Page 1

ISSUE 9.2

ALB Special Report Hong Kong 09 Tapping the Dragon economy

M&A

In search of downturn deals

Intellectual property

Lawyers keep their heads above water

GFC response initiatives

International crisis, international opportunities

PLUS:

ALB Managing Partner series: Poh Lee Tan, Baker & McKenzie

ISSN 0219 – 6875 MICA (P) 065/09/2008

MARKET Analysis LATERAL MOVES DEALS ROUNDUP REGION-wide PERSPECTIVES UK, US REPORTS

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ns io at 09 in e: m los 20 No C rch a M 20

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Country editors The Regional Updates section of ALB is sponsored by the following firms: 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.

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Indonesia BT Partnership is a dynamic and result oriented law firm specialized in corporate-financial restructuring and litigation practices with full-length and great detailed of experiences in safeguarding multinational clients from complex legal issues including for their M&A, FDI, Funds and Structured Finance transactions. In 2007, the firm has been awarded as Dispute Resolution Firm of the Year and further, Employer’s of Choice for Indonesia jurisdiction while its Partner has been inaugurated as one of the Asia Hot Lawyers of the Year 2008.

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1


EDITORial >>

Ox year but a bullish market?

T

here was a glimmer of hope last month for those hoping the Year of the Ox will bring the bullishness back to the region, with most major markets closing higher on the first day of trading after the lunar new year break. The Shanghai Composite Index gained 60 points and Shenzhen’s Component Index 149 points while the Beijing, Hong Kong and Tokyo indices told a similar story. A sign of things to come? All those concerned, ranging from economic scholars and bankers to financial advisors, lawyers and even feng shui practitioners, agree that 2009 will be a year in which markets will move to the tune of fear. But while 2009 may not be the best year for the region’s markets, it’s looking at least a little better for the region’s transactional lawyers, provided, of course, they remain on the ball. The Hong Kong listings of Singyes Solar, CVM Minerals and Strong Petrochemical (see ALB Special Report Hong Kong 09, p50) are cases in point. Memorable not for their structures and certainly not for their size, these listings, if nothing else, stand as evidence of one important fact that is too often forgotten in the current economic climate – that clients need to engage in such activities to survive. The need to list, launch follow-ons, sell off non-core or non-performing assets, or acquire other companies to avoid being acquired themselves are all moves which bespeak the dire straits some companies find themselves in at the moment. Understanding that desperation, it seems, is the key to maintaining relevancy for transactional lawyers across the region. Our M&A feature on p56 shows that the days of plain vanilla legal advice have passed. Clients no longer want to be told what they cannot do; clients want lawyers who can tell them how what they want can be done, how risk can be managed and how their businesses can come out of the current situation in stronger positions. A more apt description of a business consultant than a lawyer? Perhaps. But the business of law is changing. And lawyers who can embrace this expanded prerogative can justifiably remain bullish about their prospects in this Year of the Ox.

All those concerned, ranging from economic scholars and bankers to financial advisors, lawyers and even feng shui practitioners, agree that 2009 will be a year in which markets will move to the tune of fear

2

IN THE FIRST PERSON “Clients could land themselves in hot water if they don’t take proper action and erect compliance structures now” Samantha Bradley, office managing director, Withers, on risk and compliance in Hong Kong (p54)

“Large M&A like we saw earlier

this decade probably won’t be there this year” Eddy Hendra, partner, Hendra, Soenardi & Rekan, on Asian M&A (p62)

“So far, it’s mainly the financial

sector that’s been affected [by the global financial crisis]. The manufacturing sector, where a lot of patent work originates, is yet to be as badly hit”

Morris John, MD, Drew & Napier,on the effect of the global crisis on intellectual property (p68)

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Asian Legal Business ISSUE 9.2


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News | deals>> >> CONTENTS

contents

ALB issue 9.2 56

COVER STORY

64

44 Singapore’s QFLP Now that the licences have been awarded, where to next for the liberalisation process?

68

44 ANALYSIS

Regulars

13 Global financial crisis response initiatives Special crisis management groups might be all the rage, but what value are they delivering?

6 •

16 Asia’s downturn in numbers As the downturn hits, firms and in-house teams alike are tightening their belts. Are we about to see a new round of redundancies in Asia?

• • • •

18 China’s M&A market – boom or bust? New year, new guidelines, new rules. What will drive China’s M&A work this year?

FEATURES 50 ALB Special Report: Hong Kong 09 The Hong Kong economy might be struggling, but firms are still buoyant, thanks to the proximity of China 56 Asian M&A 2009: the start of a new world order? M&A lawyers are finding that in a downturn it’s not what you do but how you do it that counts 64 Offshore financial centres: Mauritius Companies eyeing African and BRIC investment are setting up shop in Mauritius for good reason 68 IP: from innovation to litigation Are IP lawyers in for a lean 2009?

4

NEWS Chinese banks allowed to fund M&A, but will law firms profit? FDI in India not deterred by Vodafone tax case China 2009: legal job market tightens Another India – Magic Circle entente unveiled Amarchand Mangaldas appointed Satyam advisors Wolves at the door: Allen & Overy restructures Hong Kong office

20 UK report 22 US report 76 Sign off

38 REGIONAL UPDATES • China Paul Weiss • Philippines SyCip Salazar Hernandez & Gatmaitan • Malaysia Tay & Partners • Singapore Loo & Partners • Indonesia BT Partnership • India Singh & Associates • Vietnam Indochine Counsel

PROFILES INDUSTRY UPDATES 24 Employment Law Freehills 25 Corporate KhattarWong 27 International arbitration Drew & Napier 29 IP ATMD Bird & Bird 30 Mergermarket M&A update

58 Loo & Partners 61 KhattarWong 67 Appleby

ALB ASIAN LEGAL BUSINESS

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business can accept no responsibility for loss.

Asian Legal Business ISSUE 9.2


NEWS | deals >>

Firm: Simpson Thacher Clients: Underwriter Lead lawyer: Alan Cannon

deals in brief

Firm: Nagashima Ohno & Tsunematsu Clients: Issuer Lead lawyer: Toshio Kobayashi • Deal involved sale of one billion shares of common stock of Mitsubishi UFJ Financial Group • Included public offering in Japan, an SEC-registered offering in the US and an international offering to institutional investors outside of Japan, the US and Canada under Regulation S

| HONG KONG | ►► Galaxy Entertainment Finance Company notes tender offer US$350m Firm: Skadden Client: Merrill Lynch Lead lawyers: Edward Lam, Nick Norris Firms: Richards Butler, Allen & Gledhill, Conyers Dill & Pearman

• Bank of China acted as coordinating arranger • Norton Rose also advising PLN on other projects in Fast Track program Edward Lam, Skadden

Client: Issuer • Galaxy Entertainment offered to purchase for cash US$250m in its notes due 2010 and US$100m for notes due 2012 • Given recent volatility in global capital markets, launching tender offers quickly was important. Tender offers were launched within 10 days of Galaxy deciding to proceed with the transaction

| INDONESIA | ►► Indramayu coal-fired power project financing US$600m Firm: Norton Rose Client: PLN Lead lawyer: Jeff Smith Firm: Clifford Chance Clients: Lenders Lead lawyer: Andrew Gambarini

6

• Deal involved financing of Indramayu coal-fired power project in Java. Power plant is to be developed under Indonesian electricity company, PLN’s Fast Track program to construct and finance 10,000MW of new generation capacity in Indonesia

| INDONESIA/SINGAPORE/ JAPAN | ►► Tanjung Jati B Expansion Project US$2.3bn Firm: Milbank Client: Lenders Lead lawyer: Mark Plenderleith Firm: Paul, Weiss Client: Sumitomo Corporation Lead lawyers: John Lange, HansGünther Herrmann Firm: Ali Budiardjo, Nugroho, Resodiputro Client: Lenders Lead lawyers: Emir Nurmansyah, Woody Panato Firm: Nagashima Ohno & Tsunematsu Client: Lenders Lead lawyers: Minoru Ota, Hirofumi Koizumi, Matsunaga Takayuki Firm: Wong Partnership Client: Lenders Lead lawyer: Alvin Chia

Jeff Smith, Norton Rose

Firm: Denton Wilde Sapte Client: Sumitomo Corporation Lead lawyer: Philip Goodwin

Firm: Makarim & Taira S Client: Sponsors Lead lawyer: Rahayu (Yayuk) H Hoed • Sumitomo Corporation’s US$2.3bn project will expand power supply in Indonesia • Financing is first extended deal under the Umbrella Note of Mutual Understanding, between JBIC and Indonesian government to support various independent power producer projects in Indonesia

| BRAZIL/JAPAN | ►► Petróleo Brasileiro SA loan facility US$750m Firm: Allen & Overy Clients: Bank of Tokyo – Mitsubishi UFJ, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation Gwenael Perhirin, Allen & Overy Lead lawyers: Gwenael Perhirin, Joseph Stefano, Bart Meesters

• One of very few significant primary syndications achieved in Q4 2008 post credit crisis; indicates ability of Tokyo credit market to continue to finance headline deals despite general state of worldwide economy

Firm: Nagashima Ohno & Tsunematsu Client: NEXI

• Headline greenfield power development in Indonesia since the 1997 financial crisis

Firm: Houthoff Buruma NV Client: Petrobras Lead lawyer: André G de Neve

| JAPAN/US | ►► Mitsubishi UFJ Financial Group share sale US$500m Firm: Anderson Mori & Tomotsune Clients: Underwriters Lead lawyer: Akiko Kimura Firm: Paul, Weiss Clients: Issuer Lead lawyer: Tong Yu

• Deal involved loan facility extended to Brazilian energy company Petróleo Brasileiro SA (Petrobras) • Once transaction structure was settled, negotiations, financial close and drawdown completed in approximately 10 weeks • Allen & Overy has advised banks and sponsors on more than 10 projects involving Petrobras over past eight years

“Given the current market conditions which have seen a drop in loan origination activity, it was good to be involved on a loan of this size and nature. The lenders faced difficulties in raising the loan amount through syndication markets and therefore opted for a club deal” Gwenael Perhirin, Allen & Overy Asian Legal Business ISSUE 9.2


NEWS | deals >>

| JAPAN | ►► Interactive Data Corporation – NTT Data Financial share acquisition US$20m Firm: Clifford Chance Client: NTT Data Financial Lead lawyers: Atsushi Yamashita, Naoki Watanabe, Tracy Whiriskey Firm: O’Melveny & Myers Client: Interactive Data Corporation Lead lawyers: Barbara Stettner, Eric Zabinski, Mangyo Kinoshita • NTT Data sold majority shares in subsidiary NTT Data Financial to Interactive Data Corporation • Interactive Data will acquire 64% of NDF, with NTT Data Corporation retaining 10% interest in NDF. Interactive plans to acquire remaining equity of NDF over the coming years

| KOREA | ►► One Equity Partners – DC Chemical Co investment US$150m Firm: Dechert Client: One Equity Partners Lead lawyers: Sang Park, Evan Michalovsky, Edward Lemanowicz Firm: Orrick Client: DC Chemical Co Lead lawyer: David K Cho • One Equity Partners acquired 66.75% stake in Columbian Chemicals Company from DC Chemical Co • The global financial crisis and economic downturn caused DC Chemical to sell in order to focus on core strategic businesses, mitigate global risks and reduce external debt

| SINGAPORE | ►► Sentosa integrated resort US$4.4bn

►► Your month at a glance Firm

Jurisdiction

Deal name

Ali Budiardjo Nugroho Reksodiputro

Indonesia, Korea

Lotte Shopping Co – PT Makro Indonesia acquisition

300

M&A

Allen & Overy

Japan

Petróleo Brasileiro SA loan facility

750

Finance

Anderson Mori & Tomotsune

Japan, US

Mitsubishi UFJ Financial Group share sale

500

Finance

AZB & Partners

India Singapore

BlackRock Inc – DSP Merrill Lynch Fund Managers acquisition

Undisc

M&A

Baker & McKenzie

Hong Kong, China

ARA Asia Dragon Fund – Nanjing International Finance Center acquisition

234

M&A

Bugge, Arentz-Hansen & Rasmussen

China, Hong Kong, Norway

COSL Norwegian AS acquisition financing

1,500

Finance

Cains

Singapore

Sentosa integrated resort financing

4,400

Finance

1,100

M&A

India, Netherlands

GMR - Intergen acquisition

Chengyi

China

MIH China – ADPG print media joint venture

Undisc

Clifford Chance

Indonesia

Indramayu coal-fired power project financing

600

Japan

Interactive Data Corporation – NTT Data Financial share acquisition

Thailand, Philippines

Quezon Power Project financing

China, Hong Kong, Norway

COSL Norwegian AS acquisition financing

• Deal involved financing of US$4.4bn Sentosa integrated resort, one of the www.legalbusinessonline.com

20

Practice

Joint venture Energy, finance M&A

130 Finance 1,500 55

Finance

Deacons

China, Japan

Macnica – Cytech Technology acquisition

Dechert

Korea

One Equity Partners – DC Chemical Co investment

150

Finance, investment funds

DLA Piper

China, Hong Kong, US

Datang Telecom Technology – SMIC 3G investment

171

Finance

China, Hong Kong

Strong Petrochemical IPO

32 Equity

China, Hong Kong

Singyes Solar IPO

57

Equity

M&A

53

M&A

460

M&A

Dorsey & Whitney

China, Hong Kong

Affinia – HBM acquisition

Drew & Napier

Japan, Singapore

Eng Wah Organization – Transcutaneous Technologies reverse takeover

Freshfields

China

Deutsche Bank – Shanxi Securities joint venture

Undisc

Joint venture

Gide Loyrette Nouel

China

Nanjing – Veolia joint venture

Undisc

Joint venture

China

Citélum Group PPP

Undisc

China, Hong Kong, US

Datang Telecom Technology – SMIC 3G investment

171

Finance

China

Beijing Financial Street Construction – Hengtai Securities acquisition

204

M&A

Habib Al Mulla & Co

UAE

Takaful House PJSC IPO

Hendra Soenardi & Rekan

Indonesia, Korea

Lotte Shopping Co – PT Makro Indonesia acquisition

Herbert Smith

Malaysia, UK

Friends Provident – AmLife Insurance Berhad stake acquisition

China, Hong Kong

Credit Suisse – Founder Securities joint venture

China, Hong Kong, Cayman Islands

UTFE – GST takeover bid

247 M&A

Hunton & Williams

Thailand, Philippines

Quezon Power Project financing

130 Finance

JSM

China, Japan

Macnica – Cytech Technology acquisition

China, Hong Kong

China Overseas IPO

Guantao

Firm: Cains Client: DBS Bank Limited, Royal Bank of Scotland Lead lawyer: Mike Edwards Firm: WongPartnership Client: Resorts World Lead lawyers: Paul Sandosham, Christopher Chuah

US$m

27

Infrastructure

Finance

300

M&A

46

M&A

Undisc

Joint venture

55

M&A

322

Equity

7


NEWS | deals >>

largest syndicated credit facilities ever written in Singapore • DBS Bank Limited and Royal Bank of Scotland acted as mandated lead arrangers

• EDC recently expanded into hydropower with acquisition of 60% stake in First Gen Hydro Power Corp. Financing is EDC’s first foray into the debt markets since privatisation in November 2007 Mike Edwards, Cains

• WongPartnership acted for Resorts World on long-term retainer for preparation of various infrastructure and construction-related documents in the project

| INDIA/NETHERLANDS | ►► GMR – InterGen acquisition US$1.1bn

Firm: Cains Client: Axis Bank, ICICI Bank Lead lawyer: Mike Edwards Firm: White & Case Client: GMR Infrastructure Lead lawyer: Nandan S Nelivigia • GMR Infrastructure acquired 50% stake in InterGen NV from AIG Highstar Capital • Largest acquisition of energy utility company by Indian company • Cains acted for agents under two facilities regarding Isle of Man law aspects • Deal reunites White & Case with GMR, previously advising on GMR – Homeland Mining and Energy SA stake acquisition

| PHILIPPINES | ►► Energy Development Corporation capital facility US$80m Firm: Paul Hastings Client: Energy Development Corporation Lead lawyers: Patricia Tan Openshaw, Juliet Taylor

►► Friends Provident – AmLife Insurance Berhad stake acquisition US$46m Firm: Herbert Smith Client: Friends Provident Lead lawyer: Veronica O’Shea

| INDIA/SINGAPORE | ►► BlackRock Inc – DSP Merrill Lynch Fund Managers acquisition Value: Undisc Firm: Nishith Desai Associates Client: BlackRock Inc Lead lawyer: Nishchal Joshipura

Firm: Skrine Client: Friends Provident

Firm: Skadden Client: BlackRock Inc Lead lawyer: Richard T Prins

• Friends Provident acquired 30% stake in Malaysian life insurance company AmLife Insurance Berhad

Firm: AZB & Partners Client: DSP Merrill

• Deal approved by the Malaysian regulators but subject to completion of an associated transaction between AMMB Holdings Berhad and Insurance Australia Group

| PHILIPPINES/THAILAND | ►► Quezon Power Project financing US$130m Firm: Clifford Chance Client: Electricity Generating Public Company Lead lawyers: Geraint Hughes, Piyawat Piyapaichayont

• BlackRock Inc acquired 40% stake in DSP Merrill Lynch Fund Managers through its subsidiary, BlackRock Singapore

| japan/us | ►► Sumitomo Corp – Jupiter Shop Channel acquisition US$493m Firm: Skadden Client: IAC/InterActive Corp Lead lawyer: Nobuhisa Ishizuka

• IAC/InterActive’s 30% interest in Jupiter Shop Channel was acquired by affiliates of Sumitomo • Sumitomo acquired 26,400 ordinary shares, equivalent to 30% of all issued shares through SC Media & Commerce Inc

| KOREA/INDONESIA | ►► Lotte Shopping Co – PT Makro Indonesia acquisition US$300m Firm: Ali Budiardjo Nugroho & Reksodiputro Client: Lotte Shopping Co Lead lawyers: Theodore Bakker, Ernst Tehuteru Firm: Yulchon Client: Lotte Shopping Co Lead lawyer: Yon Hee Woong Firm: Hendra Soenardi & Rekan Client: SHV Holdings BV Lead lawyers: Eddy Hendra, Soenardi Pardi • South Korean retailer Lotte Shopping Co and affiliates acquired 100% shares of PT Makro Indonesia • The Lottle Group plans to build 26 new stores until 2013, under the ‘Lotte Mart’ brand to replace the old ‘Makro’ brand

Firm: Morgan, Lewis & Bockius Client: Sumitomo Corporation

Firm: Hunton & Williams Client: Quezon Power Project Lead lawyer: Ed Koehler • Thailand’s Electricity Generating Public Company purchased 23.4% equity interest in Quezon Power Project in Philippines

| KOREA | ►► Asset Securitisation Specialty securities issuance Patricia Tan Openshaw, Paul Hastings

• Energy Development Corporation (EDC) working capital facility with International Finance Corporation

• Financing comprises unsecured term loan with a 15-year maturity. The loan will be used for EDC’s ongoing working capital purposes

8

| MALAYSIA/UK |

card receivables • The deal was successful in capital raising in difficult market circumstances

US$250m Firm: Kim & Chang Client: Shinhan Card Co Lead lawyers: Yong Ho Kim, Seon Jee Lee, Ie Hwan Yoo • Asset Securitisation Specialty Co issued asset backed securities amounting to KRW350bn • Kim & Chang advised on domestic securitisation transaction of credit Asian Legal Business ISSUE 9.2


NEWS | deals >>

| JAPAN/SINGAPORE | ►► Eng Wah Organization – Transcutaneous Technologies reverse takeover

►► Your month at a glance (cont) Firm

Jurisdiction

Deal name

Kim & Chang

Korea

Asset Securitisation Specialty securities issuance

250

Finance

Korea

Sinbo 2008 Second Securitization Specialty securities issuance

180

Finance

Korea

MBK Partners – TechPack Solutions acquisition

280

M&A

China, Hong Kong, Norway

COSL Norwegian AS acquisition financing

US$460m Firm: Drew & Napier Client: Eng Wah Organization Lead lawyers: Sin Boon Ann, Tony Toh Firm: Stamford Law Client: Transcutaneous Technologies Lead lawyers: Lee Suet Fern, Liang Seng • Eng Wah Organization Limited acquired the entire issued and paidup capital, and outstanding options of Transcu Ltd, in reverse takeover • Transcu’s shareholders will acquire no less than 91.5% of the issued share capital of Eng Wah Organization Limited

| JAPAN | ►► Dentsu – Smart JV Firm: Orrick Client: Dentsu Inc Lead lawyer: Sergey Milanov Firm: Speechly Bircham Client: Smart Communications • Japanese advertising firm Dentsu Inc created a joint venture advertising agency based in Moscow, Russia • Deal represents the first acquisition by a Japanese advertising agency of a Russian advertising agency

King & Wood

US$430m Firm: Llinks Lead lawyers: Christophe Han, James Weng, Wayne Chen Client: Shanghai Electric Firm: Zhong Lun Lead lawyers: Gu Feng, Liu Junzhe, Huang Zhiguo Client: Shanghai Power Transmission & Distribution • Shanghai Electric Group launched IPO in A-share market through merger by absorption with A-share listed Shanghai Power • Shanghai Electric, as parent company, owns 84% of Shanghai Power www.legalbusinessonline.com

1,500

Finance

China, Hong Kong

Strong Petrochemical IPO

Saudi Arabia, UAE

Jadwa Luberef Fund establishment

Lei Jie

China

Deutsche Bank – Shanxi Securities joint venture

Linklaters

China, Hong Kong

Hempel buys out joint venture partner

China, Hong Kong

RBS China sell off

China

Shanghai Electric A-share debut

China, France

La Compagnie Financière Edmond de Rothschild Banque – Zhonghai FMC share acquisition

Mayer Brown

China, Hong Kong

Hempel joint venture partner acquisition

145

Finance

Morgan, Lewis & Bockius

Japan, US

Sumitomo Corp – Jupiter Shop Channel acquisition

493

M&A

Nagashima Ohno & Tsunematsu

Japan

Petróleo Brasileiro SA loan facility

750

Finance

Japan, US

Mitsubishi UFJ Financial Group share sale

500

Finance

Nishith Desai Associates

India, Singapore

BlackRock Inc – DSP Merrill Lynch Fund Managers acquisition

Llinks

32

Practice

King & Spalding

Undisc – 145

Equity Investment funds Joint venture Finance

2,340 Finance 430 14

Undisc

Equity M&A, capital markets

M&A

India

India Realty Fund establishment

895

Finance

Norton Rose

Indonesia

Indramayu coal-fired power project financing

600

Energy, finance

O’Melveny & Myers

Japan

Interactive Data Corporation – NTT Data Financial share acquisition

China, Hong Kong, Cayman Islands

UTFE – GST takeover bid

247 M&A

Korea

One Equity Partners – DC Chemical Co investment

150

Orrick

| china | ►► Shanghai Electric A-share debut

US$m

20

Undisc

M&A

Finance, investment funds

Japan, UK, Russia

Dentsu Smart JV

Pacific Zhongzheng

China, Singapore

China Animal – Target Co acquisition

42

Paul Hastings

Philippines

Energy Development Corporation capital facility

80 Finance

Paul, Weiss

Japan, US

Mitsubishi UFJ Financial Group share sale

500 Undisc

Media M&A

Finance

China

MIH China – ADPG print media joint venture

Rajah & Tann

China, Singapore

China Animal – Target Co acquisition

Sidley Austin

China, Hong Kong

Strong Petrochemical IPO

Simpson Thacher & Bartlett

Japan, US

Mitsubishi UFJ Financial Group share sale

500

Finance

China, Hong Kong, Norway

COSL Norwegian AS acquisition financing

1,500

Finance

Skadden

India, Singapore

BlackRock Inc – DSP Merrill Lynch Fund Managers acquisition

Undisc

M&A

Japan, US

Sumitomo Corp – Jupiter Shop Channel acquisition

493

M&A

Hong Kong

Galaxy Entertainment Finance Company notes tender offer

350

Finance, investment funds

42

Joint venture M&A

32 Equity

9


NEWS | deals >>

| china/hong kong/us |

►► Your month at a glance (cont) Firm

Jurisdiction

Deal name

Skrine

Malaysia, UK

Friends Provident – AmLife Insurance Berhad stake acquisition

Slaughter and May

Hong Kong

Cazenove Asia – Standard Chartered Bank sale

Hong Kong

TPV Technology Limited – Royal Philips Electronics acquisition

15

China, Hong Kong, US

Datang Telecom Technology – SMIC 3G investment

171

Hong Kong

MTR Hong Kong Rail Links

Undisc

China, Hong Kong

RBS China sell off

2,340 Finance

China, Hong Kong, Singapore

TPV – Philips cross-border M&A transaction

Speechly Bircham

Japan, UK, Russia

Dentsu Smart JV

Undisc

Media

Stamford Law

China

Ying Li International SGX IPO

365

Equity

Japan, Singapore

Eng Wah Organization – Transcutaneous Technologies reverse takeover

460

M&A

Tianyin

China

Beijing Financial Street Construction – Hengtai Securities Acquisition

204

M&A

Watson, Farley & Williams

China, Hong Kong, Singapore

North China Shipping Holdings – VLCC new buildings acquisition finance

250

Finance

White & Case

Hong Kong

TPV Tecnology Limited – Royal Philips Electronics acquisition

China, Hong Kong, Norway

COSL Norwegian AS acquisition financing

China, Hong Kong, Singapore

TPV – Philips cross-border

India, Netherlands

GMR – Intergen acquisition

China, Hong Kong, US

Datang Telecom Technology – SMIC 3G investment

Wilson Sonsini Goodrich & Rosati

US$m 46 Undisc

15

15 1,500

Practice M&A Finance/M&A M&A Finance Construction M&A

M&A Finance

15

M&A

1,100

M&A

171

Finance

4,400

Finance

WongPartnership

Singapore

Sentosa integrated resort financing

Yuan Tai

China

Ying Li International SGX IPO

365

Equity

Yulchon

Indonesia, Korea

Lotte Shopping Co – PT Makro Indonesia acquisition

300

M&A

Yun Zhi Nan

China

Citélum Group PPP

Zhong Lun

China

Shanghai Electric A-share debut

– 430

Infrastructure Equity

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

alb@keymedia.com.au

61 2 8437 4700

►► Datang Telecom Technology – SMIC 3G Investment US$171.8m Firm: DLA Piper Lead lawyers: Liu Wei, Steven Liu, Eugene Choi Client: Datang Telecom Technology Firm: Guantao Lead lawyers: Cui Liguo, Yan Pengpeng Client: Datang Telecom Technology Firm: Slaughter and May Lead lawyers: Benita Yu, Carol Wong, Maggie Kwok Client: SMIC

Liu Wei, DLA Piper

Benita Yu, Slaughter & May

Firm: Wilson Sonsini Goodrich & Rosati Lead lawyers: Michelle Edwards, Eva Wang Client: SMIC • Datang Telecom Technology invested US$171.8m in Semiconductor Manufacturing International Corporation for 16.6% interest. Upon closing, Datang will be largest shareholder • Cross-border deal involved US, Hong Kong and mainland China law. Share purchase agreement governed by Hong Kong law

| china | ►► Beijing Financial Street Construction – Hengtai Securities acquisition US$204.6m

►► Corrections On page 8, ALB Issue 8.12, the deal titled ‘PCCW Limited Privatisation’ should mention Skadden lawyer Nick Norris leading the advisory for clients Pacific Central Regional Developments. On page 11, ALB Issue 8.12, the deal titled ‘Nomura – Lehman asset acquisition’ should mention Skadden lawyer Nick Norris leading the team advising Nomura, and caption lawyer Jonathon Stone from Skadden. On page 17, ALB Issue 9.1, in the news item titled ‘Top IP lawyer given president’s award’ ALB mentioned the International Trademark Association (ITA). This should read International Trademark Association (INTA). ALB also referred to Ella Chong; this should read Ella Cheong. On page 62, ALB Issue 9.1, the Doosan Ingersoll-Rand Company acquisition deal mentioned in ‘Snapshot: Korea’s Biggest Deals’ should name Kim & Chang and Paul, Weiss as the legal advisors. The correct deal amount is US$4.9bn ALB apologises for any inconvenience that may have been caused.

