar in a mega-firm dominated Korean legal market, but its 2009 merger with Hanseung, a boutique litigation outfit, and its work on some high-profile M&A deals such as eBay’s acquisition of Gmarket has well and truly catapulted it into the ranks of the country’s largest firms. Its merger will not only elevate it into the Top 10 law firms by size in Korea but gives it the size needed to move even further up the increasingly fluid legal market hierarchy. “Our merger with Hansueng earlier this year took us to 120 lawyers, and in Korea, 100 has typically been the critical point for achieving good specialty practices,” declared one of the firm’s managing partners, Park Sang Il, early this year.

Critical mass wasn’t the only thing that the firm gained out of the merger; it also inherited a Shanghai office, which although only in the early stages of its development is already being seen as crucial to the firm’s broader growth strategies. “So far the office largely assists Korean businesses going into China,” he said. “But in the long term when Chinese companies are seeking to do business in Korea, we’d see the Shanghai office as a good foothold for that. We’ll be developing a strategy going forward on how to achieve that growth.”

Asian Legal Business ISSUE 10.1

FEATURE | watchlist >>

• KENSINGTON SWAN Quick statistics Total number of partners: 40 Total number of lawyers (excluding partners): 110 Number of offices: 3 Location of offices: Abu Dhabi, Auckland, Wellington

Kensington Swan is breaking new ground with its office in Abu Dhabi – blazing a trail that many firms in Australia and New Zealand will be looking to follow in the future

K

ensington Swan has been building relationships in the Gulf for over five years, but in December it took the plunge and opened an office in Abu Dhabi. The office caters for locally based companies, New Zealand and Australian companies looking to set up business in the Gulf region or looking to attract direct foreign investment out of the Gulf region, and the government sector, which has long been a Kensington Swan specialty. It’s an intriguing move, particularly coming from a New Zealand firm. It is the Australian firms which are usually in geographical expansion mode, yet Australians have generally eschewed the Gulf for proximity reasons. Colin Biggers & Paisley is believed to be the only other Australian or New Zealand firm to have a partner permanently on the ground in the Gulf, and that firm also has a joint venture operation in Dubai with local firm Lutfi & Co. The Kensington Swan model, based on the competitive advantage of an NZ-dollar cost base, and the capacity to provide quality advice in areas traditionally neglected by global firms, is one to watch.

Quentin Lowcay

• KHASAWNEH & ASSOCIATES Quick statistics Total number of partners: 8 Total number of lawyers (excluding partners): 22 Number of offices: 3 Location of offices: Amman, Baghdad, Dubai, Riyadh

2009 was a year of phenomenal growth for Middle East outfit Khasawneh & Associates but how will they keep the momentum going?

K Nasser Ali Khasawneh

www.legalbusinessonline.com

hasawneh & Associates’ regional coverage coupled with its equally wide practice offering set it apart from other ‘domestic firms’ in the Middle East and make it one Gulf firm to watch in 2010. The firm, through its membership of KSLG, a regional association of firms across the Gulf, boasts offices in Amman, Baghdad and Dubai and says that further expansion is imminent. “The firm’s regional expansion will proceed in a significant manner in the coming year,” said Nasser Ali Khasawneh, the firm’s founding partner. “On January 1, KSLG will announce the launch of its office in Saudi Arabia, in partnership with the law firm of Mohammed Al-Dhabaan & Partners, a leading firm in the country with a proven track record in various sectors. KSLG will also be opening an office in another GCC country by the summer of 2010,” he said.

Despite a financial crisis which has seriously impaired the growth strategies of many firms in the region, Khasawneh & Associates has ploughed on, both increasing its headcount by 30% in 2009 and outlining a commitment to delivering more of the same in the year ahead. Watch for the firm, which already has enviable regional outside counsel relationships with companies such as Microsoft and Philip Morris, to continue to lure blue-chip clients away from the larger players in the Middle East.

“Our firm is a regional firm that employs leading lawyers from the region and around the world, and is committed to international standards of excellence. We aim to provide top of the line legal services to our clients, and maintain close involvement with the client at the partner level. We are also engaging in an ambitious regional expansion plan through KSLG. It is this combination of a region-wide firm with international standards of excellence, as well as a growing capacity to cover the work throughout the region, that sets us apart from many of our competitors,” said Nasser Ali Khasawneh

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FEATURE | watchlist >>

• MARKS & CLERK Quick statistics Total number of partners: 91 Total number of lawyers (excluding partners): 230 Number of offices: 19

What lies ahead for one of Asia’s market leading IP firms?

A

new Malaysian office, a high-profile lateral hire in the form of Gerard Samuel and a commitment to further expansion make specialist IP firm Marks & Clerk one to watch in 2010 — although the firm is a little circumspect when it comes to this tag. “We don’t aim to make headlines,” said the firm’s chairman Keith Hodkinson. “We focus on going about our business quietly and delivering the best possible client care.”

Hodkinson’s preference for an understated approach aside, Marks & Clerk is set for a bigger 2010 than most others. Its presence in KL means that the firm now has one of the most extensive networks of any specialist IP firm in a region which is becoming increasingly important to the growth strategies of IP law firms (it has offices in Singapore, Hong Kong, Beijing and Shanghai). Expect the firm to dip into local employment markets in the region to reinforce its Asia offices. “We are actively looking at other Asian markets and looking to pick up talent from the firms who have fared less well in the recession,” said Hodkinson. “Our business in Asia continues to grow and it grew significantly through the recession. By offering a quality value proposition, the businesses who have a medium-term view have stuck with us. Long-term values survive short term shocks.”

Graeme Hall

• NORTON ROSE Quick statistics Total number of partners: 190* Total number of lawyers (excluding partners): 502* Number of offices: 30 *Includes lawyers from Deacons Australia and Norton Rose’s Middle East offices

Norton Rose’s acquisition of Deacons Australia not only created headlines in 2009, but will continue to do so in 2010 … perhaps for different reasons

A

Peter Martyr

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lthough Norton Rose’s announcement that it would merge with Deacons Australia from January this year stole a fair share of headlines in 2009, there is more than enough to suggest that the combined firm— which will become one of, if not the, largest international law firm in the region— will continue to be to one to watch.

For one, the firm has outlined its commitment to further expansion, both in terms of its presence in the region and its core areas of practice. “Asia Pacific is a strategically important market for Norton Rose Group and we intend to continue to expand our business and improve the depth and breadth of our service to clients in the region, focusing on our key strengths of financial institutions, energy, infrastructure and commodities, transport, and technology,” said the firm’s group chief executive, Peter Martyr. Expect the firm to look to strengthen its manpower in these “headlight” areas in the year ahead.

A few headlines may also be generated by the logistics of the union itself. Apart from the challenges associated with obtaining full financial integration, which Australia managing partner Don Boyd says is about “18 to 24 months away,” the transition of the merged entity to limited liability status is also set to throw up hurdles of its own. Either way, the Norton Rose Group will be one to keep an eye on in 2010. “The financial crisis has not affected our development plans materially. We instigated some strategies such as our staff ‘flex’ work program which has given us flexibility to cater for the downturn without adversely impacting business. It has been well received by staff and management across the firm. We are committed to growth and development for the long term and we will stay focused on what we do best,” said Peter Martyr.

Asian Legal Business ISSUE 10.1

Firm Profile

Khasawneh & Associates

Solid Springboard For Regional Expansion

K

Khasawneh & Associates Legal Consultants PO Box 74980, Al Moosa Tower 1, Sheikh Zayed Road Dubai, United Arab Emirates Telephone: +971 (0) 4332 6550 Mobile: +971 (0) 506553198 Fax: +971 (0) 4332 6433 Email: admin@nklc.ae

www.legalbusinessonline.com

hasawneh & Associates , a law firm based in Dubai, has made significant strides since its founding in 2003. The firm has sustained an excellent level of growth year on year. The firm represents a diverse group of clients, ranging from large international and regional corporations to small and medium businesses and investors.

Its roster of clients includes many of the world’s leading multinationals, in sectors including information technology, consumer products, finance, construction and real estate, as well as several of the region’s leading family groups.

The vision of the firm centers on the need to provide top of the line legal services, and maintaining partner involvement with the client at all times. The firm is also focused on providing regional coverage for its clients through its alliances and network of correspondents.

Khasawneh & Associates recently entered into a formal agreement with the Sanad Law Group to form KSLG, a regional Middle Eastern law firm that spans the UAE, Jordan and Iraq. In addition to providing legal services in the United Arab Emirates, Jordan and Iraq, KSLG has an excellent network of correspondent firms that are able to provide legal advice and representation across the Middle East as well as in Europe and the USA. In line with the firm’s plans for expansion in the region, KSLG will also be opening an office in Riyadh on January 1, 2010. The Riyadh office will be in partnership with the Law Firm of Mohammed Al-Dhabaan & Partners, a leading firm in Saudi Arabia that has a proven track record in various sectors including intellectual property, litigation, corporate practice and real estate.

Furthermore, the firm has definitive plans to open an office in another GCC country by the summer of 2010.

Khasawneh & Associates provide legal consultancy services in various areas of law. The particular strengths of the firm include intellectual property, commercial and corporate law, information technology, media law, labour law, and arbitration.

The firm employs a diverse group of lawyers with education, experience and qualifications from various institutions around the world, including the Middle East, Europe, America and Asia-Pacific.

The team’s linguistic skills cover the Arabic, English, French, Armenian, Spanish and German languages. The firm’s team includes a number of lawyers who had earlier served as in-house lawyers in major American and European multinationals. This experience is particularly important as it provides the firm with greater understanding of client’s needs and issues.

The firm’s Managing Partner and founder is Nasser Ali Khasawneh. Before founding Khasawneh & Associates, Nasser worked as an in-house Corporate Attorney for Microsoft Corporation for four years. Prior to that, he worked as an in-house Legal Counsel for Procter and Gamble, and before that, worked for the United Nations Compensation Commission which was set up to adjudicate the compensation claims arising out of Iraq’s invasion of Kuwait in 1991. Nasser was Vice President of the Business Software Alliance, the leading international association in the field of software rights, from 1999 to 2003 and has been a Domain Name Panelist with the WIPO Arbitration and Mediation Centre in Geneva since 2003. Nasser has been a guest lecturer at a large number of conferences in the region, covering areas such as arbitration and intellectual property.

More details about the firm are available on the following websites: www.nklc.ae or www.kslg.net

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FEATURE | watchlist >>

• SHIN & KIM Quick statistics Total number of partners: 60 Total number of lawyers (excluding partners): 155 Number of offices: 2 Location of offices: Beijing, Seoul

A merger involving one of the ‘big-four’ could create a mega-firm

S

hin & Kim’s admission that it is on the look out for a merger partner in 2010 means it truly merits inclusion on our Watchlist. A slowdown of work in its core areas of practice has hastened the need for diversification, and the firm is seeking out a synergy to knit with its market-leading banking & finance, securities and M&A practices and has highlighted litigation, IP and health and pharmaceuticals as key areas in any merger. “We are currently seriously thinking about an acquisition or a merger – it’s one of the growth objectives we have for 2010,” a spokesperson for the firm said. And, it’s the very real possibility of a mega-merger that is exciting. “We can’t rule anyone out at this stage,” the spokesperson said. But mergers aren’t the only thing to look for from Shin & Kim in 2010. It has, like many of its fellow Korean law firms, established an international dispute resolution group with the hire of former Shearman & Sterling lawyer Benjamin Hughes as its co-chair and will no doubt be looking to bring its offering in this area to critical mass in the year ahead. In addition, the firm has also said that it will open its second PRC office (in Shanghai) in March or April this year in addition to seeking out alliance partners in emerging markets such as Vietnam, Central Asia and Russia.

Kim Doo-Sik

• WITHERS Quick statistics Total number of partners: 105 Total number of lawyers (excluding partners): 360 Number of offices: 8 Location of offices: BVI, Connecticut (Greenwich & New Haven), Geneva, Hong Kong, London, Milan, New York

How will the firm that has a knack for ‘breaking new ground’ in the legal market keep up the trend in 2010?

2

Joe Field

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009 was a year of firsts for Withers. Not only did it set up its first Asia office in Hong Kong but, in an unprecedented move, it became the first onshore law firm to enter the offshore legal market when it established a presence in the BVI. On top of this, it has seen growth in its Asian client base, ostensibly made up of high net worth individuals such as entrepreneurs, family offices, CEOs, private banks, entertainers and professional sportsmen. But even though the world’s wealthy weren’t immune from the downturn, Withers kept busy, helping restructure around £20bn of client wealth in the last year alone.

But just how will it keep the momentum going in 2010? Apart from the very real possibility of opening in Singapore, the firm will be looking to partner-level lateral hires to grow its practice in the region and will be pursuing some innovative strategic directions. “In 2010 we intend to create the world’s first international family practice, providing clients with advice on pre-nups, divorce and dynastic trust planning,” said the firm’s newly installed Asia senior partner, Joe Field. “This is especially critical where family interests are situated internationally.”

“The globalisation of private wealth requires expert cross border and cross disciplinary legal advice, which from a private-client perspective is hard to find in Asia. Adding to this the continued political drive for increased tax sharing of information between governments, and the continued erosion of privacy for wealthy people, suggests continued growth for the services we provide,” he said.

Asian Legal Business ISSUE 10.1

Global citizens need global advice More and more successful Asian families and their Family Offices are living, working and investing in multiple jurisdictions. As they do so their lives and related legal issues are becoming increasingly complex.

This complexity requires a clear understanding of how different international tax and regulatory regimes interact.

We can help ensure your client’s wealth is structured in the most tax efficient and secure manner, especially in the event of divorce or death.

For more information email wealth@withersworldwide.com

The Law Firm for Successful People

NEWS | news >>

Bastian Teja Partnership The Firm

B

BT PARTNERSHIP BRI Tower II, 19th Floor Jl. Jend Sudirman No. 45 Jakarta 10210, Indonesia Tel. 62 21 5700 777 Fax. 62 21 5700 877 Email: bastian@btplawfirm.com Web: www.btpartnership.com

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ASTIAN TEJA PARTNERSHIP (“BT Partnership”) is an Indonesia law firm with international orientation and network, dedicated and specialized in producing dynamic result-oriented legal services. BT Partnership was established by Rahmat Bastian and Satrya Wijaya Teja as a mixture of qualified prominent banking & finance litigation lawyer and prominent banking & finance corporate lawyer. BT Partnership lawyers are always committed to handle and solve every legal matter and commercial issue pertaining to our client’s business and legal needs. Effective representation and comprehensive advices are our significant strength to ensure that the highest standards of our client’s expectation are always met. BT Partnership lawyers are fully licensed to ensure effective representation of our clients within and outside the court of law.

The founding partners of BT Partnership directly handled and were involved in, among others, the first bankruptcy litigation with favorable judgment rendered by the Indonesian Supreme Court, the first until the seventh bankruptcy litigation against Indonesian State-Owned Enterprises, the first bankruptcy litigation against insurance company, the pioneer in setting up powerful precedents in favor of foreign lenders in the Commercial Court, the biggest swap and derivative litigation against Indonesia public foreign-exchange bank, the largest global acquisition and take over of a major group company, the first Indonesia debt restructuring and corporate reorganization , the first forensic and assets tracing for the Indonesia government, the first and second successful debt-to-equity conversion of the Indonesian chemical companies with the Indonesia Bank Restructuring Agency (IBRA), the first batch of IBRA’s corporate assets and loan sale, the biggest debt restructuring in term of value of an Indonesia public company as quoted in the International Financial Law Review, the largest acquisition of mining interests, numerous debt restructurings and corporate

reorganizations of a number of Indonesia commercial banks and numerous sale and purchase of bank asset credits.

PRACTICE AREA There are three major areas of practice widely recognized by BT Partnership’s clients, namely: Banking & Finance, Capital Market & Commercial, and Tax & Investment. In each of those areas, BT Partnership is qualified to provide clients with extensive corporate works such as consolidated or group due diligence, corporate reorganization, debt restructuring and structured finance products including the related corporate litigation works such as civil and commercial litigation, arbitration and insolvency proceedings.

The Banking & Finance department of BT Partnership advises public or private Indonesian and foreign companies, mostly banking and financial institutions for their saving and lending transactions, investment, leasing, swap and derivative transactions, corporate reorganization, financial product restructuring and financial engineering transactions. The Capital Market & Commercial department of BT Partnership has extensive and full range of services from the issuance of securities and their ancillary rights such as right issues, option or warrant, securities trading, and governmental supervisory agency related matters up to the structuring of corporate finance transactions.

This department is qualified to handle any Capital Market transactions and partners of our firm are authorized Capital Market legal consultants by virtue of the Decree of Chairman of Indonesian Capital Market Supervisory Board including in relation to the Capital Market, stock exchanges, shareholders and securities litigation works.

As both founding partners of BT Partnership also have expertise and experience in tax & investment related works, we are also qualified to provide our clients with comprehensive tax advice and representation in dealing with various tax issues, within and outside of the tax office or tax court, and to successfully certain any inward and outward investment projects, involving certain Asian Legal Business ISSUE 10.1

Firm Profile

NEWS | news >>

BT Partnership

attractive offshore jurisdiction, launched by or towards our client.

BT Partnership in an Indonesia law firm for customized and sophisticated niche of works as follows: 1. 1Banking related matters, structured finance and financial engineering transaction; 2. Corporate finance, project finance and security financing transactions, 3. Corporate reorganization and financial product restructuring; 4. Merger & acquisition, leveraged buy-out, strategic alliance and franchising; 5. Debts, Notes, Bonds issuance and any other securities sale and purchase;

6. Capital Markets, money markets and Commodity markets, including its derivative products; 7. Foreign and domestic investment including joint venture, BOT, BOO or BOLT scheme, venture capital and licensing investments; 8. Commercial and international trade including competition, anti monopoly and anti dumping; 9. Mining, Oil and Gas industries; 10. Taxation (including Treaties and Off-shore Jurisdictions), Custom and Trade related matters; 11. Insurance, reinsurance and pension fund investments; and

12. Criminal and commercial litigation, arbitration and insolvency proceeding.

CORRESPONDENCE OFFICES Through informal association that the firm had established with other major law firms around the world, BT Partnership is equipped to provide legal services associated with cross-border transactions in other jurisdictions including Barbados, Brazil, Hong Kong, India, People Republic of China, Singapore, Thailand, Taiwan, Guam, Panama, Korea, Malaysia, Philippines, Australia, Canada, United States of America, United Kingdom, Switzerland, Germany and other European countries.