10

Firm: Guantao Lead lawyers: Cui Liguo, Nie Rui Client: Beijing Financial Street Construction Firm: Tianyin Lead lawyer: Liu Wenyan Client: Hengtai Securities

Cui Liguo, Guantao

• Beijing Financial Street Construction Group with other investors invested RMB1.4bn in Hengtai in return for approx 40% equity interest Asian Legal Business ISSUE 9.2


NEWS | deals >>

www.legalbusinessonline.com

11


NEWS | deals >>

• Transaction illustrates trend of domestic securities companies actively seeking investment from prominent state-owned companies by increasing capital and issuing new shares

| china/hong kong/ singapore | ►► TPV – Philips cross-border acquisition US$15.4m

| china | ►► MIH China – ADPG print media JV Firm: Paul, Weiss Lead lawyers: Jeanette Chan, Hans-Günther Herrmann Client: MIH China Firm: Chengyi Lead lawyer: Zhang Yunyan Client: ADPG Media Group • MIH China (Mauritius) closed 37% equity investment in new joint venture established with Anhui-based ADPG Media Group, publisher of 13 newspapers and periodical titles • Deal required approval from the Ministry of Commerce, the General Administration of Press and Publications and the State Administration of Industry and Commerce • Deal is rare case of foreign investment in print media operations approved by several Chinese central government authorities

Firm: White & Case Lead lawyers: Seung Chong, Jeremy Leifer Client: TPV Technology Limited Firm: Slaughter and May Client: Philips Electronics Lead lawyer: Neil Hyman • TPV Technology Limited acquired IT display and public signage businesses of Philips Electronics across 45 jurisdictions • Acquisition is follow-on transaction from 2005 deal when White & Case advised TPV on the acquisition of the ‘upstream’ monitor and flat screen television manufacturing business from Philips Electronics

| china | ►► Citélum Group PPP Firm: Gide Loyrette Nouel Lead lawyer: Stéphane Vernay Client: Citélum Firm: Yun Zhi Nan Lead lawyer: Chen Zhibo Client: City Management Bureau of Kunming • Citélum Group negotiated urban lighting scheme to manage urban lighting in Kunming Municipality, Yunnan Province • The Kunming scheme is expected to be implemented within six months and will last 15 years. On completion, the project will cover 50,000 lighting points

| china/hong kong/ norway | ►► COSL Norwegian AS acquisition financing US$1.5bn Firm: Clifford Chance Lead lawyer: Amy Lo Client: COSL Firm: Bugge, Arentz-Hansen & Rasmussen Lead lawyer: Robin Bakken Client: COSL

Amy Lo, Clifford Chance

Firm: King & Wood Client: COSL Firm: Simpson Thacher & Bartlett Client: Lead arrangers Firm: White & Case Lead lawyer: Hallam Chow Client: Lead arrangers • Deal involved acquisition financing for China Oilfield Services Norwegian AS, in connection with its US$2.5bn acquisition of Awilco Offshore ASA • Lead arrangers include Bank of China, Standard Chartered Bank, ICBC, HSBC, Calyon, Standard Bank Plc and Sumitomo Mitsui Banking Corporation • First major successful cross-border acquisition by an A- and H-share PRC company and largest 100% stake overseas acquisition in non-oil and gas sector in China by value to date

| china/japan | ►► Macnica – Cytech Technology acquisition US$55m

“Such importance should be placed on the value of the deal as the target business is a sales and distribution business comprising employees, inventory and contracts and so, by its nature, you won’t get a high value” Seung Chong, White & Case 12

Firm: JSM Lead lawyers: Hannah Ha, Hong Tran, Julie Zhang Client: Cytech Firm: Deacons Lead lawyer: Gavin Nesbitt Client: Macnica

Hong Tran, JSM

• Listed Japanese company Macnica acquired Cytech Technology Limited, distributor of electronic components • Transaction involved the acquisition of Cytech and its PRC subsidiaries

| china/hong kong | ►► China Overseas IPO

US$322m Firm: JSM Lead lawyer: Jeckle Chiu Client: China Overseas • JSM advised China Overseas Land & Investment Ltd on its HK$2.5bn IPO • The company proposes to raise funds through the issue of over eight billion shares • China Overseas is a property development and investment company that is a constituent of the Hang Seng Index and Standard & Poor’s Global Property 40 Index

| china/hong kong | ►► Affinia – HBM acquisition US$53.2m Firm: Dorsey & Whitney Lead lawyers: Simon Chan, Jay Yan Client: Affinia • Affinia paid HK$415m for 85% equity interest in HBM Investment, sole owner of Longkou Haimeng Machining Company, automotive Simon Chan, drum and rotor Dorsey & manufacturing Whitney companies • Dorsey’s team had partners from Hong Kong and Shanghai offices

| china/hong kong cayman islands | ►► UTFE – GST takeover bid

US$247m Firm: O’Melveny & Myers Lead lawyers: Colin Law, Peter Chen Client: GST Holdings Firm: Herbert Smith Colin Law, Lead lawyer: O’Melveny & Ashley Alder Myers Client: United Technologies Far East Ltd • GST’s outstanding shares and options have been taken over by UTFE • GST’s controlling shareholder, GSTI (53.43%), executed irrevocable undertaking to accept bid Asian Legal Business ISSUE 9.2


NEWS | analysis >>

analysis

Sum greater than the parts: Global financial crisis response initiatives They are all the rage at the moment. Firms that have them wax lyrical about the amount of work they are bringing through the door, while those that don’t are clamouring to establish one. ALB investigated global financial crisis response initiatives

G

lobal financial crisis response initiatives (GFCRIs) are specialised practice groups devoted to dealing with the current and ongoing legal and business issues that have arisen as a result of the international economic downturn. Advising on everything from restructurings, insolvencies and liquidations, M&A, sell downs, spin-offs, workouts and the sale and purchase of toxic assets in addition to advising on the ins and outs of force majeure and MAC (Material Adverse Change) clauses, these groups have a wide prerogative – they are, essentially, a microcosm of the total services offered by a firm. And it is this point in particular that has the more cynical writing off such moves as nothing more than a simple repackaging of a firm’s existing services. After all, they say, all firms that offer these services already have a critical mass of lawyers dealing with matters of insolvency, restructuring and the like on a daily basis. Such arguments miss the point. www.legalbusinessonline.com

Arguably, it is not so much how the services offered by a firm’s global financial crisis response team differ from the services it normally offers but rather what firms consider the broader significance of such initiatives to be. A look at this reveals that beneath the obvious billing benefits of GFCRIs lie unparalleled opportunities for both internal growth and business development – after all, there is no better way to sell your global reach than through a global crisis.

Being proactive

It has never been more important for law firms across the region to flaunt their proactive credentials, to show current and prospective clients how they intend to grapple with the legal

complexities that are emerging from this global recession – complexities which, if negotiated correctly, can be the difference between either record revenues or the deep, dark depths of insolvency. And this is the core reasoning behind the GFCRI phenomenon. It is a recognition that, as much as clients need specialist advice on what the current environment means for their businesses, they also need to start planning for the future; to grasp with both hands the immense opportunities that seem to arise only in the context of calamity. “Our initiative is anticipatory,” said Poh Lee Tan, Asia-Pacific regional chairman of Baker & McKenzie and also co-head of the firm’s global

“Part of the difficulty is that the current situation is new to everyone, so it’s often difficult to gauge what clients are experiencing” Jeremy Pitts, Baker & McKenzie 13


NEWS | analysis >>

►► Law firms with global financial crisis response teams* • Akin Gump • Baker & McKenzie • Bracewell & Giuliani • Chadbourne & Parke • Colin Ng & Partners • DLA Piper • Dorsey & Whitney • Foley & Lardner • Fried Frank • Gibson Dunn & Crutcher • Holland + Knight • JSM • K&L Gates • Mayer Brown JSM • Orrick • Patton Boggs • Paul Hastings • Proskauer Rose * Only law firms with a presence in Asia have been listed. This list does not purport to be exhaustive

financial restructuring initiative (see profile on p54). “We’d been working on restructurings before, during the Asian financial crisis and through SARs, but we identified that we were experiencing something very different this time, both in terms of depth, pace and scale – a possible change in the global financial landscape. We knew we needed to advise clients on how things will change from a regulatory perspective but also to try and anticipate how these changes will affect their future and longer term needs.” A difficult task at the best of times and one that is no easier at the moment. But according to Tokyo-based Jeremy Pitts, co-head of Baker & McKenzie’s global financial restructuring initiative, while predicting future trends at the moment may be fraught with any number of complications, it is what clients want more than ever. “Part of the difficulty is that the current situation is new to everyone, so it’s often difficult to gauge what clients are experiencing,” he said. “What we’ve seen is a progression of issues – clients are now dealing with issues as diverse as Lehman’s Chapter 11 procedures to Icelandic bank failures, and this is all happening at the same 14

time with a speed, geographic diversity and complexity we haven’t seen before.” Pitts observed that the crisis has now extended well beyond the financial sector to include businesses in a wide field of industries. This deepening of the crisis has added further complexity, and has increased the range of responses that companies are adopting, ranging from defensive, through ‘wait and see’ to the active search for opportunities. Information is limited and law firms with a global reach are able to help their clients better understand what is happening – particularly across borders – and then help clients to formulate their strategies to deal with the situation holistically. Steve Miller, a partner at JSM in Bangkok, agreed, suggesting that the days of clients coming to lawyers with just one problem may be over, at least for the foreseeable future. “Whereas in the past clients may have come to lawyers with one problem or issue, it’s readily apparent that clients are now coming to their lawyers with a whole host of problems, albeit interrelated ones,” he said. And it is exactly on these points that the utility of having a GFCRI becomes apparent. While grappling with and mastering the issues thrown up by the global financial crisis may seem a tall order for even the most assiduous of lawyers, it helps to be able to deliver advice that is both backed by the weight of global knowledge and responsive to changes in client needs.

Following the big boys

However, it is not only legal leviathans like Baker & McKenzie and DLA Piper that have established such groups. Domestic firms, too, have found it necessary to invest in GFCRI. The similarities between the

offerings of large and small law firms in this area are, however, often only ‘name deep’. “The initiatives launched in response to the global financial crisis by smaller firms can be categorised as much more reactive than those offered by the international players,” said a partner at one international firm. “If you have a look at the approaches they have taken, look at aspects of the groups from the type of work they are advising on, staffing, resources and the clients they are advising, the differences become clear – they really deal with issues ex post facto,” the partner said, instancing the GFCRI launched by one Singapore-based firm. “For smaller firms, the longer-term utility of such initiatives isn’t factored into the equation. It’s fair to say that they lack a measure of foresight – the ‘repackaging’ arguments are most valid with reference to smaller firms.”

Global crisis, micro matters

If on the one hand GFCRIs are about “staying ahead of the curve”, being anticipatory, helping clients keep their head above water and identifying commercial opportunities for them to do so, then on the other hand they present a unique opportunity for firms such as Baker & McKenzie and JSM to tend to micro-practise management matters within their firm. And it is an opportunity that both are cognisant of. Whether it is harnessing, streamlining or refining the integration of one’s global operations or coordinating and conditioning lawyers to deal with the complex global and local law issues that have surfaced in the current crisis, a firm’s GFCRI, it seems, serves a vital dual purpose. “There are two broad objectives of our initiative,” said Pitts. “One relates

“Whereas in the past clients may have come to lawyers with one problem or issue, it’s readily apparent that clients are now coming to their lawyers with a whole host of problems, albeit interrelated ones” Steve Miller, JSM Asian Legal Business ISSUE 9.2


NEWS | analysis >>

news in brief >> “We now rarely even look at submissions from firms that don’t have extensive networks of global offices and the ability to offer seamless global solutions” General counsel of a US investment bank to making sure that our lawyers understand and anticipate clients needs across a range of disciplines and geographies; and the other relates to the better coordination of our practices to make sure that we can Poh Lee Tan, deliver against these Baker & McKenzie client expectations.” He went on to note that equipping lawyers with the diverse skill sets required now will only prove beneficial in the future. But while some may feel that it is only clients feeling the pinch at the moment, lawyers interviewed by ALB agree that the current crisis is also exerting analogous pressures on firms, especially in terms of manpower and know-how. However, according to Tan, they are pressures that are being alleviated somewhat by how GFCRIs require firms to pool resources and integrate processes across the globe. “When you have 68 offices, it’s quite a challenge to anticipate changes across the world and tailor our responses to client needs accordingly,” said Tan. “We felt it was important to focus primarily on the needs of clients, not just their immediate needs but also to anticipate their medium-term needs and, in this regard, it’s vital for us to work across our traditional practices and provide a practical and more integrated response across, for example, banking, insolvency and disputes issues.” On another level, however, many feel that the rise of GFCRIs may be evidence of a process of much more profound change being underway – change that indicates shifts both in terms of how clients purchase legal services and how law firms market and sell their services. Clients, it seems, are now less inclined to rely on the individual www.legalbusinessonline.com

reputation of lawyers than in the past, preferring instead to opt for counsel who have immediate access to resources at ground zero. “In-house counsel will always look to lawyers with whom they are familiar and a lawyer’s track record will likely always play a part, but things have changed now,” said the general counsel at a US investment bank that has fared better than most in the global financial crisis. “Our company has just released a circular on outside counsel procedures, which is intended to serve as a guide to firms tendering for our work, but what it does not mention is that we now rarely even look at submissions from firms that don’t have extensive networks of global offices and the ability to offer seamless global solutions.” According to Pitts, this is the key to differentiating one’s GFCRI from others in the market. “[Showing] strength of knowledge in local markets and Jeremy Pitts, local law, and the Baker & McKenzie ability to apply that across borders is vitally important,” he said. That UK firms have been the most savvy and proactive legal marketers on a global level is well known, but what is relatively novel is how traditionally conservative US firms are upping their marketing activities – and using GFCRIs as the means to do so. It should come as no surprise then to see that the biggest exponents of GFCRI are US-based firms. Although the rise of global teams to deal with a global crisis may seem simply pragmatic, even intuitive to most, its impact on the business of law will remain long after financial markets rebound and global economic chaos subsides. ALB

Lex Mundi appoints five members to advisory council Five new members have been appointed to replace outgoing members of Lex Mundi’s client advisory council. The council advises members of the legal group on ways to better serve the needs of their clients and in-house counsel. The new members are legal representatives from major corporations. The group includes: Cathie Armour of Macquarie Group Limited; George Freeman of The New York Times; Beat Hess of Royal Dutch Shell; Joia M Johnson of Hanesbrands Inc; and Uzi Karniel of Teva Pharmaceutical Industries. Singapore: Rajah, Infinitus locked on anime IP suit Law firms Infinitus Law Corporation and Rajah & Tann will come head to head in an IP infringement case that has stirred the online anime community to action. Rajah & Tann is advising five media studios – Showgate, Geneon Entertainment, TV Tokyo, GDH KK and Sunrise – that are suing four ‘heavy downloaders’ for allegedly acquiring the studios’ anime cartoons illegally using BitTorrent. Infinitus’ Wong Siew Hong, the head of the firm’s IP litigation, is representing two of the accused downloaders, Felix Lukman and Koh Lian Boon. The case has caused a flurry of online activity, with one online group, XedoDefense, undertaking a fundraising drive for the defence of the two accused. Several members of the group have posted comments criticising Singapore’s IP laws and urging action to “fight” the court pressure being placed on the accused by Rajah & Tann. Wong said that his firm has no business relationship with XedoDefense but is aware of the fundraising drive. The lawsuit, said to be first of its kind, is likely to set a legal precedent. Wong, however, remained somewhat sceptical. Clifford Chance, Hunton on speedy Thailand deal Clifford Chance and Hunton & Williams advised the signing of a major Thailand energy deal in just under three weeks. The deal saw Thailand’s Electricity Generating Public Company (EGCO) purchase a 23.4% equity interest in the Quezon Power Project in the Philippines, the first privately built and operated plant in the country. Representing Thailand’s first independent power producer, EGCO, Clifford Chance’s Geriant Hughes led a team that included Bangkok counsel Joe Tisuthiwongse and Hong Kong-based Erin Brennan, advising on cross-border legal issues relating to the acquisition and deal structure. Hunton & Williams’ Edward Koehler was lead partner advising Quezon Power Project.

15


NEWS | analysis >>

analysis

Asia’s downturn – the numbers While firms in Asia and the Gulf are not suffering as much as those in Europe and America, the globalisation of law practices means they do not remain unscathed. ALB has gathered the data on the effects of the financial crisis – from redundancy figures to management strategies for 2009

T

►► Law firm lay off list: worldwide Firm

Total

Allen & Overy Ashurst

10

Baker & McKenzie

20

Blake Dawson

4

Clifford Chance

80

Dewey & LeBoeuf

12

DLA Piper

5

Fried Frank

15*

Linklaters

120

Mayer Brown O’Melveny & Myers Orrick

33 5 75*

Proskauer

35

Reed Smith

126

Skadden

30*

White & Case

70

Morrison & Foerster

53

Source: lawshucks.com NB: Figures as at 30/1/09 and excluding administrative staff * Figure unconfirmed/in consultation

16

10*

he new year saw firm after firm announce staff cuts. While the big ticket lay offs began as early as November last year, with a total of 431 cuts reported, this declined to 388 in December. Lay offs then almost doubled, at 783, in January. Recent research on the legal industry might provide reasons for the redundancies – a Wachovia survey found that law firm partner revenues in the US were down by 4.5% on 2007. ALB asked partners in Asia and the Gulf to outline how firms will remain buoyant and resilient in 2009. They reveal how the downturn will affect their firms, what the outlook is for the most important legal markets and which practice areas will either boom or bust.

Morrison & Foerster Ken Siegel on Japan “We continue to be positive in Japan. We remained above budget, and grew by 15% during 2008. So we see the work moving around quite a bit, in terms of being more outbound. Historically in Japan, legal work has primary been outbound since 2002. Since then, inbound work has really gone away. We see spending in the US will be quite positive, as activity heads towards outbound M&A and

also litigation in the last six months of the year. Real estate and capital markets are relatively weak, but might improve between next year and 2010. Project finance is also very busy, in the outbound infrastructure projects and iron ore sectors. Japanese companies are very interested in M&A outside of Japan, but have been somewhat deterred … by the very bad results in the US, and Europe to some extent. A second government stimulus package would be terrific; anything that will stabilise the markets would create optimism.”

Simmons & Simmons Jeremy Hoyland on the UK and the Middle East “Although transactional volumes are down, we have done very well in picking up advisory mandates and are performing in line with expectations. Continuing to do so through 2009 will be challenging but we’ve got an excellent client list and a flexible, service-driven team focused on delivering a premium service in these very difficult conditions. The market in the UK is very difficult at the moment and is unlikely to support short-term growth in a finance practice. Although the Middle East markets have slowed from the boom we have seen Asian Legal Business ISSUE 9.2


NEWS | analysis >>

news in brief >>

►► Announced relocations by jurisdiction: Dec 2008 to Jan 2009 From Europe

From US

To Japan To Singapore To Hong Kong/China To Middle East

From within Asia

0

1 (2%)

4 (8%)

3 (6%)

0

6 (13%)

4 (8%)

3 (6%)

8 (17%)

8 (17%)

1 (2%)

1 (2%)

0

0

6

To Other (including offshore and India) NB: Data gathered from the ALB appointments database

►► Announced relocations by practice area: Dec 2008 to Jan 2009 IP

Banking & finance

8 (17%)

4 (8%)

Energy & infrastructure/ real estate 9 (20%)

Corporate

8 (17%)

Dispute resolution/ insolvency and restructuring 8 (17%)

Insurance, funds, trade

8 (17%)

NB: Data gathered from the ALB appointments database

in recent months, there are still many opportunities in the region which we are focused on developing.”

KhattarWong Tan Chong Huat on Singapore “It will take time for government bailout packages and policy changes to take effect. Doubtless, we will be affected as much as other industries. However, not all is doom and gloom. Domestic demand in Asia is still growing, despite falling export rates. China, India and other Southeast Asian countries are still reporting positive, albeit smaller, growth projections for 2009. With KhattarWong’s aggressive geographical expansion policy in 2008, I believe we are well poised to seize opportunities generated by these markets. Moments of crisis also serve to separate the weak from the strong. The firm has built up a strong balance sheet in good times by prudent spending and wise investments. We have also invested heavily in training, redeploying and increasing the relevance of all our employees. I believe we have implemented enough strategies and initiatives to keep ourselves relevant and progressive.” www.legalbusinessonline.com

Herbert Smith Andrew Tortoishell on China and Hong Kong “It will be a difficult year for everybody everywhere; you can’t get away from that. Often, difficult times do create opportunities, and if you look hard enough there will be work, but we generally remain positive and opportunistic. It’s true we are not going to be as busy in 2009 as we were in 2008. We have a strong dispute resolution practice at Herbert Smith – that will be busy, especially in Hong Kong and China – so we’re looking to build on that practice area. There hasn’t been that much restructuring work, to be honest, in terms of the reportedly ‘big ticket’ deals, just small [companies] … but this is expected to increase, and we’re trying to put ourselves in a good position to get into that when it arrives. Capital markets work will increase at least in the second half of the year, and we’re reasonably optimistic there will be M&A work around then, on the basis that there are still people with money around – for example, strategic investors – as prices are cheaper. Also, corporate fraud and the ongoing minibonds sagas will create a lot of work. The energy practice overall will be also busy.” ALB

Part II of “Asia’s downturn in numbers”, featuring in-house counsel’s projected legal spending for 2009, will appear in ALB Issue 9.3

Law societies provide lifelines for Hong Kong, Singapore lawyers in financial crisis Lawyers in Hong Kong and Singapore feeling the pinch of the financial crisis can breathe a small sigh of relief, as the respective law societies have plans to ease their financial burden. The Hong Kong Law Society is waiving its yearly membership fee to take the pressure off the lack of work, and is providing free training sessions for lawyers with their newfound free time. The Society’s president, Lester Huang, said that the rise in insolvency and bankruptcy work was not enough to balance the overall decline. Lawyers with free time will be able to further their academic skills with the free civil litigation training workshops provided by the Society. In Singapore, a recent decision by the Law Society to increase its annual fee by around S$200 has been postponed until 2010 in light of the impending financial challenges faced by lawyers. The Law Society president, Michael Hwang, also proposed a meeting to vote on approval of the increase, which is needed to support the organisation’s operating costs. Lawyers currently pay around S$600–900 for membership. Apple to drag and delete US law firms from preferred list The in-house legal team at Apple is currently compiling a newer and leaner list of preferred legal advisors. The move comes following similar moves by competing IT companies to shape up their legal departments. According to Apple’s general counsel, Daniel Cooperman, the company has historically used a large number of firms since it has been difficult for any single firm to have an adequate understanding of its technology, markets and culture to perform at “peak efficiency”. It is currently unclear which firms will make the short list. However, they are likely to include previous advisers such as Orrick, Morrison & Foerster, O’Melveny & Myers and Howrey Wilson – who helped Apple go public in 1980. IP enforcement work: here to stay It is not news that litigation work rises during an economic downturn, but what about IP-related litigation? Given that this type of litigation has nothing to do with the usual debt claim matters which are becoming all too common nowadays, it may come as a surprise that IP litigation is becoming a hot area for firms. Sheena Jacob, head of IP and technology at ATMD Bird & Bird, says she has noticed a momentum in IP litigation building over the past year, with the firm seeing a 50% increase in this area of work. Jacob attributes the trend to a number of factors, including a rise in awareness by local companies of the importance of IP rights and increasing activity by multinational companies, some of which have arrived in the Asia region only recently.

17


NEWS | analysis >>

analysis

China’s M&A market – boom or bust? New year, new guidelines, new rules. ALB examines the factors that will be driving M&A work this year in China

C

hina’s M&A market has been undergoing developments at a rapid pace. In only a few months, government bodies have issued new M&A guidelines for banks, made amendments to merger laws and grappled with the adverse effects of the financial crisis. So is China likely to see an M&A boom or bust in 2009?

Chinese banks allowed to fund M&A deals

China has issued new guidelines to allow domestic banks to finance deals for the first time, but local law firms are not likely to see an immediate boost in M&A activity, say industry observers. In a bid to drive the country’s economy further, the China Banking Regulatory Commission (CBRC) issued guidelines in December 2008 allowing commercial banks to lend to local companies undertaking outbound and domestic acquisitions. However, the guidelines are simply that, and do not contain specific measures or regulations for banks to follow. This could result in the 18

curbing of deals, as banks will hold back from lending, according to a local lawyer. “Various compliance officers of Chinese banks have indicated to us banks won’t be rushing out to make M&A loans until there’s some form of reconciliation between the PBOC [People’s Bank of China] principles and CBRC’s guidelines,” said Maurice Hoo, corporate partner at Paul Hastings, Hong Kong. “The [guidelines] are less formal than ‘measures’ or ‘regulations’ but, given who CBRC is, banks are not inclined to test what might happen to them if they violate the guidelines,” he explained. Hoo suggests that firms would need to wait for clearer regulations, as other contentious subjects – including whether Chinese banks will be allowed to fund cross-border acquisitions – remain unaddressed. Cross-border acquisitions are complicated because overseas banks cannot lend for M&A deals but local banks with foreign shareholders can. As yet, the CBRC has left the cross-border question open, recently

stating that, if the number of outbound M&A transactions by Chinese enterprises grows, M&A lending would be overhauled to support overseas acquisitions. In the long term, however, law firms are likely to witness a rise in enquiries, as one specific criterion in the guidelines requires that banks, in order to initiate the business, engage a team of M&A “experts” with more than three years’ experience, including a legal team.

Revised merger laws means more work for lawyers

Meanwhile, a series of new guidelines issued by the Anti-Monopoly Bureau (AMB) of the Chinese Ministry of Commerce (MOFCOM) will generate more work for lawyers handling M&A deals. More work has to be done – particularly in the pre-filing stage – consistent with existing practices applied in other mature jurisdictions, such as the US and EU. “More detailed information and documents may be required. The collection and preparation of such Asian Legal Business ISSUE 9.2


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documents may be more challenging and result in increased costs,” said Alex Zhang, a partner at Jones Day Shanghai. Kirstie Nicholson, counsel with Lovells in Shanghai, saw one possible future opportunity offered by the guideline. “MOFCOM used to require filings under the AML to be made either by the parties themselves or by a domestic PRC law firm, but the new guideline may leave the door open for international law firms to submit filings to MOFCOM in the future,” Nicholson said. Some international firms have already taken early action in reacting to the guidelines. Jonathan Gowdy, partner at Morrison & Foerster, said the firm has established a China antitrust team that assists clients in analysing and completing any required notifications for their M&A transactions. “With more than 60 lawyers in China, we actively monitor developments in antitrust and other areas, and keep our clients up to date on changes in the legal and business environments,” explained Gowdy.

Chinese acquirers on hot coals

Last year, Chinese companies embarked on an overseas shopping spree as prices plummeted, but the uncertainty in the global market and a decline in Chinese companies’ earnings will see a slowdown in outbound M&A activity this year. www.legalbusinessonline.com

“Amid the global financial crisis, China is also experiencing contracting growth,” said Ashley Alder, head of Asia at Herbert Smith. “Any notion that China has ‘decoupled’ to any significant degree from the global recession no longer has any credibility. Over the next few months, the economic slowdown may well delay Chinese corporations’ ambitions to expand through M&A transactions abroad, although we also expect that China may well come out of the current economic turmoil faster than the US and Europe.” Although cheaper assets overseas are making more Chinese companies eager to jump on the outbound M&A bandwagon, legal advisors have reported certain difficulties in closing deals. “The economic uncertainty has created hurdles, preventing the buyers and vendors from reaching an agreement on the value of targets. Chinese investors remain cautious, as some markets are still searching for the bottom,” said Zhang Shiwei, partner at Kaiwen. “Some transactions we are advising on are progressing slowly and a few have come to a halt, due to the uncertainty in valuation.” Law firms in the region hope that incomes generated from advising on cross-border transactions of Chinese investors will offset the downturns in some of the more affected markets. But while Western attitudes towards Chinese investment are improving slowly, Chinese investors have learned to play it safe by investing closer to home. According to Ian McCubbin, lead partner of Deacons’ China practice group in Australia, his firm’s crossborder M&A work with Chinese companies has doubled over the past 12 months. Half of the M&A revenue is from cross-border deals with state owned enterprises and most of these have been in the resources sector. King & Wood is similarly optimistic. “Lower prices and costs in M&A deals will encourage PRC regulators to continue their policies of backing domestic enterprises in their overseas investment and M&A. Such governmental support will result in an increased number of deals and a better possibility of success,” said partner Yang Xiaolei. ALB

news in brief >> Consolidation buzzword in Philippines The Philippines legal market is set to thrive in spite of the economic difficulties pulsing through the region. Rafael Morales, a partner at the largest domestic firm in the country, SyCip Salazar Hernandez & Gatmaitan, says that a number of areas will remain strong in 2009. “2009 will be busy for M&A lawyers and banking & finance practitioners,” said Morales. He believes that consolidation in the country’s financial sector to be one of the biggest drivers of work as the country’s central bank, Bangko Sentral ng Pilipinas, looks to continue its long-standing policy of “transforming existing players into fewer but bigger institutions”. In addition to this area, Morales believes that project work is set to provide the country’s lawyers with a steady stream of work in the year ahead as the government looks to prop up the economy through infrastructure spending. “Project finance will get a boost if the planned economic stimulus of the government – 100 billion pesos’ worth of infrastructure projects – materialises,” he said. Consolidation may not be limited to the financial sector. “We might see some consolidation in the legal profession, in the form of acquisitions of boutique firms by multi- or full-service firms. This will be the wave of the future as the Philippine legal profession copes with the changing face of law practice in the region and globally.”

New Year clean out at Clifford Chance Magic Circle firm Clifford Chance is to axe at least 8% of its staff across its UK offices. The firm has warned staff that at least 70 to 80 of the firm’s 880 London-based associates will be laid off in response to worsening economic conditions and the inexorable slump in the firm’s staple areas such as M&A and banking & finance. It is understood that the lay offs will not affect partners or trainee lawyers. Jeremy Sandelson, the firm’s London regional managing partner, said that although the decision was difficult to make it will ensure that the firm remains strong through the current crisis and beyond. “We have not taken this decision lightly. However, like any other business, we have to respond to prevailing market conditions,” he said. “By taking action now, we believe we will be well placed once conditions begin to improve.”

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uk report Linklaters sheds London staff In a bid to boost productivity and profit in the current financial climate, Linklaters recently decided to slash between 100 and 120 of its City lawyers and 130 to 150 members of its business services staff. The restructure by the Magic Circle firm, titled the ‘New World’ strategy, will see 4.8% of the firm’s total workforce slashed and a reduction of 4.2% in lawyer headcount. Whether the cuts will continue through the firm’s international network remains to be seen. Clifford Chance slashes staff count Clifford Chance recently initiated a redundancy consultation involving 880 staff members in their London offices. The Magic Circle firm reportedly appointed 13 employee representatives to assist in the process, and will have two representatives allocated for each of the firm’s six main practice areas, with an additional representative for paralegals. The final cuts are expected to be confirmed by the end of February/early March. The firm stated changes in both the quality and quantity of work coming into the office in many areas as reason for the layoffs. Cadwalader loses London partners to Paul Hastings Cadwalader Wickersham & Taft has lost seven of its London partners to rival firm Paul Hastings. The walkout has left the firm with only four partners in London, and is accompanied by the news that the firm has also suffered a 30% profit plunge, with profit per equity partner (PEP) dropping to US$1.88m from US$2.72m.

CMS looking to merge CMS Cameron McKenna is on the prowl for a merger partner. The firm has reportedly set up a taskforce specifically geared to find a suitable firm to merge with it in the UK. Combining with a similarly sized rival in a merger is just one of the viable options being considered by the firm. According to recent reports, other strategies such as being swallowed up by a larger firm or taking on a small specialist practice have also been discussed. Denton joins in the cutting Denton Wilde Sapte has joined the growing number of UK firms making redundancies in 2009. The firm recently launched a redundancy consultation and says 80 members of staff are at risk of losing their jobs. While the marketing, accounts, facilities and compliance sectors will not be affected, all fee-earning departments except competition, tax and TMT, across London and Milton Keynes, will be under review. The firm’s international offices will not be included in this specific consultation, and the reconstruction & insolvency team may also escape the cuts due to recent increases in work. Addleshaw slashes partnership Addleshaw Goddard has cut 19 partners from its team, after deciding that there were too many and not enough demand in business. Turnover for the first six months of the 2008/09 financial year was 4% below budget for the firm, which had 177 partners.

ROUNDUP • Hammonds recently slashed 77 jobs across the UK offices • Blake Lapthorn has announced a second redundancy consultation, with up to 30 fee earners and support staff in London and the south east facing layoff • Clifford Chance Amsterdam managing partner Jan ter Haar recently replaced Spain managing partner Ignacio Ojanguren on the firm’s management committee and will take responsibility for offices in Western Europe • Berwin Leighton Paisner officially opened its Moscow office in January with the addition of a 70-lawyer team from local firm Pepeliaev Goltsblat & Partners • Simmons & Simmons has closed its Rotterdam office following a two-month consultation and will move the Dutch lawyers, 27 partners and 78 fee earners, to Amsterdam

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FDI not A

lthough analysts have predicted that the Indian court order for Vodafone to pay US$2m in tax following its acquisition of a stake in local telco Hutchison-Essar will cause investor uncertainty, Daksha Baxi, head of Khaitan & Co’s international tax practice, says that the order will not affect foreign investors’ confidence in India, as it is an independent case. “The Vodafone court ruling cannot have any impact on whether there will be more telco market M&A deals or not,” she said. “This is dependent purely on the perception of the economic benefit to the deal makers in acquiring or investing in Indian telco sector.” According to analysts from firms such as KPMG, the ‘aggressiveness’ of the Indian tax authorities would affect foreign investors who will likely reassess the profitability potential

HONG KONG

King & Wood:

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espite recent media reports, PRC heavyweight law firm King & Wood denies it is merging with Swiss firm SG Fafalen & Co, but welcomes Serge Fafalen, the founder and managing partner of the Swiss firm, to its Hong Kong office as a partner. King & Wood has told ALB that the news about the merger was based on a misunderstanding, since PRC firms are barred from merging or setting up joint ventures with foreign firms. In a recent statement, King & Wood clarified that it has no plans to enter into a merger with any Swiss firm but that it has appointed Serge Fafalen, the founder and managing partner of SG Fafalen & Co, as a partner in its Hong Kong office, in association with Arculli Fong & Ng. Several staff will be accompanying Fafalen in his move to King & Wood, but the number is not yet finalised. Fafalen noted that the team going to King & Wood is likely to be small. “King & Wood already has substantial resources, so it makes Asian Legal Business ISSUE 9.2


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news in brief >>

deterred by Vodafone tax case of their investments. Vodafone is contesting the ruling on the grounds that the deal involved foreign players, Vodafone’s Dutch subsidiary and Hutchison-Essar’s Cayman Islandsincorporated company. But Baxi said that investors will not be deterred by tax implications. Khaitan & Co, which recently advised on the US$2.7bn telco deal between NTT DOCOMO and Tata Teleservices, predicts that, on the contrary, the Indian telco industry will likely be engaged in more future deals. “There is no impact on the projected growth of the Indian telecom industry [that has] the potential to grow at a much higher rate than most

other countries and, to that extent, we do not see that this ruling will have any impact on such deals. If anything, for the economic reason itself, we see more telco deals happening in India, provided there are funds available to the investors to enter into such deals.” ALB

‘merger’ a misunderstanding sense to only take on new partners and teams whose expertise and experience can complement and add value to its existing practices,” said Fafalen, who also serves as the president of the Swiss Chamber of Commerce in Hong Kong. Fafalen’s move to King & Wood, which was expected to be finalised some time in February, will serve the best interests of both parties. “If a firm wants access to a new market, which it has [little] knowledge of and [few] contacts in, the best way is to join forces with someone who has the knowledge, expertise and resources it needs to penetrate the market,” said Fafalen. In this case, Fafalen will leverage King & Wood’s solid platform across China to better assist his international clients to invest in China. King & Wood will benefit from the new resources and contacts in Europe and Middle East that Fafalen will bring. ALB has previously reported that, as China’s outbound M&A transactions www.legalbusinessonline.com

continue to gain momentum, law firms are following clients in the race for international expansion. Some PRC firms have strengthened their global network and international presence by various means, King & Wood being one of the leading firms to do so. “To sustain its economic growth, China will continue to acquire oil and gas assets, and buy up other strategic natural resources and industries overseas. It’s clear that the crossborder deal flow between China and regions such as Russia, the Middle East and Australia will be strong. PRC laws are following their clients everywhere in the world and expanding to meet client needs,” said Fafalen. The appointment of Fafalen and his team is the most recent initiative taken by King & Wood to increase its offerings to large domestic clients keen to invest abroad. Looking forward, industry observers anticipate the integration of King & Wood and its Hong Kong association firm, Arculli Fong & Ng, to be completed this year. ALB

Oliver Agha launches own firm Well-known Islamic finance expert Oliver Agha has established his own firm focusing on Islamic finance, energy, restructuring and project finance. The firm, established jointly with Emirati lawyer Dr Al-Shamsi, will be based in Abu Dhabi and will initially employ six lawyers. This new development comes after Agha’s departure from his previous role as global Islamic finance head at DLA Piper last October. The new firm will have a non-exclusive relationship with Pillsbury Winthrop and has plans to operate in Saudi Arabia with an as yet undisclosed sponsor. Meanwhile, DLA Piper has found a new Saudi sponsor.

Pro bono popularity holds steady Amid global economic turmoil and dwindling workflows, US lawyers are showing good spirit and using their spare time to do more pro bono work. According to Dechert chairman Barton Winokur, at least seven of that firm’s associates are expected do full-time pro bono work for about three to six months. The associates have extra capacity due to a slowdown in structured finance work. Cadwalader, Wickersham and Taft has similarly increased pro bono hours, while Akin Gump partner Steven Schulman said his firm’s annual pro bono hours rose from 69 to 85 hours per attorney in 2007/08. In most parts of Asia, international firms chose to leave their pro bono work to their US headquarters. One of the few exceptions was Tokyo-based Paul Hastings; partner Alexander Jampel said: “We don’t plan to make staff work solely on pro bono, we just want all attorneys to work on some matters. About half of our lawyers work on pro bono and most of the partners do it, too,” he said. China M&A deals almost halve The number of M&A deals in the mainland has almost halved compared to the same period last year, according to accountancy firm PricewaterhouseCoopers. Around 543 deals were undertaken by mainland companies from July to November 2008, a reduction of 47% compared to 2007 figures. Chinese companies’ outbound announced M&A deals also fell, by 29%, with only 32 deals announced. PricewaterhouseCoopers said the technology industry is becoming hot property, with buyers eyeing industries in biotechnology, software and medical technology, as these were likely to produce higher gains.

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INDIA

Clifford Chance’s

us report Staffcuts at Nixon The US Department of Labor Statistics reports that 1,300 jobs have been lost from the legal service sector so far, and Nixon Peabody has recently joined the ranks of downsizing firms when it laid off 20 attorneys and 36 staffers across its US offices. Nixon Peabody has locations in 15 US cities, as well as four international offices. Bakers lays off in NYC Baker & McKenzie has joined the tally of US firms announcing staff cuts in the wake of the credit crunch. The firm recently confirmed that six associates in the New York office have been made redundant. The laid-off lawyers were given a two months’ severance pay package. Orrick salaries capped Orrick Herrington & Sutcliffe has followed in the footsteps of fellow US firm Latham & Watkins by recently announcing a firm-wide salary freeze for 2009, with pay packets for associates, counsel and senior consultants at the firm set to remain at 2008 levels. The firm claimed economic conditions were the motive behind the salary freeze and has confirmed that year-end associate bonuses will remain at 2008 levels, from US$25,000 for junior associates up to US$50,000 for the most senior associates. Sonnenschein recruits from Thacher Sonnenschein Nath & Rosenthal recently hired an eloquence of lawyers from Thacher Proffitt & Wood after the latter’s dissolution following the collapse of its four-month merger talks with King & Spalding. The US firm acquired 100 lawyers, more than half of Thacher Proffitt’s 195, including 40 partners and

its managing partner, Paul Tvetenstrand. This has brought Sonnenschein’s total headcount to 800. Chadbourne initiates survival strategies Following a firm-wide hiring freeze on legal and non-legal staff, Chadbourne & Parke recently launched a global review of staffing levels in an attempt to ease pressure in the worsening economic conditions. The review aims to decrease support staff across the global network and will be an additional strategy for coping with the economic crisis. Rather than hiring laterally, the firm will be moving lawyers from less busy practice groups to areas that require additional legal personnel.

hile the merger talks with Mallesons may be on hold, Clifford Chance has stepped up its commitment to the region with the announcement that it has signed a “best friends” agreement with prominent Indian firm AZB, which will see the Magic Circle firm refer Indian work to AZB, who will in turn refer international work to Clifford Chance. This is far from the first such alliance. Linklaters signed a “best friends”

MoFo cuts staff Buckling under the economic pressure, Morrison & Foerster recently joined firms on the laying off list when it announced it will make 53 lawyers and 148 staff across its US offices redundant. The US firm, which also eliminated jobs across its European network, reported a 2% rise in revenue from US$894m in 2007 to US$911m last year, but its average profit dropped by 13%, from US$1.27m in 2007 to US$1.1m in 2008. McDermott joins the lay-off line McDermott Will & Emery has cut 60 associates and 89 support staff from its US offices after recently reporting a 1.2% drop in 2008 revenues from US$978m in 2007 to US$966m last year. McDermott has initiated a fund to assist staff who may face economic hardship and provided affected associates with severance benefits and career counselling services.

ROUNDUP • Associates at Texas firms Haynes and Boone and Fulbright & Jaworski will not be receiving raises any time soon. The 508-lawyer Dallas-based and 437-lawyer Houston-based firms (respectively) reportedly initiated firm wide salary freezes recently. • Freshfields recently launched a US litigation practice, following the hire of Aaron Marcu and Adam Siegel from Covington & Burling and Benito Romano from Willkie Farr & Gallagher • US firm Nixon Peabody has set up an Israel practice group to be based in the US. The practice will be led by Washington DC partners Samuel Feigin and Mark Kass, and will advise on inbound and outbound Israeli transactions • Dewey & LeBoeuf recently closed its San Francisco office, and combined its Bay Area legal and support staff

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CHINA

Legal job market tightens

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he outlook provided by both employers and legal recruitment agencies is not so positive for legal job seekers in China. Unlike the past few years, when employment opportunities for legal professionals were plentiful, 2009 will see a continuing reduction in legal recruiting opportunities as the global economy slows. “Except for a few newcomers to the market from the US and the UK, existing foreign and even local law firms will continue cost-cutting measures to avoid redundancies and trim their teams in China to the right size,” said Frazer Xia, founder and managing director of China Legal Career. According to Xia, a wait-and-see mentality will characterise the job market, at least for the first quarter of 2009. Capital markets and real estate attorneys will either be let go or redeployed to work on M&A or even Asian Legal Business ISSUE 9.2


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alliance follows well-trodden path agreement with Mumbai-based Talwar Thakore & Associates in 2006, Allen and Overy signed on with Trilegal last year, Jones Day is associated with P&A Law Offices and Brown Rudnick bedded down with Poovayya in 2007. There are also a number of rumoured alliances. “Some firms are concerned that such arrangements are sailing close to the wind [on the prohibition against international firms advising on local law],” said one partner on condition of

anonymity, “so they do not publicise the existence of these alliances. However, the Clifford Chance agreement may tip the balance in favour of firms making these alliances officially known in order to gain a competitive edge.” From the Indian perspective, the list of potential suitors is not yet exhausted. Baker & McKenzie is another international firm said to be “open minded” about the possibility of an alliance. ALB

FDI deals. Attorneys in the M&A and private equity practice areas should not worry too much about their losing jobs, although PricewaterhouseCoopers’ latest report has revealed that the number of M&A deals in the mainland has almost halved compared to the same period in 2007. The safest practice areas are expected to include employment, litigation, distressed assets, restructuring and bankruptcy. A managing partner of a wellestablished international firm in Beijing, who did not wish to be identified, confirmed Xia’s prediction. He noted that a number of international firms in China have laid off legal staff in the past few months and around 80% of the international law firms there are currently experiencing a relatively quite time. One of the reasons for the rising number of job casualties was the

aggressive expansion of some firms that hired a large number of lawyers from local law firms earlier this year. Many leading local firms told ALB that they would slow down on recruitment plans, but would not stop taking on good talent. Nevertheless, there remains some good news for employers with a budget and partners who are looking to move. “Some clients are taking advantage of this special market situation to upgrade their team, so with the same budget they can now put a better team together,” said Xia. “Another interesting phenomenon is that partner search, contrary to common understanding, is thought to become more active, especially for those who carry a book of business.” The in-house side will also see a similar pattern and outlook. The financial crisis will trickle down the ‘food chain’, slowing down many industries, including auto, shipping and hi-tech. Some in-house openings will become available, especially for mid- to senior-level counsel with a high degree of independence. The market will further concentrate on hiring more local talent, partly as a cost reduction effort, partly for being more effective. One uncertainty, though, is to what extent multinational companies will turn to the China market for a solution when their home markets are experiencing serious trouble. “It’s very likely that many MNCs will come to this market, as a better option. General counsel will need to be better prepared to do more handson work when headcounts in 2009 aren’t increased; this will bring some pain,” said Xia. ALB

www.legalbusinessonline.com

news in brief >> Al Tamimi boosts UAE presence with Riyadh office Al Tamimi has become the first foreign law firm licensed to practise in Saudi Arabia without a local association, after it announced the opening of a Riyadh office. Although the firm received its licence to practise as early as February and underwent a ‘soft launch’ earlier in the year, the announcement comes as the firm builds up its on-the-ground capabilities, said firm spokesman Ted Glendening. The new office was said to be already experiencing rapid growth, manned by a staff of 17 including two partners, eight lawyers and a paralegal, led by banking & finance partner Nicholas Diacos and corporate partner Mohammad Arif Saeed. It is already advising clients on various finance and energy deals including the first professional services outsourcing agreement with the Saudi government. According to Diacos, the Saudi government’s plan to develop the Kingdom into a competitive economy by 2010 will increase the region’s investment potential. Firm founder Essam Al Tamimi said that the opening of the new office was a response to the need for an internationally connected Arab firm to have a presence in the Kingdom. “The Saudi economy is growing rapidly with the highest GDP in the region, and we believe the new office will offer significant opportunities for our Middle East and international clients,” he said. US law firm mergers surge in 2008 Law firm mergers in the US rose by 17% last year, according to research released this week. According to consultancy firm Altman Weil, M&A of law firms in the US topped 70 last year, compared to 60 in 2007. Although this marked a 17% rise, activity was shown to slow in the last two quarters of 2008. “This may be the largest number of law firm combinations ever in a single year in the US,” said Altman Weil principal, Tom Clay. “Even as the economy deteriorated, most mergers went forward as law firms pursued expansion plans.” Target law firms largely hailed from the southern US states, with 44% of mergers involving a southern-based firm. Almost 3% were cross-border deals, including the Reed Smith-Richards Butler Hong Kong acquisition which came into effect in January last year, and K&L Gates’ acquisition of Taipei-based J&J Attorneys at Law. It is predicted that the financial crisis will push law firm consolidation this year, with nine new law firm deals in the US already having been announced. “Large law firms with clean balance sheets will continue to pursue opportunities aggressively; and smaller firms, fearful of the economic downturn, will be looking for safe havens in larger firms,” said Clay.

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Update >>

Amarchand Mangaldas to Satyam: Luthra

Employment Significant change for employers of expatriates in India

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ecent changes to obligations under the Indian Provident Fund and Pension Fund Schemes are likely to result in a significant increase in costs for employers who engage expatriates in India. Currently, the scheme obligations apply to most Indian establishments which engage a total of 20 or more workers. Employees of several different companies working together in an “establishment” will be counted together for the purposes of this test, and subject to the obligations if the threshold is met. From 1 November 2008, establishments to which the scheme obligations apply are required to participate in respect of all “International Workers” engaged in that establishment, regardless of salary level. Previously, the same rules applied to both local and foreign employees, being that participation was only compulsory for employees in India earning less than INR6500 (approximately SGD$200) per month. It was therefore common for employers to make contributions to expatriates’ home pension funds rather than participate in the Indian Schemes. The impact of the change is an additional financial burden of 24% of the expatriate’s salary, which is shared equally between the employer and employee. However, the compliance burden falls upon the employer – they are required to deduct the employee’s contribution from salary payments and remit it to the relevant funds (together with the employer contribution). It is unlikely that expatriates will be able to withdraw the contributions that have been made in respect of their employment until they reach the ages of 55 (Provident Fund Scheme contributions) and 58 (Pension Scheme contributions), though there may be arguments to support earlier withdrawal of the Provident Fund Scheme contributions if the expatriate leaves India permanently. There is some relief from the obligations for International Workers who are contributing to a home pension scheme in a country which has a bilateral social security agreement with India. Currently, however, no countries have an applicable bilateral agreement in place with India – India has signed agreements with Belgium, France and Germany, but these have not yet been ratified by those countries. Negotiations are underway with the Netherlands, Czech Republic, Hungary, Norway, Switzerland, Sweden, Luxembourg, USA and Australia. While the apparent purpose of the amendments is to place pressure on countries that are reluctant to negotiate social security agreements with India, it will still take some time for such agreements to be negotiated, finalised and ratified. Meanwhile, the impact on employers is immediate and costly. George Cooper, Practice Leader Workplace Law & Advisory – Asia Freehills Direct +65 6236 9941 Telephone +65 6236 9939 Facsimile +65 6538 2575 http://www.freehills.com

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George Cooper

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ndian law firm Amarchand & Mangaldas has been appointed as legal advisors to the controversial Satyam Computer Services following Satyam’s highly publicised fraud scandal. A new Satyam board constituted last month confirmed the appointment of the law firm as the outsourcing company comes to grips with several legal challenges it is facing. These include a number of class actions filed in the US following the alleged fraud committed by chairman Ramalinga Raju. Earlier last week, law firm Luthra & Luthra issued a statement denying involvement with Satyam. The firm said that it had only advised Satyam’s proposed target company, Maytas Properties, in an unrelated IPO transaction.

MALAYSIA

Malaysia should liberalise UK official

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irst it was the UK Law Society lobbying the Indian Bar Council to open its legal market. Now a senior British government official has called on the Malaysian government to open up the legal sector to foreign firms. Boyd McCleary, the British High Commissioner to Malaysia, said that the Malaysian government’s recent decision to review restrictions on foreign firms entering the services sector is welcomed by the UK. “The [legal] market here has been closed,” said McCleary. “We are aware there is discussion between the Bar Council, the government and another partner about the possibility of opening up the legal services sector. We pretty much welcome that.” McCleary said that Malaysia will benefit from market liberalisation, pulling more investment into the south Asian nation and fostering better trade relations with the UK. “It is a win-win [situation for both countries],” he said. “We believe that at the moment Malaysia is closing itself off to some business which is being written in London and Singapore,” he said. “We think that there is recognition on the part of the law firms and the government here. We would like to see some opening up of the sector – that would be beneficial on both sides.” Local law firm Azmi & Associates said that it supports the liberalisation of the legal market and would welcome the arrival of foreign firms. “Azmi & Associates has no fear of global competition – in fact we welcome and thrive on it,” said a spokesman from the firm. The firm’s managing partner, however, has clarified that the opening up of the market should be done ‘gradually’. “We believe in the benefits of competition which fosters Asian Legal Business ISSUE 9.2


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appointed advisors denies association “We would like to clarify that Luthra & Luthra Law Offices has not been engaged by Satyam Computer Services Limited in any capacity at any time, including in relation to its proposed buy-out of Maytas Properties Limited,” read Luthra & Luthra’s statement. Raju has engaged a local lawyer, Bharat Kumar, for his defence. The long line of law firms that have filed class action suits against Satyam include The Brualdi Law Firm, Harwood Feffer, Glancy Binkow & Goldberg, Finkelstein Thompson, Pomerantz, Vianale & Vianale, Federman & Sherwood, Brodsky & Smith, Dyer & Berens, Sarraf Gentile and Izard Nobel. ALB

legal sector: creativity, efficiency and cost-effectiveness,” said managing partner, Azmi Mohd Ali. “While we’ll have much to learn from the foreign law firms’ global best practices, they have equally much to learn from our long experience in the thriving Islamic finance market of Malaysia.” Nevertheless, Ali is a firm believer that Malaysia will benefit from the market liberalisation. “Malaysian businesses and other types of client will also benefit from the wider range of options and expertise available to them in the legal sector. Perhaps this will force Malaysian law firms to specialise in order to find their own blue ocean,” said Ali. In India, the High Court test case against three foreign law firms contesting their restricted entry will be heard this month. The UK Law Society is also said to be publishing a 2009 calendar of ‘India-related activities’ soon. ALB

Corporate Recent cases relating to insider trading in Singapore

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nsider trading refers to the trading in securities while in possession of material price-sensitive information not generally available (“inside information”). In Singapore, the provisions against insider trading are found in the Securities and Futures Act (“SFA”).