BT Partnership BT Partnership is a dynamic and results-oriented law firm specialised in corporate-financial restructuring and litigation practices. The firm has full-length and detailed of experience in safeguarding multinational clients from complex legal issues, including M&A, FDI, funds and structured finance transactions. In 2007, the firm was awarded as Dispute Resolution Firm of the Year and further, Employers of Choice for Indonesia jurisdiction, while its partner has been inaugurated as one of the Asia Hot Lawyers of the Year - 2008.

Supported by well-educated and well trained lawyers, we provide a full range of commercial legal services and are able to combine the best resolution of skill and experience to guide local and international clients through the rapid changes in Indonesia’s economy, legal system, political and regulatory environment. Moreover, regulations particularly in banking, bankruptcy, tax, capital markets, and foreign investment continue to shift and fluctuate, demanding the sophisticate and specialized legal and business-consulting, provided by our firm.

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BT PARTNERSHIP BRI Tower II, 19th Floor Jl. Jend. Sudirman No.45 Jakarta 10210, Indonesia Tel. 62 21 5700 777 Fax. 62 21 5700 877 Email: bastian@btplawfirm.com Web: www.btpartnership.com

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FEATURE | 2010 predictions >>

The year ahead Where are the key markets and key sectors heading, and what can law firms expect 2010 to deliver? A panel of legal industry pundits predict Tiger-Year trends and provide a guide to the opportunities and challenges that lie ahead

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L

awyers often go into their shell when it comes to crystal-ball gazing, especially in emerging Asian markets where rapidly changing legal and economic landscapes make accurate predictions all the more difficult.

Nevertheless, here a panel of industry leaders has come together from jurisdictions across the Asia-Pacific to give their views on the pipeline issues and how they are likely to affect the complexity of legal markets across the region in 2010.

The result is an engaging – and opinionated – look at the world’s most exciting and diverse legal markets.

Current issues include the effect of more competition law in India, what a

general election will mean for lawyers in the Philippines, and the challenges facing in-house lawyers across the region, along with enforcement issues and company law changes in the Gulf and possible legal market liberalisation in a number of jurisdictions.

This year may well be a year of economic recovery for the region, but it is still guaranteed to generate its fair share of headlines. Who, for example, would bet against other international firms following the lead of Hogan & Hartson and Lovells?

Certainly, the following pages will provoke healthy discussion among peers.

Regardless of the results, ALB wishes all law firms and in-house teams across Asia-Pacific success in the coming year.

Asian Legal Business ISSUE 10.1

FEATURE | 2010 predictions >>

People’s Republic of China Adam Li, Jun He

• Firms that branched out into emerging areas of practice (IP, AML and labour law) already started reaping rewards towards the end of a difficult 2009 • Investment in and commitment to new areas will be the keys to success for law firms in 2010

F

ocus in the legal services market has shifted: traditional FDI, M&A and even venture capital businesses have significantly shrunk in volumes, size and fees. However, law firms that have prepared themselves for non-traditional businesses have reaped the opportunities.

These firms include those that specialised in IP, anti-monopoly law, labour law, tax and trade.

While more experience can still be transplanted into China’s legal practices, the difference between the domestic market and other markets means having different focuses. For example, while Chapter 11 for bankruptcy law could be

good practice in the US, it may not be the most appealing business in China.

On the other hand, China’s legal services market is diverse and ranges across many different provinces. The major challenges facing practitioners in China are institutionalisation and specialisation. While the Chinese market is one that requires a lot of investment, the vast majority of PRC firms are not organised as true partnerships and lack support for new market penetration.

Law firms should capitalise on the bounceback which will be seen in market conditions in 2010 to introduce better talent and invest in new areas.

HONG KONG Lindsay Esler, Deacons

• GFC highlighted need for diversified practices and strong dispute resolution capabilities • International law firms will have to differentiate to set themselves apart

2

009 was a year of decidedly mixed fortunes for law firms in Hong Kong. The SARS outbreak five years earlier in 2003 resulted in the closure of smaller or niche practices by many international firms and a subsequent strategic focus on a narrow range of practice areas, at the time considered more profitable.

Now the GFC has demonstrated the benefits of maintaining a diverse practice – in particular the importance of maintaining strong litigation capabilities.

Firms that were poorly diversified in terms of their client base and practice areas suffered disproportionately in the downturn to those who were prepared.

Hong Kong is evolving into a market overflowing with foreign firms, where

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being a locally-based business with a broad-based practice has become an extraordinary status for a law firm.

In 2010 the challenge will be for US and UK-based firms to separate themselves from their competitors, in a market which is increasingly saturated with firms focusing on the same range of practice areas. Due to increased competition, fee pressures will naturally increase in those practice areas where foreign-based firms have clustered.

Maintaining morale and recruitment will likely prove more difficult in future for those who have let staff go. Law firms that had been reducing their client base for strategic or conflict reasons will find themselves more reliant upon (and therefore vulnerable to) a smaller base of clients.

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FEATURE | 2010 predictions >>

INDIA

Amarchand & Mangaldas & Suresh A Shroff & Co

• Competition laws and merger controls to challenge practitioners • All large M&A deals will need approval from competition watchdog; will delay project timetables and increase transaction costs

O

n 16 May 2009 the Government of India made effective the substantive provisions (Ss 3 & 4) of the Competition Act 2002 (The Act). These provisions dealt with the prohibition of anti-competitive agreements (including cartels) and abuse of dominance, thus changing the way in which business was to be conducted in India. Provisions relating to Combination Regulations (sS 5 & 6) are yet to be notified, though expected soon.

Once enforced, all large M&A deals – domestic, cross-border and totally offshore – with an India nexus will be required to seek mandatory prior approval of the Competition Commission of India (CCI).

The approval is based on certain asset/

turnover thresholds prescribed and is subject to a suspensory waiting period of at least 210 days. The CCI may stay, reverse or modify a combination if it is seen as causing ‘appreciable adverse effect’ on competition.

The Combination Regulations are expected to include detailed provisions in relation to transactions that are exempt from per-merger filing (for example, de minimis rules, local nexus asset/turnover thresholds), fast-track approval, long and short form filing process and others.

However, some concerns have been raised that the introduction of a mandatory merger control regime in India may lead to transaction delays, inter-regulatory jurisdictional conflicts and increased transaction costs.

“Asian Legal Business has done a great job covering local news, deals, and general trends in the legal market in Asia” Partner Minter Ellison Asian Legal Business is Asia’s leading legal magazine. Published from three regional centres, each issue is packed with news, hard hitting analysis and investigative journalism. Regional editors provide up to the minute legal and regulatory updates, while a team of dedicated journalists provide in-depth analysis of all the issues facing lawyers and in-house counsel throughout the region.

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All subscriptions will not be fulfilled until the subscription fee is paid in full.

Asian Legal Business ISSUE 10.1

FEATURE | 2010 predictions >>

JAPAN

Masanori Sato, Mori Hamada & Matsumoto

• Debt finance and real estate markets are struggling yet strategic M&A is thriving • Japan may face a second downturn • Challenging year ahead for law firms during which new strategies and diversification will be needed

A

s predicted last year, debt finance and leveraged buyouts/investments were inactive, although equity finance by blue-chip Japanese companies surged despite the economy. In contrast, bankruptcy and reorganisation matters continued to increase. Many real estate developers were unable to weather the storm, and the “Business Revitalisation ADR” procedure, a recently-enacted out-of-court reorganisation process was utilised by many struggling companies.

Strategic investment and M&A activities stabilised, and were seen in deals such as the capital and business alliance between Sanyo Electronics and Panasonic and the consolidation of Sumitomo Trust and Chuo Mitsui Trust. Many M&A

transactions resulted from attempts to restructure the businesses of struggling foreign financial institutions (for example capital injections by Mitsubishi-Tokyo UFJ Group to Morgan Stanley, sales by Citigroup of Nikko Cordial and Nikko Asset Management). Japan also saw the first case of a merger between J-REITs. While there have been some legislative and regulatory developments such as amendments to Japanese securities regulations, changes were not as notable compared to legislative and regulatory changes seen in recent years. Having said that, in the context of M&A activities involving listed companies (for example MBO, new issue of stocks to third parties), the Tokyo Stock Exchange has introduced several new rules.

UNITED ARAB EMIRATES

Husam Hourani, managing partner, Al Tamimi & Co

• Increased focus on bankruptcy procedures in the UAE; enforcement remains a concern • Less focus on using foreign law for local deals a challenge for international firms • Law firms to diversify in 2010, reduce dependence on handful of major clients and develop dispute resolution capabilities

T

he lowered emphasis on transactional work in 2009 affected many law firms. Local firms were less affected by the downturn as their focus remained on assisting clients in understanding the complexities of doing business in the UAE, along with the UAE legal system generally.

Areas such as employment law, compliance, litigation and arbitration were particularly active – although other areas (banking & finance, IP and shipping) were also kept busy.

There will be more emphasis on ensuring that legal obligations are enforceable in the jurisdiction where the assets are located, including choice of UAE law for purely domestic transactions and security. An increase in due diligence is expected, including a higher focus on enforcement and bankruptcy procedures

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in the UAE. Under UAE law, firms will take a closer interest in the proposed amendments to the Commercial Companies Law as well as changes in the interpretation of the Commercial Agencies Law. Corporate governance is coming under scrutiny: also, watch how proposed changes to the collective investment regime will be handled under DIFC laws and regulations.

Changes to the listing requirements of NASDAQ Dubai may also happen. Many law firms need to better understand how UAE law affects the advice they give to multinational clients doing business in the region. Multinational clients will be less inclined to accept heavily qualified legal opinions without a clear path to enforcement, if such action subsequently proves to be necessary.

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FEATURE | 2010 predictions >>

PHILIPPINES

Jose Hofileña, partner, Sycip Salazar, Hernandez & Gatmaitan • Domestic M&A keeps firms afloat in 2009 • Impending 2010 general election may see clients put projects on hold • Competition between local law firms to increase; marketing efforts will be stepped up

A

lthough international transactions may have slowed, the domestic M&A market saw a number of major acquisitions during 2009 that buoyed the legal services sector. The impact of the GFC was probably adversely felt by external counsel engaged in finance, securities and regulatory work, as corporate clients strove to manage their legal costs. As clients do more in-house, as well as bidding out legal work in order to procure the lowest capped fee quotes, the legal services market has had to adjust to a more competitive environment.

Looking ahead, 2010 is an election year in the Philippines. The country will have a new president and the composition of congress will also change. Although it is not anticipated that fundamental

economic and free-market policies will change, businesses typically take a waitand-see stance with respect to the results of the elections before embarking on new business and finance projects.

Improvements in the economy are anticipated to foster an even more competitive legal environment in the country. As such, law firms must heighten their own marketing efforts.

The market may also drive firms to revisit and adjust their billing policies – given that while corporate clients will likely seek out quality firms, reasonable rates may just be as important a yardstick in selecting external counsel. Moreover, the legal services sector will move towards developing further areas of specialisation in order to keep in step with a possibly more sophisticated business environment.

SINGAPORE

Loo Choon Chiaw, partner, Loo & Partners

• Uncertainty is the only certainty as law firms enter 2010 • Expected increases in operational costs mean firms must respond prudently • Demand for specialised legal services such as IP will increase, insolvency & restructuring work will decrease

U

ncertainty would appear to be the only certainty in the ever-changing global economic and financial climate as we enter 2010. Yet barring unforeseen circumstances, including a worsening of the global financial market, Singapore should be on a steady path of recovery.

The recent forecast by the Ministry of Trade and Industry indicates 3-5% economic growth. The benchmark Straits Times index has risen to 2,791 points in December, in contrast with its mere 1,800 points when 2009 predictions were penned in this column last year.

Most law firms will need time to build up their pipeline of cases and will take a

48

cautious approach. Salary increases (even in deserving cases) and rise in office rentals will be contained and the overall business costs of operating a law firm will be manageable. There will be very little justification for law firms to increase their billing rate and recruitment drives from both the local and foreign law firms will be slow. However, specialised legal services including IPO, M&A and corporate finance and corporate governance and compliance work will pick up steadily. Arbitration work will also increase with strong support from the government. While corporate insolvency & restructuring work will dwindle, IP business will increase.

Asian Legal Business ISSUE 10.1

FEATURE | 2010 predictions >>

TAIWAN

Ken-Ying Tseng, partner, Lee and Li

• Taiwan economy to recover quickly with deals to return and few bankruptcies expected • Law firms need to offer clients more specialisation and value-added services to hold on to work • Chinese investment in Taiwan companies to take off, keeping lawyers busy

W

hile we have seen a drop in caseloads and an increase in requests for discounts, a gradual economic recovery has been visible since Q3 2009. The size of the largest M&A deal for this year (US$1.7bn Taiwan Mobile/Eastern Multimedia) is almost twice the size of the largest deal seen in 2008 (US$862m Dragon Steel/China Steel). Bankruptcy cases did not rise at all and the anticipated redundancy cases peaked in Q2 2009.

Nonetheless, the environment remains a challenge for law practices. Clients

are tightening their budgets, so law firms need to demonstrate strong skills in specialised fields and provide valueadded services to maintain or attract clients. New practice areas and business focus is also developing.

In 2010, the IPOs of foreign companies on the Taiwan stock exchange and M&As and restructuring of financial institutions will continue to be a leading trend. It is expected that the Taiwan government will continue to liberalise the legal barriers on cross-Strait activities. Investment from China in leading Taiwan companies will be the next hot practice area in Taiwan.

IN-HOUSE

Peter Siembab, head of transaction legal (investment banking) non-Japan Asia, nomura

• International firms to ramp up local law practices and expertise • Little progress will be made vis-à-vis legal market liberalisation in India and Korea • Practice development and expansion could become more difficult despite improving economic conditions

G

rowth of Asia as a financial centre, the global economic meltdown and Asia’s recovery and resilience has set the stage for 2010 developments. Continued growth and use of Asian-law governed documents and clients using Asian law practices will be seen in the year ahead.

Expansion of international law firms into domestic markets will continue, with many setting up local law practices – although little progress will be made in opening up Korea and India to foreign law firms.

Of the firms that don’t expand by opening local law practices, some will

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become boutique operations and some will be unable to survive, leading to their collapse or merger with a competitor.

On the other hand, for those who pick up local law practices in 2010, there will be a struggle to build and maintain profitability. Billing rates will drop due to increased competition and costs will increase, particularly for talented local practitioners with much business to process. In these challenging competitive and economic conditions, law firms will also explore alternative fee arrangements with clients and, likewise, alternative compensation arrangements with their lawyers.

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profile | managing partner >>

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Asian Asian Legal Legal Business Business ISSUE ISSUE 10.1 10.1

profile | managing partner >>

alb/Aderant 2010 managing partnerS series

Dilhan Pillay Sandrasegara – WongPartnership:

New directions

Since joining the firm from its very beginning, Dilhan Pillay Sandrasegara is now steering the firm towards opportunities beyond the shores of Singapore

D

ilhan Pillay Sandrasegara doesn’t get much sleep – not that he seems to need it. The man has enough energy to run his own corporate practice, manage a successful law firm, serve as a director on numerous boards and still be on the lookout for new opportunities.

“I am a Type A personality – I never sit still,” he admits. “There are always more opportunities out there than you could ever imagine – but you have to get out there and see what they are.”

Despite his rise to the top, Sandrasegara is humble about his achievements. He sees his role as managing partner as a responsibility, not a privilege, and it’s clear that his number-one priority is to get his role right – for the next generation of lawyers.

This means propelling WongPartnership beyond the shores of Singapore to ensure its long-term success.

Liberalising legal services

Sandrasegara’s ability to identify an opportunity in any challenge is indicative of his leadership style. A case in point Timeline

Joined Wong Meng Meng & Partners 1992

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is the liberalisation of the legal services market in Singapore. While an increase in competition in the market would surely be cause for concern, Sandrasegara doesn’t see liberalisation as a threat.

“I think it’s good for the legal services sector as a whole. If we want to be really good lawyers, then the domestic market has to become better and better in terms of the sophistication of its services,” he says. “I would rather benchmark with the best of the local law firms and the best of the foreign law firms and see where we are falling short and how we can truncate that gap.” According to Sandrasegara liberalisation is necessary for the promotion of Singapore law and for a more broader acceptance of the nation’s laws for cross-border transactions. “I think Singapore law firms can still be significant in their own market, notwithstanding more competition,” he says.

“I don’t see liberalisation as being a zero-sum game… It is a means for foreign law firms to promote Singapore and to bring more transactional

Promoted to partner 1994

activity to Singapore. Hopefully, we as a Singaporean firm can participate in one way or another.”

Liberalisation led to the dissolution of WongPartnership’s joint venture with Clifford Chance, due to WongPartnership’s large market share of capital markets and corporate work.

In capital markets and corporate practice the firms actually competed more than they were able to work together. “It became very difficult for us to actually work together on a number of transactions as we found ourselves acting for clients who may have had a competing interest on the transaction,” reveals Sandrasegara.

The split between the two firms was not as controversial as it first appeared. “It had no impact at all – our joint venture with Clifford Chance was very loose,” says Sandrasegara.

“The revenues attributable to Clifford Chance were hugely insignificant.”

The international firm was granted a qualifying foreign law practice (QFLP) license and is a ‘friendly competitor’, according to Sandrasegara. “You should

Promoted to head of capital markets and corporate practice, joined executive committee 2001

Promoted to managing partner 2007

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profile | managing partner >>

never be afraid of competition,” he says.

“I wish them well and I look forward to them adding value to this market.”

GFC impact

The GFC affected many law firms and WongPartnership was not immune.

Capital markets and corporate activity slowed down but litigation and construction work increased.

Fortunately, Singapore was largely sheltered from the financial storm and transaction work has picked up again in the second half of 2009, in line with GDP growth. “We see that our end-ofyear number will not be as significantly impacted as we thought it would be at the beginning of the year. It will still be down as against last year but that huge gap that we were looking at has been significantly ameliorated.”

The financial crisis has also forced WongPartnership to take time to reevaluate. “It has had an impact on how law firms should look at their practices, businesses and strategy going forward,” the managing partner says.

Accordingly, WongPartnership is evolving. A new deputy managing partner will come on board in January to take over administrative and management duties. This will allow Sandrasegara and senior partner Alvin Yeo the opportunity to focus on client work and strategy.