Framework of insider trading legislation in Singapore

Under section 218(2) of the SFA a person connected to a corporation (“connected person”) must not subscribe, purchase or sell, or enter into an agreement to subscribe, purchase or sell, the securities of such corporation, or procure another person to do so, if he is in possession of inside information.

“Other persons”

For other non-connected persons in possession of inside information, the statutory prohibition against insider trading is found in section 219 of the SFA, which is substantially the same as that in section 218.

Criminal sanctions

Contravention of section 218 or 219 is a criminal offence under the SFA. A person found guilty is liable to a fine, imprisonment, or both.

Civil penalty

The Monetary Authority of Singapore (“MAS”) may, with the consent of the Public Prosecutor, bring an action in a court against a person to seek an order for a civil penalty.

Civil liability

In addition to a criminal sanction or civil penalty, a person who has contravened a relevant provision which resulted in his gaining a profit or avoiding a loss shall also be liable to pay compensation to any person who contemporaneously with the contravention, had subscribed for, purchased or sold securities and suffered a loss.

Recent cases

The insider trading of options and transactions in contracts for differences relating to shares falls under the SFA. In July 2008, Teo Chuan Teck paid a civil penalty for insider trading under section 218(2)(a) of the SFA. He traded in contracts for differences relating to securities of Cosco Corporation Singapore Limited. Also, one should not trade on inside information even if the information is perceived as uncertain. In November 2007, Ms Angela Yeo Yoke Foong paid a civil penalty for insider trading under section 218(2) (a) of the SFA. She traded using inside information concerning a voluntary conditional offer for System Access Limited. It is also important to note that prohibitions and penalties apply and will be enforced regardless of how small the profit. In September 2008, Yap Sew paid a civil penalty for insider trading under section 218(2) (a) of the SFA. He traded in shares of See Hup Seng Limited using inside information to make a profit of just S$4,020. Ms Ch’ng Li-Ling Partner, Corporate & Securities Laws Department Email: chngliling@khattarwong.com

www.legalbusinessonline.com

Ch’ng Li-Ling

25


News >>

news in brief >> Foreign law firms in Vietnam: beggars rather than choosers? Foreign law firms may be the first to feel the full force of the global economic slowdown, according to the managing partner at one Vietnamese domestic firm. Dang The Duc, the managing partner of Indochine Counsel, believes that the downturn in staple projects and infrastructure work that is expected to result from economic contraction in the country could see them running scared. “International law firms will be the first affected, since larger projects and cross-border work will be reduced,” he said. “In the last three to four months, foreign law firms have seen a decrease in the volume of work and new inquiries. Korean outbound investment into Vietnam has decreased noticeably and substantially affected the volume of work for some Korean law firms.” The result, according to Dang, is that some foreign firms may have to become beggars rather than choosers. “The downturn will up the ante between law firms for work. Many firms will find that they cannot be as selective [in terms of the work they take on] as they had been in the past.” Troutman Sanders finalises merger with Ross Dixon Bell The new year brought a new era for Troutman Sanders, with the firm completing a previously announced merger with Ross, Dixon & Bell on 2 January. The result is the creation of a 785-attorney firm which continues to operate from Atlanta headquarters under the Troutman Sanders name. In the meantime, it will be interesting to see how the merger affects the firm’s long-established Hong Kong and Shanghai offices. With Ross, Dixon & Bell previously well known for its insurance, professional liability and commercial litigation practices, Troutman Sanders may well look to beef up its Asia expertise in these areas in coming months. Hill Dickinson sails into Singapore While most firms are battening down the hatches, UK firm Hill Dickinson has taken the unexpected step of opening a new office in Singapore. The firm is hoping that the move will particularly capitalise on its reputation for marine work. Hill Dickinson’s expansion into Singapore will be led by partner and master mariner Tony Goldsmith who will be joined by associate Andrew Lee. The firm also expects to recruit locally. Senior partner Tony Wilson said that Hill Dickinson already had many clients in the region and that having a team on the ground would enable the firm to be on hand to attend casualties and urgent situations immediately.

26

CHINA

New merger guidelines bring more work for firms

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series of new guidelines issued by the Anti-Monopoly Bureau of the Chinese Ministry of Commerce (AMB) will generate more work in M&A deals, law firms have told ALB. The new guidelines outline the merger review framework and process, and the information required to notify the AMB of a transaction in accordance with the compulsory pre-merger notification regime under the AntiMonopoly Law (AML). For lawyers, more work has to be done particularly in the pre-filing stage under the new guidelines which are broadly consistent with the existing practice applied in other matured jurisdictions, such as the US and EU. “More detailed information and documents may be required. The collection and preparation of such documents may be more challenging and result in increased costs,” said Alex Zhang, partner, Jones Day Shanghai. Soh Chun Bin, the director of Stamford, held a similar opinion. “As the reporting requirements under Rule 10 [the rule on foreign M&A introduced in September 2006] are numerous, the new guidelines may have the effect of making some domestic M&A transactions more complex and more challenging to execute,” he said.

“However, for foreign–PRC transactions, I don’t think law firms need to adapt their practices significantly.” Kirstie Nicholson, counsel with Lovells Soh Chun Bin, in Shanghai, saw Stamford one potential future opportunity offered by the guideline. “MOFCOM used to require filings under the AML to be made either by the parties themselves or by a domestic PRC law firm, but the new guideline may leave the door open for international law firms to submit filings to MOFCOM in the future,” she explained. Some international firms have already taken early action reacting to the guidelines. Jonathan Gowdy, a partner at Morrison & Foerster, said the firm has established a China antitrust team that assists clients in analysing and completing any required notifications for their M&A transactions. “With more than 60 lawyers in China, we actively monitor developments in antitrust and other areas, and keep our clients up to date on changes in the legal and business environments,” said Gowdy. ALB

REGION

New Latham & Watkins partners freeze decision

A

ssociates recently promoted to partner at Latham & Watkins have narrowly escaped the firm’s decision in December to freeze associate pay in 2009. In a series of recent developments, the US-based firm announced in November the promotion of 30 to partner across its global network, in what seemed to be a clear signal to the world that it was business as usual. However, in an e-mail announcement on 16 December, the firm revealed economic pressures had forced its executive committee to freeze associate salaries for 2009: “The world economy is experiencing unforeseen

and unprecedented dislocations. Our clients are feeling those impacts and the legal community is not immune. As a result, we are modifying associate compensation as part of a prudent business strategy. Effective January 1, 2009, associates moving to the next class year will continue to receive the same base compensation as they received in 2008.” “When we promote partners, we’re not looking for the next year, we’re looking at the next 10 or 15 years,” said Bryant Edwards, Latham’s Middle East office managing partner. Asian Legal Business ISSUE 9.2


News >>

MIDDLE EAST

Update >>

Third time lucky for DLA Piper in Saudi Arabia

International Arbitration

D

Selection of Arbitrators

LA Piper has terminated its association with Saudi Arabian lawyer Abdulaziz Al-Bosaily. The association had originally been established last July in order to meet local law requirements for international firms to be sponsored by a Saudi national who is also a Saudi-qualified lawyer. The firm’s new Saudi sponsor will be Dr Alaa Naji, previously legal counsel at Saudi Arabian Airlines and general counsel at Sama Airlines. The change of sponsor may possibly have been precipitated by the departure of global Islamic finance head Oliver Agha from DLA Piper (see p21). The firm had originally intended that Agha would run the Saudi office jointly with Al-Bosaily, a plan which did not eventuate following Agha’s departure last October. Agha and Al-Bosaily had previously worked together at another firm prior to joining DLA Piper. This is the latest chapter of an eventful history for DLA Piper’s Saudi office, with Al-Bosaily being the firm’s third sponsor within a year. The original sponsor, Abdulaziz Al-Fahad, reportedly left after disagreements as to the operation of the firm. Other international firms have also had difficulty maintaining a Saudi operation, owing to a lack of suitable sponsors. ALB

escape associate pay “We look for promising young lawyers who will take the firm into the next couple of decades. Just because there’s a global recession doesn’t mean we’ll change our [partnership] game plan. We’re not going to not make up partners just because of the recession.” Edwards remained positive about the value of the Middle Eastern market to push the firm’s growth. “Asia, the Middle East and Europe have traditionally been dominated by the UK Magic Circle firms, and Latham is the pre-eminent US firm to really be challenging them in those markets.” ALB www.legalbusinessonline.com

M

any of us will agree that the personality, leaning and experiences of the decision maker can often influence the outcome of legal proceedings. The Americans consider this so important that they frequently have specialists to assist Counsel with jury selection (remember, “The Devil’s Advocate” starring Al Pacino and Keanu Reeves). Even when appearing before a Judge, most good advocates will want to know something of the Judge’s personality, background and track record so as to tailor their arguments to be as persuasive as possible. When it comes to international arbitrations, knowing the personality, track record and personal experiences of the arbitrator(s) is even more important for two extra reasons. First, unlike litigation, there is no right of appeal. This makes the decision of the arbitral tribunal almost invariably the final say in the matter, save for the recourse of setting aside awards on very limited grounds. Secondly, unlike litigation, parties to an arbitration have a say in selecting their “Judge”. Selecting an arbitrator is thus not simply about considering matters of convenience and availability. Insufficient appreciation of the proposed arbitrators’ personality, track record and past experiences which may have a bearing on their view of the facts and issues may result in a frustrating and unsatisfactory conclusion to the proceedings. If the case involves complex commercial facts or technical issues, the right arbitrator must be someone who is good at such things. Apparent reputation may not be enough; a research on his track record in his professional career may be warranted. If the case involves intricate legal issues or numerous conflicts of laws, the right candidate must be someone who is at ease with such complexities. If the evidential hearing is anticipated to be long and spread out over several months, then a very popular arbitrator or busy professional may not have sufficient time and diligence to reacquaint himself with the case at the beginning of each tranche of hearings. If you are faced with a recalcitrant opponent who tries every trick to either frustrate the proceedings or to secure an unfair victory, such a situation may require a strong and just arbitrator who is prepared to put his foot down firmly, without regard to being unpopular with one side. In the world of international arbitration, one can’t win a bad case just by choosing the “right” arbitrator. One can however frustrate and delay a perfectly good case if you choose the wrong arbitrator. Mr Jimmy Yim, S.C., is the Managing Director of Drew & Napier LLC’s International Arbitration Group. Consistently rated top tier in dispute resolution by international ranking organisations, Drew & Napier is one of Singapore’s leading and largest law firms. Mr Yim can be contacted at +65 6531 2505 or jimmy.yim@drewnapier.com.

Jimmy Yim, SC

27


News >>

news in brief >> Walkers strides into Singapore Offshore law firm Walkers has announced that it will set up shop in Singapore in February this year, making it the third offshore law firm in the lion nation behind Cains and Conyers Dill & Pearman. Walkers’ global managing partner, Grant Stein, said the decision to open in Singapore was vindicated not only by how much Singapore had grown in stature as an international financial centre but also the extent to which it, and other jurisdictions in the region – namely India – demonstrated the capability for further growth. John Rogers, co-managing partner of the firm’s Singapore office and head of its finance team, added: “Singapore’s position as a key Southeast Asian hub for many international law firms and financial institutions will provide an excellent platform for growth in Singapore, India and all of the members of the ASEAN.” Vietnam’s top firms partner in strategic alliance Two of Vietnam’s prominent law firms, Indochine Counsel and Leadco Vietnam Legal Counsellors, have entered into a strategic alliance. Although it was initially set up in May 2007, the firms said that now was the right time to officially declare the alliance. The partnership is based on a matter of convenience and cost-effective strategy for both firms, as both had intended to set up shop in the other’s jurisdiction. The alliance will bridge each firm’s base, in Hanoi and Ho Chi Minh, expanding the market reach and cross-border capabilities of each firm. The two firms will act as co-counsel on specific corporate, IP and real estate deals and transactions. Indochine’s managing partner, Dang The Duc, said the alliance is the largest in Vietnam and will strengthen his firm by broadening its range of legal professionals. “This alliance furthers [the firm’s] strategy of selectively joining with top-tier lawyers and firms that have synergy with our unique culture and strong brand,” he said. South Africa: The next legal outsourcing hub? India faces some competition to hold on to its status as the world centre for legal process outsourcing (LPO), with South Africa quickly emerging as an alternative LPO hub. Lovells is one of a handful of law firms piloting the offshoring of a portion of low-end legal work. According to Lovells’ chief operating officer, Nick Cray, the firm has been sending Cape Town-based company Exigent administrative work from its real estate and finance practices since October 2008. “We did considerable research and visited a number of providers before deciding that Exigent was the best partner. The pilot is helping us to confirm the quality of service and address the processes before deciding whether to extend the service to a wider user base,” he said. In addition to Lovells, several Magic Circle firms, including Clifford Chance, Allen & Overy and Linklaters, are rumoured to be actively looking at launching their own South African LPO pilot program.

28

HONG KONG

Wolves at the door: Allen & Overy restructures Hong Kong office

A

llen & Overy is restructuring its Hong Kong office in the wake of a seven-partner departure late last year. The Magic Circle firm outlined in a statement that the restructure was caused by the adverse economic climate and the departure of seven corporate partners – including the firm’s top corporate partners Michael Liu and Kenneth Chan – who moved to Latham & Watkins last October: “Our business in Hong Kong is undergoing a restructuring in view of the departure of seven partners and exceptionally difficult market conditions. In any restructuring, the

interests of our people are paramount. We are still exploring a number of options with our people and, due to this, we are not able to comment further.” Kenneth Chan, The departures left the Latham & Watkins firm’s corporate practice with only four partners. Although it is believed that around 10 associate positions were being reviewed as part of the restructure, a message posted on the firm’s intranet last week was said to have reassured staff it was maintaining job security as a top priority. ALB

INDIA

India Bar Council to hold urgent market liberalisation talks

T

he Bar Council of India (BCI), the main body opposing the entry of foreign law firms into the Indian market, has called an urgent meeting to review the issue in a possible sign of recognition that legal market liberalisation may be inevitable. The two-day meeting, held in early February, gathered important stakeholders, including state bar councils and legal associations, to discuss the future of the restrictions in light of recent developments including a rise in ‘best-friends alliances’ between local and foreign firms and the new limited liability partnership Bill, which formally allows such alliances. “The BCI has taken note of the reports on [the] rush of foreign firms to India and notification of the LLP Act, 2008,” said BCI chairman, Suraj Narayan Prasad Sinha. “We have convened a meeting of various stakeholders … to discuss these new developments and their impact on the legal service sector.” Revised rules regulating market liberalisation will be considered at the meeting, with local industry fearing that it will be swamped

by the size and innovation of their international counterparts. The timing of the meeting is opportune. Recently, talks were held between Indian and UK government officials to discuss legal market liberalisation, Magic Circle firm Clifford Chance announced an alliance with local firm AZB & Partners and the ongoing High Court case of banning foreign firms from setting up in India was reconvened. Last Friday, the Indian law minister, HR Bhardwaj, met with UK business secretary Peter Mandelson to discuss measures allowing Indian lawyers to practise in the UK and took the opportunity to issue a warning to local law firms about the inevitability of market liberalisation. “Whether you like it or not, the legal services [industry] will only go global and if you do not allow overseas law firms to come in, you will be looked upon with suspicion,” he said. The managing partner of local law firm Amarchand Mangaldas Cyril Shroff was doubtful about when the market will open up to foreign firms. “I don’t think in 2009 they will be allowed into the country,” said Shroff. ALB Asian Legal Business ISSUE 9.2


News >>

MIDDLE EAST

Update >>

Middle East arbitration set to take off

Intellectual Property

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aw firms in the Middle East should brace themselves for an increase in arbitration work this year, say local lawyers. The prediction comes following a marked rise in arbitration cases, which is attributable to new legal rules and local collaborations with overseas arbitration bodies. “Over the last 10–15 years, there has been a move towards arbitration to resolve disputes about international investments,” says arbitration lawyer Ben Knowles of Clyde & Co. “That change has been less pronounced [in the Gulf], but recent local developments such as the new Dubai International Arbitration Centre (DIAC) rules and the establishment of the Dubai International Financial Centre – London Court of International Arbitration (DIFC– LCIA) collaboration are now contributing to an upswing in arbitration cases across the region.” The developments in arbitration laws are intended to bring the UAE laws in line with international standards and establish Dubai as a regional arbitration hub. In addition to the DIAC rules, the UAE Ministry of Economy has been busy drafting federal arbitration laws and overseeing the implementation of arbitral awards in order to help international and domestic companies settle disputes more effectively. It is expected that the financial crisis, which has most notably affected the Dubai real estate and construction industries, will cause a rise in litigation work. Local experts say that companies looking to resolve disputes more quickly will increasingly move towards arbitration as an option over litigation. “It is increasingly clear that dispute resolution is very much at the forefront of the minds of businesses as a result of worldwide economic conditions,” said Clyde & Co arbitration consultant, Alec Emmerson. ALB

Private Prosecution of IPR infringement – A Double-Edged Sword?

S

ingapore is unique in allowing intellectual property rights owners to privately take enforcement actions against infringers of intellectual property rights under the country’s criminal provisions. The “self-help” regime as it is aptly known, provides rights owners with the jurisdiction to commence criminal proceedings against infringers as private prosecutions. Lawyers representing rights owners can file applications in court for warrants to search premises suspected of containing counterfeit goods, implements for the manufacture of such goods or other evidence of an offence. The rights owners then conduct the raids with the cooperation of the police who act to execute the search warrant in cooperation with the rights owners’ lawyers and investigators. During the raid, investigators will assist the police in searching the premises and seizing infringing goods and documents evidencing the infringement. If the raid is successful and infringing goods are found, the rights owners can then apply through their lawyers for a fiat from the Attorney-General’s Chambers to prosecute the offenders under the relevant criminal provisions of the Trade Marks Act and Copyright Act. The “self-help” regime has been widely used by rights owners taking action against trade mark counterfeiting and copyright piracy. It complements the civil remedies available to them and avoids the need to rely solely on the resources of the police. Rights owners can seize the initiative and carry out these criminal actions to serve their needs. However, the regime has its draw-backs. Rights owners have to bear the legal and investigation fees for these cases without financial return. The rights owners also have no powers of investigation and the offenders are not arrested at the scene and there is no police questioning or investigation conducted to assist with the prosecution. The rights owners therefore have to prosecute these cases based only on the evidence of the raid and many of the offenders prosecuted are often merely pawns in the organized criminal syndicates which run the counterfeiting operations. The prosecutions are therefore not always an effective tool and may not have a significant impact on piracy other than to clear the stocks of goods on the premises. Rights owners have therefore increasingly sought to rely on police prosecutions of IPR offences, particularly when syndicates are involved or if the case requires extensive investigation, such as in the case of a distributor or manufacturer of counterfeit goods. However, the self-help regime in Singapore provides another weapon in the arsenal for rights owners in their protracted battle against piracy.

Sheena Jacob Partner Intellectual Property and Technology Group ATMD Bird & Bird LLP Phone +65 6428 9801 Email Sheena.Jacob@twobirds.com

www.legalbusinessonline.com

Sheena Jacob

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News | deals update >>

mergermarket M&A deals update

30

Asian Legal Business ISSUE 9.2


News | deals update >>

www.legalbusinessonline.com

31


News >>

news in brief >>

Hong Kong launches Masters program for mainland judges The School of Law at City University in Hong Kong (CityU) has announced the inauguration of a Master of Laws program for 30 Chinese judges in Hong Kong. The program is specially designed under a tripartite arrangement between CityU, the National Judges College of the Supreme People’s Court of the PRC and Columbia Law School. As part of the one-year program under the tripartite arrangement, the judges will study for one month at the Columbia Law School, from where they will take a study tour to Washington DC, visiting the US Congress, the Supreme Court and the Department of Justice. “I consider this tripartite arrangement a watershed moment in the further education of judges in China. This partnership will have major significance for the legal fraternity in China, Hong Kong and the US,” said Wan Exiang, vice-president of the Supreme People’s Court of China, at the inauguration. It is the first time that China’s legal authorities have organised for Chinese judges to further their legal studies at postgraduate level outside the mainland. Grandall strengthens presence in the YRD region Soon after the 36km-long bridge was built on Hangzhou Bay, halving travel time between Shanghai and Ningbo, Grandall Legal Group has opened its 10th office in the important port city. The opening of the Ningbo office gives Grandall three offices in the Yangtze River Delta region, with Shanghai and Hangzhou being the other two. This puts the firm in a better position to service a broader and diverse portfolio of clients in the region. Although the three offices are geographically close to each other, Grandall’s executive partner Lv Hongbing is certain that competition between these offices is minimal, as they have different specialties and will focus on different practice areas. “Ningbo has one of the largest ports in China and is expected to have greater development opportunities in the near future. The Ningbo office is an integral part of our strategy to develop a solid shipping practice across major port cities,” said Lv. In Tianjin, Grandall has an established shipping practice team.

32

GLOBAL

Clifford Chance asks partners for US$92m

C

lifford Chance’s global partnership has been asked to contribute capital towards the firm as it undergoes cost-cutting exercises due to the financial crisis. Around 400 partners across the firm’s global platform have been asked to contribute a total of US$92m, with the individual amount, from as much as US$200,000, varying on the individual partner’s level. The decision was made by a partnership vote last year, increasing equity partners’ capital contributions “to match the growth in our business since the last call”, said a spokesman from the firm, as part of the firm’s ongoing management of its finances. “Raising additional capital is one of a number of standard financial measures that we take from time to time to ensure that we are best placed for the long-term development of the firm globally,” said the spokesman. The firm most recently announced that around 80 lawyers in the London office will be made redundant as it responds to changing client needs. The spokesman said that the exact and final number of redundancies as yet remain undecided, as the firm is undergoing consultation with representatives of those being potentially affected. The firm said that its Asia operations will not be specifically affected by the cash call. It also denied that the equity contributions were related to the recent redundancies. “This is simply prudent financial planning to ensure that we continue to be best placed to achieve the firm’s business goals,” said the spokesman. In an unrelated matter, the firm has won its appeal to the Bombay High Court after being ordered to pay taxes on fees it earned on projects it advised on in 1996–98. ALB Asian Legal Business ISSUE 9.2


News | appointments >>

appointments ►► LATERAL HIRES Name Glenn Knight Steven Dewhurst.

Leaving Bernard & Rada Law Corp DLA Piper

Going to Colin Ng & Partners Stephenson Harwood

Practice Dispute resolution Insurance

Location Singapore Singapore

Henry Liu Dean Collins Idrus Ismail Anthony Raven Brian Cassidy Andi Haryanto Desmond Ong

Heller Ehrman Actis In-house Herbert Smith McGrigors BPMIGAS DLA Piper

Nixon Peabody O'Melveny & Myers Azmi & Associates Lovells Lovells Lovells Eversheds

China Funds Islamic finance Energy and projects Energy and projects Energy and projects Managing Partner

Shanghai Singapore Malaysia Tokyo Singapore Singapore Singapore

Yang Sidong Ding Zhenyu Mark Brooks Maysa Ibrahim David McElveney

Genesis Simmons & Simmons Paul Hastings White & Case Deacons

Grandfield Run Ming Morrison & Foerster's Latham & Watkins Clyde & Co

IP Finance Real estate Securities Construction & projects

Beijing Shanghai Hong Kong Dubai Abu Dhabi

Practice Finance Finance Greater China managing partner South East Asia managing partner Competition Corporate transactions Dispute resolution Corporate finance Corporate transactions Corporate transactions Corporate transactions Corporate transactions Corporate transactions Capital markets M&A Litigation and regulatory Corporate

Location Beijing Singapore Hong Kong

Dispute resolution Finance Corporate transactions Corporate Corporate Litigation Dispute resolution

Hong Kong Hong Kong Shanghai Shanghai Tokyo Singapore Dubai

Partner

Dispute resolution

Dubai

Partner Partner Partner

Corporate Banking & Finance Banking & Finance

Hong Kong Singapore, Taipei

►► Firm Promotions Name Huang Ling Sanja Udovicic Andrew Tortoishell

Firm Shearman & Sterling Shearman & Sterling Herbert Smith

Promotion Partner Partner Partner

Austin Sweeney

Herbert Smith

Partner

Nathan Bush David Roberts Friven Yeoh, Peter Chen Ivan Smallwood Dauwood Malik Neeraj Budhwani Chin Chuan Chen Lachlan Jackson Noriko Annen John Cordova Sammy Fang Chris Terry

O’Melveny & Myers O’Melveny & Myers O’Melveny & Myers O’Melveny & Myers Morrison & Foerster Clifford Chance Clifford Chance Clifford Chance Clifford Chance Clifford Chance Clifford Chance DLA Piper DLA Piper

William Leung Michael Yau Claudio d’Agostino Kit Kwok Hajime Iwaki Deborah Barker Omar Al Shaikh

DLA Piper DLA Piper DLA Piper DLA Piper DLA Piper KhattarWong Hadef Legal Consultants & Advocates Hadef Legal Consultants & Advocates Choo Lye Tan Herman Yip Chung-Ping Liu

Partner Partner Partner Partner Partner Counsel Counsel Partner Partner Partner Partner Director Greater China corporate group Partner Partner Partner Partner Partner Litigation group head Partner

Erik Muthow K&L Gates Jones Day Jones Day

►► Relocations Firm Linklaters Linklaters Linklaters Simmons & Simmons Simmons & Simmons DLA Piper

34

Partner Tom Lindstrom David Ludwick Jon Gray Philip Abbott Natalie Boyd Joseph Christian

From London London New York London London Boston

Colin Ng

Bernard & Rada

To Hong Kong Hong Kong Hong Kong Dubai Dubai Hong Kong

Singapore Beijing Beijing Hong Kong Hong Kong Tokyo Hong Kong Hong Kong Beijing Beijing Tokyo Bangkok Beijing Beijing

Colin Ng appoints Knight Colin Ng & Partners has announced that former senior state counsel Glenn Knight will join the firm as a partner in its dispute resolution and FIRST (global financial crisis response team) groups. Knight joins the firm from Bernard & Rada Law Corp (B&R) where he was a consultant. Prior to his stint with B&R, Knight served in the Singapore Legal Service, where he handled major fraud and tax evasion cases and was responsible for setting up the Commercial Affairs Department where he was director from 1984 to 1991. Knight’s career is also notable for other reasons in addition to those above. In 1994, after being tried and convicted of fraud relating to investments in an Indonesian country club on the island of Batam, Knight was disbarred by the Law Society of Singapore and later had a second conviction of two counts of misappropriation. Knight was granted an application to be reinstated as a lawyer in May 2007. He is the only person to be granted such a request in the Law Society’s 35-year history.