New directions

Together the two have set in motion restructuring initiatives: the capital markets and corporate practice groups, now numbering 160 lawyers, will be split into two separate groups. The new financial services group will deal with capital markets, banking & finance, regulatory and funds work while the corporate group will cover corporate M&A, corporate real estate,

competition and regulatory work (see box).

Sandrasegara is also working on finetuning WongPartnership’s regional strategy, with the firm investing more into its Doha office to make it fully operational. Doha is currently being supported by the Abu Dhabi office but a new partner (not yet named) has been hired to run the Doha office separately.

“We think that with those two offices we have probably covered most of the territory that we need to cover in the Middle East,” Sandrasegara says.

WongPartnership has identified India as another significant source of business and is investigating initiatives with Indian law firms to enhance crossborder activities between India and South-East Asia. Malaysia is also on the radar, as is Vietnam. “We are currently investigating whether we should get more involved in [the Vietnam] market by looking at the possibility of opening an office there. But that is not very clear

►► Structure of WongPartnership

Management • Alvin Yeo, senior counsel, senior partner • Dilhan Pillay Sandrasegara, managing partner • Tan Chee Meng, senior counsel, deputy managing partner

Practices • Corporate – corporate/M&A, corporate real estate, competition/regulatory • Financial services – capital markets (debt & equity), banking & finance, financial services, regulatory, funds • Litigation & dispute resolution – commercial and corporate disputes, international arbitration,

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• • • • • •

banking & financial disputes, infrastructure, construction & engineering Regional – China, Middle East, India, South East Asia Corporate governance & compliance Energy, environment & projects IP, media & technology Restructuring & insolvency Tax

Umbrella groups • Client strategy group • Practice strategy group • Regional strategy group

to us right now as something we should do,” he explains.

New umbrella groups have been established to involve a younger group of partners in the strategic development of the firm. “[This will] get more people engaged in what the firm is doing so that they feel a sense of involvement in the strategies which would have an impact on their own practices down the road,” Sandrasegara says.

In essence, he is launching the first step of his succession plan. “The idea of this, including the refocusing and restructuring of our firm’s practices, is to give more opportunities to a younger group of partners – not just the level which has been looked at for succession, but also the next level – and identify who amongst them are going to be the leaders of the firm in the future,” he says. “I think it will generate quite a bit of excitement for a number of people who are looking to be significant.” ALB

“If we want to become really good lawyers, then the domestic market has to become better and better in its services” Dilhan Pillay Sandrasegara, WongPartnership Asian Legal Business ISSUE 10.1

ALB special report | Korea 2010 >>

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Asian Legal Business ISSUE 10.1

ALB special report | Korea 2010 >>

Korea 2010:

Outward bound An economy that has rebounded quicker than most in the region coupled with a chaebolled wave of outbound investment is keeping lawyers busy in the land of the morning calm. ALB reports from Seoul on a legal services market that has recovered

T

he Korean economy suffered like most others in the region during the dark days and months of the global financial crisis. Exports volumes fell off, the Korean won depreciated at a rate few had seen before and many analysts were predicting deep-seated and longlasting recession for what was hitherto one of North Asia’s fastest growing economies. But if Korea’s experiences over the last 18 months were typical of other Asian countries during the GFC, what has been occurring over the past few months has been anything but.

Spurred on by a proactive government intent on establishing Seoul as an international financial hub in North Asia, exports have again started to pick up, the won is strengthening versus the greenback and the country’s nascent capital markets have deepened — for the first time attracting international interest — through sheer innovation and a number of new and exciting financial products such as sukuk, covered bonds and foreign dual-tranche IPOs. Somewhat ironically, in years to come the financial crisis may be viewed as a watershed development for the Korean economy. As Min Euoo-Sung, the chairman and CEO of the Korea Development Bank (KDB) pointed out earlier this year, “It [the GFC] may have slowed our economy down…but it

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has given us time to think, time to take a breath; to evaluate where we have come and the next steps required for our economic development.”

The GFC is set to be just as profound for the nation’s legal services market.

Korean law firms have emerged from the crisis rejuvenated and with a renewed sense of purpose. New players have surfaced and old ones have regrouped, reorganised or merged (or are looking to merge). The result is an increasingly fluid legal market hierarchy in the country.

However, it would be wrong to assert that any of these changes are ‘new’ developments. While they may have gathered pace during the financial crisis, these processes have been underway for much of the last decade and will continue to loom large in the future as the market grapples with the challenges presented by profound shifts in client behaviour, Korea’s changing role in the global economy and impending legal sector liberalisation.

The saying ‘십 년이면 강산도 변한다’ (something changing so much that it becomes unrecognisable in the space of 10 years), typically describes how the face of Seoul has changed over the last decade. However it is perhaps just as apt to describe how far the Korean legal services market has come – and how much more change is in store. ALB

►► Legal advisors to Korean M&A Q3 2009 (by volume) Y/E08 position

Q1-Q3 2009

Firm

Deal Count

Value (US$m)

1

1

Kim & Chang

28

8,918

3

2

Lee & Ko

20

3,541

4

3

Bae Kim & Lee

10

3,776

2

4

Shin & Kim

5

5

Yulchon

8

6

29

7

9

1,577

2,769

8

Yoon Yang Kim Shin & Yu

157

5

Jisung Horizon

849

4

Source: Mergermarket

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ALB special report | Korea 2010 >>

The Korean Wave

F

or much of 2009 cross-border activity in Korea mirrored the downward trend seen across the globe. Thomson Reuters figures indicate that cross-border volumes for the first nine months of 2009 dropped 46% to US$6.5bn, compared to the same period in the preceding year. The figures accounted for only 25% of the market.

Somewhat surprisingly, inbound activity took a 14% market share, up from 11% in the first nine months of 2008, reaching US$3.8bn – nearly 1.5 times more than outbound volumes. “The financial crisis of course had an impact on deal flow, especially for outbound deals which suffered due to a number of global issues plus the weakness of the won,” said Lee Jai Wook, a foreign lawyer with Kim & Chang.

“However, we have seen a number of positive developments on the outbound side over the last few months and we like everyone else in Korea are hopeful that these deals will start to flow freely again,” he said.

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The positive developments to which Lee refers were spirited Q3 and Q4 performances in which, courtesy of midmarket M&A, outbound investments outpaced Kim Jae Hoon inbound volumes by Lee & Ko almost 300%. He is quick to point out that this doesn’t mean a return to the heady days of mid-tolate 2007. “It will be a long road to get back to that point,” he concludes. This is a sentiment shared by other lawyers ALB spoke to.

Sometimes overlooked in such analyses is the fact that outbound investment needn’t only be of the M&A variety. In many respects, outward FDI – transfer of capital, technology, know-how and experience overseas – has been just as important for Korea, if not more so.

Aided by government-backed economic stimulus in certain parts of the world, this type of outbound activity has remained relatively stable,

much to the excitement of lawyers in the country.

“Outbound investments by Korean companies, especially in South-East Asian countries, have been a noticeable trend of the last few years,” says Kim Jae Hoon, a senior partner at Lee & Ko. “In places like Vietnam, Cambodia, Laos, Thailand and many others we see some of our largest companies helping build infrastructure, roads and energy facilities. Recently, we have also seen many of them set up bases in these countries to lower the costs of doing business there,” he says.

Of course, it’s not merely South-East Asia or infrastructure development that is on the radar. Just like the pervasive cultural phenomenon of hallyu which preceded them, Korean corporations have their sights set on so many sectors in so many markets that it is becoming increasingly difficult to single out only a few. “Russia and the CIS continue to be areas of great interest,” says Raymond Kang, a foreign lawyer at Yulchon. “Lots Asian Legal Business ISSUE 10.1

ALB special report | Korea 2010 >>

►► Korean M&A Volumes: historic

Volume No. of Deals

3Q

2Q

9

4Q

1Q 0

3Q

2Q

8 1Q 0

4Q

3Q

2Q

4Q

1Q 07

Source: Thomson Reuters

consortium beat strong competition from France, the US and Japan. And sources close to ALB suggest that the Korean government is in advanced talks with other governments in the region to complete similar projects.

NAtioNAl lAw Firm oF thE YEAr

- iFlr ASiAN AwArDS, EvErY YEAr SiNCE 2002

KorEA DEAl oF thE YEAr KorEA DEAl Firm oF thE YEAr

Year Established 1973 Number of Professionals Approximately 700 Languages Spoken Korean, English, German, French, Japanese, Chinese, Swedish and Spanish

Seyang Building, 223 Naeja-dong, Jongno-gu, Seoul 110-720, Korea Tel. +82-2-3703-1114 Fax. +82-2-737-9091 E-mail. lawkim@kimchang.com www.kimchang.com

www.legalbusinessonline.com

3Q

2Q

1Q 0

6

No. of Deals

Volume (US$ Million)

of Korean clients, especially in the automobile indutsry, are looking at establishing plants in Russia and CIS countries to invest in facilities.

They are looking at the feasibility of consumer markets for Korean cars and as has been the trend before, when an automaker sets up manufacturing facilities in a new region, suppliers and contractors naturally follow,” he says.

“India, China, the Middle East, and South America and of course the US and Europe are all of interest as well.

Here, Korean companies are competing against and winning bids against larger US and European companies for very lucrative work.”

This was demonstrated most recently by a KEPCO-led consortium’s successful bid to design, construct and operate four units of 1400MW reactors for the UAE. In winning the Raymond Kang project, which is worth Yulchon US$40bn, the Korean

Shin Hee-Gang, a partner with Bae, Kim & Lee, sums up the mood of many Korean companies vis-à-vis outbound investment when he says “everything is possible and every corner of the globe is on their list.” ALB

Corporate

Industry

- Anti-Corruption and Regulatory Compliance - Antitrust and Competition - Broadcasting & Telecommunication - Construction - Corporate Governance - Customs and International Trade - Energy - Entertainment - Environment - Foreign Direct Investment - Health - Insolvency and Restructuring - Labor and Employment - Mergers & Acquisitions - Overseas Investment - Private Equity and Venture Capital - Real Estate

- Banking - Broadcasting & Telecommunication - Construction - Energy - Entertainment - Financial Institutions - Health - Insurance - Investment Management - Private Equity and Venture Capital - Securities

Criminal Defense

Litigation

- White Collar Criminal Defense

Finance - Acquisition Finance - Banking - Derivatives - Financial Institutions - Insolvency and Restructuring - Insurance - Investment Management - Lease and Transportation Finance - Private Equity and Venture Capital - Project Finance - Securities - Structured Finance

Intellectual Property - Intellectual Property

International - Chinese Practice - European Practice - Japanese Practice

- Construction - Insolvency and Restructuring - International Arbitration & Cross-Border Litigation - Litigation & Arbitration - Product Liability / Consumer Claims - Shipping

Tax - Finance Tax - General Tax Consulting - Tax Audit and Dispute Resolution - Transfer Pricing

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ALB special report | Korea 2010 >>

The Korean diaspora:

Korean law firms in Asia

T

he current wave of chaebolinspired hallyu is good news for the nation’s law firms, who have long tied their own international aspirations to the inherently international inclinations of their country’s corporations.

Korean law firms are advising corporates on the whole gamut of legal issues – tax, employment, disputes, trade, due-diligence and investigations as well as company establishment.

“There is a good amount of work being generated by Korean companies seeking to go abroad or already doing business overseas to keep us all very busy for years to come, ” says Kim Kyoung Yeon of Yulchon.

More than enough, it seems, to keep the coffers of their international offices full – if not overflowing. Most of Korea’s Top 10 law firms have some form of international presence (Kim & Chang, the country’s largest firm by headcount and the smaller Barun Law, are the only two law firms in the Top 10 without international offices; according to sources at both firms this is unlikely to change in 2010).

China and Vietnam remain the most popular destinations for offices while Cambodia, Central Asia and former Eastern Bloc countries are gaining in popularity (see box). And, according to sources close to ALB, we should expect to see at least four international office openings in the first half of 2010. ►► Korean law firms: International offices Firm name Bae Kim & Lee Hwang Mok Park Jisung Horizon Lee & Ko Logos

Sehwa Park & Goo Shin & Kim Yoon Yang Kim Shin & Yu Yulchon

International office(s) Beijing, Shanghai Shanghai Hanoi, Ho Chi Minh City, Shanghai Beijing Beijing, Hanoi, Ho Chi Minh City, Moscow, Phnom Phen Hanoi, Phnom Phen Beijing Tashkent, Tokyo Ho Chi Minh City

*This list does not purport to be exhaustive

58

“We are looking at several opportunities at the moment,” says Yulchon’s Raymond Kang. “A second office in Vietnam, a PRC presence as well as Russia and the CIS are being looked at very seriously, but it’s one step at a time.”

Shin & Kim is casting the net just as wide. “We currently have an office in Beijing and by March or April of 2010 we will have added a Shanghai office to this,” said a spokesperson for the firm. “We are also looking at SouthEast Asia and Central Asia… but our expansion here is likely to be in the form of seeking out an alliance with a leading local firm.”

Just what continues to make international expansion into often challenging frontier markets such an alluring proposition for the country’s law firms? Is it enough to chalk up their global expansion to the usual confluence of factors (domestic market saturation, client demands and preemptive growth) that usually guides the developmental trajectories of most other law firms in the region?

Kim Tongeun, a partner with Bae, Kim & Lee, says all of these issues are at the heart of Korean firms’ growth outside their own territory, but also suggests that cultural issues are just as important. “Many of the top Korean law firms have grown to a size where

it is now a case of use it or lose it,” he contends. “Headcounts for most exceed 200 and the domestic market is becoming saturated and competition for top-end work is very fierce, so squeezing out this mass across the region is needed.” (It’s worth noting here that the Korean legal services market is estimated to be worth only KRW2trn (US$1.61bn); US firm Skadden’s revenue for FY2008 was around US$2.2bn) “Getting into lucrative areas before others is also dictating a lot of this, but what is also evident is the somewhat unique nature of Korean business culture,” he said. Put simply, Korean clients feel more comfortable dealing with Korean lawyers in the foreign countries in which they operate.

“This is a major element in the lawyer-client relationship in Korea,” says Kim. “It’s something that has become entrenched in the way they do business and been reinforced by their recent outbound expansion,” he says, adding that the complexity of some Korean laws is also a factor.

It’s not difficult to see why Korean law firms are bullish about their international strategies and why many are relishing the challenges that will come with legal market liberalisation (for more detailed discussion on liberalisation see separate article on page 60). ALB Asian Legal Business ISSUE 10.1

Firm Profile ALB special report | Korea 2010 >>

Bae, Kim & Lee

SPAC, a Revolution in the Korean M&A Market?

I

n order to introduce a system involving a Special Purpose Acquisition Company (“SPAC”), the Korean financial authorities have recently amended the applicable laws and regulations including the regulations related to the Korea Exchange (“KRX”). An SPAC is a company incorporated for the sole purpose of procuring funds for mergers and acquisitions (“M&A”) through listing and initial public offering (“IPO”) and finding a target company for M&A within certain period of time. The SPAC system has already been actively utilized in the United States, and Canada and other countries in Europe with advanced economies have commenced or prepared for the commencement of the SPAC system in an effort to relax rules on listing.

Since early 2008, Bae, Kim & Lee LLC has been assisting the financial supervisory authorities and the KRX on the introduction of the SPAC system and necessary amendments to the applicable laws and regulations including the KRX related regulations. As such amendments have now become effective, Bae, Kim & Lee LLC is now providing advice on documentation and other procedures necessary for the incorporation of the first ever SPAC in Korea.

Immediately upon incorporation, the first SPAC in Korea will make an IPO to attract investors, be listed on the KRX and enter into full-scale operations for M&A. The SPAC system, if well established, is expected to be important in facilitating fund raising and M&A of the companies that are competitive and in good standing.

The SPAC system introduced in Korea is different in some measure from its counterpart in other jurisdictions: A Korean-style SPAC is required to be incorporated as an ordinary joint stock company, one of whose sponsors must

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be an “investment dealer” (i.e., securities company) having total shareholders equity of 100 billion Won or more as of the end of the latest fiscal year and holding at least a 5% interest in the shares or other securities issued by the SPAC. In addition, the SPAC must be listed within 90 days of the date of payment of IPO funds and merge with the target company within 3 years thereafter (under the SPAC system, an acquisition of the target company by way of a transfer of the securities is not permitted).

Sponsors of an SPAC and other investors that have invested in the shares or convertible bonds issued by the SPAC prior to the IPO (“Pre-IPO Investors”) are not allowed to dispose of such shares or convertible bonds prior to the merger of the SPAC and during a certain period thereafter and to exercise their voting rights or appraisal rights at a general meeting of shareholders convened to resolve on the merger.

To protect the investors in the IPO of the SPAC (“IPO Investors”), the SPC is required to place in escrow or put in trust 90% or more of the IPO funds (to be used at a later date for the merger) with a securities finance corporation, which may not be withdrawn or provided as security until the merger is properly registered. If the SPAC fails to be listed within the 90 day period or have the merger registered within the 3 year period, the SPAC must be dissolved. Upon dissolution, the funds so deposited will be returned to the IPO Investors in proportion to their shareholding ratio. Even if the M&A fails, the IPO Investors may recover 90% of their investments and the interest accrued from the day of payment of investment and the date of return thereof. In such event, however, the Pre-IPO Investors will not be entitled to the return of deposited funds.

Under the SPAC system, a company seeking to raise funds through an IPO may

enjoy timely and effective fund raising through merger with an SPAC, which will simplify the complex requirements and procedures that would be usually required for listing and IPO. In addition, such merger would result in a friendly M&A with minimal risk of losing management control because the shareholding structure is already decentralized among investors.

The introduction of the SPAC system is expected to help the Korean financial market procure funding sources to support the corporate restructuring and enhancement of corporate value and contribute much to the development of the financial investment industry. Accordingly, the financial investment industry is expected to be more active in sponsoring SPAC-related IPOs, consulting on M&A and direct investment.

As a law firm that has been actively involved in the introduction of the SPAC system, by working with and giving advice to the financial supervisory authorities and the KRX, and in the incorporation of the first ever SPAC in Korea, Bae, Kim & Lee LLC expects that the SPAC system will set the stage for companies to tap into a new method of funding and IPO in Korea.

By Jeong Rai Cho and Woojung Kim For further queries, please contact: Jeong Rai Cho (Partner) Woojung Kim (Foreign Legal Advisor) Bae, Kim & Lee LLC Tel: + 82-2-3404-0161 Fax: + 82-2-3404-7302 E-mail: jeongrai.cho@bkl.co.kr woojung.kim@bkl.co.kr

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ALB special report | Korea 2010 >>

Tough times in-house:

Corporate counsel seek critical mass

D

espite the close bond between Korean lawyers and their in-house counterparts, many agree that the dynamics of this relationship is quickly changing.

Much of this can be explained by how the role of corporate counsel itself has evolved over the past few years.

Prima facie, in-house lawyers in Korea face challenges not dissimilar to their colleagues in other parts of Asia: budgets for external legal spend have been slashed and lawyers are being forced to handle more work in-house but the resources at their disposal are dwindling.

Underlying this are profound shifts in societal and corporate attitudes.

Korea as a society is becoming increasingly litigious: over the past decade the number of law suits filed against listed companies has increased from 18 in 2000 to around 500 in 2009, according to statistics released by the Korean Exchange.

This has not only increased the importance of the risk mitigation function that in-house lawyers play but has also raised their profile among Korean corporates who themselves are becoming increasingly savvy in the way they use legal services.

In-house lawyers are being used earlier in transactions, often finding themselves at the coal-face of dealmaking. “In the past we would usually be involved in a transaction after it had progressed through the initial stages,” said an in-house lawyer at Samsung, who declined to be named. “Now we are being asked to screen deals very early on, to give advice on deals in the works and in some cases actually negotiate the agreements which it is our job to draft.”

While the lawyer is quick to point out that this sort of experience and exposure to the business is “absolutely invaluable for lawyers,” he does concede that it places a strain

60

on resources. “There’s no question that in-house lawyers in Korea are overworked at the moment,” he said.

“I am fortunate in that I have a team of around 250 to work with, but ours is one of the larger ones in Korea…

I wouldn’t want to be in-house at a company which only has a small legal team at the moment.”

LG’s in-house team is of similar size to Samsung, while Hyundai, Kia and SK all have in-house teams that are relatively well-developed. But these companies are largely exceptions to the rule. A recent survey conducted by the Korean Chamber of Commerce found that out of a sample of over 200 Korean companies, less than 30% had dedicated legal departments.

Even where a company has in-house lawyers, holding onto them has proven to be difficult. Many younger lawyers still prefer either to work for large law firms or to take up postings as judges and public prosecutors, meaning it is difficult for many in-house teams to achieve a working critical mass.

This circumstance has seen a number of Korean companies dip into foreign employment pools. The number of foreign lawyers working as corporate counsel has noticeably increased over the past three years in a trend which many believe will continue in the years ahead. “There is a real need to build critical mass of competent, experienced corporate counsel in Korea,” said the Samsung lawyer. “International hires, for the moment, appear to be one of the few ways by which this can be achieved.

And their presence will do more than just help build critical mass. “This is a positive development for the in-house community here as these lawyers bring with them their own experience and knowledge of how in-house teams operate in other countries,” said the in-house lawyer. “We already see it is having a positive impact in raising standards here.” ALB Asian Legal Business ISSUE 10.1

Firm Profile ALB special report | Korea 2010 >>

Lee & Ko

Korea’s push for tax amendment to allow Islamic finance

I

Yong-Jae Chang

Yong-Jae Chang (Partner) LEE & KO 18th Floor, Hanjin Main Building 118, Namdaemunno 2-ga, Jung-gu Seoul, Korea 100-770 Direct: 82.2.772.4394 Main: 82.2.772.4000 Fax: 82.2.772.4001 yjc@leeko.com www.leeko.com

www.legalbusinessonline.com www.legalbusinessonline.com

n light of the remarkable growth of Islamic finance and its ever increasing relevance in the global finance market, market participants in South Korea (Korea) are turning their eyes to Islamic finance.

In particular, Sukuk, which is commonly referred to as “Islamic bonds” but is more accurately described as “Islamic Investment Certificates”, has attracted much of the attention in Korea. However, given the nonconventional structures of Sukuk that present unique challenges for Korea, there are many legal, regulatory and tax issues to be resolved and streamlined before Korea’s embrace of Sukuk. This article aims to briefly discuss some of the pertinent tax issues relating to the issuance of Sukuk in Korea.

For a typical Sukuk transaction, a special purpose vehicle (SPV) is established as an issuing entity for the Sukuk. It issues Sukuk certificates to investors for the purpose of raising funds for investment in the underlying asset, through a pre-arranged transaction with the original holder of the underlying asset. In such a transaction, the investors that hold Sukuk certificates that represent an undivided pro-rata ownership (legal or beneficial) of the underlying asset are entitled to all proceeds arising from the underlying asset.

Currently, under the Special Tax Treatment Control Act (STTCA) in Korea, no corporate income tax is imposed on interest income received by a foreign entity in relation to foreign currency denominated notes or bonds.

However, in the case of issuance of Sukuk through an offshore SPV, it is questionable whether any amount received by the offshore SPV exceeding the original investment amount may be viewed as interest income arising from foreign currency-denominated notes or bonds. Apart from corporate income tax issues, it is also questionable whether individual transactions forming part of the overall Sukuk transaction would be viewed as a “single” transaction for the purpose of other relevant taxes, such as acquisition tax and registration tax.

If and to the extent that the Sukuk transaction is not viewed favourably from a tax perspective, many of the attractive features of Sukuk as an alternative method

of raising funds would be outweighed by hefty transaction costs, in the form of various taxes. To overcome this, there has been a continued demand from many players in Korea’s financial and capital markets for the grant of tax benefits or exemptions relating to the Sukuk transaction. Given the increasing recognition of Islamic financing in both domestic and international markets, the Korean Government has reacted favourably to such demand and, as a first step, submitted in late September, 2009 a draft amendment of the STTCA to the national parliament for deliberation.

The key aspects of the proposed amendment involve considering a series of transactions in the issuance of Sukuk (in particular Sukuk-al-Ijara and Sukuk-alMurabaha) as a “single” transaction. The practical implications of such an amendment would include: • Granting tax exemptions from corporate income tax for any investment returns in excess of the original investment amount received by the offshore SPV involved in Sukuk transactions meeting requirements of STTCA, by regarding such income as “interest income” subject to tax exemption.

• Granting tax exemptions relating to certain taxes (for example, acquisition tax and registration tax) which arise during multiple transfers of the underlying assets among the parties to the Sukuk-al-Ijara transaction.

In substance, the proposed amendment seeks to remove various taxes that exist at different stages of the overall Sukuk transaction. This would create a level playing field for the Sukuk transactions, by removing the tax barriers that make the Sukuk transactions less appealing and commercially viable compared to other conventional bonds.

While Korea faces a long, tough road to fully embrace the techniques and applications of Islamic finance (in particular, Sukuk), some of the much awaited progress is currently underway in Korea to relax some of the tax restrictions. As discussed above, an amendment of the STTCA is currently being deliberated before the Korean parliament.

Such an amendment, if adopted, would certainly be a step in the right direction.

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ALB special report | Korea 2010 >>

The hermit kingdom opens: Legal market liberalisation

D

iscussion about legal market liberalisation normally follows a predictable pattern: the process is inherently stop-start; actual talk about opening closed legal markets predates meaningful action in some cases by as much as 30 years; and one hears everything from neo-liberal critiques regarding the virtues of open markets to impassioned apologies for closed markets.

Korea has had all of this and more.

Now, almost 25 years after the idea was first raised, the government has laid out a blueprint for the staged opening of its legal services market. Under the blueprint released early in 2009, foreign law firms from countries that enjoy an FTA with Korea will be permitted to establish representative offices. The plan envisages that full liberalisation should occur no earlier than 2016.

Despite this roadmap and numerous positive developments on the trade liberalisation front, the opening of Korea’s legal services market is far from a fait accompli. A number of hurdles remain, not least the fact that of three FTAs crucial to international law firms entering the country (US, EU and ASEAN agreements) only one has come into effect (ASEAN). While the EU FTA is expected to commence in Q1 2010, the agreement with the US isn’t expected to come into effect anytime soon – thanks largely to a recalcitrant US Congress.

To the delight of many it appears that the first foreign law firms into Korea may well be from South-East Asia. As ALB reported in 2009, the Korean Ministry of Justice has been approached by at least four law firms from ASEAN member countries (three firms are believed to be from Vietnam; the identity of the fourth, widely rumoured to be from Singapore, was not disclosed) and a few others have also expressed similar interest. These are moves which, given the everincreasing trade volumes between SEAsia and Korea, make a lot of sense.

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Yet a number of hurdles still exist.

The stipulation that foreign lawyers wishing to qualify for consultant status must have at least three years’ work experience in Korea and must have lived in the country for at least 180 days each calendar year is one that few of the relatively small firms from ASEAN states can meet. The managing partner at one Vietnamese law firm told ALB: “We are looking at entering Korea but under the current guidelines it will be difficult for us to do so.” This is a view also expressed by other law firms in the region.

Even if the entry of foreign law firms is still some way off, the country’s domestic law firms are busily preparing for their eventual arrival.

From mergers to alliances to the launching of new practice areas, the

partner both indicate that mergers which add additional expertise, balance and synergy, rather than just size, are becoming increasingly important. “We were in discussions with Hanseung for about six months before the merger and we were clear from the start that we wanted it to be about obtaining something that strengthened our practice rather than just about size,” said Park Sang Il, a managing partner with Hwang Mok Park. “Hanseung brought specialist litigation skills to our firm at a time when ours were still developing,” he says. “If you look at the size of the Korean legal market, you have to question sometimes whether a merger is efficient…we did it for litigation, but you look at full-service synergies and have to ask what is the point. A merger just to increase headcount is of no use.”

“People are gradually realising that the smaller guys do work which is just as good as the bigger players” Thomas Pinansky, Barun hiring of foreign attorneys and moves towards greater specialisation, much of the activity witnessed over the last year is evidence that liberalisation is already having a visible impact on the complexion of the legal market.

“Merger activity will feature heavily again in 2010,” said Kim & Chang’s Lee. “We should see some consolidation in the market; some smaller firms will merge and so will some of the larger players… it remains a good way for firms to achieve the size to remain competitive.”

But mergers aren’t being pursued for the same reasons they once were. Hwang Mok Park’s merger with dispute resolution specialist firm Hanseung, and Shin & Kim’s admission that it is Park Sang-Il on the lookout for a merger Hwang Mok Park

It’s a similar story at Shin & Kim. “We are currently seriously thinking about an acquisition or a merger – it’s one of the growth objectives we have for 2010,” said a spokesperson for the firm. “What we are looking to get is a synergy and balance … something that will knit with our banking & finance and M&A practices… this could be in the areas of litigation, IP and even health or pharmaceuticals.”

Balance is the key according to Lee & Ko’s Kim. “Through economic down times or liberalisation, balance is the only thing that will get a firm through,” he says. “To ensure that your firm is balanced so if one area goes down, you can make up this shortfall in another area of practice.” According to lawyers ALB interviewed, Lee & Ko is widely perceived to be leading the way. The firm has sub-divided Asian Legal Business ISSUE 10.1

Firm Profile | Korea ALBALB special report 2010 | India special report 09 >> >>

Shin & Kim

Korea Considers Introduction of Poison Pill

T

he Ministry of Justice of Korea proposed legislation in November 2009 which would amend the Korean Commercial Code in order to introduce a “poison pill” scheme as a defensive measure against hostile takeover attempts. In a public hearing on November 9, 2009, the Ministry stated that the proposed legislation is intended to encourage Korean companies to invest capital for the benefit of the company, rather than purchasing their own shares to defend against hostile takeover attempts. Currently, Korea does not have a mandatory public tender rule or a ceiling on foreign investment, making it relatively difficult for Korean companies to fend off hostile takeover bids, according to the Ministry. The Ministry hopes its proposed poison pill legislation will remedy this situation, and enable Korean companies to focus more on building and maintaining shareholder value.

The proposed legislation is also seen as an effort by the Korean government to stimulate investment in infrastructure, factories and R&D by large conglomerates (chaebols) in order to create more jobs and stimulate the economy.

Korea’s chaebols typically spend billions of dollars each year on share buybacks in order to protect their management rights against unsolicited takeover attempts. However, many doubt that the measure would have such an effect, and point to the fact that most large chaebols are not making such investments in the current economic environment despite having accumulated huge capital reserves.

Under the plan, also known as a shareholder’s rights plan, Korean companies would be permitted to issue warrants to certain existing shareholders, allowing them to purchase additional shares in the company at a discounted exercise price. Currently, Korean law does not permit the issuance of warrants except under very limited circumstances.

The proposed legislation would also allow companies to discriminate with regard to the issuance, exercise and redemption of the warrants in order to prevent a certain shareholder or group of shareholders from owning a certain percentage of shares and/or acquiring management rights in the company.

Finally, the bill also provides that, prior to the exercise period, the company may cancel warrants issued to shareholders without paying compensation to the holders of such warrants.

In order to employ such tactics, discriminatory treatment of the shareholders must be permitted under the company’s Articles of Incorporation (AOI).

The bill has generated opposition from

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foreign investors, who feel the legislation is directed primarily at them, and has received mixed reviews in Korea both inside and outside the government. Until recently, both the Financial Services Commission and the Fair Trade Commission had opposed the bill, and it is not certain that it will be approved by lawmakers in the National Assembly.

The Ministry and supporters of the proposed poison pill legislation believe that it will help companies direct their time and efforts toward enhancing the value of the company rather than defending against unsolicited takeover bids. The Ministry says that the proposed poison pill legislation would not be subject to abuse by majority or controlling shareholders at the expense of other shareholders. First, in order to amend the company’s AOI to permit the issuance of the warrants, the shareholders must approve the amendment by a special resolution which requires approval by shareholders holding two-thirds of the voting shares present at the meeting and at least onethird of the total shares issued and outstanding.

This lowers the risk that the company’s directors might implement the scheme contrary to the interests of the shareholders. Second, the discriminatory treatment of the shareholders with respect to the issuance, exercise and redemption of the warrants would be permitted only to the extent necessary to protect or advance the interests of the company and its shareholders. Finally, shareholders would have the right to seek injunctive relief with respect to the issue, exercise or redemption of these warrants if the company acts in violation of its AOI or applicable law, or in a manner which is patently unfair.

Those opposed to the bill argue that large shareholders will be able to use the scheme to preserve their dominant shareholding position at the expense of other shareholders and the efficient management of the company. They point out that hostile takeover attempts are very rare in Korea, and that this legislation may be seen as a step backwards in terms of improving corporate governance in Korea, discouraging foreign investment.

The Ministry of Justice will submit its proposed legislation for consideration by the National Assembly in early 2010. It remains to be seen whether (and in what form) the bill will be passed into law by the National Assembly. Even if it is passed, it is anticipated that the Korean courts would eventually need to weigh in on many issues. For example, the proposed legislation states that a poison pill

Chang Weon Rhee

Benjamin Hughes

scheme may be used only when (and to the extent that) it is necessary in order to protect or advance the value of the company and its shareholders. Controversies will no doubt arise as to how to interpret and apply this standard, by which the validity of any given poison pill scheme will be determined.

Chang Weon Rhee (Partner) and Benjamin Hughes (Senior Foreign Legal Consultant), SHIN & KIM For more information, please contact: Chang Weon Rhee (Tel: +82-2-316-4005, E-mail: cwrhee@shinkim.com) Benjamin Hughes (Tel: +82-2-316-4211, E-mail: bhughes@shinkim.com)

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ALB special report | Korea 2010 >>

itself into 30 specialist teams which cover the full spectrum of corporate and commercial law. Lee & Ko’s organisational model is the envy of many others.

But the initiative, according to Kim’s fellow partner Chang YongJae, is only now paying Yong-Jae dividends. “It has helped Chang Lee & Ko us weather the financial crisis,” he says. “But it’s not something that you can achieve in a short space of time; we started the process 20 years ago and we still regard it as incomplete.”

Chang’s sentiments give an insight into the challenges involved in implementing such a process, especially given the fact that most firms now bear little resemblance to the firms they were when they started practicing.

Mergers, alliances, recruitment drives and a sometimes unpredictable Korean economy have all taken their toll on the structure of firms in Korea, leaving

64

them a little incongruent. “We badly need to address issues regarding the shape of our firm,” said one partner.

“Our growth path hasn’t been planned and when you start out as a firm that handled mostly dispute resolution work, as we did, then branch out into corporate work, it is a big concern.”

As firms implement these strategies, many expect the levels of competition at the top end of the domestic market (which are already cut-throat) to increase. However, it is incorrect to assume that this is the only source of competitive pressure in the Korean legal services market.

While the largest firms continue to cast the most conspicuous shadows over the legal arena, the emergence of specialist players and boutique law firms will also play a big role.

Manifestations of this already exist in some areas, IP being most widely cited.

Here, the smaller law firms (those that have not been subsumed as the IP arm of full-service players) are mounting a fierce challenge and have the portfolio

of clients to prove it. “We can count Microsoft, Sun Microsystems and Philip Morris, among others, as our clients,” says Cho Tae-Yeon, a named partner at IP boutique Cho & Partners.

“We have these clients because of the service we offer. We try to operate like a US law firm: to offer personalised, highly specialised and industry-focussed advice.” The recent success of firms below the seemingly impenetrable trio of Kim & Chang, Lee & Ko and Bae, Kim & Lee is something that Thomas Pinansky, a senior foreign lawyer with Barun, says is indicative of the fact that the Korean legal services market is quickly maturing. “People are gradually realising that the smaller guys do work which is just as good just as often as the bigger players in the market... it will take some time to be displaced, but the feeling Thomas Pinansky that bigger is better is Barun slowly eroding.” ALB

Asian Legal Business ISSUE 10.1

Firm Profile ALB special report | Korea 2010 >>

Yulchon

The Metamorphosis of International Arbitration in Korea

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rbitration in Korea grew rapidly during 2009. It is poised for further growth this year, and international cases are leading the way. The 318 new cases that the Korean Commercial Arbitration Board received in 2009 constituted a 21% increase from 2008. Of these, the international cases grew even more rapidly, by a surprising 66%.

Other international arbitral institutions are also seeing increases in the number of cases involving a Korean party or some aspect of Korean law. They are also seeing an increase in the complexity of the issues and the amount at stake. Last year, for example, an ICC tribunal issued a US$750 Million award in a dispute among the shareholders of Hyundai Oilbank.