Relocations

Linklaters

Linklaters partners on the move Linklaters has announced that three of its litigation, insolvency and restructuring partners will move to its Hong Kong office from January 2009. Senior litigation partner and white-collar crime expert Tom Lindstrom and corporate specialist David Ludwick will relocate from the firm’s London headquarters, while former Simpson Thacher partner Jon Gray will join from its New York office.

Herbert Smith

Sweeney, Tortoishell win race in new Herbert Smith management Hong Kong-based partner Andrew Tortoishell and Singapore managing partner Austin Sweeney will step into two new Herbert Smith management roles, overseeing the China and South East Asia regions respectively. Andrew Tortoishell Tortoishell will become the Greater China managing partner, looking after the firm’s business development interests in Beijing, Hong Kong and Shanghai. Sweeney moves from Tokyo, where he has spent two years as a corporate partner, to become the new Southeast Asia managing partner overseeing the Singapore, Thailand and Indonesia offices. Both will report to the firm’s head of Asia, Ashley Alder, who said that the creation of the roles was prompted by an increase in business activity producing greater cross-office collaboration in the Asia region. “Having in place an appropriate regional management structure will, among other benefits, support this collaboration so Andrew’s and Austin’s appointments mark an important step forward for us,” he said. Asian Legal Business ISSUE 9.2


News | appointments >>

O’Melveny

O’Melveny boosts China practice with promotions Four Asia-based lawyers have been promoted in O’Melveny & Myers global 15-strong 2009 partnership overhaul. In Beijing, competition lawyer Nathan Bush and corporate transactions attorney David Roberts Nathan Bush have been promoted, while the Hong Kong office will be boosted with the promotions of Friven Yeoh, who advises on cross border dispute resolution, and corporate finance lawyer Peter Chen. The firm’s Asia practice head, Howard Chao, said the Friven Yeoh promotions were a reflection of the diversity of the China practice, which counted for almost 30% of the promotions. “We believe that China is one of the pivotal markets for international law firms, and we are determined to maintain our market leadership,” said Chao.

Morrison & Foerster

Ten new partners for MoFo; Tokyo still strong Morrison & Foerster has elected 10 lawyers to partnership across its global network, with only one of these being Asia-based. The sole Asia promotion is corporate transactions lawyer Ivan Smallwood in Tokyo. Smallwood specialises in M&A Ken Siegal and represented Citibank in one of the firm’s larger deals last year. Ken Siegal, managing partner of the Tokyo office, said that the ratio of Asia promotions was not under representative. “We have 10% of our partnership in Japan; it’s roughly proportionate to the US. We don’t view it as a larger strategy; the promotions are based on growth,” he said.

office has promoted capital markets lawyer Noriko Annen, who joined the firm in 2007, while in Bangkok the firm has elevated M&A lawyer John Cordova. Asia managing partner Peter Charlton said that the promotions will help to strengthen the firm against the market conditions. “In such dynamic times, it’s impossible to predict precisely what the year will hold,” said Charlton. “However, having the right people – such as these counsel who understand the region, our clients and their businesses – is essential if we are to stay ahead of changing trends as they happen.”

DLA Piper

DLA Piper: China-heavy partnership round Although equity contributions were on the agenda for management at DLA Piper last November, the firm has remained steadfast in its 2009 partnership revamp, with most of the Asia promotions being China based. Claudio d’Agostino In Asia, the firm has created seven new partnership positions – including a new legal director. Six of the seven promotions were based in mainland China, with a sole promotion in Japan. The Beijing office will see the addition of Sammy Fang, as legal director in the office’s litigation Kit Kwok and regulatory group, and Chris Terry, as part of the Greater China corporate group. In Hong Kong, dispute resolution lawyer William Leung and finance attorney Michael Yau will become partners, while Shanghai will count corporate transactions lawyers Claudio d’Agostino and Kit Kwok as partners. Outside of China, the firm has made Tokyo-based Hajime Iwaki a partner. “Asia remains vitally important to companies, which is why we are also deepening our investment, talent, and services here,” said Asia managing partner, Alastair Da Costa.

Clifford Chance reaffirms commitment in Asia While Clifford Chance has been feeling the pinch of the financial crisis (see p23), the firm has reaffirmed its commitment to the Asian region with the promotion of six new Asia-based counsel. The Magic Circle firm has promoted four lawyers in Dauwood Malik mainland China, and one each in Japan and Thailand. In the Hong Kong office, corporate transactions lawyers Dauwood Malik and Neeraj Budhwani were promoted to counsel, with Beijing advancing lawyers Chin Chuan Chen and Lachlan Jackson. The Tokyo www.legalbusinessonline.com

Heller Ehrman

Stephenson Harwood

Stephenson Harwood recruits DLA Piper insurance partner Stephenson Harwood’s Singapore office has received another major boost with the appointment of former DLA Piper partner Steven Dewhurst. Dewhurst arrives at the firm as a partner from DLA Piper’s Hong Stephen Dewhurst Kong office, where he had been advising on insurance and reinsurance matters. He has worked in the Hong Kong market for eight years. “We set up the corporate practice in Singapore just over one year ago and have been very successful in growing our corporate client base in the region,” said Martin Green, the firm’s Singapore managing partner. “Steven’s appointment … will attract a

Nixon Peabody

Latest Heller hire Nixon Peabody became the latest firm to build its Asia practice by picking up seasoned lawyers formerly with Heller Ehrman. Henry Liu, the former head of Heller Ehrman’s China desk in New York, Henry Liu has been appointed by the firm as the chair of China practice, to play a leadership role in its China and Asia practice. Liu, also a global finance partner, will split his time between Nixon’s New York and Shanghai offices, the firm’s first Asia office launched in early 2008.

KhattarWong

KhattarWong appoints new litigation head Singapore-based law firm KhattarWong has unveiled its new litigation and dispute resolution practice group head. Prominent Senior Counsel Deborah Barker will oversee the firm’s litigation group as demand for litigation advisory increases with the Deborah Barker financial crisis. The firm’s managing partner, Tan Chong Huat, said that Barker’s appointment was a clear-cut decision for the ambitious firm. “Deborah’s position as SC and her broad-ranging experience makes her a natural choice to steer the department through the challenging months ahead. I am confident she will lead the team ably and successfully,” he said. Barker has been with the firm since 1980, and has held the coveted Senior Counsel title, one of only 60 or so in Singapore, since being appointed in January 2001.

Actis DLA Piper

Clifford Chance

lot of business from the insurance and re-insurance clients who are flocking to Singapore.”

O’Melveny & Myers

Actis fund director joins O’Melveny & Myers O’Melveny & Myers has recruited a former director from private equity firm Actis to its Asia practice. Dean Collins joins the firm’s Singapore office as partner in the investment funds and securitisation practice. Collins arrives from the London office of Actis, as a director Dean Collins specialising in funds, and has also had a six-year stint with law firm SJ Berwin. Actis partner Jonathon Bond said that the appointment will strengthen ties between O’Melveny and the PE firm. “Dean has joined one of our principal relationship law firms, and [we] look forward to strengthening our relationship with O’Melveny in the future.” Collins said that his move was motivated by the “immense” opportunities in the private equity market in Asia.

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News | appointments >>

In-house counsel

Azmi & Associates

Fast growing Malaysian firm grows a little more One of the region’s fastest growing law firms, Malaysiabased Azmi & Associates, has expanded its Islamic finance practice with a new appointment. The firm has recruited former in-house counsel Idrus Ismail as a senior lawyer for its Islamic Azmi Mohd Ali banking and finance practice group as the Islamic finance market develops further in the region. “Almost immediately after he joined us, we landed an Islamic takaful insurance transaction, reviewing a wakalah agreement, which we attended on behalf of CIMB Aviva Takaful Berhad,” said managing partner Azmi Mohd Ali. The timely addition comes as competition for market share in the Islamic finance market heats up between Singapore and Malaysia, after the Singapore government launched its first Islamic bond program in January.

various

Lovells

Lovells boosts energy practice… again It is clear where Lovells’ priorities lie in Asia. Only days after acquiring Tokyo-based energy partner Anthony Raven from rival firm Herbert Smith, the firm announced that two more high-profile energy experts will join its Singapore office. Brian Cassidy will come to the firm as of counsel from Edinburgh-based firm McGrigors, and Andi Haryanto will join in March from the legal team of the Indonesian Executive Agency for Upstream Oil and Gas Activity (BPMIGAS). Cassidy and Haryanto will join former White & Case partner Brad Roach on Lovells’ Singapore energy team. This team represented PT Medco Energi Internasional TBK in its proposed development of the Donggi-Senoro LNG Project in Sulawesi. The team also represented Salamander Energy and Murphy Overseas Ventures Inc in its record-breaking bid for oil & gas exploration rights in Indonesia. Raven’s addition had marked Lovells’ fourth lateral hire in 12 months. DLA Piper

Eversheds

Eversheds recruits DLA Piper managing partner for Singapore launch UK-based law firm Eversheds has launched in Singapore and appointed DLA Piper’s Singapore managing director to head the new office. The office is the firm’s 41st worldwide and second in Asia, and is intended to act as Desmond Ong the firm’s hub in Southeast Asia, working closely with the Shanghai office and the soon to be launched Hong Kong office. It will focus

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on the financial services and technology industries, and will be headed by Desmond Ong, who held the title as DLA Piper’s Singapore managing director for eight years. “The time felt right to move on to a fresh challenge and to find a platform from which to continue to service clients,” said Ong, on the motivation behind his move. Due to ‘fiduciary obligations’, Ong did not bring any DLA Piper colleagues with him, but indicated that the new Eversheds office will be bolstering its numbers soon. “We currently have three partners and 15 people in total in the Singapore office. We are still looking to recruit and will do so judiciously in the coming days.”

Paul Hastings

Morrison & Foerster

Paul Hastings’ real estate lawyer shifts to MoFo Morrison & Foerster’s ‘strategic focus’ in Asia has seen its Hong Kong office boosted with the addition of former Paul Hastings real estate partner, Mark Brooks. Brooks, who served in the US Special Forces before embarking on a law career, said he was Mark Brooks grateful for the opportunities at his previous firm, which allowed him to develop his private equity and real estate experience. His move to MoFo was prompted by the firm’s longterm commitment in Asia, which also gave him the opportunity to reunite with colleagues. “During my days in Tokyo, I worked with several [MoFo] partners in Japan and have always held the firm and its attorneys in high regard,” he said. “Joining the firm was a great opportunity to reconnect with friends and it provides me with a great platform on which to build my practice.” White & Case

Latham & Watkins

Latham & Watkins beefs up Dubai office with White & Case hire As the Middle East financial market continues to develop, Latham & Watkins has responded by strengthening its Dubai office with the appointment of securities lawyer Maysa Ibrahim. Ibrahim joins the firm from White & Case’s London office, where she spent four years advising clients such as Citibank and Deutsche Bank on debt obligations and other structured products. As counsel in the Dubai office, Ibrahim will utilise established businesses connections in building the firm’s global derivatives and securitisation practices. “Maysa … has strong ties to this region,” said Bryant Edwards, Middle East Office managing partner. “Her Iraqi background and language skills, and her knowledge of the emirates that run the sovereign wealth funds and other funds in the region make her a strong addition.” Edwards confirmed that the appointment follows development in the Gulf financial industries. “We’ve watched the development of the derivatives market

in NASDAQ Dubai, and gaining a structured finance lawyer will help us with those new and developing markets here,” he said. However, Edwards did not feel that Ibrahim’s move specifically reflects on the difficult state of the London markets, which have been affected by the financial downturn. “Rather, I think it’s more a reflection of the Middle East market developing; it’s clear that the markets all over the world are depressing,” he said. “We’re not hiring for the next year but for next 10 or 15 years.”

Deacons

Clyde & Co

Clyde and Co builds Abu Dhabi construction and projects practice Clyde & Co has recruited David McElveney to head the firm’s Abu Dhabi construction and projects practice. McElveney, previously with Australian firm Deacons, will head up a group of 14 lawyers. Associate Glen Warwick is also making the switch across from Deacons while Jerome Martin, a construction associate from a boutique specialist construction firm in London, joins the Dubai office. Simmons & Simmons

Relocations

From London to Dubai: Simmons relocates finance partners Simmons & Simmons has transferred two finance partners from its London office to Dubai, bringing its combined finance practice in the Gulf to five partners. The firm has relocated banking and restructuring partner Philip Abbott, who now heads the firm’s Middle East financial markets department, and debt capital markets lawyer Natalie Boyd. “It has always been part of our medium- and long-term strategies to focus on developing parts of the world and ensure that we have the capacity and expertise in the countries our clients are targeting for future growth,” said Jeremy Hoyland, head of the firm’s finance practice. “In the current market we can now also see opportunities for clients who are headquartered in the Middle East to become more influential internationally and our additional partner involvement ensures we are well placed to support them.”

Allen & Gledhill

Lucky 13 at Allen & Gledhill Allen & Gledhill has announced the elevation of 13 lawyers to its partnership in yet another mass partner promotion by law firms in the Asian region. Effective 1 January 2009, the firm added six new partners to its financial services group: four in litigation and dispute resolution, two in corporate/ M&A, and one in corporate and commercial.

Asian Legal Business ISSUE 9.2


News | regional update >>

Regional updates

CHINA

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CHINA

Paul Weiss

Philippines SyCip Salazar Hernandez & Gatmaitan

MALAYSIA

Tay & Partners

SINGAPORE Loo & Partners

INDonesia BT Partnership

INDIA

Singh & Associates

Vietnam

Indochine Counsel

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

New Regulation on Share Repurchase by Listed Companies On October 9, 2008, after a period of public consultation, the China Securities Regulatory Commission (the “CSRC”) promulgated the Supplementary Provisions on Share Repurchase through Centralized Price Competition by Listed Company (the “Provisions”) to regulate share repurchases through centralized price competition (“Share Repurchases”). The Provisions supplement and repeal some of the existing regulations on Share Repurchases which were enacted in 2005 by the CSRC (the “2005 Measures”). One of the challenges under the 2005 Measures was that a listed company could not implement a Share Repurchase until it received a no-objection letter from the CSRC. The Provisions aim to relax this requirement. Now a listed company is required to announce the shareholders’ resolutions approving the repurchase, submit relevant materials to the CSRC and the relevant stock exchange for filing, and announce the repurchase report. Although the Provisions remain silent regarding no-objection letters, based on our understanding, a no-objection letter will no longer be required. Note, however, that certain provisions of the 2005 Measures continue to regulate Share Repurchases. For example, the repurchase report must adhere to the 2005 Measures (and the relevant exchange guidelines), which require, among other items, price range for the repurchase, class and number of shares to be repurchased and management analysis of the impact of the repurchase on the operation, finance, and future development of the company. Additionally, pursuant to the 2005 Measures, listed companies continue to be required to provide an

announcement of the legal opinion simultaneous with the announcement of the repurchase report. In an earlier draft of the Provisions, a listed company is not permitted to declare or pay cash dividends during the period beginning on the date of the announcement of the repurchase plan and concluding on 30 days after the repurchase. Apparently this restriction was not favorably received by the public and thus was not included in the final draft. The Provisions are meant to “improve the mechanism of share repurchase, which could help maintain investor confidence and stabilize the stock market when equities were undervalued.” It is too early to see the impact of these Provisions but it is clear that with the global financial crisis in place, these Provisions alone will not be able to boost investors’ confidence and revert the downward trend of the Chinese stock markets. Written by Ricky Fong, associate Paul, Weiss, Rifkind, Wharton & Garrison Hong Kong Club Building, 12th Floor 3A Chater Road, Central Hong Kong Email: rfong@paulweiss.com Ph: (852) 2846-0339

Philippines

Republic Act 9513: Renewable Energy Act of 2008 To accelerate the exploration, development and utilization of renewable energy (“RE”) resources, the Renewable Energy Act of 2008 (“Act”) was signed into law on December 2008. The Act provides the legal and institutional framework for harmonizing the policies on the development of RE Asian Legal Business ISSUE 9.2


News | regional update >>

resources. The Department of Energy (DOE) is designated as the lead agency to implement the Act. The National Renewable Energy Board (NREB) is created to facilitate the implementation of the National Renewable Energy Program. Its composition, representing the major players in the electric power industry, emphasizes the need for collective effort to contribute to the growth of the RE industry. Seeking to institutionalize a Renewable Portfolio Standard (“RPS”) system, the Act requires electricity suppliers to source a minimum percentage of their energy supply from RE resources. RPS is complemented by a feed-in tariff system to ensure the priority grid connection, purchase and transmission of electricity generated by companies from renewable sources. To strengthen compliance with the RPS, the Renewable Energy Market (REM) is integrated into the Wholesale Electricity Spot Market (WESM). The end-users contribute to RE development through the Green Energy Option, a program allowing power consumers to choose RE resources in meeting their energy requirements. The Philippine Electricity Market Corporation, National Transmission Commission, and relevant parties engaged in transmission and distribution are mandated to establish the mechanisms for the physical connection, commercial arrangements, net-metering interconnection standards and pricing methodology of the RE program. To spur investment into the RE projects and activities, RE developers and local manufacturers, fabricators and suppliers of locally-produced renewable energy equipment are granted fiscal and nonfiscal incentives, upon prior registration and certification from the DOE. Some of these incentives are: income tax holiday (ITH) for the first seven years of commercial operations; duty-free importation of RE machinery, equipment and materials within the first 10 years upon issuance of a certification; a realty tax cap of 1.5% on RE equipment and machinery; Net Operating Loss Carry-Over (NOLCO) for the first three years of commercial operation carried over as deduction for the next seven consecutive years; after sevenyear ITH, corporate tax of 10% of its net taxable income; accelerated depreciation, in lieu of ITH; zero percent value-added www.legalbusinessonline.com

tax rate on the sale of its power; cash incentive of RE developers for missionary electrification; tax exemption of carbon credits; and tax credit on domestic capital equipment services. Written by Jasmine Anne B. Gapatan, Legal Assistant Sycip Salazar Hernandez and Gatmaitan SSHG Law Centre, 105 Paseo de Roxas Makati City, Manila, Philippines Tel: +63-2-817-98-11 loc. 261 Fax: +63-2-817-38-96 E-mail: sshg@syciplaw.com, syciplaw@globenet.com.ph Website: www.syciplaw.com

MALAYSIA

Malaysian AntiCorruption Commission – Great Expectations The new Malaysian Anti-Corruption Commission Act 2009 came into effect on 1 January 2009 in a nation coming to grips with the realization that rampant corruption will eventually deal an irreversible blow to nation building. The new Commission is fashioned after Hong Kong’s Independent Commission Against Corruption and hopes are high that it will function as effectively as the Hong Kong’s commission. There are however ample detractors and skeptics that it will not. In the Malaysian context, many argued that the Commission should have powers to initiate prosecution but this was rebuffed by the ruling party. As it stands, prosecution can only be initiated with the consent of the Public Prosecutor who is the Attorney General. The Commission will be advised by a panel of not less than seven independent and imminent advisors and it will ultimately report to a Parliamentary Special Committee on Corruption. While there are provisions

for oversight and reporting, the decision to prosecute lies with the Attorney General who is not answerable to Parliament. The new Act repeals the old AntiCorruption Act 1997 and the AntiCorruption Agency which reported to the Executive Branch of the Government. General consensus is that the old Anti-Corruption Agency has proven ineffective in the fight against corruption because of heavy Executive oversight leading to charges that it has not been independent. Among the harshest criticisms leveled on the new Act ( in addition to the lack of prosecutorial powers ) is the role of the Prime Minister in the appointment of the Chief Commissioner and the Anti-Corruption Advisory Board. Both are appointed by the Yang di-Pertuan Agong on the advice of the Prime Minister. A much welcomed suggestion for the protection of informers was incorporated in the Act. This prohibits disclosure of information that can lead to identification of the informer or whistle-blower. Other legacy issues like the lack of staffing and unattractive remuneration schemes are being addressed with the government promising to review salaries and doubling of staff strength in the Commission. For the longest time, the Malaysian public and business community, and foreign investors alike, think Malaysia deserves better. Corruption has been eroding Malaysia’s attractiveness as an investment destination for decades and this Commission is long over-due. The hope is that it will live up to its promise and deliver Written by Tay Beng Chai, Managing Partner Tay & Partners 6th Floor, Plaza See Hoy Chan Jalan Raja Chulan 50200 Kuala Lumpur, Malaysia Tel: +603 - 2050 1888 DID: +603 2050 1881 Fax: +603 - 2031 8618 Email: bengchai.tay@taypartners.com.my

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News | regional update >>

SINGAPORE

Growth of Islamic Finance With the efforts of the Monetary Authority of Singapore (“MAS”), Singapore is moving closer to its wellpublished desire of becoming an Islamic finance centre in Asia. Singapore has been chosen as the first Asian country to host the 6th annual summit of Islamic Financial Services Board in May 2009. The hosting of the scheduled event underscores Singapore’s role as an international financial centre. In January 2009, an Islamic Sukuk Al-ljarah Trust Certificate Issuance Programme worth $200 million (“Sukuk Programme”) has been set up to stimulate the growth of Islamic finance by the MAS. The instruments issued under the Sukuk Programme are subject to the same laws and regulations as that applicable to the investment instruments of Singapore Government Securities. It is viewed as a strategic milestone for the growth of Islamic finance in Singapore, as sukuk is one of the most widely accepted Islamic investment products, which could pave the way for the launch of Shariah compliant investment products for the retail investors in Singapore dollar. This signifies the expansion of Islamic finance in a non-Islamic country. The Sukuk Programme will capitalise on Singapore excellent track records in conventional banking thereby enjoys the prestige of AAA sovereign’s rating in parallel. This value added point may help to boost the investors’ confidence in the Islamic finance in Singapore. Overall, the MAS has announced three essential tasks to maximise the growth for Islamic finance. The first task is to promote greater integration of Islamic markets in Singapore, in view that trade flows between the Middle East and Asia (in particular with Singapore) has grown significantly. The second task is to address the need

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for appropriate legal, regulatory and supervisory frameworks for Islamic finance. The third task is to promote greater cooperation while looking at technical issues such as accounting, regulations and capital adequacy. As regards the legal framework to facilitate the MAS’s effort, Regulation 23 of the Banking (Amendment No. 2) Regulations 2006 sanctions the banks to carry on Murabaha financing as a “prescribed alternative financing business” whereby the banks can trade on the underlying assets in compliance with the Shariah’s principles. The markup or the profit element generated from the Murabaha transactions shall be regarded as the equivalent of interest for income tax purposes. Additional goods and services tax (“GST”) will be exempted from the Islamic property financing arrangement in line with the GST payable in the conventional financing arrangement. Further, the authorities have granted tax incentives to lure the investors and the industrial players. Under the Enhancement of Financial Sector Incentive Scheme, it provides 5% concessionary tax rate on income derived from performing Shariah compliant activities relating to lending, fund management and other investment advisory for a period of five years. In accordance with the Qualifying Debt Securities Scheme, Islamic bonds or sukuks, is subject to the condition that any amount payable by the issuer to the investors of sukuks is not deductible against any income of the issuer accruing in or derived from Singapore, and the proceeds from the issuance are used outside Singapore. Remission will be granted in respect of stamp duty on instruments related to the transfer of immovable properties for the purpose of issuing sukuk, in excess of that chargeable in the case of equivalent conventional bond issue, subject to the prescribed conditions. In summary, the authorities have built up a practicable legal structure and investor friendly environment to capture the fast-growing Islamic finance market which is estimated to be worth US$1 trillion (S$1.53 trillion). Written by Ms Lee How Fen and Ms Cecilia Law

Ms Lee How Fen Foreign Counsel, Legal Associate (Corporate Practice) Ph: (65) 6322-2205 Fax: (65) 6534-0833 E-mail: leehowfen@loopartners.com.sg and Ms Cecilia Law Foreign Counsel Legal Associate (Corporate Practice) Ph: (65) 6322-2283 Fax: (65) 6534-0833 E-mail: cecilialaw@loopartners.com.sg Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907

INDonesia

Plantation Investment Legal Requirements Takeover of Plantation Company Takeover is a legal action to takeover all or a substantial part of shares and/ or assets of the Target Company and as a result thereof, the acquirer shall control the Target Company. Under Indonesian laws, takeover transaction against Plantation Company by foreign investors, in the form of legal entity or individual, must observe various relevant laws among others Investment Law, Limited Liability Laws, Land Laws, Forestry Law and Agriculture Law. During the process of takeover the interest of the Target Company, minority shareholders, employee, creditor and business partner as well as the community and fair competition must be considered at all times. Pursuant to the prevailing Negative List of Investment, foreign shareholding in Plantation Company is limited to 95% (ninety five percent). Furthermore, takeover by foreign investor of private plantation company (not listed) or Plantation Company which has been declared bankrupt must be consulted to, and approved by the Minister of Forestry. In summary, the process of takeover of Plantation Company by foreign investor is as follows: Asian Legal Business ISSUE 9.2


News | regional update >>

• The foreign investor conveys their intention to takeover; • The foreign investor and Target Company prepared takeover plan proposal; • The plan must be published in 2 newspapers and informed in writing to employee at the latest 14 days prior to the calling for GMS; • The plan then must be set forth in a takeover deed made before Notary; • The takeover deed must be submitted to Minister of Law and Human Rights to obtain ratification; • Filling of application to the Indonesian Investment Coordinating Agency to obtain approval for amendment of status to Foreign Investment Company (PMA); • Registering the takeover in the Company Registry. The takeover is effective when the Minister’s ratification is obtained if it results in amendment of the articles of association. Otherwise the takeover is effective as of the execution of the takeover deed if it does not result in amendment of the articles of associations. The Plantation License The Plantation Company must process various plantation licenses among other are as follows: • The Location License (Ijin Lokasi) filed to Regent/Mayor (Minister of Land Affairs/Chairman of National Land Agency No. 2 Year 1999); • The Plantation Business License (IUP) 25 Ha – 100.000 Ha (Law No. 18 Year 2004 & Minister of Agriculture Decision No. 26/Permentan/05.140/2/2007) to be issued by: i. The Governor if the planted area covering adjacent regency and/or city; or ii. The Regent/Mayor of the relevant regency/city where the planted area located. • Release of Forest Area (Pelepasan Kawasan Hutan) (Joint Decision of Minister of Forestry, Minister of Agriculture & Chairman of National Land Agency No. 364/Kpts-11/90 & 519/Kpts/HK.050/7/90&23-VIII-1990) filed to Ministry of Forestry; • Land Cultivation Right (HGU) (Law No. 5 Year 1960) filed to Chairman of National Land Agency through Chairman of the Provincial Office of National Land Agency. Each of these licenses, in addition to the www.legalbusinessonline.com

Investment licenses issued by Indonesian Investment Coordinating Agency, must be obtained and periodically renewed for the purpose of legal operation of the relevant Plantation Company. Written by Tyana Asri Martianti BRI Tower II, 19th Floor Jl. Jend. Sudirman No.45 Jakarta 10210 Indonesia Tel. 62 21 5700 777 Fax. 62 21 5700 877 Email : martianti@btplawfirm.com Web : http//www.btpartnership.com

INDIA

RBI provides second bout of monetary stimulus The worldwide financial situation persists to be hesitant. In view of the fact that the official recognition of recession in the Western region and Japan, the downside risks to the global economy have augmented. Concurrently, the policy initiatives in the advanced economies are committed geared towards managing the recession and defusing potentially deflationary trends. The Indian Government also geared is trying hard for minimizing the impact of the global sluggishness and financial crisis on the Indian economy. The Reserve Bank of India (RBI) has taken a major step and presented the IInd Fiscal Rehabilitation Package to boost the Indian economy. RBI has announced steps to inject an additional Rs 20,000 crore into the system, a move that would pave the way for further cut in interest rates and more funds for credit disbursal. This stimulus aims at providing much higher and cheaper funds in the economy along with supplementary expenses by the Centre and the state governments. Further it intends at liberalization of External Commercial Borrowing norms and raising FII investment limit in Rupee-denominated

instruments to $15 billion from $6 billion. Besides, in this package, importance was being paid to housing sector, macro and micro industries and infrastructure sectors. The RBI slashed three of its key rates in its continuing efforts to promote credit off take and carry on the Indian growth story. In its second package of financial incentive, the RBI cut the Cash Reserve Ratio (CRR) by 0.5 per cent and concentrated the Repo Rate under the liquidity modification facility (LAF) by 100 basis points, with instantaneous consequence and the Reverse Repo Rate under the LAF by 100 basis points from 5.0 per cent to 4.0 per cent. It is expected that the reduction in the policy interest rates and the CRR will further enable banks to provide credit for productive purposes at appropriate interest rates. RBI has lowered the Repo rate or the rate, at which it lends to banks by 100 basis points to eight per cent. The reduction, the first since 2004, was effective with immediate effect. A reduction in Repo rate had lowered the cost of funds for banks. Undoubtedly, Reserve Bank’s measures to cut CRR and Repo Rate have considerably improved the availability of cash in financial system. Reduction in statutory liquidity ratio, cash reserve ratio and repo rates are good tools of RBI to generate more funds for Indian banks. These efforts have been made by government to reduce the level of recession. Further, the Apex Bank in exercise of powers conferred under Section 45 L of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this behalf, hereby issues the following Directions to Non-Banking Financial Companies (NBFCs): a. The Board of each NBFC shall adopt an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc and determine the rate of interest to be charged for loans and advances. b. The rates of interest and the approach for gradation of risks shall also be made available on the web-site of the companies or published in the relevant newspapers. c. The rate of interest should be annualized rates so that the borrower is aware of the exact rates that would be charged to the account.