Why are these changes occurring? One reason is the increasingly global expansion of Korean business groups. Another reason is that the number of foreign-invested companies in Korea keep growing, more than doubling over the last decade, from 4,317 in 1998 to 9,612 in 2009. Cross-border disputes have likewise increased, and arbitration is the preferred means to resolve such disputes.

The result is an increase in demand for legal counsel who can work adeptly across borders to keep up with their clients.

This globalization of arbitration has rendered obsolete many traditional models for handling international arbitration cases. It may once have been sufficient for an international law firm handling a Korean law arbitration case to obtain an outside expert opinion on Korean law. Similarly, it may once have been sufficient for a Korean law firm handling a case governed by foreign law to obtain an outside expert opinion on foreign law.

No longer. These days, firms that still depend on outside experts for key aspects of a case are at a disadvantage. The legal issues are more complicated than ever, frequently requiring in-depth understanding of both local law and the law of the contract. For example, even a clearly drafted choice of law clause is not always as straightforward as it seems – Korean law may still govern some aspects of a transaction even when a contract clearly specifies that the law of a non-Korean jurisdiction governs.

Yulchon has responded to these challenges by assembling a team of experienced, bilingual Korean and international lawyers who meet today’s standards of effective representation in international arbitration.

Our team is distinguished in Korea for its

www.legalbusinessonline.com www.legalbusinessonline.com

As international arbitration in Korea or involving Korean law has grown in scale and complexity, Yulchon has assembled a highly skilled, bilingual IDR team with experience handling cases before all of the major international arbitration institutions. Senior members of the team include (standing, from left to right) Jiwoong Lim, Young Seok Lee, Kumju Son, and Robert Wachter, and (seated, from left to right) Young Hill Liew and Sae Youn Kim.

bilingual capabilities, which make it easy for us to work comfortably, naturally and efficiently in English and in Korean, understanding and appreciating many of the subtle nuances that would otherwise be lost in translation. Our bilingual capability also makes it easier to adapt quickly to complicated cases in which different aspects may be governed by the laws of different countries.

Our team is also unique in Korea for its diversified experience and specialized talent.

The senior members of the arbitration team all have complementary expertise in subjectarea practices, and the Yulchon associates who work on arbitration matters are expected to develop specialized expertise in other legal fields. We believe that such cross-disciplinary expertise is the best way to provide extra value to our clients.

Young Seok Lee and Sae Youn Kim lead the Yulchon international arbitration practice.

A veteran corporate lawyer with special expertise in shipping and insurance disputes, Mr. Lee has been handling arbitration matters for many years. A former judge, Ms. Kim has extensive experience litigating complex commercial disputes as well as handling such disputes in arbitration.

Former patent court judge Young Hill Liew is a senior member of the team who also leads the firm’s intellectual property practice.

Kumju Son, also a former judge, specializes in competition and telecommunications law in addition to arbitration. Ji Woong Lim also practices in finance as well as bankruptcy and

corporate restructuring.

Yulchon’s arbitration team also includes three senior U.S.-licensed lawyers. Suk Jo Kim is a former general counsel of the Daewoo business group and previously practiced at Debevoise & Plimpton in New York.

Formerly of Cravath, Swaine & Moore and Kim & Chang, John K.J. Kim has substantial experience in outbound and inbound foreign investment and project finance in Europe, Russia, the C.I.S., China, and North and South America. Robert Wachter specializes in inbound foreign investment, regulatory law, and finance and construction law.

As outbound and inbound investments continue to increase in Korea, the international arbitration practices at Korean law firms should continue to grow. For Korean law firms to enjoy the same level of success as their clients, they must exhibit the same commitment to excellence and the same ability to work globally across borders, languages, cultures, legal systems and specialties.

At Yulchon, we are confident that we are up to this task. We have a track record of success in handling cross-border disputes not only before the KCAB, but also before the major international arbitral institutions. Please contact us to find out how we can help you resolve your cross-border disputes.

By Sae Youn Kim and Robert Wachter Yulchon IDR Team Leader Contacts: Young Seok Lee: +82 2 528 5312; yslee@yulchon.com Sae Youn Kim: +82 2 528 5349; kimsy@yulchon.com Yulchon: +82 2 528 5200; www.yulchon.com

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FEATURE | banking & finance >>

Financial lawyers head back to work Even though the financial crisis hit hard, banking & finance lawyers have found innovative ways to keep busy and keep fee revenues up

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efore the GFC banks were eager to lend, cheap money flooded the market and borrowers had their pick of lenders. Yet those halcyon days were quickly forgotten after the credit crunch and unexpected collapse of Lehman Brothers.

Given the severity of the crash, you would expect most banking & finance lawyers to be starving for work. Yet despite the sudden drop in liquidity, lawyers have adapted to the changing needs of their clients in an evolving financial market.

Lending post-GFC

Although the crisis is easing in Asia, many banks are still cautious.

Legal work has shifted from documenting new loans to advising on refinancing and Susan Wong WongPartnership restructuring deals.

“There was a slight sense of concern and panic at the beginning of the year following [the Lehman Brothers bankruptcy],” says Susan Wong, a partner at WongPartnership in Singapore. “But I think, having come through most of the year, the impact of that fallout on Singapore was not as dire as feared and there was a predominance of refinancing and restructuring.”

Lenders in Asia-Pacific are restricting loan conditions and taking the opportunity to engage their lawyers to perform reviews of loan documentation and security positions “The days of covenant light financing are gone,” says Wong. “[2009] has been very different.

Banks are very circumspect. There has been a tightening of covenants and a noticeable shift towards greater contributions from sponsors and shareholders – both in terms of equity and security.”

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Even the strongest borrowers have had to deal with an increase in governance by their lenders. “In some cases, banks may request that borrowers deposit three months’ interest payments in advance to cover their position if things turn sour,” says Khong Mei Lin, a partner with Shook Lin & Bok in Malaysia.

While there may be a decline in new loans, banking & finance lawyers have gained work from the sale of nonperforming loans. Shook Lin & Bok recently acted for the purchaser on two significant sales of non-performing loans, from Maybank and CIMB. The firm conducted due diligence, provided advice on the sale and purchase agreement and continues to advise the purchaser in relation to finance issues.

Market disruption

‘Changes in circumstances’ clauses are now being used with greater frequency and are heavily negotiated to reflect the volatile state of the market. These clauses are introduced to protect banks

“Now it is worth lenders’ while to put the time in to do the more complicated deals. They are taking the opportunity to enjoy the market while it lasts and there is incredible pressure on us to get the deals in the pipeline closed” Joseph Bevash, Latham & Watkins in the event there is a sharp and sudden change in market conditions, leading to an increase in the cost of lending money.

During the height of the crisis, banking & finance lawyers found themselves revising the language in the clauses to reassure lenders of their ability to cover internal cost of funds.

“Market-disrupt provisions are now crafted to make it easier for a bank or club of lenders to trigger,” says Wong.

“What has come out of it though is a lot of rethinking about how the market-disruption clause should work.

Asian Legal Business ISSUE 10.1

FEATURE | banking & finance >>

In-house view: ge capital and nomura

1. Geoff Culbert, general counsel, GE Capital Asia Pacific

2. Peter Siembab, in-house counsel, Nomura

What kinds of deals are you seeing in the sector at the moment?

The consumer finance market has remained strong throughout the year, particularly in Australia and Korea. We are starting to see a stronger pipeline of LBO and acquisition finance deals after a quiet start. We are also seeing a lot of activity on the PE side and recently made a cornerstone investment in [heavy equipment manufacturer] SANY's IPO in Hong Kong.

What kinds of deals are you seeing in the sector at the moment?

It has been an amazing year to see the swing in the market from the heights of the liquidity crisis to the more fluid markets of December. Currently we are seeing increased interest and activity in the banking and finance sectors, with ample credit available; however, the challenge has been finding the right deals. For example, for sponsors there have been a limited number of opportunities where sponsors can secure control or even take the target private.

How do you see the market evolving in the next year?

With valuations having come down over the past year, and greater stability returning to the market, I would expect to see a lot more activity in PE and M&A, with the LBO and acquisition finance markets coming back in support. I would also expect to see companies begin to reinvest in their businesses after limited capital investment over the past year. That should see opportunities in asset based finance and leasing.

What kinds of issues are affecting your deals at the moment?

Our existing deals are performing well. With the worst of the financial crisis hopefully behind us, we are very optimistic about the quality of our portfolio. On new deals we are seeing more realistic pricing and structuring compared to where the market was pre-Lehman, which is encouraging.

What advice do you generally seek from external legal counsel and how can they best assist you in this environment?

We typically engage outside counsel to assist with large, resource-intensive matters such as M&A, and specialist areas such as litigation and employment law. Not surprisingly, over the past year we have also worked with bankruptcy and restructuring counsel on complicated work-outs. We do not maintain a formal legal panel. Our preferred providers are generally leading international firms who have regional coverage, as well as domestic top-tier and specialist law firms who are cost-effective. We always look for our external counsel to provide proactive and efficient service at a reasonable cost, but those qualities are more important than ever in the current environment. www.legalbusinessonline.com

How do you see the market evolving in the next year?

I don’t see the situation about finding the right deals changing much in the near future but I do expect to see increased outbound activity from China and India. With ample financing available, I would expect that for any financings that do arise that the terms and conditions for those financings would continue to loosen. Also, as the markets continue to grow in confidence, I expect to see a re-emergence of private loans marketing, including the pre-IPO and club deals. I don’t expect to see a return of the 100% underwriting of loans in the immediate future.

What kinds of issues are affecting your deals at the moment?

The unknown here is whether this outbound business [from China and India] will need financing as the buyers may have sufficient cash to fund these deals. Lenders will be looking for any competitive edge they can get to secure a role in these limited opportunities.

What advice do you generally seek from external legal counsel and how can they best assist you in this environment?

From our external counsels I hope that they keep abreast of the changing trends in the market, particularly with respect to the terms and conditions of financings. What may be market today may be overly conservative tomorrow. If counsel can alert us to these changes, it will allow us to be more competitive.

It has led to some revised drafting which addresses some of the lenders’ larger, more significant concerns,” says Joseph Bevash, an office managing partner at Latham & Watkins’ Hong Kong office.

“There has been some evolution and that is constructive because it addresses concerns on both sides. It refines language that was probably as good as it could have been at the time before being tested.”

Workflows

Despite the economic downturn, Bevash has been busier than ever.

Money has been drawn away from less well structured products into funding for projects, which tend to be structured, documented and heavily monitored by lawyers. “Now it is worth lenders’ while to put the time in to do the more complicated deals,” he says.

“They are taking the opportunity to enjoy the market while it lasts and there is incredible pressure on us to get the deals in the pipeline closed.”

There has also been an increase in multi-currency facilities requiring significant swap contracts. “Currency hedges are very important now because lenders are sourcing and lending funds in currency other than US dollars.

As a result, banks are doing a terrific business in currency swaps – which can sometimes be the most lucrative part of the deal,” says Bevash.

Banking & finance lawyers in Asia are now looking to service a more mature market with a broader product mix. Finance deals are becoming more sophisticated and Khong Mei Lin complicated – as a result, Shook Lin & Bok they require a more significant role from lawyers.

If the market continues to settle throughout 2010, borrowers may look for opportunities to refinance with cheaper deals. For example, in Singapore, REITs are already looking to the market to refinance or restructure and acquisition finance appears to be picking up. In particular, the market for enbloc sales of property is experiencing a revival. Financing deals will be created as purchasers generally require substantial funding to complete these acquisitions. ALB 67

FEATURE | banking & finance >>

Banking & Finance Q&A Moving past the ‘year of fear’: Loo Choon Chiaw discusses Asian Legal Business: As the world economy has been recovering over the last few months, are there any notable trends?

Loo Choon Chiaw: The world economic landscape has been drastically changed after the recent global financial crisis (“GFC”). Most experts agree that as the developed economies were the most adversely affected by the GFC, consumption from those economies will remain relatively low for quite a while. Some expect the developing economies, especially the PRC, to generate more demand in consumption.

Loo Choon Chiaw

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ALB: How about the trends in the global financial sector?

LCC: Industry experts noted a growing and sustained “back to basics” demand on the part of the bank customers (both individual and corporate), probably because the nightmare caused by the infamous Lehman structured products was still relatively fresh in their minds. According to the Monetary Authority of Singapore (“MAS”), as at end May 2009, the banks and financial company involved had offered settlements to 67% of investors on a no-admission-of-liability basis to over 3,600 investors for about $105 million.

In the light of the above, most investors in the capital market, since the GFC, have indicated a strong preference for simple, standardised, straight forward, more transparent, plain vanilla type of products. They have also demanded that trading and settlements be conducted via central clearing mechanisms with a view to reducing counter-parties risks.

Banks in general have certainly felt the pressing need to adjust back to an environment in which profits are primarily earned from the comparatively traditional, unglamorous and less than sexy activities such as the provision of traditional loans and mundane banking services.

With a view to minimising their exposure, banks have also taken further precautions in prohibiting their tellers from referring customers to representatives for the purchase of investment products; in tightening the sales process for specific groups of customers (who may find it difficult to understand the salient features of investment products) and in implementing enhanced product suitability checks for these customers to ensure that they have fully understood the special features, benefits and risks of investment products; in requiring authorised representatives to explain the nature and risks of such investment

products to all prospective customers; in enhancing adequate due diligence for new investment products; in introducing a cooling off period of up to 7 days for structured products (with the exception of time-sensitive treasury / investment products); in conducting robust and specialised training as well as examinations for representatives; and in reinforcing commitment to handle complaints and disputes effectively.

ALB: Any notable trends vis-à-vis the regulators?

LCC: Any serious regulators will “react” (the term is not used in a derogatory sense) after a crisis in the light of the valuable lessons which have been learnt. The reaction of the regulators after the GFC was of no surprise to anyone. Regulators across the globe have been re-examining their supervisory and regulatory approaches. Banking and financial regulations have been tightened. More changes to those regulations have been contemplated by many regulators. Such proposed changes include the raising of capital ceiling for banks and financial institution and the imposition of more stringent liquidity management by banks and financial institutions. Reforms are on the cards for the introduction of measures for the enhancement of consumer protection frameworks, and the clearer identification and better monitoring of systemic risks.

ALB: What are the strategies adopted by Singapore in capitalising on those trends indentified?

LCC: Mr Goh Chok Tong, Singapore’s Senior Minister and Chairman of the MAS, has recently outlined 5 strategies which Singapore has adopted in its effort to capitalise on the global trends identified. They are: (1) to maintain a sound and progressive regulatory framework; (2) to tap the growing wealth in Asia; (3) to leverage on the massive infrastructural needs in Asia; (4) to enhance Singapore’s risk management capabilities and market infrastructure, and (5) to enhance Singapore’s talent pool and intellectual capacity.

ALB: What kinds of clients are you acting for and in respect of what type of banking and financing work?

LCC: We act for MNCs, local listed corporations, SMEs, foreign central banks, domestic and international banks and financial Asian Legal Business ISSUE 10.1

FEATURE | banking & finance >>

the rejuvenation of Asia’s B&F scene with ALB institutions, financial intermediaries, Chinese (PRC) and Taiwanese (ROC) governmentlinked corporations and foreign legal firms in respect of cross-border transactions which have a Singapore dimension. We attend to a wide range of domestic and international banking and financing work, ranging from simple bi-lateral facilities to complex club and syndication facilities.

We also advise clients on the full range of corporate finance matters, including, public and private equity and debt offerings, IPO, RTO, M&A and funds matters.

ALB: What type of new work do you see flowing in to your practice?

LCC: We have been receiving increasing instructions from corporate clients who wish to undertake an internal corporate restructuring exercise, for instance, the voluntary winding up or striking off of a dormant subsidiary, the amalgamation of 2 or more entities in the group which exercise similar functions, as a prelude to major financing exercises to address regulatory or tax issues. We have also been receiving more instructions from clients in relation to the restructuring of their existing financing arrangements. In similar vein, we have also been receiving instructions from financial institutions for advice relating to the legal implications of their customers’ existing financing arrangements in the light of a proposed reorganisation of their customers’ internal group structure.

With an appetite for expansion and with it, a need for financing, many of our clients are also actively reviewing their options, ranging from equity financing (for instance, private placement, IPO and rights issues) to debt financing (for instance loans and bonds) or a hybrid financing arrangement comprising both equity and debt elements (for instance, convertible loans and loans with equity kickers, such as, options or warrants on shares).

ALB: Your firm has garnered strong support from foreign banks that chose to set up their branches in Singapore. Why Singapore?

LCC: In Singapore, the banking system is central to its economy. Thus, high systemic support is expected in times of financial turbulence. Moody’s Investors Service noted in its recent report, “Banking System Profile for Singapore,” that, banks in Singapore www.legalbusinessonline.com

enjoy a stronger operating and regulatory environment than banks in most of its neighboring countries despite the volatility in the city-state’s economic growth. The operating environment for the Singaporean banks has been robust attributed by: its good economic growth (in most years); a well established and efficient legal system; and sound controls of corruptions.

ALB: Is there more interest in Shariahcompliant financial instruments and financing?

LCC: As you may be aware, in accordance with Shariah principle, Islamic banking activities must avoid riba (the payment or receipt of interest), must prohibit gharar (uncertainty), must posses an element of risk-sharing and profit-sharing, and ought to focus on halal activities, i.e. be confined to Islamic permissible activities. Shariah-compliant financial activities have unique characteristics that make shariah-compliant financial instruments attractive. These unique characteristics include the requirement that every Islamic finance transaction must be supported by an underlying and genuine trade and business-related activity. Being supported by such activities means that the gearing of the Islamic finance transaction would be lower than that applicable to a conventional finance transaction. The requirement to share risk and profit between the funder and the entrepreneur has the effect of ensuring that the funder is just as careful and vigilant as the entrepreneur in carrying out the requisite due diligence investigations before agreeing to fund the transaction. Thus, advocates argue that Islamic financial activities, as compared to conventional financing activities, are likely to be less speculative, more prudent and with less leverage.

With a view to promoting Islamic banking activities, Asian nations such as Malaysia, Indonesia, Brunei, Singapore and Hong Kong SAC being acutely aware of the lucrative opportunities presented by the Shariahcompliant banking activities have, without exception, allocated much resources to review, revise or change their legal, regulatory and fiscal framework to ensure that Islamic banking activities are not disadvantaged vis-à-vis the conventional banking activities.

Hence, in the light and aftermath of the GFC and notwithstanding the Dubai World ‘default’ debacle on 23 November last year, there may

be more interest in Islamic financing even amongst non-Muslim.

ALB: As your firm undertakes Islamic finance work, please share your thoughts on the opportunities and challenges presented by Islamic banking?

LCC: In structuring financing transactions, whether they are conventional finance transactions or Islamic finance transactions, competent legal advice and services are essential. As Islamic finance is still in its infancy stage, it presents opportunities to lawyers who are familiar with such transactions. Legal skills and advice shall be needed to ensure that the legal documents are consistent with the applicable Islamic principles. Lawyers with expertise in conventional finance will face great challenges and opportunities to use their cumulative experience to develop innovative Islamic financial products by utilising concepts used in existing conventional finance which are not inconsistent with applicable Islamic principles.

The Dubai World ‘default’ debacle shall invariably cause the bankers who are entering into new Islamic financing deals to be more cautious in structuring such transactions. This will certainly bring more work for the lawyers whose practice covers such areas.

Loo & Partners LLP 88 Amoy Street Level Three Singapore 069907 Tel : (65) 6322-2288 Fax : (65) 6534-0833 Email : ccloo@loopartners.com.sg Website: www.loopartners.com.sg Loo & Partners LLP (Registration No. LL0800566K), registered with liability in Singapore under the Limited Liability Partnerships Act (Chapter 163A), was converted from the firm “Loo & Partners” to a limited liability partnership with effect from 28 May 2008.

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Feature | interview >>

In-house perspective

Alibaba Group:

Inside the law

Legal advisors have to evolve as fast as Alibaba itself to keep, or win, mandates. ALB meets the company’s in-house team

Alibaba group’s in-house legal team, led by general counsel Tim Steinhert (centre)

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libaba Group is a company that has flourished since its humble beginnings. Starting as a small operation, it is now a global powerhouse controlling various subsidiaries including Alibaba.com, Taobao.com, Alipay.com and China Yahoo!. Alibaba Group has captured the e-commerce market in China.

In a world on the brink of a new economic era, many global players are looking to China for salvation, whereas Alibaba Group has set its eye on the rest of the world. A company with those ambitions requires the support of dedicated employees, so the in-house legal team for the group and its subsidiaries is constantly evolving.

“I think our expertise and our size and coverage makes us unique among Chinese companies, and reflects the strength of our business and our business ambitions to grow domestically and internationally,” says Alibaba Group’s general counsel, Tim Steinert.

The team

Steinert came to Alibaba from the Hong Kong office of Freshfields Bruckhaus Deringer, where he spent seven years as a partner specialising in private M&A and securities. It was during the Alibaba.com IPO in 2007 where Freshfields was an adviser that 70

he jumped from private practice to in-house law.

Steinhert leads a legal team of over 50 people (32 who are lawyers) including specialists in M&A, IP, disputes, listing compliance, securities, financial services and commercial transactions. And it’s easy to see why Alibaba was keen to have Steinert at the helm. Fluent in Mandarin, he also has significant experience with legal transactions in Asia, having started his career in Beijing with Coudert Brothers in 1989.

Headquartered in Hangzhou, Alibaba now has around 17,000 employees, with only around 250 people based outside the mainland. “In the past, our business was more focused on China, but the legal issues we have been facing more recently have been increasingly international,” Steinert says.

Uncharted legal territory

As e-commerce companies, Alibaba. com and Taobao.com facilitate the relationship between buyers and sellers in an online marketplace.

However, this creates situations where some sellers can offer products that may infringe on third-party IP rights.

This model has created a new (and rapidly evolving) area of law around

the enforcement of these types of commercial relationships.

It can be challenging to navigate through any legal framework, but especially so in China. “The internet business is relatively new and therefore the legal issues that arise are in some ways undeveloped,” Steinert says, pointing to privacy, online defamation and third-party IP rights as examples. In addition, lawyers for Alipay.com must also deal with the uncertainty of China’s regulations surrounding online payment and settlement, as there is currently no established framework regulating these transactions.

Steinert and Alibaba Group understand that regulations are currently being drafted in China.

“The People’s Bank of China will be the regulator and the regulations will provide a licensing framework,” he says. Earlier this year, the group entered a strategic alliance with the Bank of China to collaborate on e-commerce initiatives, including online payment and the development of the Alipay smart card.

Despite the developing laws, the legal issues are not entirely foreign.

“The laws in China may be different but the underlying principles of the law and the approach on issues in China are similar to the rest of the world,” says Steinert. “For instance, the obligation of the marketplace with respect to third-party IP in China is similar to that in the US and Europe,” he explains. It also helps that the in-house legal team has specialists in trademark, domain names and patents law.

M&A activity

Alibaba Group is pursuing expansion plans; creating Alibaba Strategic Investment, a team which functions very much like a venture capital fund.

The team identifies and invests in early-stage companies that may be of strategic benefit to the group or its subsidiaries, either through improving Brief history of Alibaba Group

• Alibaba Group founded

1999

• Alibaba Group raises US$25 mn from Softbank, Goldman Sachs, Fidelity, and other institutions

1999-2000

Asian Legal Business ISSUE 10.1

Feature | interview >>

technology, people, products or markets.

In addition, the subsidiaries of Alibaba Group also pursue their own M&A strategies. “We have M&A specialists who can support our collective needs. An in-house M&A specialty is unique for companies in mainland China. We may also outsource some of the work, but we have people internally who can do it,” says Steinert.

Not every in-house legal team has M&A specialists but the Alibaba team has strong support from management.

“Our management appreciates the value that having skilled lawyers inhouse brings,” Steinert says.

Outsourcing policies

Even though the legal team has strong in-house capabilities, Alibaba Group and its subsidiaries still seek assistance from external legal counsel when necessary, usually for particular transactions and specialist needs. To

“The internet business is fairly new and therefore the legal issues that arise are in some ways undeveloped” Tim Steinert, general counsel, Alibaba Group ensure it receives the highest quality support, the group invites law firms to pitch for the legal work when the need arises – rather than keeping a set panel of firms. “We look first and foremost to expertise; firm expertise and then team expertise. The team has to be able to meet our needs on a transaction,” says Steinert.

Legal expertise also has to be applied with a deep understanding of the internet business and of Alibaba

• Alibaba.com becomes profitable

2002

• Consumer e-commerce website Taobao.com is founded

• Online payment system Alipay is launched

2003

www.legalbusinessonline.com

2004

►► structure of Alibaba Group’s legal department • 8 Hong Kong/US qualified lawyers

General Counsel Tim Steinert

Corporate finance, M&A, investment, group structuring, shareholder matters, disputes and IP Subsidiaries – 20 lawyers Commercial transactions, product and service structuring, trust and safety legal support, general regulatory compliance, employment law, purchasing, finance support and other administration

Group. “Lower down the list are things like availability and their track record onshore or offshore. Of course, they have to speak Chinese for deals relating to China.” Steinert also identifies value-for-money as an important factor in selecting external legal counsel. “We expect that the firms will give us good value for the fees they charge. We are an intelligent user of external legal services,” he says. According to Steinhart, the group sometimes works on an estimate basis, sometimes on a cap basis and sometimes on a non-cap basis.

Yet this does not mean that Alibaba looks for low-cost law firms – there is an understanding that quality legal work can be more expensive.

“Logically, fixed-fees are only appropriate where you have an accurate idea of the volume of work.

It’s not in anybody’s interest if the volume of work significantly exceeds the original calculation and the client insists the cap be maintained, because that is not good for the relationship and you may not get the quality of service that you deserve,” Steinert says.

He notes that PRC domestic law firms are more willing to work on a capped basis on a variety of transactions, including on litigation.

“This is not as widely accepted outside China… International law firms are willing to cap in certain transactions but this cap is normally subject to a lot of assumptions.”

►► Outsourced legal work Financial services 5%

2006

2007

2008

Other 15%

IP 30%

Commercial 15% M&A 30%

Litigation 5%

Note: Estimate based on total fees paid in the past 12 months.

Expansion plans The group’s business eye is set on a joint venture plan in India, as this is Alibaba.com’s largest supplier market after China. It saw 138% sales growth in India last year, with SME membership surpassing one million in June 2009. A new business unit – Alibaba Cloud Computing – is also being launched, to showcase computing, memory and network services, while providing another level of internet service for customers.

As the business expands so will the requirement for legal services. The in-house legal team is already looking to boost its depth and expertise.“As an international company, our legal department has to deal appropriately with laws in the jurisdictions where we are more active. So, as we expand internationally, I expect we will have to expand our legal department capabilities as well,” Steinert says.

• Internet-based business software • Koubei.com merged with • Alibaba Group company Alisoft launched forms strategic • Alibaba China Yahoo! to form partnership with Group makes • Alibaba.com lists on the Hong Yahoo! Koubei a strategic Kong Stock Exchange Yahoo! Inc. • Alimama integrated with investment in • Alibaba Group launches and takes over Taobao Koubei.com Alimama, an online advertising operations of • Alibaba Group R&D exchange company China Yahoo!

Institute established

2005

• 24 PRC qualified lawyers

Alibaba Group – 10 lawyers

• Alisoft merged with Alibaba R&D Institute • Alisoft’s Business Management Software division injected into Alibaba.com • Koubei.com injected into Taobao as part of the “Big Taobao Strategy” • Alibaba.com acquires up to 99.67% interest in China Civilink

2009

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| ALB Law | ALB ATURE Feature Awards Law Awards wrap >> wrap >>

A year of excellence Four hundred and thirty five trophies, 197 unique winning firms and companies, thousands of nominations and attendees. 2009 was a big year for the ALB Law Awards series of events, even if it wasn’t the best for the underlying economies of the 14 jurisdictions that the five events covered

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tarting with the ALB China Law Awards 2009 in Shanghai in April, progressing to the ALB Japan Law Awards in Tokyo in May, the ALB Australasian Law Awards in Sydney also in May, and the ALB SE Asia Law Awards in early June, and finishing with the huge ALB Hong Kong Law Awards in September, these well established, high-profile events once again gave recognition to the very best deals, inhouse teams and law firms the AsiaPacific profession has to offer.

All five events were black-tie dinner ceremonies attended by hundreds of leading lawyers and business leaders eager to learn the winners in each

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category. Key to the events was the months of intense research that preceded them. While the ALB team managed, filtered and processed the huge amounts of information, great thanks go to the many marketing departments and individual lawyers who spent valuable time compiling the nominations and submissions from which the finalists were selected.

As the table on this page shows, the Magic Circle firms and the big US firms and investment banks scored highly in overall number of wins, but also notable was the strong showing from regional powerhouse firms like Mallesons, King & Wood, Mori Hamada and Allen & Gledhill.

Particularly pleasing was the depth of the winners list. Six years ago, when most of the events started, who would have expected to see firms like J Sagar (India) and JunZeJun (China) on the list? As the global – and particularly Asia-Pacific – economy rebounds and firms start to gear up, the ALB Law Awards look set for an even bigger year in 2010. With some fresh new categories to reflect the rapidly changing markets around the region, this year’s events will likely involve an even greater spread of in-house teams, firms and individuals whose work deserves to be awarded.The following pages detail all winners across every category of the five events for 2009. ALB Asian Legal Business ISSUE 10.1

Feature | ALB Law Awards wrap >>

►► The big winners – organisations winning 4 or more awards

►► ALB Law Awards 2010 – important dates ALB China Law Awards 2010 - Shanghai

Nominations open Nomination deadline Finalists announced Event – winners announced

7 Jan 2010 29 Jan 2010 22 Feb 2010 16 Apr 2010

ALB Australasian Law Awards 2010 - Sydney

Nominations open Nomination deadline Finalists announced Event – winners announced

28 Jan 2010 18 Feb 2010 14 Mar 2010 13 May 2010

ALB Japan Law Awards 2010 - Tokyo

Nominations open Nomination deadline Finalists announced Event – winners announced

12 Feb 2010 5 Mar 2010 29 Mar 2010 28 May 2010

ALB SE Asia Law Awards 2010 - Singapore

Nominations open Nomination deadline Finalists announced Event – winners announced

19 Feb 2010 12 Mar 2010 5 Apr 2010 4 Jun 2010

Organisation

Wins Organisation

Baker & McKenzie

10

Deacons

5

Clifford Chance

10

Deloitte

5

JP Morgan

9

Jun He

5

Mallesons Stephen Jaques

9

Skadden

5

Morgan Stanley

9

UBS

5

Linklaters

8

WongPartnership

5

Freshfields Bruckhaus Deringer

7

Cains

4

Sullivan & Cromwell

7

Cleary Gottlieb

4

Allen & Gledhill

6

Drew & Napier

4

Allen & Overy

6

Freshfields

4

Allens Arthur Robinson

6

Gilbert + Tobin

4

Citi

6

Jingtian & Gongcheng

4

Conyers Dill & Pearman

6

JSM

4

King & Wood

6

Nagashima Ohno & Tsunematsu

4

ALB Hong Kong Law Awards 2010 – Hong Kong

Nominations open Nomination deadline Finalists announced Event – winners announced

11 Jun 2010 2 Jul 2010 26 Jul 2010 17 Sep 2010

Wins

Mori Hamada & Matsumoto

6

Rajah & Tann

4

Nikko Citigroup

6

Sidley Austin

4

Davis Polk & Wardwell

5

White & Case

4

DBS

5

To make sure your firm receives the recognition it deserves at the ALB Law Awards for 2010, please contact iris@kmimail , tel +852 2815 5988.

Please visit www.albawards.com for full details of nominating for, sponsoring and attending these events www.legalbusinessonline.com

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Feature | ALB Law Awards wrap >>

ALB China Law Awards 2009 winners

ALB Australia Law Awards 2009 winners

ALB Japan Law Awards 2009 winners

ALB SE Asia Law Awards 2009 winners

ALB Hong Kong Law Awards 2009 winners

Debt Market Deal of the Year

Country Garden Convertible Bond Offering

Primary Health Care - Symbion Health Acquisition Financing

GE Capital Corporation Samurai Bond Series

City Development Islamic Trust Certificate Programme

Champion REIT

Debt Market Deal of the Year

China Oilfield Services Acquisition of Awilco Offshore

Chinalco/Alcoa Acquisition of Stake in Rio Tinto

Equity Market Deal of the Year

China Railway Construction Corp IPO

Commonwealth Bank of Australia Equity Placement

MUFJ Financial Group Global Offering

Reliance Power IPO

Hutchison Telecom Spin-off

Deal Award categories

Insolvency & Restructuring Deal of the Year

Allco Finance Group Restructuring and Receivership

M&A Deal of the Year

Chinalco Acquisition of Stake in Rio Tinto

Westpac - St George Merger

Project Finance Deal of the Year

Central Asia-China Gas Pipeline

Energy Infrastructure Investments Group Asset Sale

Real Estate & Construction Deal of the Year

Asia Pacific Land Acquisition of The Center, Shanghai

Mitsui Fudosan - Frontier Real Estate Inv Corp Acquisition

International Dealmaker of the Year

Chun Wei, Sullivan & Cromwell

Theodore Paradise, Davis Polk & Wardwell

Dealmaker of the Year

David Liu Dali, Jun He

Deal Team of the Year

Singapore Deal of the Year WINNER Drew & Napier LLC Established in 1889, Drew & Napier is one of Singapore’s leading law firms. Consistently rated top tier in Dispute Resolution, the firm is also rated top tier in Insolvency & Restructuring, IP, Competition & Antitrust, TMT and Tax, with market leading practices in Mergers & Acquisitions, Corporate Finance, and Admiralty & Shipping. Drew has brought home the Singapore Deal of the Year award for the second year running.

Contact details: 20 Raffles Place, #17-00 Ocean Towers, Singapore 048620 Tel: +65 6535 0733 Fax: +65 6535 4906 Email: mail@drewnapier.com Website: www.drewnapier.com

MUFJ- Morgan Stanley Stake Acquisition

Aust: Philippa Stone, Freehills; NZ: Pat Bowler, Russell McVeagh

Akiko Kimura, Anderson Mori & Tomutsune

Aust: Mallesons, Corporate/ M&A; NZ: Bell Gully, Corporate/M&A

Mori Hamada & Matsumoto, M&A Corporate

International Deal Firm of the Year

74

Nomura-Lehman Brothers (Asia) Acquisition

Davis Polk & Wardwell

Merrill Legal Solutions Award INTERNATIONAL ARBITRATION LAW FIRM OF THE YEAR WINNER Drew & Napier LLC One of Singapore’s leading law firms, Drew & Napier has 7 Senior Counsel – the largest number of any Singapore law practice. The firm is consistently rated top tier in Dispute Resolution, and is the only law firm to win both the Commercial Litigation and International Arbitration Law Firm of the Year awards at the ALB SE Asia Law Awards and has accomplished this for two years.

Contact details: 20 Raffles Place, #17-00 Ocean Towers, Singapore 048620 Tel: +65 6535 0733 Fax: +65 6535 4906 Email: mail@drewnapier.com Website: www.drewnapier.com

Lion Power Holdings - Senoko Power Financing & Acquisition

China Merchants Bank – Wing Lung Bank Acquisition

Resorts World Sentosa Project Finance

Central Asia – China Gas Pipeline

Linklaters

PHILIPPINES DEAL FIRM OF THE YEAR

BMW Asia Award SE Asia Deal of the Year

WINNER

WINNER

Romulo Mabanta Buenaventura Sayoc & De Los Angeles

Luthra & Luthra Law Offices

Romulo Mabanta Buenaventura Sayoc & De Los Angeles is one of the three largest and among the oldest firms in the Philippines, established in the early 1900s. The firm has garnered ALB SE Asia Law Awards for 2005, 2006, 2007 and 2009.

Contact details: 30th Floor Citibank Tower, 8741 Paseo de Roxas, Makati City, Philippines Tel: +632 848 0114 Fax: +632 815 3172 / +632 810 3110 Email: Romulo@Romulo.com Website: www.Romulo.com

Luthra & Luthra Law Offices is a ‘full service’ premier Indian law firm with 175 lawyers. The key areas of practice include M&A, Private Equity & Funds, Capital Markets, Banking & Finance, Project Finance, Tax (Direct & Indirect), Intellectual Property rights, Litigation & Arbitration. The Firm currently ranks 1st in the world in the category ‘Global PFI/PPP Deals’ by ‘Dealogic Global Review’ and has also topped the charts in the category ‘Global Project Finance Deals’. The Firm is the recipient of India Firm of the year by Asialaw.