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News | regional update >>

External Commercial Borrowing reviewed: The External Commercial Borrowing (ECB) policy has also been reviewed to keep it in tune with the evolving macroeconomic situation, changing market conditions, sectoral requirements, the external sector and lessons of experience. ECBs for NBFCs exclusively engaged in financing of the infrastructure sector & Integrated Township: RBI has decided to allow NBFCs, which are exclusively involved in financing of the infrastructure sector, to avail of ECBs from multilateral/regional financial institutions and government owned development financial institutions, under the approval route. Written By Mr. Manoj K Singh (Managing Partner) Mr. Ankit Dua (Associate) For more information, please contact:Singh & Associates, Advocates and Solicitors N-30, Malviya Nagar, New Delhi-110017 Ph: 91-11-26680927, 26687993, 26680331 Fax: 91-11-26682883 Website: www.singhassociates.in Email: newdelhi@singhassociates.in

Vietnam

Circular to regulate blogs in Vietnam The Ministry of Information and Communications (“MOIC”) has recently issued Circular No. 07/2008/TT-BTTT (“Circular 07”) dated 18 December 2008 providing new rules for management of blogs, in accordance with Government Decree No. 97/2008/ND-CP dated 28 August 2008 on management, provision and use of Internet services and electronic information on the Internet. As the authorities told the press, the Circular is designed to encourage the expansion of interaction possibilities in the Internet, sharing

personal experiences and the use of clean Vietnamese language in the Internet, as well as to prevent bloggers from abuse of Internet for spreading illegal information. Circular 07 specifies the acts prohibited in provision of information in blogs, as well as the responsibilities of bloggers and of the social network providers in respect of the creation and operation of blogs. “Personal electronic information site” (blog) is defined in Circular 07 as a private website and used to display personal information so as to store, exchange, or share with a group of people or a community using Internet services. Blogger is personally responsible for contents of information provided on, stored in, transmitted from his/her blog, including information provided by others in his/her blog. The following acts in respect of creation and operation of blog are prohibited: a. Abuse of blogs to provide, transmit or place links directly to false or illegal information;

Inaugural SCCA Regional Conference 2009 Grand Copthorne Waterfront Hotel

The Singapore Corporate Counsel Association (SCCA) is proud to host its Inaugural Regional Conference on 2-3 April 2009. The Conference will feature the latest and most innovative thinking of corporate counsel, practitioners and other experts in the region and beyond. Leading speakers from around the world including Australia, Hong Kong, India, Indonesia, Korea, London, Malaysia, New Zealand, Sri Lanka and Singapore will culminate under the same forum to share their insights and expertise covering current issues faced by corporate counsel on their daily jobs and how they stay relevant to their respective organisations. Preferential rates are offered to members of the international and regional corporate counsel associations in the hope that this Conference will serve as a platform for a fruitful exchange of ideas and experiences for the professionals who make up the diverse membership of these associations around the world and open the gateway for cross border exchanges. Conference Supporting Organisations:

| 2-3 April 2009

Topics to be discussed include: 1. Business Opportunities in the Region and the Role of In-house Counsel 2. Liberalisation of the Legal Profession – Singapore’s Journey 3. Debate: Singapore Is Doing Enough to Attract MNCs to Set Up Their Regional HQs Here 4. The Changing Business Landscape and Implications for the Law 5. Legal Professional Privilege for In-house Counsel

6. Sarbanes Oxley – Current Trends and Developments 7. Measuring In-house Counsel Performance

8. Common Law / Civil Law – Convergence? Current Trends and Practical Implications 9. Innovation Inside a 21st Century Corporation

Registration fees range from S$500 – S$750 for 2 days of Conference, Welcome Cocktails and Gala Dinner. 50% Training Subsidy for Limited Period Only! For more details about the Conference, please visit www.scca.org.sg/conf2009, email: SCCA@intellitrain.biz or call: +65 6329 6496.

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Asian Legal Business ISSUE 9.2


News | regional update >>

b. Creation of blogs forging other organizations or individuals; illegal use of blog accounts of other individuals; and posting of false information harmful to the legitimate rights and interest of other organizations or individuals; c. Diffusion of press works, literary and art works, publications which violate the laws on press and publication; d. Use of personal information, pictures violating provisions on right to protection of honour, dignity and reputation, and on right to privacy; and e. Provision of information in blogs, which violates the laws on intellectual property, e-commerce transactions and other related laws. The social network providers which provide the blogging platforms shall have certain responsibilities, among others: a. Establishment and publication of the relevant regulations on creation and operation of blogs at its website providing services, and taking

www.legalbusinessonline.com

appropriate measures for those blogs violating such regulations; b. Building database of bloggers’ personal information, and providing the competent government authorities with such information upon request; and c. Blocking and removing illegal contents as soon as the provider detects such information or when it receipts the request from the competent authorities. However, Circular 07 covers those blogs created on the websites of Vietnam-based service providers only. The MOIC, in a recent press conference, told that those websites hosted outside Vietnam by foreign service providers are not covered by the Circular. However, the Ministry also told that it would discuss with the foreign providers such as Google and Yahoo for the cooperation mechanism in order to minimize the “black� blogs. For enforcement of the Circular, the MOIC

is drafting a decree on administrative penalties for violations in the field of Internet, which will also include the penalties and remedies for blog violations. Written by Dang The Duc Managing Partner 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 duc.dang@indochinecounsel.com www.indochinecounsel.com

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FEATURE | Singapore >>

J

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QFLPs: Singapore legal market liberalisation begins

ust as Rome needed more than a day to construct its mighty empire, so too has Singapore embarked on the long road of building the legal empire to outlast all others. But this is about as far as the analogy extends. Where Rome was adventurous, Singapore has proved conservative. Where Rome had an appetite for risk, Singapore has shown itself to be predicable – just look at the six firms recently awarded Qualifying Foreign Law Practice (QFLP) licences. Rome did, of course, fall… A three-month long evaluation process presided over by government officers including the AttorneyGeneral, the Minister of Law and Permanent Secretaries from the Ministry of Finance and the Ministry of Trade and Industry culminated in the announcement last December that six firms had beaten off 14 others to successfully claim QFLP licences – licences which will permit them to practise Singapore law in certain areas using Singapore-qualified lawyers. Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case – the list of QFLP firms reads like a who’s who of corporate law. Between them, they boast over 140 years of activity in Singapore, each firm’s name synonymous with high-profile, highvalue transactional work in Asia. And while this list may seem complete to some observers, to others it is the omissions that were the most telling. Those who did not make the cut – the likes of Ashurst, Jones Day, DLA Piper, Baker & McKenzie, O’Melveny & Myers, Freshfields, Slaughter and May, Davis Polk, Sidley Austin, Simpson Thacher, Sullivan & Cromwell, Gibson Dunn & Crutcher and Milbank or those that did not apply, for example Linklaters and Lovells. Does this prove that the Singapore legal market is only capable of sustaining a few heavyweights at a time? Or is an opening up imminent? Asian Legal Business ISSUE 9.2


FEATURE | Singapore >>

“We intend to continue to build our existing practices, particularly adding expertise in product areas such as financial products and asset/aviation finance. We also plan to add new capabilities in arbitration, energy, Islamic finance and regulatory advice” Philip Rapp, Singapore managing partner, Clifford Chance “The areas we will focus on are our core strengths – energy, transactional work and disputes. In particular, two other areas to watch us in will be arbitration and contentious regulatory work where we expect there to be growth resulting from the global financial downturn” Austin Sweeney, managing partner Southeast Asia, Herbert Smith “Norton Rose will continue to grow … continue to focus on our headlight areas and use Singapore as our regional hub into Indochina, India and Southeast Asia” Jeff Smith, Singapore managing partner, Norton Rose “Singapore is an excellent strategic hub for us in Southeast Asia and a good resource for North Asia, but we are not proposing to do things very differently. M&A, private equity and capital markets, investment funds and India will continue to be our core areas” Doug Peel, executive partner Singapore, White & Case The real story is not how the complexion of Singapore’s legal market will change in two, three or even four months from now, but what it will look like in six months time when sources close to ALB predict the next round of liberalisation will occur.

New licence, same approach

It is hard to differentiate between the stated five-year plans of the QFLP licensees (see right). If you have read one, it seems, you have read them all – so striking are the similarities between them. Nevertheless, says Austin Sweeney, Herbert Smith’s Southeast Asia managing partner, these bland, mundane statements accurately depict the situation confronting each of the six firms. “All of the law firms granted licences have been in Singapore, doing business www.legalbusinessonline.com

here, for a number of years,” Sweeney says. Herbert Smith established its Singapore office in 1995. “The reason why statements about five-year plans won’t differ all that much is because in being granted licences, the QFLP firms won’t have to drastically change their approach – they will have to continue to support the development of the domestic legal market and Singapore’s position as the financial hub of Southeast Asia,” says Sweeney. Jeff Smith, a partner at Norton Rose in Singapore, agreed, noting that while firms will need to further develop their capacities in areas that “reflect Singapore Inc’s ambitions”, areas such as Shariah law, international arbitration, energy, infrastructure, aviation and marine law, they will not be asked to change their strategies in Singapore.

“Success for QFLP firms will be down to sticking with core strengths,” he says. “There are no plans to start moving away or into areas just because a licence has been granted, and no plans to start moving away from an approach that has worked for over a decade. QFLP firms will analyse what can be done, what opportunities there are, but the broader strategy will not change. But one shouldn’t think that nothing will change. While some may feel that the granting of QFLP licences is a ‘pat on the back’ and a ‘thank you’ for the work these firms have done in Singapore over the past few decades, for some firms it represents a substantial departure from existing law firm business structures.” This is especially the case for QFLP firms previously in Joint Law Ventures (JLVs) or alliance agreements. For these firms, Allen & Overy (JLV with Shook, Lin & Bok) Clifford Chance (previously in a JLV with WongPartnership) and White & Case (in a formal law alliance with Venture Law), the granting of a licence will allow them to cultivate their Singapore operations off their own bat.

RIP Singapore JLVs?

Clifford Chance’s Singapore managing partner Philip Rapp says that, although its JLV provided years of solid growth, the opportunities provided under the QFLP scheme proved too ►► Six of the ‘best’: the QFLP firms Allen & Overy Latham & Watkins Clifford Chance Norton Rose Herbert Smith White & Case ►► The rest: Firms who missed out on QFLP licences* Freehills Cotty, Vivant, Marchisio & Lauzeral Baker & McKenzie. Wong & Leow

Stephenson Harwood DLA Piper Jones Day O’Melveny & Myers

*This list does not purport to be exhaustive. Based on anecdotal evidence

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FEATURE | Singapore >>

Liberalisation : local views “Liberalisation is going to raise standards across the board. The cross-pollination that will occur will mean better things for Singapore lawyers and their clients” David Kerr, CEO, Bird & Bird “Retaining talent has always been challenging for most law firms in the world. It is no different in Singapore and the presence of QFLP firms may make it slightly more challenging. I do, however, believe that the Singapore law firms will meet these challenges” Manoj Sandrasegara, director of marketing, Drew & Napier “I do not think the legal market is overcrowded. If not for the recessionary global climate, currently the market may not be able to support the original projections of some of the QFLPs” Tan Chong Huat, managing partner, KhattarWong “While there will be increased competition, the scheme is also intended to grow the pie. We believe that with the QFLPs there will be additional opportunities for lawyers in Singapore to be involved in a greater amount of international and regional work, which will in turn add to their expertise, in terms of breadth and depth. In the long run, we believe the legal profession will benefit from this” WongPartnership spokesman

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good to pass up. “We saw the QFLP as the best way in that we could expand the range of legal services we provide,” says Rapp. “We enjoyed a productive six-year JLV with WongPartnership, but the time was right to review our business strategy in the Singapore and South Asia markets. The liberalisation of the local legal services market, growth in other South and Southeast Asia markets and other changes in this region led us to believe that our own interests and those of our clients would best be served by operating as an independent entity rather than pursuing the joint venture.” A statement released by Allen & Overy provides a strong indication that it is looking to cut ties with its JLV partner. “The new licence will enable Allen & Overy to develop [its own] Singapore law practice separately,” it states. White & Case’s situation is a little different. Instead of a JLV, the firm has been in a formal law alliance with domestic firm Venture Law, a model that makes the transition to a QFLP firm a little easier according to White & Case’s Singapore managing partner, Doug Peel. “Our alliance with Venture Law has been extremely useful and has enabled us to combine our resources with Venture Law’s vast pool of domestic knowledge. It has been a happy and

fulfilling relationship, and the granting of this licence will create opportunities for us to truly unify. Venture Law will soon become an integrated part of White & Case,” he says.

No easy ride

But the six QFLP firms will not be in for an easy ride over the next two years. According to sources close to ALB, each firm must meet strict criteria regarding headcount and revenue increases, based both on their own modelling and as stipulated by the Singapore government – or risk having their licences rescinded. ALB understands that, at the time of application, firms were required to commit to increasing headcount levels in practice areas identified by the Singapore government in addition to meeting agreed overseas revenue targets. If the six firms fall short on either condition by 50% after two years, the Singapore government has reserved the right to take back that firm’s QFLP licence. A tough task, especially given the current economic environment. All the firms ALB spoke to remained bullish about meeting their targets.

Singapore: one step closer to India

That Singapore is the perfect platform for law firms seeking access to the Asian Legal Business ISSUE 9.2


FEATURE | Singapore >>

to use Singapore as its launching pad into India.

QFLP firms: coming for your young

largely untapped potential of the Indian legal market (with a view perhaps to launching into a liberalised legal sector) is no secret. The economic, social, historical and legal links between the two countries span some 100 years and the two can only become closer as levels of bilateral trade increase. “We will be able to service Indian clients very well from Singapore,” says Sweeney. “Many of the firm’s Indian clientele have their Southeast Asia headquarters in Singapore. Being able to handle the Singapore aspects of Indian cross-border work will be a positive,” he adds. The implication is that Herbert Smith would seek to run more of its India practice out of Singapore (it is currently run out of the firm’s London office) and seek to establish a presence in India if the situation permits. Clifford Chance has made no secret of its Indian ambitions. In November 2008, the firm established a dedicated team of lawyers in its Singapore office focusing primarily on transactions in the Indian market headed by Amarchand & Mangaldas lateral hire Rahul Guptan. More recently, Clifford Chance cemented a ‘best friends’ agreement with Indian firm AZB Partners, all part of the Magic Circle firm’s strategy www.legalbusinessonline.com

While competition between domestic and QFLP firms will at most be a medium-term war, all agreed that the real terrain on which the short-term battle will be fought is Singapore’s tight talent market. Singapore-qualified lawyers of all levels, particularly those with significant PQE in corporate, banking & finance, M&A and project finance areas are already in high demand. Expect to see a ramping up of activity in this regard in the months ahead. Activity at the lateral hire level is expected to peak in the next few months as QFLP firms set up their new operations. It is also worth keeping an eye on intra-office movements and secondments as Singapore-qualified lawyers working in QFLP foreign offices start being repatriated. “We will add new hires, relocations and secondments at all levels,” Rapp tells ALB. In 2008, Clifford Chance secured two partner-level lateral hires in Singapore, promoted two of counsel to partnership and relocated a partner from its London office. Sweeney says that Herbert Smith will also look at both lateral hires and relocating partners from its overseas offices to complement its offering in Singapore where many of its employed Singapore lawyers will soon be eligible to regain their Singapore practising certificates. In the second half of 2008, Sweeney himself relocated to Singapore while London-based partner Nick Peacock followed him in late January 2009. Such moves are largely unsurprising, but what is novel is that most of the QFLP firms are quite open about their plans to dip into the domestic employment market at the lower levels and go after fresh graduates. “We intend to hire and develop promising Singapore law graduates,” an Allen & Overy spokesperson says, for example.

Further liberalisation in six months

In his opening remarks at the QFLP press conference, the minister for law, Mr K Shanmugam, notes that the Singapore government will “review the

[QFLP] scheme in 18 months, plus or minus, and see whether [it] needs to fine-tune the scheme, and whether [it] needs to consider further steps.” As implied by Shanmugam, the timeframe for the review of the scheme is flexible, and sources close to ALB suggest, “rather confidently” according to one source, that further steps could be taken as soon as six months after the first licences were awarded. But just what form this will take is a source of speculation. Perhaps the worst kept secret in the Singapore legal fraternity at the moment is that Singapore-qualified lawyers employed by international firms who were not granted/did not apply for QFLP licences will soon be eligible to reclaim their Singapore practising certificates. But there are much more profound liberalising measures on the cards according to one international firm who missed out on a QFLP licence this time around. “We have been in discussions with the Attorney General’s Chamber and the Ministry of Law since the initial decision was made,” says the source. “We have it on good authority that some of the firms who missed out will be granted a QFLP licence, or something equivalent, within six months.” While this is certainly a ‘wait and see’ proposition, what could be more immediate is a launching of and enhanced JLV (EJLV) scheme, the possibility of which was first raised some six months ago by the Ministry of Law. Under the findings of Justice VK Rajah’s Committee to Develop the Singapore Legal Sector, the government noted the possibility of introducing EJLVs in which foreign law firms would be allowed to hire their own Singapore qualified lawyers and share in up to 49% of their profits with their Singapore partner firm. Thus far, the Ministry of Law and the Singapore government have not commented on this scheme. Our sources within existing JLVs believe that this aspect of legal sector liberalisation is being, as Shanmugam says, ‘fine-tuned’ at present. When complete we may see the pairing-off of select foreign and domestic firms as a forerunner to the next round of legal market liberalisation. ALB 47


Profile | managing partner >>

ALB ASIAN LEGAL BUSINESS

alb 2009 managing partnerS series

Poh Lee Tan, Baker & McKenzie:

Instinctively global Poh Lee Tan, Asia-Pacific regional chairman of Baker & McKenzie, talks to ALB about what distinguishes her firm from rival international firms

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veryone, it seems, likes to call themselves international. Whether a firm happens to have a worldwide network of ‘best friends’, a joint venture overseas or even a couple of representative offices, it seems that every law firm is now claiming international status. But as Poh Lee Tan, Asia-Pacific regional chairman of Baker & McKenzie, points out, some firms have been in the international arena longer than others. A lot longer, as it happens. Baker & McKenzie’s Asian presence, for example, dates back to 1963 when the firm opened its Manila office. “We’ve been in Asia longer than most [international] firms and that long association with the region means that we’ve been able to attain a critical mass in terms of reputation and scale,” says Tan. The firm is sometimes described as ‘Chicago based’, largely because of its Chicago origins. However, the real business of running the firm is performed by an executive committee on which all regions are more or less evenly represented.

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“That’s a key point of difference – we don’t regard any one city or country as our headquarters,” says Tan. And unlike firms that derive the bulk of their income through a principal office such as London or New York, Baker & McKenzie derived only about onethird of its revenues from the Americas

“That’s a key point of difference – we don’t regard any one city or country as our headquarters” Poh Lee Tan, Baker & McKenzie in the 2008 fiscal year, while Asia accounted for 26%. The firm also pursues a genuinely international outlook in its practices by recruiting locally. “We don’t enter new markets by parachuting in lawyers from a home base,” says Tan.

“Instead, our partners understand and appreciate the subtle nuances of legal and business issues in the different geographies where we operate across the globe, while having a global perspective.”

India and Korea

With Clifford Chance having recently entered into a ‘best friends’ agreement with major Indian firm AZB, rival international firms will no doubt be reviewing their own Indian arrangements. Baker & McKenzie has traditionally not gone down the path of establishing representative offices, believing that such operations will not deliver the necessary level of scale and quality of service. But a ‘best friends’ or associate firm agreement is certainly not out of the picture. “We don’t close off options, in India or anywhere else,” says Tan. She has long been an enthusiastic proponent of further engagement in the Indian market. “The global nature of Indian companies and the way they buy assets everywhere is very exciting,” she says. Asian Legal Business ISSUE 9.2


Profile | managing partner >>

The choice of a partner firm, however, will not be dictated by size; Tan instead gives compatible culture, client base and practice skills as key criteria. Korea is another ‘no-go’ jurisdiction where a partner firm might be an option, although Tan says that this matter has not received as much attention as the Indian options to date. “Korea is a different market; Korean clients have been a part of the firm for a long time and Korean companies went international before the Indian companies,” she says.

Diversity

“Clients want to be represented by law firms who place an important emphasis on diversity – having women in leadership positions in the firm helps to demonstrate our commitment to diversity,” says Tan. However, she is, of course, not the first woman on the executive committee; she cites the prominent former chairman Christine Lagarde, now Minister of Finance of France. While diversity has only recently come to the fore in corporate parlance, Tan says that – in her experience – Baker & McKenzie has always been a remarkably diverse firm, even in the days when she joined 24 years ago. However, the firm does not set quotas for the representation of particular groups. “Baker & McKenzie is a meritocracy, and always has been from day one,” says Tan. “It would be wrong, for example, to promote someone simply because of his or her gender. But what we do, instead, is groom that person and give him or her the opportunity to learn the skills that a person needs in order to advance.” ALB www.legalbusinessonline.com

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special report | Hong Kong 09 >>

ALB

hong AUSTRALASIAN LEGAL BUSINESS

kong 09

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Asian Legal Business ISSUE 9.2


special report | Hong Kong 09 >>

Hong Kong’s economy may be suffering just as badly as other international financial centres around the world; its legal market is, however, thriving – thanks largely to the giant on its doorstep

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hile 2008 was the year in which economies the world over were brought to their knees by the worst financial crisis in living memory, it (or at least the first half of it) was also a year in which the Dragon economy continued driving through its program of empire building and strategic acquisitions. And, 2008 was a year in which China’s Special Administrative Region of Hong Kong continued to be a major beneficiary of the economic miracle in full swing just across the Lo Wu border. Headlined by transactions such as Sinosteel’s acquisition of Midwest and Coca Cola’s bid for Huiyuan Juice,

and amply supported by a spate of capital markets transactions like China Railway Construction’s mega offering, Want Want’s blockbuster IPO and, more recently, Singyes Solar Technologies Holdings and Strong Petrochemical’s Hong Kong Stock Exchange (HKSE) listings, it is easy to see why pundits are predicting that the shift in the balance of economic power could accelerate during and after the global financial crisis in favour of China. Business lawyers in Hong Kong, especially those in international firms, must be counting their lucky stars. Of course, the ‘rise of China’ has been a mid- to long-term play for Hong Kong lawyers for a number of years.