Contact details: Mumbai Office: 704-706, 7th Floor, Embassy Centre, Nariman Point, Mumbai – 400 021 Tel: +91 22 6630 3600 Fax: +91 22 6630 3700 Email: luthra@luthra.com

Asian Legal Business ISSUE 10.1

Feature | ALB Law Awards wrap >>

ALB China Law Awards 2009 winners

ALB Australia Law Awards 2009 winners

Deal Firm of the Year Deal of the Year (1)

China Netcom/Unicom/ Telecom restructure

Westpac - St George Merger

ALB Japan Law Awards 2009 winners

ALB SE Asia Law Awards 2009 winners

Anderson Mori & Tomotsune

Allen & Gledhill

MUFJ- Morgan Stanley Stake Acquisition

SE Asia: GMR - Intergen Financing and Acquisition

Deal of the Year (2)

ALB Hong Kong Law Awards 2009 winners

S’pore: Resorts World Sentosa Project Finance

In-House Award categories Banking & Financial Services In-House Team of the Year

ICBC

Insurance In-House Team of the Year Investment Bank In-House Team of the Year

Commonwealth Bank of Australia

Nikko Citigroup

IAG JP Morgan

UBS

Bank of America Merrill Lynch AIA

Nomura Securities

International Investment Bank Team of the Year

Goldman Sachs

TMT In-House Team of the Year

Sony

Media & Entertainment In-House Team of the Year

DBS

JP Morgan

Morgan Stanley

Singtel

Hutchison Telecom

Kerry Gleeson, Incitec Pivot

PCCW

Real Estate & Construction InHouse Team of the Year

CapitaLand

Hongkong Land

Shipping In-House Team of the Year

Neptune Orient Lines

COSCO Pacific

Jeffrey Wong, UBS

Jaclyn Jhin, Morgan Stanley

In-House Lawyer of the Year

www.legalbusinessonline.com

Akiko Yamahara, Nikko Citigroup

75

Feature | ALB Law Awards wrap >>

ALB China Law Awards 2009 winners

ALB Australia Law Awards 2009 winners

ALB Japan Law Awards 2009 winners

ALB SE Asia Law Awards 2009 winners

ALB Hong Kong Law Awards 2009 winners

In-House Team of the Year (1)

Foreign Company: Procter & Gamble

Australia Company: Commonwealth Bank of Australia

Nikko Citigroup

UBS

Morgan Stanley

In-House Team of the Year (2)

Chinese Company: China Telecom

NZ Company: Fonterra

Rajah & Tann

Pinsent Masons

Drew & Napier

Herbert Smith

Firm Award categories Banking Law Firm of the Year

Jun He

Construction Law Firm of the Year Dispute Resolution Law Firm of the Year

Dacheng

Anderson Mori & Tomotsune

International Arbitration Law Firm of the Year

Drew & Napier

Employment Firm of the Year

Harmers Workplace Lawyers

Simmons & Simmons

Energy & Resources Law Firm of the Year

Linklaters Allen & Gledhill

Insolvency & Restructuring Law Firm of the Year

Guantao

Insurance Law Firm of the Year

Grandall Legal Group

Wotton + Kearney

IP Law Firm of the Year

Fangda

Davies Collison Cave

Nishimura & Asahi

JSM Deacons

Mori Hamada & Matsumoto

ATMD Bird & Bird

Bird & Bird

IT/Telecommunications Law Firm of the Year

Freshfields Bruckhaus Deringer

Real Estate Law Firm of the Year

WongPartnership

JSM

Shipping Law Firm of the Year

Sloma & Co

SE Asia: Ince & Co; S’pore: Rajah & Tann

Holman Fenwick Willan

Tax & Trusts Law Firm of the Year

JunZeJun

Allen & Gledhill

Baker & McKenzie

Offshore Law Firm of the Year

Conyers Dill & Pearman

Maples and Calder

Conyers Dill & Pearman

Maples and Calder

Osaka: Oh-Ebashi

India: Amarchand & Mangaldas, AZB & Partners

PRC Firm: King & Wood

Regional firm awards West China: Solton & Partners

Adelaide: Thomson Playford Cutlers

North East China: Deheng Law Firm

Brisbane: McCullough Robertson

Indonesia: Hadiputranto, Hadinoto & Partners

Korea Deal Firm: Kim & Chang

Zhejiang: Zhejiang T&C

Perth: Jackson McDonald

Malaysia: Zaid Ibrahim & Co

Taiwan Deal Firm: Lee and Li

Jiangsu: Fangben

Melbourne: Hall & Wilcox

Philippines: Romulo Mabanta

Tianjin: Winners

Sydney: Gilbert & Tobin

Thailand: Baker & McKenzie

Shenzhen: Shu Jin

Vietnam: VILAF Hong-Duc

Hong Kong Law Firm, PRC Office: Deacons Guangzhou: Alpha & Leader Shanghai: AllBright Beijing: King & Wood

76

Managing Partner of the Year

Xiao Wei, Jun He

Robert Milliner, Mallesons

International Law Firm of the Year

Freshfields

Skadden

Law Firm of the Year

King & Wood

Po Lee Tan, Baker & McKenzie; Elaine Lo, JSM

Linklaters

Asian Legal Business ISSUE 10.1

Feature | ALB Law Awards wrap >>

ALB China Law Awards 2009 winners

ALB Australia Law Awards 2009 winners

ALB Japan Law Awards 2009 winners

ALB SE Asia Law Awards 2009 winners

ALB Hong Kong Law Awards 2009 winners

China In-house Team of the Year: China Telecom

Corporate Citizen Firm of the Year: Gilbert + Tobin

Tech. & Telecoms Deal of the Year: Bain Capital - D&M Holdings Acquistion

Asset & Corporate Finance Deal of the Year: GMR Intergen Financing and Acquisition

Taiwan Deal of the Year Advanced Semiconductor Engineering Going-Private Buyout of ASE Test

CSR Firm of the Year: Mallesons Stephen Jacques

Trading Company In-House Team of the Year: Mitsubishi

SE Asia M&A Deal of the Year: Tata Motors - Jaguar/ Land Rover Acquisition

Korea Deal of the Year - E-Land Group- Homever Sale

Innovative Use of Technology Award: Minter Ellison

Lifetime Achievement Award: Takashi Ejiri, Nishimura & Asahi

Other awards Rising Law Firm of the Year: MWE China

Outstanding Contribution to the Legal Profession: Hon Michael Kirby AC CMG

Construction In-House Team of the Year: MTRC Investment Funds Law Firm of the Year: Clifford Chance Boutique/Specialist Law Firm of the Year: Charltons Criminal Law Firm of the Year: Haldanes Matrimonial Law Firm of the Year: Hampton, Winter and Glynn

Chivas 18 Award SE ASIA M&A DEAL OF THE YEAR WINNER

IPP financial advisers award SINGAPORE M&A DEAL OF THE YEAR

Insurance Specialist Firm of the Year – ALB Australasian Law Awards 2009

Rodyk & Davidson LLP

WINNER

• Singapore’s oldest law practice, established 1861.

• More than 130 lawyers, one of Singapore’s largest.

• Five core practices: Corporate, Finance, Intellectual Property & Technology, Litigation & Arbitration, and Real Estate • Acknowledged as one of Singapore’s best local counsel on mega-M&A – ALB, September 2009 • “…expertise in all aspects of corporate finance... M&A advisory and transactional work...”

– Chambers Asia, 2009

Rodyk & Davidson LLP

WINNER

• Singapore’s oldest law practice, established 1861.

• More than 130 lawyers, one of Singapore’s largest.

• Five core practices: Corporate, Finance, Intellectual Property & Technology, Litigation & Arbitration, and Real Estate • Acknowledged as one of Singapore’s best local counsel on mega-M&A – ALB, September 2009 • “…expertise in all aspects of corporate finance... M&A advisory and transactional work...”

– Chambers Asia, 2009

Wotton Kearney

Contact details: 80 Raffles Place, #33-00 UOB Plaza 1 Singapore 048624 Phone +65 6225 2626 Fax +65 6225 1838 Email mail@rodyk.com Website: www.rodyk.com

Contact details: 80 Raffles Place, #33-00 UOB Plaza 1 Singapore 048624 Phone +65 6225 2626 Fax +65 6225 1838 Email mail@rodyk.com Website: www.rodyk.com

Contact details: Level 5, 88 Phillip Street, Sydney, Tel: +61 2 8273 9900 Level 6, 550 Bourke Street Melbourne, Tel: +61 3 9604 7900 www.wottonkearney.com.au

www.legalbusinessonline.com

Wotton + Kearney is a specialist insurance law firm based in Sydney and Melbourne. Consistently rated as one of Australia’s fastest growing law firms, Wotton + Kearney’s leading insurance law experts provide advice to insurers, other risk carriers and corporate insureds servicing clients throughout Australia, Asia and the UK markets.

SE Asia Shipping LAW FIRM OF THE YEAR WINNER Ince & Co Ince’s Singapore office has provided legal services in the region for more than 15 years and now has 17 fee earners. The firm is acknowledged as one of the leading offshore firms in Singapore with principal business areas in Shipping, Energy & Offshore, Insurance & Reinsurance, International Trade, Commercial Disputes, Business & Finance, and Aviation.

Contact details: 16 Collyer Quay, #24-01 Hitachi Tower Singapore 049318 Phone: +65 6538 6660 Fax: +65 6538 6122 Email: richard.lovell@incelaw.com Website: www.incelaw.com

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FEATURE | asset finance & aviation >>

Diversify to fly: Asia’s aviation firms

80

Asian Legal Business ISSUE 10.1

FEATURE | asset finance & aviation >>

You need money to make money, the saying goes. For Asia’s aviation practices, when the banks stop lending for asset financing it will naturally affect the amount of work coming in. But even during the global credit crunch deals are being done. Asian aviation practices are still airborne – and the key is diversification

T

he main source of revenue for most aviation practices in Asia has been leasing and financing business. But since the credit crunch aviation lawyers have been watching as funds from the traditional sources (banks) have dried up. It also didn’t send a positive sign this year when some of those sources (from RBS to ING) exited the Asian region.

One of the region’s top aviation lawyers sketched this portrait of the current market. “Liquidity scarcity has dampened the amount of transactions coming out of the banks, several of the big lending houses are undergoing restructuring, and some have withdrawn from the Asian market altogether,” explains Paul Ng, the global head of aviation at Stephenson Harwood & Lo. “That leads to fewer transactions – and means fewer deals for lawyers.”

The market was adverse towards the end of 2008 and early 2009 but some improvement has been seen thanks to government funding and export credit agencies (ECAs) in Asia and Europe who have guaranteed the funds to finance new aircraft. “The fact that governments are supporting the credit risk of the airlines has allowed some banks to lend, so that’s one source of work taking over from your regular bank financing,” says Ng. Whereas project finance lawyers found relief from the crisis thanks to government economic stimulus packages, aviation lawyers have found the same relief from ECAs. “The main deals have been the ECA-supported deals, and nearly all utilise a special purpose entity – often established in Cayman Islands or Ireland – to

www.legalbusinessonline.com

enhance the security position of the lenders and, ultimately, the ECAs who provide the debt,” says Mark Western, a partner at the Hong Kong office of Maples and Calder.

Amir Fazael Zakaria, the senior legal counsel with Asia’s largest lowcost carrier, AirAsia, explains why ECAs have been the “saviours of the industry” at this time. “They are the only players in town, and no banks would dare to lend money if it wasn’t for the ECAs backing these loans,” he says. “If it wasn’t for them there’d be a lot of people not picking up their aircraft deliveries.”

“A number of firms are positioning themselves to complete work other than financing. Even if it’s not as lucrative, they’re now willing to do it” Amir Fazael Zakaria, AirAsia

Regulatory work

Relying on the big-ticket asset financing will not be enough for aviation practices during the credit crunch. While both Ng and Western say that leasing and financing remains a significant proportion of work in their practices, it’s no surprise that increasingly more work is seen in regulatory advice. “In the good times financing and leasing work would comprise 100% [of our practice]; but right now I would say that 25% is nonfinancing leasing work,” says Ng. AirAsia’s Zakaria says that groundwork regulatory business practice is inescapable for aviation lawyers. “Financing would be the glamour kind of work … there are other nitty-gritty things in the regulatory side dealing with embassies, lost luggage, flying permits, joint ventures … there’s a whole breadth of work there.”

The biggest advantage for law firms investing in the regulatory side is that, like shipping practices 81

FEATURE | asset finance & aviation >>

►► RECENT AVIATION DEALS AVIC – General Electric JV Firm: Run Ming Lead lawyers: Liu Yi, Yang Lijun Client: AVIC Firm: Weil Gotshal Lead Lawyer: Steve Xiang Client: GE Agreement to set up 50/50 joint venture to provide avionic products and services for future civil aviation programs in the worldwide market.

PT Lion Mentari Boeing aircraft financing Firm: Stephenson Harwood Client: PT Lion Mentari Lead lawyers: Paul Ng, David Hon, Simon Wong, James Bradley, Henry Preston, Edward Campbell Financing of seven new Boeing 737-900ER for PT Lion Mentari, Indonesia's largest airline Facility was arranged and provided by Citibank, N.A. Gulf Air Airbus Ijara financing Firm: Linklaters Client: Gulf Air Lead lawyer: Robert Fugard Firm: Hassan Radhi and Associates Client: Gulf Air Firm: Denton Wilde Sapte Client: Bahrain Islamic Bank Lead lawyers: Paul Jarvis, Sami Syadi Gulf Air’s US$70m loaned to partly finance eight new Airbus A320 aircrafts is a unique Shariah-compliant Islamic financing transaction. Deal is another sign of the upturn in the Gulf aviation sector, and client use of Islamic financing options Air China – Cathay Pacific stake acquisition

Firm: Freshfields Client: Air China Lead lawyers: Kay-Ian Ng, Alan Ryan, Michael Han Air China acquired additional 12.5% stake in Cathay Pacific from CITIC Pacific. CITIC represented by in-house counsel. “This significant deal would bring two of Asia’s leading airlines closer together as well as strengthen the position of Beijing and Hong Kong as two of the key aviation hubs in the region.” Kay Ian Ng, Freshfields Bruckhaus Deringer

82

and ‘wet work’, it will remain largely unaffected by financial crises. As Zakaria points out, regulatory work is “still as troublesome as ever, despite the crisis” and he’s seen UK law firms (whose pre-crisis mainstay had been large aircraft financing transactions) deliberately diversifying.

“A number of firms are positioning themselves to do work other than financing. Even if it’s not as lucrative, they’re now willing to do it,” he says. One aviation practice recently approached his department offering IP and trademark work. “They’re quick to find a solution and that shows the order of the day.”

In the mid-to-long term scenario, another source of work for Asian firms will be generated from legal developments. For example, the Cape Town Convention came into effect in 2006 to standardise international aviation transactions such as assetbased financing and leasing contracts, and the EU Emissions Trading Scheme (ETS), which is expected to come into effect from 2013.

Airlines in Asia will continue to seek regulatory advice on their commitments and liabilities towards both these frameworks – and this is where law firms will come in. As Stephenson Harwood’s Ng says, “You would not be a credible firm if you could not provide advice on these issues.”

Lessons learned

Diversifying into regulatory work has been one strategy which has helped

aviation practices. For Ng, who has flown in from a big international employer (Freshfields) to a specialist operation (Stephenson Harwood), it is clear why some firms have remained stable where others haven’t. “It’s a lesson to firms to have a diversified portfolio of clients,” he says. “It also requires some foresight on the side of the partners to see trends in the market and to position the practice against the downturn.

Clients can see how you’re performing and it’s the firms who see their clients through the good and the bad, and still maintain good relationships, that will see high levels of activity.”

Zakaria’s company has engaged Ng on several deals in the last few years and he couldn’t agree more.

External legal counsel must have an understanding of not only the company’s business model, he says, but the operational aspects of an airline’s business too. “The main criteria to choose any legal firm would be their understanding of the business,” he says.

“We’ve seen lawyers from the other side who look at [matters] entirely from a commercial perspective, but they should also understand the operational needs of the airlines – from engineering requirements to the lease and sublease of aircraft within the group of companies. That can make negotiations smoother,” he says.

Winners are usually the ‘adaptable’ firms who adjust prices according to the market, build relationships beyond the workplace model, and most Asian Legal Business ISSUE 10.1

FEATURE | asset finance & aviation >>

importantly possess a global network or international presence. For most of the Asia-Pacific region’s law firms, however, lack of resources is an issue.

Domestic firms – even if they are among the biggest in the country – are retained by aviation clients largely on regulatory work such as assisting on local taxation, employment or tenancy issues. “When we go into a new territory we’d need a local firm to guide us through the process and procedures,” says Zakaria.

“We don’t find any reason not to

development of smaller players in the aviation legal industry by bringing them in on innovative transactions.

“It doesn’t matter to us if they need to engage someone else but we’re actually paying their lawyers to learn.

That means in the next assignment they don’t need to employ another firm,” adds Zakaria. “Some of our transactions are quite complex, we’ve won awards for our aircraft financings and it would be a great opportunity for a local Malaysian firm to learn some of the things we do here.”

“It’s a lesson to firms to have a diversified portfolio. It requires foresight on the side of the partners to see trends in the market and to position the practice against the downturn.

It’s the firms who see their clients through the good and the bad and still maintain good relationships that will see high levels of activity” Paul Ng, Stephenson Harwood

►► Rise of the low-cost airline • While ECAs have been the saviour for airlines, it’s the low-cost carriers (LCCs) that have saved the legal industry during the downturn. “They’ve been a huge source of work for the industry, whether it is the lenders or lawyers,” says Ng. “They’ve continued to grow in a tough market by targeting those who could not previously afford to pay the premium ticket prices.”

• Taking on the example of LCCs in Europe such as Ryanair, Asia’s LCCs have been highly active in the region in the last year, supplying work for firms fortunate to be on their list of external counsel. At the time of press, Tiger Airways was reported to be considering an IPO in the range of US$300m-US$500m, to fund its expansion in Australia and 50 new Airbus A320 aircraft currently in order.