►► PRC via Hong Kong: China deals with HK components* Transaction Capital markets

M&A

China South Locomotive Hong Kong IPO

Value (US$m)

Legal advisors involved*

533 Grandall, Baker & McKenzie, Herbert Smith, Jia Yuan

SOHO China Hong Kong IPO

1,900 Commerce & Finance, Conyers Dill & Pearman, Freshfields, Haiwen & Partners, Skadden, Zhong Lun

Want Want China Hong Kong IPO

1,050 Freshfields, Jingtian & Gongcheng, Jun He, Lee and Li, Maples and Calder, O’Melveny & Myers

China Railway Group Hong Kong IPO

2,800 DLA Piper, Jia Yuan, Kaiwen, Linklaters, Simpson Thacher

Coca-Cola’s proposed takeover of Huiyuan Juice

2,400 Freshfields, Skadden, Herbert Smith, Dacheng

China Merchants Bank acquisition of Wing Lung Bank

4,700 Freshfields, DLA Piper, Deacons, Clifford Chance

ICBC acquisition of Seng Heng Bank

600 JNR Advogados, King & Wood, Linklaters, JSM

China Telecom acquisition of China Unicom’s CDMA business

15,800 Commerce & Finance, Freshfields, Jingtian & Gongcheng, Sullivan & Cromwell

*This list does not purport to be exhaustive

www.legalbusinessonline.com

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special report | Hong Kong 09 >>

HKSE Listings – against the run of play Listed company CVM Minerals Value US$17m Announced date 15/12/08 Legal advisers Mallesons Stephen Jaques Listed company China Singyes Technologies Holdings Value US$8.1m Announced date 13/1/09 Legal advisers DLA Piper Listed company Strong Petrochemical Value US$32.2m Announced date 12/1/09 Legal advisers DLA Piper, Sidley Austin Listed company China Overseas Value US$322m Announced date 14/1/09 Legal advisers JSM

But whether it is the rise of the country’s corporate sector or the emergence of its new class of wealth generators, ALB reports from Hong Kong that Andrew Tortoishell, never has the mainland Herbert Smith been so central to the Hong Kong legal services market. “In the past decade most of the work we’ve done in our Hong Kong corporate group has a China element in one way or another and 90% of our work related to China has an offshore element,” says Andrew Tortoishell, who was recently elected Herbert Smith’s China managing partner. Andrew Whan, a partner with Clifford Chance in Hong Kong, mentions a similar trend and notes that the amount of work coming to Hong Kong lawyers from the mainland will only increase in the future, especially as Hong Kong’s role as a gateway to the west continues to be realised. “Some of the transactions involving Chinese companies are becoming more sophisticated and complex, and require greater input from external legal advisors,” he says. “We see considerable growth in mainland China-related work.” And while Clifford Chance remains active with clients who are considering offerings this year, the Hong Kong offices of Sidley Austin and DLA Piper were playing pivotal roles in pushing the first HKSE listings of 2009 over the line. Sidley Austin, led by Constance Choy, acted as issuer’s counsel in Strong Petrochemical’s HK$250m (US$32.2m) IPO. King & Wood was retained on PRC law, while DLA Piper, led by partner Esther Leung, represented the sponsor and underwriter China Everbright Capital. Leung also helped lead partners Liu Wei and Jeffrey Mak on another HKSE listing – China Singyes Technologies Holdings’ HK$63m (US$8.1m) IPO. This IPO was reported as being 70 times oversubscribed.

HK capital markets: dead or alive?

Such is the power of China’s growing 52

corporate sector that it possesses the power to keep itself and, perhaps more importantly, those around it from the depths of global recession at arm’s length. But while the recent flurry of listing activity may lead some to suggest that signs of life have finally returned to Hong Kong, corporate lawyers there are not entirely convinced. Cherry Chan, a corporate partner with Clifford Chance in Hong Kong, feels that the recent spate of HKSE listings may be nothing more than ‘exceptions to the rule’, suggesting that further activity in Hong Kong’s capital markets will depend, as always, on favourable market conditions and valuations. “I’m sure there are a considerable number of enterprises, especially private enterprises in mainland China, looking for opportunities to list in Hong Kong. “This would also be the case for the investors who have made pre-IPO investments in these enterprises. However, it will really depend on market conditions and valuations,” she said. “I think things will still be slow in the coming six months, but hopefully will get better in the second half of this year.” Conrad Chan, a partner at the Hong Kong office of Mallesons Stephen Jaques, agrees, but for him things could turn on whether market confidence has been sufficiently restored by the recent listings. “Each company has its own listing agenda and fund raising needs,” Chan says. “While there’s been a global drought in capital markets transactions, it’s undeniable that there are good quality companies that will want to raise funds according to their own timetable, and there will still be investors who are happy to invest in these companies at the right price … but it depends on the few forthcoming listings, some of which are relatively sizeable. “If the market keeps getting receptive and confidence is restored, we may see an increasing trend.” Chan was the lead lawyer on the Hong Kong listing of CVM Minerals Limited, which floated just before Christmas last year. Asian Legal Business ISSUE 9.2


special report | Hong Kong 09 >>

Confidence remains fragile, states DLA Piper’s Mak. “While these listings may help rebuild some confidence, it’s important to remember confidence remains extremely fragile. Of course, this is an incredibly challenging year, but I believe the market in Hong Kong this year will still be active not just with listings but M&A [involving] listed companies, privatisations, takeovers and other activity including repurchase offers and rights issues – open offers.”

Subsisting on a strict cross-border diet

One of the more interesting developments has been the increasing ferocity of China’s FDI-led economic imperialism. At no stage in the past has China been so active in throwing around its economic might. But this has not only been one way, for – as much as China has directed its economic empire building through the special administrative region – US, European and other Asian investors have also done the same, seeking to stake their claim in the China through companies listed on the HKSE. No clearer example of this exists than Coca Cola’s proposed HK$18bn (US$2.3bn) takeover of Huiyuan Juice Company. Lawyers could not be happier with such a trend. “As more companies are listed in Hong Kong over time, it creates more M&A work for lawyers,” says Tortoishell. “The underlying assets of these companies are in China but most of the M&A legal work is done in HK.” Herbert Smith is acting on Coca Cola’s proposed acquisition as well as Gome’s acquisition of China Paradise. However, while it is becoming increasingly common for PRC companies to list in Hong Kong, it is decidedly less common for PRC law firms to set up shop in Hong Kong. In fact, only 10 (of the more than 13,000 law firms in the PRC) are registered as foreign law firms with the Hong Kong Law Society. But is this set to change in the near future? Lawyers interviewed by ALB agreed that, as China’s legal and regulatory frameworks become more developed, efficient, transparent and www.legalbusinessonline.com

How much Hong Kong IPO work is in store for 2009? “We’ve received new instructions to complete IPOs before the end of 2009. From our position, we can see that small to medium-sized IPOs will continue to take place in the next six months. At such times we will be working closely with clients to ensure that they are thoroughly prepared for their listing, that risks are managed and their business is in a strong position to take advantage of market opportunities” Esther Leung, DLA Piper

“I think there’s a general belief that the IPO market will start to regain its momentum after Q2 or Q3. Let’s keep our fingers crossed” Conrad Chan, Mallesons Stephen Jaques

Esther Leung, DLA Piper

Conrad Chan, Mallesons

“It will really depend on market conditions and valuations. I think things will be slow in the coming six months, but hopefully will get better in the second half of this year” Cherry Chan, Clifford Chance Cherry Chan, Clifford Chance

“Although some deals are governed by PRC law, they still involve overseas parties and run in international ways, such as documentation, so international and Hong Kong counsel need to be instructed”

Benita Yu, Slaughter and May

Benita Yu, Slaughter and May

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special report | Hong Kong 09 >>

“Tax and regulatory environments are changing by the day and this makes life a lot more complex for many private clients”

Samantha Bradley, Withers

Samantha Bradley, Withers

reliable, the role of PRC firms on cross-border transactions is likely to grow considerably. In the Coca-Cola/Huiyuan deal, Beijing-based firm Dacheng has been charged with the tasks of dealing with antitrust filings and liaising with China’s Ministry of Commerce to ensure that approval for the deal is secured before the acquisition agreement expires on 23 March 2009. To be fair, while PRC firms still lack the acumen, commercial knowledge and sophistication to mount any serious challenge to the market share of their international law firm counterparts, their own development and the role they are playing vis-à-vis the evolution of China’s legal and regulatory landscapes serves a greater good. “We always see China legal issues as being best advised on by PRC firms for their expertise, and the growing need for PRC legal advisors to come into the structuring of a transaction

is inevitable. But it doesn’t mean that if PRC firms are stronger and more involved in a deal we will have less share of the profit of the deal,” says Benita Yu of Slaughter and May. Notwithstanding this, says Yu, given that most of the cross-border deals are structured through offshore vehicles and involve common law jurisdictions, Hong Kong-based counsel will retain the upper hand. “In most high-profile cross-border deals, international expertise and Hong Kong legal advice are required. Many of the Chinese companies involved are listed in Hong Kong and a large volume of Hong Kong regulatory applications need to be done for the deals,” says Yu. “Although some deals are governed by PRC law, they still involve overseas parties and run in international ways, so international and Hong Kong counsel need to be instructed,” she explains.

The nouveau riche, uber rich and ‘families of the world’

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ith a high percentage of high-net worth assets passing through Hong Kong on a daily basis, there are plenty of opportunities for lawyers to capture a share of the legal work generated by both the new generation of wealth creators and socalled ‘families of the world’. But as Samantha Bradley, the office managing director of Withers’ Hong Kong office, notes, client service in the private client area is substantially different from what is expected of lawyers in the corporate arena. A different approach is required – one that balances clients’ investment goals with a more personalised touch. But even this is a generalisation. In this broad practice area, covering everything ►► PRC firms with a presence in hong kong Chen & Co China Law Office Duan & Duan Grandall Guangdong Hua Fa

Source: Hong Kong Law Society

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Guangdong Xin Yang Guantao Jin Mao Jun He King & Wood

from family business and estate and succession issues to philanthropy and charitable giving, clients of all shapes and sizes are to be found. “I have worked with private clients for more than a decade and there are substantial differences between domestic clients and families of the world,” says Bradley. “Your average domestic client doesn’t usually have the complex cross-border complications that families of the world do. Bradly gives an extended explanation of what is involved. “These clients typically have family members and/or personal assets in different jurisdictions and, while they are very diverse, they usually have home tax issues and foreign tax issues and need to avoid double taxation. “They also have cross-border succession issues. Our role is to help such clients maximise wealth and help them with the creation of structures to invest efficiently and facilitate harmonious wealth transfers from one generation to the next. “International wealth management requires a broad knowledge of law and investment practice across jurisdictions. Asian Legal Business ISSUE 9.2


special report | Hong Kong 09 >>

Tax legislation and compliance obligations are becoming increasingly complex in many jurisdictions. Client needs differ greatly from what they were five or 10 years ago and servicing these needs requires a different approach. “Tax and regulatory environments are changing by the day and this makes life a lot more complex for many private clients. “There have been significant changes to the personal tax regime in the PRC and changes have also been under discussion in Taiwan. “The UK and US continue to refine their legislation to close loopholes and increase the revenue from their taxpayers globally. There continues to be considerable interest in using offshore jurisdictions to structure succession planning but this can raise many complications. “Lawyers in this space differentiate themselves by having broad

www.legalbusinessonline.com

knowledge. They not only take a wide view on things, but also a long-term view on things. There is a continuity of issues to deal with. “Structures that are set up now may be around 40 or 50 years from now and you need to think forward. It’s about much more than delivering the requisite commercially sound advice.” “There are two layers of client service that are important in the private client area. The first is that lawyers must understand their client’s technical wealth planning needs. The second aspect is that the advice must be framed within the context of the client and those they wish to inherit their wealth as individuals. Understanding their personal perspectives and goals and how they interrelate as a family is important when helping a client devise structures for the harmonious management of family wealth or a family business.”

Financial crisis

“It’s really too early to say what the aftermath of the global financial crisis will be on areas such as philanthropy and charitable giving,” says Bradley. “It may make people more apprehensive to give, but should not really affect existing philanthropic structures except for the obvious that many have lost considerable value. “Nonetheless, there’s no time like the present to focus on managing and diversifying investments and addressing issues pertaining to risk and compliance,” continues Bradley. “Clients could land themselves in hot water if they don’t take proper action and implement compliant structures. Forward planning can mitigate future complications as well as open new opportunities,” said Bradley. Advice which is as applicable for families of the world and the nouveau riche as it is for MNCs and SMEs. ALB

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FEATURE | M&A >>

Asian M&A 2009:

The start of a new world order?

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Asian Legal Business ISSUE 9.2


FEATURE | M&A >>

A

recently released Boston Consulting Group (BCG) study found that investors, acquirers and targets do better with downturn deals and divestitures: ROIs increase, on average, by at least 13%. Based on research of over 408,000 deals from 1981 to 2008, with a special focus on more than 5,000 divestitures, the unique longitudinal report gives a compelling reason for pursuing M&A when the economy is weak. “Downturn deals have a higher chance of creating shareholder value and delivering greater returns. They are twice as likely to produce longterm returns in excess of 50% and, on average, create 14.5% more value for shareholders of the acquirer,” the study states. The figures for divestitures are almost identical. “Divestitures have a higher probability of success for buyers than the purchase of entire companies and can create substantial value for sellers as well. Sellers’ overall returns from divestitures are 1.5% on average, rising to 1.7% during downturns (a 13% increase), suggesting that it is a good idea to clean up portfolios during downturns,” the study reports. It is this type of study that has many across the region calling 2009 the year of strategic M&A, of empire building and of mid-market consolidation. But chances are you will not find too many lawyers among them. The M&A

landscape in Asia at the moment is a little hazy, difficult and uncertain, and likely to remain that way for a while yet, report most. Notwithstanding, the reality of the situation is that the sector can never completely stop and transactions will never come to a complete halt – there will always remain something for lawyers to do, whether it be at the front- or back-end of transactions. But while the work may, in many respects, stay the same, the game has well and truly changed. Lawyers ALB spoke with noted that while the old ‘vanilla’ ways had not died, they are becoming infused with a different set of concerns. Clients are requiring deals to be completed in tighter timeframes, calling on counsel to accelerate due diligence while at the same time asking them to make sure all bases are covered. They are asking lawyers to ensure that document control is strict and that MAC (Material Adverse Change) and force majeure clauses are watertight. Being an M&A lawyer in the downturn is less about the type of work being done and more about the way it is done.

A new world order?

The end of the Asian financial crisis (AFC) late last decade saw M&A activity reach unprecedented levels. Companies from the US, UK and Europe unaffected by Asia’s storm

pillaged some of Asia’s household names, making use of devalued Asian currencies to buy up companies on the cheap and stake a claim in Asia. This time around, however, things are a little different. This time, it is the companies who did the buying 10 years ago that are struggling to keep their heads above water while their Asian counterparts – companies in countries like China, Japan and India, who are cash rich – boast envious balance sheets and are looking, sometimes rather nationalistically, to plant their flags across the globe. This time, it seems, the shoe is on the other foot. But, according to Tan Chong Huat, managing partner of KhattarWong, the nature of the current financial crisis means that Asian companies may have to choose their western targets carefully or risk becoming casualties themselves. “The 1997 crisis was limited to Asian economies and resulted in Asian companies becoming attractive targets to Western MNCs, since funding wasn’t restricted in those economies,” explains Tan. “The current worldwide credit and financial crisis may not, however, lead to an immediate charge by Asian companies on Western targets, given that the current crisis was contributed to, in the main, by the toxic assets of the Western economies.” Keith Johnson, head of corporate/ M&A at Linklaters in Hong Kong,

►► M&A DEALS: Top 10 Any Asia PACIFIC (ex-Japan) Involvement Announced Deals Rank date

Status

Target

Acquirer

13/5/2008

Completed

St. George Bank Ltd

Westpac Banking Ltd

17,933.0

1/2/2008

Completed

Rio Tinto PLC

Shining Prospect Pte Ltd

14,284.2

28/4/2008

Completed

TM International Sdn Bhd

Shareholders

8,976.6

8/9/2008

Completed

Origin Energy–Coal Seam Gas

ConocoPhillips Co

7,937.7

2/6/2008

Completed

China Netcom Grp (HK) Corp Ltd

China Unicom Ltd

7,785.0

4/8/2008

Pending

Asciano Group

Asciano Group SPV

7,231.4

18/11/2008

Completed

China Construction Bank Corp

Bank of America Group

7,067.4

13/6/2008

Completed

Angel Trains Ltd

Investor Group

7,011.0

15/1/2008

Completed

Citigroup Inc

GIC

6,880.0

17/11/2008

Pending

Coca-Cola Amatil Ltd

Investor Group

6,040.2

Source: Thomson Reuters

www.legalbusinessonline.com

Rank value (US$m)

Cont p60

57


FEATURE | M&A >>

Asian Mergers and Acquisitions Q&A Asian M&As in 2009: some random Loo & Partners LLP

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 limited 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.

►► The philosophy of Loo & Partners LLP as represented by its corporate logo The simplicity of our logo echoes our approach when providing legal solutions in meeting clients’ needs: simple and effective, concise but not prolix. Our logo epitomizes our corporate philosophy. It underlines the strong sense of esprit de corps which we cherish. The pair of oval rings represents our clients and our firm. We regard ourselves as our clients’ strategic partner when tackling their daily challenges. While the two oval rings are similar, they are by no means identical, each has its distinct identity. The upper (and heavier) ring represents our clients. It reminds us of our solemn oath to do our utmost in the discharge of our duty to our clients. We are represented by the lower ring. It affirms our consistent approach in subordinating our interests to those of our clients. Although we are close partners of our clients, we, nevertheless ensure that there is a sufficient space between us, symbolized by how the two rings are positioned: proximate yet separate, giving us the requisite objectivity in recommending to our clients-partners the best options in meeting their daily challenges.

58

Loo Choon Chiaw

ALB: How would you characterise the Mergers and Acquisitions (“M&A”) landscape in Asia at the moment? LCC: M&A activities have certainly been adversely affected by the current global financial tsunami. Relevant statistics show that the M&A activities declined globally in 2008, both in terms of volume and quantum. It is pertinent to note that the decline has been less significant in the Asian Region. The M&A activities in 2008 have registered a drop of 43.4% in America, 42.9% in Europe, the Middle East and Africa, 24.4% in Japan, and only 5.5% in the Asia-Pacific Region (excluding Japan). At present, there is a huge expectation or valuation gap between the targets (the would be sellers) and the predators (the would be buyers). The prospective targets refuse to accept the existing low valuation of their shares (or assets) and hope that the economy will soon turn around, thereby pushing the valuation of their shares (or assets) higher. In contrast, the prospective predators, while waiting for clearer and more stable economic prospects, also hope that the prospective targets’ bargaining position may be weakened with time, thereby be compelled to dispose of their shares (or assets) at an even lower valuation. Figuratively, there is a tug-of-war between the prospective targets and the prospective predators. ALB: What is the outlook for the M&A activities in 2009? LCC: The outlook in 2009 appears to be hazy at the moment. The opinions of market experts

are divided on this issue. Some are of the view that the current meltdown presents lowlygeared, well capitalised institutional investors with a golden opportunity to pick up bargains. They speculate that M&A activities would start to pick up in late 2009. Others, however, take the stand that in the light of the credit crunch, there would not be many M&A deals in 2009. As a born optimist, I am more inclined to the former view. One must not forget that the same capital market turmoil that has caused the delays in projects, the cancellations of sale orders and the insolvency of companies will also bring about more divestments, privatisations and distressed sales. Thus, I believe that shrewd institutional investors with a deep pocket that have no funding problems shall be on a lookout for good acquisition opportunities even in 2009. I further believe that there will be acquisitions of US and European companies by companies from the Asian Region, in particular from the PRC, India and Japan. ALB: Why the PRC, India and Japan? LCC: The companies from these countries are relatively less exposed to the sub-prime crisis. They have also been blessed with a steady and sustained domestic demand for their products and services. There is also an abundance of lowly-geared, well capitalised and well managed companies in those countries. The oversea acquisitions by PRC companies amounted to approximately USD47.9 billion in 2008. Moving forward, ambitious PRC conglomerates with international exposures will continue to pursue selective oversea acquisitions. It is noteworthy that recently the China Development Bank of China (“CDBC”) made its very first M&A loan of RMB 1.6315 billion to CITIC Group for the acquisition of Baiyin Nonferrous Metal (Group) Co., Ltd., a pillar large-scale nonferrous metal production plant. The CDBC ‘s M&A loan did not appear to be an isolated event as the Industrial and Commercial Bank of China has also recently announced its intention to expand the scope of its financial services in 2009 to include M&A loans. There is no reason to assume that the M&A loans shall only be confined to domestic M&As. Oversea M&As effected by Indian companies reached USD13.15 billion in 2008.This trend may continue. According Asian Legal Business ISSUE 9.2


FEATURE | M&A >>

reflections. ALB discusses with Loo Choon Chiaw, to the latest Thomson Reuters figures, outbound M&A deals from India will continue in 2009 as Indian companies will increasingly be looking to internationalise as well as to acquire well known brand names. In 2008, Japanese companies utilised approximately USD75.9 billion for oversea acquisitions. Japanese MNCs are also wellpositioned to continue with its oversea acquisitions in 2009. The acquisitions will primarily be prompted by a strategic necessity. They have no choice but to expand beyond their matured domestic market. Furthermore, Japanese banks, being less exposed to the current credit turmoil, are familiar with the granting of large M&A loans for oversea acquisitions. ALB: In your view which sectors in particular will see the most M&A activities in 2009? LCC: I think the financial services, natural resources and energy sectors will be quite busy. Distressed sales shall be the major feature of M&A activities in 2009. Famous consumer brands shall also be the sought after targets for acquisitions. The acquisition of Woolworths (the international retail giant), and the impending acquisition of Waterford Wedgwood (the high end pottery utensil and accessory manufacturer) are good examples. While 2009 may not witness many mega acquisitions, there would not be a lack of mid-cap acquisitions. ALB: As a specialised corporate firm, how does your firm view the decline in M&A activities? LCC: Viewing the half-emptied glass, we feel grateful that the glass is still half-filled! Opportunities abound in any crisis. The tug-ofwar between the prospective targets and the prospective predators referred to earlier cannot go on forever. Once equilibrium is reached, a commercial bargain will be struck, thereupon competent legal advice and services shall have to be sought to structure and finalise the legal aspects of the transaction. Speaking from my personal experience and in a usual case involving an acquisition of a substantial amount, our learned friends (incidentally, this is a term of endearment used by lawyers when they refer to colleagues of other law firms acting for the other side during formal proceedings, no matter how disagreeable or unpleasant they find the www.legalbusinessonline.com

other lawyers to be) and our firm would have been rendering advice and services to our respective clients behind the scene even before the commercial bargain is struck. ALB: What are these legal advice and services which you have mentioned? LCC: Under the existing circumstances, i.e., when there is a scarcity of external funding, investment bankers shall be compelled to utilise creative and innovative deal structures to complete the transaction. “Plain Vanilla” transactions whereby an acquisition is effected solely by cash funded by banks or share swap shall become the notable exception. Instead, the completion of transactions will most probably have to rely on Private Equity Funds or even Sovereign Wealth Funds, where appropriate, which have not been adversely exposed to the sub-prime crisis (as opposed to external funding from banks). Assets may be sold on a piece-meal or bought on a lease-back basis. The swapping of debt for equity (and vice versa), the utilisation of options, warrants and other financial devices or a combination thereof shall be creatively deployed to get the transactions done. No matter how novel the deal structure may appear to be, the commercial consensus shall have to be accurately reflected in the legal documentation based on clear and established legal principles and concepts. That will be the moment when law firms need to provide their value-add services. In that connection, our learned friends and our firm will have to be engaged in very involved (and very often, extremely tedious) negotiations with a common objective of producing the final documentation which both parties could live with and ready to sign on (or more accurately, would have no choice but to accept unless they could afford not to seal the deal in question). ALB: I take it that you were referring to the provision of the legal advice and services by your firm as regards its existing practice areas. Has your firm embarked upon any new types of work since the decline in M&A activities? LCC: As a firm, we always try to expand into new practice areas whether in good times or bad. Indeed, we have to work even harder

►► The practice areas of Loo & Partners LLP Loo & Partners LLP was founded in 1985 as a niche practice, handling mainly banking, corporate, securities and commercial work. Within these broad categories, the firm provides the entire spectrum of legal advice and services. Whilst the firm does not maintain any office outside Singapore, it has, over the years, developed good relationships with leading law firms located in the major financial and trading centres. The support of a comprehensive network or correspondent law firms throughout the ASEAN countries— Hong Kong, China (PRC) and Taiwan (ROC) puts the firm in a strategic and unique position to serve its clients in their regional needs.

to detect the relevant market trend during bad times. As and when dictated by the relevant commercial circumstances, we shall take up the gauntlet and position our firm to capitalise on those commercial opportunities and where appropriate, expand our scope of services to cover those new practice areas. Last year, we were approached by a client to act in the acquisition of a coal mine. In the process of taking our client’s instructions and as we researched into the commercial statistics of the coal industry, we were impressed by the great commercial potential afforded to our firm should we mobilise our collective expertise in developing this practice area. Thereupon, we promptly set up a new practice group, namely, the Natural Resources and Energy Practice (NREP) Group. In connection therewith, we mobilised substantial inhouse and external resources in training our NREP colleagues and in ensuring that they are familiarised with the commercial and legal intricacies of coal projects. We were lucky in that our investment of resources in enhancing the capabilities of our NREP Group has yielded good dividends. Our NREP colleagues are now kept busy executing the acquisitions of coal mines in Indonesia, the PRC and Mongolia. They have also just been instructed to advise on a dedicated coal terminal project in Russia. To be extremely honest, had there not been a downturn last year, there would have been less incentive for us to develop our expertise in the natural resources and energy practice area. As the saying goes, every cloud has a silver lining!