• AirAsia in June ordered 10 Airbus A350, and the company’s legal counsel Amir Fazael Zakaria says seventy five A320s are in delivery. The company’s revenues for Q32009 grew 4% to US$218.5m due to strong passenger growth. “I think AirAsia’s business model has been a reason for its insulation from the crisis. We’ve seen the demand for lower fares and the volume of passengers both growing,” Zakaria says.

employ Malaysian or Singaporean firms and find that we’re often happy with the work. But there have been times when some have been illequipped and had to bring in other firms to assist.” Unfortunately that will result in a larger legal bill which, for any client, is unwelcome.

Companies like AirAsia are inadvertently facilitating the www.legalbusinessonline.com

Regardless of the financial crisis, it’s clear that Asia’s aviation lawyers have many challenges ahead. Whether it’s dealing with new market conditions, new players in the industry or new legal developments, aviation lawyers are enduring the same turbulence as their clients.

As Zakaria says, “law firms will have to sink and swim with us.” ALB 83

market data | M&A >>

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Asian Legal Business ISSUE 10.1

market data | M&A >>

www.legalbusinessonline.com

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market data | capital markets >>

Equity Capital Markets TRANSACTIONS List

Asia, inc Japan, ex Australia & New Zealand Nov 20 - Dec 17 Issuer

Proceeds (USDm)

Issue date

Currency

Bookrunner(s)

Sector

Hong Kong Tingyi(Cayman Islands)Hldg

530.7

12/08/09

TWD

SinoPac Securities

Consumer Staples

CNPC(Hong Kong)Ltd

480.2

12/01/09

HKD

Bank of America Merrill Lynch

Energy and Power

Sino-Forest Corp

460.0

12/10/09

USD

TD Securities Inc, Credit Suisse, Merrill Lynch

Consumer Staples

Sino-Forest Corp

349.3

12/10/09

CAD

Credit Suisse, TD Securities Inc

Consumer Staples

Belle Intl Holdings Ltd

300.5

12/16/09

HKD

Morgan Stanley

Consumer Staples

First Pacific Co Ltd

282.3

12/01/09

HKD

Cazenove Asia Ltd, Credit Suisse Hongkong and Shanghai Bkg (SG)

Financials

Brilliance China Automotive

145.2

12/03/09

HKD

JP Morgan Secs (Asia) (HK)

Industrials

Green Dragon Gas LTD

75.0

12/08/09

USD

Smith & Williamson Corporate

Energy and Power

Digital China Holdings Ltd

56.7

11/20/09

HKD

BOC International (China) Ltd

High Technology

Neo-Neon Holdings Ltd

55.9

12/15/09

TWD

Fubon Securities Co Ltd

Industrials

China Engine Group

51.8

11/20/09

KRW

Shinhan Investment Bank

Industrials

Digital China Holdings Ltd

41.9

12/10/09

HKD

Macquarie Group

High Technology

Sandmartin Intl Hldg Ltd

36.8

12/11/09

TWD

Grand Cathay Securities Corp

Telecommunications

Hindalco Industries Ltd

600.5

11/24/09

INR

Bank of America Merrill Lynch, Citi, Deutsche Bank AG, HSBC Holdings PLC, RBS, SBI Capital Markets Ltd, UBS Investment Bank

Materials

Cox & Kings(India)Ltd

131.2

11/27/09

INR

Indiainfoline Ltd

Consumer Products and Services

Pantaloon Retail(India)Ltd

107.6

11/23/09

INR

DSP Merrill Lynch Ltd, ENAM Financial Consultants

Retail

Welspun Gujarat Stahl Rohren

100.8

12/01/09

INR

JP Morgan

Materials

Godrej Properties Ltd

99.4

12/11/09

INR

Kotak Mahindra Capital Co, ICICI Securities & Finance Co

Real Estate

DB Corp Ltd

79.1

12/15/09

INR

Citi, Enam Securities, Kotak Mahindra Capital Co

Media and Entertainment

Bajaj Electricals Ltd

34.6

12/09/09

INR

Edelweiss Capital

Consumer Staples

Sunteck Realty Ltd

34.5

11/25/09

INR

UBS Investment Bank, Citi, Kotak Mahindra Capital Co

Real Estate

200.1

12/09/09

IDR

Mandiri Bank, CIMB-GK Securities Pte Ltd

Financials

12,069.6

12/14/09

JPY

Morgan Stanley & Co. Intl plc, Nomura International PLC, Mitsubishi UFJ Sec Intl Plc, JP Morgan Securities Ltd

Financials High Technology

India

Indonesia PT Bank Tabungan Negara{BTN}

JApan Mitsubishi UFJ Financial Grp Hitachi Ltd

2,960.3

12/07/09

JPY

Nomura International PLC, Goldman Sachs International

T&D Holdings Inc

1,409.4

12/09/09

JPY

Nomura Securities, Daiwa Securities SMBC Co Ltd

Financials

Nippon Yusen Kabushiki Kaisha

1,341.5

12/01/09

JPY

Merrill Lynch International, Nomura International PLC

Industrials

Hitachi Ltd

1,119.2

12/07/09

JPY

Nomura Securities

High Technology

572.8

11/25/09

JPY

Nomura International PLC

Materials

Asahi Glass Co Ltd Mitsui Chemicals Inc

514.6

11/24/09

JPY

Nomura Securities

Materials

GREE Inc

414.3

11/24/09

JPY

Nomura Securities

High Technology

Tokyo Tatemono Co Ltd

368.9

11/30/09

JPY

Mizuho Securities Co Ltd, Daiwa Securities SMBC Co Ltd

Real Estate

Japan Real Estate Investment

318.2

12/01/09

JPY

Nikko Cordial Securities Inc

Real Estate

Mori Seiki Co Ltd

201.3

12/02/09

JPY

Nomura Securities

Industrials

Akebono Brake Industry Co Ltd

172.8

11/20/09

JPY

Nomura Securities

Industrials

Kadokawa Group Holdings Inc

130.0

12/01/09

JPY

Daiwa Sec Europe Geneva Branch

Media and Entertainment

Hajime Kensetsu Corp

128.3

12/15/09

JPY

Mitsubishi UFJ Securities Co

Industrials

Disco Corp

118.7

11/26/09

JPY

Nomura International PLC

Industrials

eAccess Ltd

116.4

12/09/09

JPY

Goldman Sachs International, Barclays Bank PLC

High Technology

96.5

11/30/09

JPY

Nomura Securities

Real Estate Financials

Nomura RE Residential Fund Miyazaki Bank Ltd

95.0

12/07/09

JPY

Nikko Cordial Securities Inc

JDC

86.0

12/08/09

JPY

Mitsubishi UFJ Securities Co

Energy and Power

Daiwabo Holdings Co Ltd

85.7

11/25/09

JPY

Nomura Securities

Consumer Staples

Mitsui Matsushima Co Ltd

54.7

12/08/09

JPY

Nomura Securities

Materials

Kohnan Shoji Co Ltd

40.5

11/26/09

JPY

Mizuho Securities Co Ltd

Retail

Atom Corp

36.5

11/25/09

JPY

Nomura Securities

Retail

Ya-Man Co Ltd

32.1

12/14/09

JPY

Mitsubishi UFJ Securities Co

Retail

2,504.6

11/20/09

HKD

Goldman Sachs (Asia), Citigroup Global Markets Asia, Barclays Capital Asia Limited, BNP Paribas (Hong Kong), UBS AG

Media and Entertainment

macau Sands China Ltd

Malaysia Tenaga Nasional Bhd Dijaya Corp Bhd

206.7

12/11/09

MYR

Maybank Investment Bank Bhd

Energy and Power

57.7

12/02/09

MYR

AmInvestment Bank Group

Real Estate

109.9

12/11/09

SGD

Cazenove & Co (Singapore), Citigroup Global Markets Asia

Real Estate

44.7

11/24/09

SGD

Cazenove & Co (Singapore), Macquarie Equity Capital Mkts, National Australia Bank

Real Estate

SinGapore Suntec REIT MacarthurCook Industrial REIT

Korea Woori Fin Hldgs Co Ltd

752.6

11/23/09

KRW

UBS, Citi, Woori Invest & Sec Co Ltd, Samsung Securities

Financials

Posco Co Ltd

403.9

12/09/09

KRW

Morgan Stanley

Materials

Korea Power Engineering Co Inc

143.0

12/01/09

KRW

Tongyang Investment Bank

Industrials

STX Corp

108.7

12/11/09

KRW

Daewoo Securities Co Ltd

Financials Retail

Hyundai Food System

51.9

12/03/09

KRW

Hyundai Securities Co Ltd

Hanil Engineering & Constr Co

49.0

12/04/09

KRW

Hanwha Securities Co

Industrials

Melfas Inc

46.7

12/04/09

KRW

Korea Investment & Securities

High Technology

UMC

127.2

11/30/09

USD

Credit Suisse

High Technology

Prime View Intl Co Ltd

165.0

12/10/09

USD

Credit Suisse

High Technology

80.0

11/30/09

USD

Credit Suisse

High Technology

Taiwan

UMC

86

Asian Legal Business ISSUE 10.1

market data | capital markets >>

DEBT CAPITAL MARKETS TRANSACTIONS LIST

Asia, inc Japan, ex Australia & New Zealand Nov 20 - Dec 17 Issuer

Proceeds (USDm)

Issue date

Currency

Bookrunner(s)

Sector

Hong Kong The Hongkong Land Notes Co Ltd

64.5

12/11/09

HKD

Hongkong & Shanghai Bank (HK)

Financials

Salim Ivomas Pratama PT

47.9

11/20/09

IDR

Danareksa Sekuritas, PT CIMB Securities Indonesia, Kim Eng Securities Pte Ltd, PT Mandiri Sekuritas, PT OSK Nusadana Securities

Consumer Staples

The Link Finance (Cayman) 2009

38.7

12/17/09

HKD

Standard Chartered Bank (HK)

Financials

HKCG Finance Ltd

32.3

11/26/09

HKD

HSBC Holdings PLC

Energy and Power

INDIA ICICI Bank Ltd

748.7

11/20/09

USD

Banc of America Securities LLC, Credit Suisse Securities, HSBC Holdings PLC

Financials

Essar Steel Algoma Inc

394.1

12/04/09

USD

UBS Investment Bank

Materials

Power Finance Corp Ltd

227.3

12/01/09

INR

Axis Bank Ltd, AK Capital Services Ltd, Kotak Mahindra Bank Ltd, ICICI Sec Primary Dealership, SPA Merchant Bankers, Trust Investment Advisors, Deutsche Bank (India), Almondz Global Securities Ltd, Yes Bank Ltd, SBI Capital Markets Ltd, LKP Shares & Securities Ltd, ICICI Bank Ltd, Standard Chartered Bk (India)

Financials

Hindustan Petroleum Corp Ltd

216.2

12/01/09

INR

Standard Chartered Bk (India), Citibank NA (India), Axis Bank Ltd, SBI Capital Markets Ltd

Energy and Power

GVK Airport Developers Pvt Ltd

147.4

12/11/09

INR

Standard Chartered Bk (India)

Industrials

Bank of Baroda

129.2

11/23/09

INR

Trust Investment Advisors, Bank of Baroda, AK Capital Services Ltd

Financials

Allahabad Bank Ltd

108.2

12/08/09

INR

ICICI Bank Ltd, ICICI Sec Primary Dealership, AK Capital Services Ltd, Axis Bank Ltd

Financials

HDFC

107.7

12/07/09

INR

Standard Chartered Bk (India)

Financials

Export-Import Bank of India

107.6

11/23/09

INR

Standard Chartered Bk (India), HSBC India

Financials

Punjab National Bank

107.6

11/24/09

INR

AK Capital Services Ltd, Axis Bank Ltd, ICICI Bank Ltd, ICICI Sec Primary Dealership, Trust Investment Advisors

Financials

National Housing Bank

107.5

11/27/09

INR

ICICI Sec Primary Dealership, ICICI Bank Ltd, HSBC Holdings PLC

Financials

HDFC

101.8

11/20/09

INR

Standard Chartered Bk (India)

Financials

Bank of India

70.7

11/25/09

INR

Axis Bank Ltd, AK Capital Services Ltd, Darashaw & Co Ltd, ICICI Bank Ltd, ICICI Sec Primary Dealership, Trust Investment Advisors

Financials

Andhra Bank Ltd

68.8

12/15/09

INR

Andhra Bank, AK Capital Services Ltd, Axis Bank Ltd, Darashaw & Co Ltd, ICICI Sec Primary Dealership

Financials

Oriental Bank of Commerce

64.6

12/07/09

INR

Yes Bank Ltd

Financials

HDFC

64.5

12/15/09

INR

Axis Bank Ltd

Financials

Shree Cements Ltd

64.4

11/20/09

INR

Standard Chartered Bk (India), Kotak Mahindra Bank Ltd

Materials

Indian Hotels Co Ltd

53.6

12/08/09

INR

Citibank NA (India), Standard Chartered Bk (India)

Media and Entertainment

IL&FS

48.4

11/30/09

INR

Standard Chartered Bk (India)

Financials

Aditya Birla Nuvo Ltd

43.1

11/23/09

INR

Axis Bank Ltd

Financials

Punjab National Bank

43.0

11/24/09

INR

AK Capital Services Ltd, Axis Bank Ltd, ICICI Bank Ltd, ICICI Sec Primary Dealership, Trust Investment Advisors

Financials

IDFC

36.5

12/14/09

INR

Axis Bank Ltd

Financials

Allahabad Bank Ltd

32.3

12/10/09

INR

Axis Bank Ltd

Financials

Tata Chemicals Ltd

32.2

11/20/09

INR

Standard Chartered Bk (India), Barclays Bank PLC

Materials

Indian Hotels Co Ltd

32.2

12/08/09

INR

Citibank NA (India), Standard Chartered Bk (India)

Media and Entertainment

137.8

11/30/09

IDR

Danareksa Sekuritas, DBS Vickers Sec Indonesia PT, PT Mandiri Sekuritas

Telecommunications

INDONESIA Indosat Tbk JAPAN Sumitomo Mitsui Banking Corp

3,535.7

12/04/09

JPY

Nikko Cordial Securities Inc

Financials

Mexico

1,683.9

12/11/09

JPY

Daiwa Securities SMBC Europe, Nomura Securities New York Inc

Government and Agencies

Japan Housing Finance Agency

1,655.3

11/27/09

JPY

Mitsubishi UFJ Securities Co

Government and Agencies

Nomura Europe Finance NV

1,504.9

12/02/09

EURO

Nomura International PLC

Financials Government and Agencies

Japan Housing Finance Agency

824.4

12/17/09

JPY

Mizuho Securities Co Ltd

Japan Housing Finance Agency

797.8

11/20/09

JPY

Mitsubishi UFJ Securities Co

Government and Agencies

Mitsubishi Heavy Industries

565.9

12/03/09

JPY

Mitsubishi UFJ Securities Co

Industrials Consumer Staples

Shiseido Co Ltd

565.9

12/03/09

JPY

Daiwa Securities SMBC Co Ltd

Nissan Financial Services

449.0

12/11/09

JPY

Mizuho Securities Co Ltd

Financials

Central Japan Railway Co

442.0

12/04/09

JPY

Nomura Securities, Mizuho Securities Co Ltd

Industrials Government and Agencies

Japan Housing Finance Agency

407.6

11/25/09

JPY

Mitsubishi UFJ Securities Co, Daiwa Securities SMBC Co Ltd, Mizuho Securities Co Ltd

Tokyo Electric Power Co Inc

396.1

12/03/09

JPY

Nikko Cordial Securities Inc

Energy and Power

BTMU RMBS 5 (JHF Guarantee)

372.9

11/30/09

JPY

Mitsubishi UFJ Securities Co, Deutsche Securities Inc

Financials

Mitsubishi UFJ Lease & Finance

347.5

11/26/09

JPY

Mitsubishi UFJ Securities Co

Consumer Products and Services

JFM

345.8

12/01/09

JPY

Mizuho Securities Co Ltd

Government and Agencies High Technology

Mitsubishi Electric Corp

345.8

12/01/09

JPY

Daiwa Securities SMBC Co Ltd

Japan Expressway Holding

342.9

12/02/09

JPY

Mitsubishi UFJ Securities Co, Daiwa Securities SMBC Co Ltd, Mizuho Securities Co Ltd

Government and Agencies

Coca-Cola West Co Ltd

339.7

12/10/09

JPY

Daiwa Securities SMBC Co Ltd

Consumer Staples

Urban Renaissance Agency

337.6

11/20/09

JPY

Nikko Cordial Securities Inc, GSJCL

Government and Agencies

East Japan Railway Co

336.8

12/11/09

JPY

Nomura Securities, Mizuho Securities Co Ltd

Industrials

Tohoku Electric Power Co Inc

331.5

12/04/09

JPY

Nomura Securities

Energy and Power

Tokyo Gas Co Ltd

331.5

12/04/09

JPY

Nomura Securities

Energy and Power

JFM

286.4

11/25/09

JPY

Mitsubishi UFJ Securities Co

Government and Agencies

Chuo Mitsui Trust & Banking

280.7

12/11/09

JPY

Daiwa Securities SMBC Co Ltd, Nikko Cordial Securities Inc

Financials

Honda Finance Co Ltd

231.7

11/26/09

JPY

Mizuho Securities Co Ltd

Financials

NGK Insulators Ltd

231.4

11/27/09

JPY

Nomura Securities

Materials Financials

ORIX Corp

229.1

11/25/09

JPY

Daiwa Securities SMBC Co Ltd, Nomura Securities

JFM

227.2

12/09/09

JPY

Nomura Securities

Government and Agencies

Coca-Cola West Co Ltd

226.5

12/10/09

JPY

Nomura Securities

Consumer Staples

Hitachi Construction Machinery

226.5

12/10/09

JPY

Mitsubishi UFJ Securities Co

Industrials

JICA

226.5

12/10/09

JPY

Mizuho Securities Co Ltd, Daiwa Securities SMBC Co Ltd

Government and Agencies

Kansai Electric Power Co Inc

226.3

12/08/09

JPY

Mitsubishi UFJ Securities Co

Energy and Power

Electric Power Dvlp Co Ltd

225.1

11/20/09

JPY

Daiwa Securities SMBC Co Ltd, Nikko Cordial Securities Inc

Energy and Power

Urban Renaissance Agency

225.0

11/20/09

JPY

Nikko Cordial Securities Inc, GSJCL

Government and Agencies

Metropolis of Tokyo

224.7

11/20/09

JPY

Nomura Securities

Government and Agencies

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