59


FEATURE | M&A >> From p57

agrees and suggests that those waiting for an Asian-led M&A spree may have to wait. According to Johnson, while it is true that some Asian companies Keith Johnson, Linklaters have better vitals than their European or US counterparts at present, everyone is bound by the same set of M&A rules. “It’s true that Asian companies, particularly Japanese companies, are strong, have good balance sheets

and have a lot of cash at the moment, but there probably won’t be the outbound rush that a lot of people are predicting,” says Johnson. “Sellers, no matter if they’re in Europe, the US or Asia, are all unwilling to accept the low multiples that buyers are looking for at the moment and this mismatch between the expectations of buyers and sellers is holding up deals.” And this trend – the so-called ‘valuation gap’ – is a pattern identified by all of the lawyers ALB spoke to. All note that, despite the current economic climate,

►► M&A DEALS: Any asia pacific (ex-japan) involvement COMPLETed

►► M&A DEALS: Any asia pacific (ex-japan) involvement announced 1/1/2008–31/12/2008 Rank value Legal adviser

US$m

No. deals

Rank value

Rank

US$m

Rank value

% change in rank value Legal adviser

Rank

US$m

1/1/2007–31/12/2007

Market share

No. deals

Rank value

Rank

US$m

% change in rank value Rank

Allens Arthur Robinson

69,327.6

1

13.5

97

47,244.9

5

46.7

Mallesons Stephen Jaques

67,162.6

1

15.7

114

48,406.3

5

38.7

Mallesons Stephen Jaques

64,968.3

2

12.7

109

52,230.1

4

24.4

Allens Arthur Robinson

63,328.6

2

14.8

90

66,031.4

2

-4.1

Freehills

56,888.7

3

11.1

143

95,023.2

1

-40.1

Linklaters

52,975.4

3

12.4

41

51,519.7

2

2.8

Skadden, Arps, Slate, Meagher & Flom

51,928.3

4

10.1

26

26,982.0

12

92.5

Freehills

51,754.4

4

12.1

133

111,814.8

1

-53.7

Linklaters

51,297.8

5

10.0

49

65,061.1

2

-21.2

Freshfields Bruckhaus Deringer

38,992.0

6

7.6

53

42,300.7

6

-7.8

Sullivan & Cromwell

33,482.7

7

6.5

21

52,657.5

3

Sullivan & Cromwell

45,672.2

5

10.7

20

35,963.0

11

27.0

45,625.5

6

10.7

44

28,588.4

15

59.6

Freshfields Bruckhaus Deringer

7

10.5

22

29,733.3

12

51.2

Skadden, Arps, Slate, Meagher & Flom

44,964.0

-36.4

Cleary Gottlieb Steen & Hamilton

32,726.2

8

7.7

16

8,958.2

34

265.3

▲ ▲

WongPartnership

32,411.0

8

6.3

54

13,784.1

22

135.1

Cleary Gottlieb Steen & Hamilton

28,293.1

9

5.5

14

14,897.0

21

89.9

WongPartnership

32,536.1

9

7.6

49

11,120.3

29

192.6

Clifford Chance

28,291.4

10

5.5

40

32,863.0

7

-13.9

Clifford Chance

31,472.2

10

7.4

37

38,220.7

9

-17.7

Gilbert + Tobin

27,525.4

11

5.4

26

22,008.9

17

25.1

30,689.8

11

7.2

8

-

-

-

Wachtell Lipton Rosen & Katz

25,689.8

12

5.0

6

5,000.0

47

413.8

Wachtell Lipton Rosen & Katz Allen & Gledhill

24,282.2

12

5.7

48

17,132.2

23

41.7

Clayton Utz

25,627.2

13

5.0

72

30,142.4

9

-15.0

Clayton Utz

23,658.9

13

5.5

70

41,134.8

6

-42.5

Allen & Gledhill

25,058.6

14

4.9

49

25,434.9

14

-1.5

Gilbert + Tobin

22,424.2

14

5.3

23

23,937.9

16

-6.3

Shearman & Sterling

23,303.3

15

4.5

18

5,904.2

39

294.7

Baker & McKenzie

20,000.5

15

4.7

74

29,579.6

13

-32.4

Simpson Thacher & Bartlett

20,900.9

16

4.1

6

23,244.1

15

-10.1

Slaughter and May

17,819.1

16

4.2

11

40,168.6

8

-55.6

17,183.3

17

3.7

7

37,824.0

10

-54.6

▼ -

Slaughter and May

20,667.1

17

4.0

17

8,053.4

29

156.6

Simpson Thacher & Bartlett

Baker & McKenzie

20,662.8

18

4.0

90

26,936.4

13

-23.3

Shearman & Sterling

15,572.6

18

3.7

17

19,085.6

19

-18.4

15,510.6

19

3.6

8

7,312.0

37

112.1

14,682.1

20

3.4

5

17,144.4

22

-14.4

Ashurst

14,882.1

19

2.9

6

4,344.5

52

242.6

Dewey & LeBoeuf

Herbert Smith, Gleiss Lutz, Stibbe

13,564.8

20

2.6

27

4,127.0

56

228.7

Ashurst

White & Case LLP

13,139.3

21

2.6

30

13,266.6

23

-0.7

Allen & Overy

12,496.6

22

2.4

36

29,011.1

10

-56.9

Blake Dawson

12,304.7

23

2.4

90

22,212.0

16

-44.6

Dewey & LeBoeuf

11,807.4

24

2.3

9

7,632.0

30

54.7

Jones Day

10,229.5

25

2.0

62

10,831.6

24

-5.6

Subtotal with legal adviser

311,083.9

-

60.6

1,508

389,270.0

-

-20.1

Subtotal without legal adviser

202,245.4

-

39.4

9,857.0

231,099.5

-

-12.5

Industry total

513,329.3

-

100.0

11,365.0

620,369.7

-

-17.3

Source: Thomson Reuters

60

1/1/2008–31/12/2008

1/1/2007–31/12/2007

Market share

investors are still going in search of high ROIs, more choice and lower price-toearning ratios. Many agree that M&A in Asia, and for that matter throughout the world, may be at an impasse. It should come as no surprise then that the most active segments of the M&A sector for lawyers are those that do not depend Nicola Wakefield on a consensus ad Evans, Mallesons idem between buyers Stephen Jaques and sellers.

Latham & Watkins

14,603.7

21

3.4

18

23,644.6

17

-38.2

Allen & Overy

13,054.4

22

3.1

30

40,563.4

7

-67.8

White & Case

12,683.3

23

3.0

26

12,208.8

28

3.9

Minter Ellison

12,450.7

24

2.9

89

61,846.2

3

-79.9

Herbert Smith, Gleiss Lutz, Stibbe

11,395.5

25

2.7

24

17,171.1

20

-33.6

Subtotal with legal adviser

309,355.3

-

72.4

1,305

370,149.4

-

-16.4

Subtotal without legal adviser

117,845.8

-

27.6

5,321

156,649.6

-

-24.8

Industry total

427,201.1

-

100.0

6,626

526,799.0

-

-18.9

Source: Thomson Reuters

Asian Legal Business ISSUE 9.2


Firm Profile| FEATURE arbitration and ADR >>

KhattarWong

Asia’s leading M&A Specialists

W

hilst interest in acquiring Asian targets or Asian assets has not waned in light of the global financial crisis, particularly in emerging markets such as Vietnam and Cambodia, it is clear that the mergers and acquisitions (M&A) landscape is shifting. Due to changes in the global economy, leveraged buyouts and other forms of M&A are now finding it more difficult to source for funds while the wide choice of alternative investments has led to investors not only expecting higher returns, but being more cautious in their due diligence. In the fast-changing economic climate, M&A professionals now have to be more proactive in assisting clients in moving ahead in their business strategies as well as be more actively involved in deal structure, negotiation of key terms and valuation considerations, even as they work against tight deadlines. “We’re definitely seeing the emergence of more M&A work that requires lawyers to step beyond merely giving textbook legal advice. We have to be very aware of our client’s business needs, and mindful of their cost considerations in the current climate,” says Mr Tan Chong Huat, Managing Partner of KhattarWong and Head of its Corporate & Securities Laws Department. “KhattarWong is fortunate to have a team of very business savvy lawyers on board – we’ve always prided ourselves on our ability to take our client’s business strategies into consideration and even facilitate networking amongst clients whom we know can leverage on each other’s capabilities. Our Corporate and Commercial Practice Group features a team of dedicated and highlytrained lawyers who specialise in M&A, private equity, joint ventures and commercial work. This is further augmented by our satellite offices and strong alliances in Greater China, Vietnam, Indonesia, India, Malaysia, Japan, the Middle East and our global network in the American and European continents,” he added. Notably, in 2008, the Group handled a wide spread of M&A and Joint Venture work amounting to approximately $700 million, including a highly profiled joint venture transaction involving the Asian Development Bank. The Corporate and Commercial Practice Group draws on the strengths of KhattarWong’s various specialist groups and provides a range of services in the domestic and cross border markets as well as foreign ventures. The Group’s expertise covers the divestment and acquisition of shares and

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businesses, local and international joint ventures, fund management, corporate reorganisation and reconstruction, business strategic alliances, capital restructurings, private equity investments and placements, and L-R: Nicholas Lim, Rajan Menon, Tan Chong Huat, Anne Chua, Dennis Lui and a comprehensive Winston Seow range of business expansion structures, such as franchising and distribution models. “We’re actually looking forward to 2009 “Our value-add lies in our strict adherence being an even better year, as clients look to good values and corporate governance to us in supporting their various ventures,” principles and our ability to mobilize new added Dennis. deal teams imbued with such qualities within Other than Dennis Lui, the Partners of the a very short turnaround time,” says Senior Firm’s Corporate and Commercial Practice Partner Rajan Menon, a veteran practitioner of Group include Anne Chua, Winston Seow and more than 36 years. Nicholas Lim. Together with Senior Partner “Clients tell us that once they work with Rajan Menon and Managing Partner Tan Chong KhattarWong, they never look back because Huat, KhattarWong’s Corporate & Commercial the level of dedication and expertise we bring Practice Group continues to be one of Asia’s to the table is unrivalled by other larger firms. leading M&A specialists. In the case of SMRT’s acquisition of a 49% Established since 1974, KhattarWong is one equity interest in Shenzen Zona Transportation, of Asia’s leading law firms with strong global our clients tell us that even the Chinese alliances. With more than 150 lawyers, the Firm counterparts were impressed by our service and has an international practice with collaborations cross-border knowledge,” adds Mr Tan. and clients in countries in South East Asia, The Firm has been particularly successful in Indochina, Asia Pacific, Greater China, Middle Takeovers, having advised King’s Safetywear East, Africa, Europe and the United States of in a voluntary cash offer by Safe Step Group America. KhattarWong’s clientele include Fortune Limited and the purchase of the entire issued 500 and listed companies, private and public and fully paid-up share capital of China non-listed companies, Government Ministries and Dongyuan Environment Pte. Ltd. by the SGX authorities, Government-linked companies, local Catalist listed Gates Electronics Limited. and international banks, financial institutions and “We’re very comfortable with cross border, insurance companies representing a wide range complex deals, having the size, reach and of industry and interests. expertise within our Firm to leverage on” says Corporate Partner Dennis Lui. “This year, we expect even more complex deals that require cross border advice. Considering the present difficulty for companies to source for funds, many investors are looking KhattarWong Singapore 80 Raffles Place at a much lower price earning ratio and higher UOB Plaza 1 #25-01 internal rate of returns. Continued consolidation Singapore 048624 Tel: (65) 6535 6844 Fax: (65) 6534 4892 in the industries of financial services, property, energy, healthcare, media and infrastructure KhattarWong Shanghai Shanghai Stock Exchange Building (North Tower) is likely. Given that KhattarWong’s Corporate 528 Pudong Road South #24-04 Shanghai 200120, China & Commercial Practice Group draws expertise Tel: (86) 21 6869 0028 Fax: (86) 21 6881 7668 from various departments working closely KhattarWong Vietnam together in areas that call for joint expertise, I Bitexco Office Building am confident we are able and ready to deliver 19-25 Nguyen Hue Boulevard, District 1 Suite 1501, 15th Floor end-to-end legal services for any potential Ho Chi Minh City, Vietnam clients in the year to come and beyond.” Tel: (84) 8 915 1624 Fax: (84) 8 915 1627

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FEATURE | M&A >>

“We’re seeing a lot of private M&A activity,” says Nicola Wakefield Evans, managing partner international at Mallesons Stephen Jaques. “[We’re seeing] a lot of acquisitions and dispositions and strategic acquisitions, particularly with distressed assets as corporate restructurings are on the rise.” The situation is the same for Loo Choon Chiaw, managing partner of Loo & Partners, who takes a philosophical view. “One mustn’t forget that the same capital Loo Choon Chiaw, market turmoil that Loo & Partners has caused the delays in projects, cancellations of sale orders and insolvency of companies will also bring about more divestments, privitisations and distressed sales,” he says. Eddy Hendra, one of the founding partners of Indonesian firm Hendra, Soenardi & Rekan, agrees and says that his firm is witnessing a spike in M&A Eddy Hendra, transactions that are Hendra Soenardi & Rekan about survival. “Large M&A like we saw earlier this decade probably won’t be there this year. We’ll see smaller M&A in select sectors like oil and gas and coming out of emerging economies in Southeast Asia, like Indonesia, Vietnam and Thailand, and most certainly India and China.” Whichever way you look at it, it seems that the days of the mega M&A deals are over, and that transactions which were hitherto routine are set to become ‘remarkable’ in 2009.

The colour of money

That China has been one of the most acquisitive Asian nations over the last five years is no secret, nor is its wish to purchase more assets across the globe to extend its economic and political influence while securing the resources needed to guarantee its own economic development. But what is relatively surprising is how quiet the dragon nation is at present – evidence, according to lawyers interviewed by ALB, that China is by no means immune from the current crisis. “Any notion that China is ‘decoupled’ to any significant degree from the global recession no longer has any credibility,” said Ashley Alder, head of 62

Asia at Herbert Smith. “Over the next few months, the economic slow-down may well delay Chinese corporations’ ambitions to expand through M&A transactions abroad, although we also expect that China may well come out of the current economic turmoil faster than the US and Europe.” Johnson agrees but sees China sitting on the sidelines now as nothing more than the calm before the storm suggesting that the ‘imperatives’ that were around this time last year have not disappeared. “China has effectively drawn in its claws recently in the volatility but obviously has cash. It is clear that China has a number of strategic M&A objectives and those haven’t gone away because of what is happening globally. There’ll come a point where the Chinese state feels the valuations on these things make them too tempting.” Wakefield Evans, too, believes that China’s strategic stakebuilding will soon be back on track. “We believe that Chinese companies will continue to invest in offshore companies, particularly in the energy & resources sector. The current market conditions will provide Chinese companies an opportunity to realise their global ambitions,” she says. And it is the same global conditions that may also break down political and ideological barriers that have until now surrounded Chinese outbound acquisition. “The opportunities which will come the way of Chinese companies will be opportunities that face less political resistance than in the past,” says Johnson, explaining that at the same time ailing Western companies may find that they have no other option but to accept red money to keep their heads above water. “If you have struggling companies overseas then the lure of Chinese money may be more tempting than it was the in past, because it doesn’t really matter what colour the money is if it saves a company and saves jobs,” he says.

The M&A method

While M&A lawyers across the region noted that there was not, as yet, any discernable change in the way deals are structured in the current environment, they agreed that clients are increasingly asking more of their counsel. All lawyers said that the speed

with which transactions are to be finalised is relatively new. This covers all aspects of a would-be deal and even extends as far as the due diligence process. They noted this to be especially applicable with respect to transactions involving the acquisition of distressed assets. But these are not the only demands clients are making of lawyers. In fact, what makes this downtime so difficult to practise in the area is that lawyers are also called on to ensure watertight document control. “Deals are being completed in increasingly shorter timeframes, but with greater economic protections in the deal documentation,” says Wakefield Evans. “MAC, force majeure and other market out clauses will be heavily negotiated in light of recent litigation over these terms.” For Loo, there are also noticeable, though not expected, behavioural changes in parties to transactions. “In cases of the acquisition of distressed assets … the targets are often less willing to give extended representations and warranties. The predators shall insist on the withholding of a certain portion of payment on completion of an assurance against the possible losses that may be sustained by the targets after completion,” he says, adding that trends like these are ones which must be identified early if lawyers are to survive the downtime. But do not expect to see substantial changes in deal structure just yet. “Financial markets have to regain confidence before new structures are accepted,” says Tan. “The basic goal of securing returns on investment still remains the same; however, M&A professionals may now have to be more proactive in assisting clients in their business strategies.” ALB Asian Legal Business ISSUE 9.2


FEATURE | Global Forum on Intellectual Property 2009 >>

The Global Forum on Intellectual Property GFIP 2009

On 8–9 January, some 400 global IP and business experts converged on the Raffles City Convention Centre to attend the IP Academy’s (Singapore) 2nd Global Forum on Intellectual Property to discuss key multidisciplinary IP issues and developments

►► The Singapore IP Academy In brief: To support Singapore’s evolution into a regional IP hub of South East Asia, the Singapore government created the Intellectual Property Academy in 2003 – a leading resource for executive IP education and thought leadership development in Singapore and the region. It plays a key role in developing and broadening the knowledge and capabilities in the creation, protection, exploitation and management of IP in Singapore and the region.

www.legalbusinessonline.com

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well-developed IP portfolio can make high-profile M&A deals; a diversified IP portfolio enhances market position and a well-protected IP portfolio is cornerstone of a country’s competitiveness and is the crucible of innovation. Such is the importance of IP in today’s business world that it affects everyone from national governments and MNCs to SMEs, cottage industry operations and sole traders. IP in Asia is serious stuff. It was against this backdrop that the 2nd Global Forum on Intellectual Property (GFIP) Asia Pacific’s premier multi-disciplinary IP event was held in early January 2009. Organised by the IP Academy (Singapore), the GFIP was attended by some 400 participants including IP practitioners, IP thought leaders, academics, businesspeople, industry players and policy makers from across the globe. Kicked off by Singapore’s Senior Minister of State, Ministry of Law and Ministry of Home Affairs Associate

Professor Ho Peng Kee, the GFIP 2009 explored, inter alia, the challenges and opportunities for business and governments that are presented by the evolution of IP ecosystems across the globe. Delegates at the GFIP 2009 were not only provided with a unique networking experience with access to over 90 high-profile international speakers but treated to extremely informative multi-disciplinary plenary sessions, keynote speeches, and over 30 parallel sessions and roundtables which traced the dynamic progression of IP infrastructures and their effect on day-to-day business dealings. Panel discussions touched on both traditional IP fields such as copyrights and design, patents and trademarks as well as emerging areas such as strategic intellectual asset management, IP financing and valuation, and IP protection in sports and brand marketing, and explores different perspectives from a socioeconomic angle. ALB 63


FEATURE | offshore financial centres >>

Mauritius: Gateway to global investment There’s more to Mauritius than Indian investment. Africa, China and Southeast Asia are all on this tropical island’s client list. ALB looks at what makes Mauritius an ideal platform for international investment

L ►► Mauritius: double taxation avoidance treaties (DTA)

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Barbados

Lesotho

Seychelles

Belgium

Luxembourg

Singapore

Botswana

Madagascar

South Africa

China

Malaysia

Sri Lanka

Croatia

Mozambique

Swaziland

Cyprus

Namibia

Sweden

France

Nepal

Thailand

Germany

Oman

UAE

India

Pakistan

Uganda

Italy

Rwanda

UK

Kuwait

Senegal

Zimbabwe

ying approximately 2,000km off the coast of Africa, Mauritius may no longer be one the best kept holiday secrets, but it remains one of the best kept offshore secrets, especially for offshore law firms. Only two – Conyers Dill & Pearman and Appleby – have a physical presence there. But according to lawyers interviewed by ALB, this isn’t likely to remain so for much longer, as Mauritius goes about cementing its position as the gateway to global investment. In addition to offering the traditional advantages of many offshore financial centres (through various tax incentives), Mauritius is also a treaty-based jurisdiction, boasting a network of double taxation avoidance agreements with over 30 countries, all of which mean Mauritius enjoys the status of being one of the most reputable offshore financial centres (OFCs) in the world. Asian Legal Business ISSUE 9.2


FEATURE | offshore financial centres >>

►► Mauritius: key facts • • • • • •

no CGT no withholding tax no capital duty on issued capital confidentiality free repatriation of profits and capital has signed various Investment Protection and Promotion Agreements (IPPAs) with African countries • has strict anti-money laundering laws and has never been blacklisted by the OECD, FATF or UN • convenient time zone location (UTC +4) – East Asia (am); Europe (noon/early afternoon); US (pm)

Indian Investment

While some may feel that longerestablished OFCs – places like Bermuda, Cayman and the BVI – hold sway as the world’s pre-eminent offshore jurisdictions, Anthony Whaley, a partner at Conyers Dill & Pearman, disagrees and suggests that Mauritius is certainly holding its own in the battle of the OFCs, thanks largely to the unprecedented access it offers investors looking to dip into BRIC countries, most notably India. Mauritius and India share a rich history spanning back to the nineteenth century, when Indian immigrants arrived at Aapravasi Ghat to work as indentured labourers under British rule. “Today, Mauritius is the location from which most direct investments are made into India. This is principally due to the Mauritius-India Double Taxation Avoidance Agreement (MIDTAA) which dates back to 1983.” Under the MIDTAA and Mauritian domestic law, capital gains are exempt in both India and Mauritius, something that is critical, according to Whaley, because of the investment profile of most investors into India. “It is probably the case, now, that most investments into India [made via Mauritius] are made more with a view to making capital gains than to securing regular dividend flow.” According to the Central Bank of India, between April 2000 and March 2008 nearly 45% of all FDI into India was made through Mauritius. Industry experts put this figure even higher throughout the remainder of 2008, when projects in India’s Information, Communication & Technology (ICT) and energy sectors took off. www.legalbusinessonline.com

“Investment into China through a treaty-based country like Mauritius will be the preferred approach” Anthony Whaley, Conyers Dill & Pearman With statistics like these, lawyers ALB spoke to believe that Mauritius is likely to stay ahead in the OFC race for Indian investment, especially in light of recent moves designed to tighten its tax regime. “Mauritius has tightened its tax residency requirements – access to the MIDTAA depends on the tax resident status of the investing entity in Mauritius,” Whaley adds. “A memorandum of understanding [recently signed] by both countries provides for effective exchange of information in the detection of fraudulent market practices.”

To Africa… and beyond

But India, while being a market of unbridled opportunity, is not the be all and end all, according to Whaley. Rather, the liberalisation of Indian outbound investment offers new opportunities for the use of Mauritius as a jurisdiction from which to invest in resource-rich Africa. “The potential for highly profitable foreign investment in Africa is huge and the commodity boom has opened a window of opportunity for mineral rich countries to accelerate their development … Mauritius has a vital role to play.” At present, Mauritius has concluded tax treaties with some 11 African nations, including South Africa, Zimbabwe, Uganda and Botswana. The country has also been extremely proactive in dispelling many of the myths

surrounding the safety of investing in Africa. “Most African countries impose withholding tax on dividends paid to non residents. But owing to tax treaties, a Mauritius-based investment vehicle may potentially save them from 5% to 20% tax, depending on the country,” he says. For investors wary of investing into Africa, Mauritius has structures in place to allay their fears. “Mauritius can point to the various Investment Promotion and Protection Agreements (IPPAs) which it has signed with African countries. The IPPAs, among other things, provide for free repatriation of investment capital and returns, guarantee against expropriation, most-favoured-nation rule with respect to treatment of investors and compensation for losses in case of armed conflict.” In addition, Mauritius is a member of the major African regional organisations that provide preferential access to markets on the continent such as the African Union, the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean Rim – Association for Regional Cooperation (IOR-ARC). In relation to the future, things look as bright for Mauritius in Asia as they do across Africa. “Investment into China through a treaty-based country like Mauritius will be the preferred approach,” said Whaley. “This is due

►► Incorporating your company in Mauritius

Companies incorporated in Mauritius for the purpose of doing business primarily outside of Mauritius are called global business companies or ‘GBCs’. Entities are typically set up as category 1 or category 2 global business companies (GBC1 and GBC2 respectively). The GBC2, which is ideally suited to asset or investment holding, is similar in aspects to international business companies or exempted from companies established in the traditional offshore jurisdictions such as Bermuda, Cayman and the British Virgin Islands. A GBC2 is not subject to any tax in Mauritius and does not benefit from the numerous Mauritian tax treaties. A GBC1 is resident in Mauritius for tax purposes and, while liable to taxes at a rate of 15%, such companies enjoy treaty benefits that either eliminate or significantly reduce such taxes.

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FEATURE | offshore financial centres >>

mainly to the corporate Income Tax Law which eliminates the exemption of dividend withholding taxes.” Elsewhere in Asia, Mauritius ranks first in respect of FDI into Indonesia for the period January to May 2008, despite not currently having a tax treaty enforced in that country.

Offshore law firms

It should come as no surprise then, that Conyers decided to set up in Mauritius as soon as local regulations permitted it to do so (recent amendments were made to the country’s Law Practitioners Act allowing foreign law firms to establish offices there as well as allowing for the formation of joint law ventures). What is more surprising, however, is that it is only one of two offshore law firms with an office in Mauritius – a trend Whaley believes will not be reversed any time soon, thanks largely to the inclement economic environment.

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“The potential for highly profitable foreign investment in Africa is huge…” Anthony Whaley, Conyers Dill & Pearman “There is no doubt that we expect to see a number of other offshore law firms setting up in Mauritius. Many have already made serious enquiries in that regard although they are likely to hold off establishing in Mauritius until they are better able to assess the full impact of the global financial crisis – not just on Mauritius, but on the world economy,” Whaley explains.

The global financial crisis

The pervasiveness of the current economic downturn means that no country, no matter how robust or resilient its economy, can hope to remain immune. Such is the case for Mauritius. The fact that its economy

is so inexorably linked to that of emerging economies like India and China means that it is not a case of if it will be affected but when. “We’ve seen a general slowdown in the number of investment funds being established, for example, in relation to investment in India and a greater proportion of financing transactions involving Mauritius entities,” Whaley explains. But, as always, where there is a slowdown in one area there is almost certain to be upturns in others. “We are starting to field enquiries relating to the liquidations of Mauritius entities,” says Whaley. This occurrence has been echoed by other lawyers interviewed by ALB. ALB

Asian Legal Business ISSUE 9.2


Firm Profile FEATURE | offshore financial centres >>

Appleby

A passage to India:

Incorporating FDI through Mauritius Many clients in North America, Europe and Asia look for the resources of a firm like Appleby to create efficient investment structures through a well-placed, independent sovereign country such as Mauritius.

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s the first global offshore law firm to provide fiduciary and administrative legal services from Mauritius, Appleby has grown rapidly in the two years it has been building its presence on the island. Economic development in India, Asia and the Middle East has been a key factor for the office’s growth, where the global business industry is highly active in inbound investment into India and China. In India, Mauritius has become number one jurisdiction for foreign direct investment (FDI) due to the favourable treatment under a double taxation treaty between the two countries. Since the signing of the treaty, many investment and hedge funds have, and continue to be, incorporated in Mauritius for the specific purpose of investing in India. The benefits of considering to use Mauritius in an investment structure for access to the Indian market are unparalleled, whether utilising a collective investment scheme, a closed end fund or a another investment vehicle. Besides the favourable withholding tax rates, Mauritius has a long-standing relationship with India, spanning not only economic, but also political and cultural ties. The majority of the population of Mauritius has roots in India, and Mauritius has consistently supported India in all international organisations where both countries are members. Although the double taxation treaty between the two countries is not unique, the Mauritian route has always been the first source of FDI in

www.legalbusinessonline.com

India. Singapore also has a solid tax treaty with India, but stringent capital requirements (at least S$150,000 must be paid into the company on a yearly basis) make it a less attractive option. Mauritius also benefits from a strategic location in the Indian Ocean between India and Africa with direct flights to most major centres. It has also double taxation agreements with several countries within the African region. Although the Mauritius treaty continues to be a subject of controversy, case law in India has upheld the use of Mauritius to invest into India, and Mauritius has in recent years tightened its tax residency requirements and formulated strict anti-money laundering laws. In addition to such measures, a Memorandum of Understanding (MoU) signed between India and Mauritius provides for effective exchange of information in the detection of fraudulent market practices. Certain other procedures have been established for effective exchange of information, both upon request and on a voluntary basis, about suspicious securities dealings between the two countries. It should be noted that the intention behind the MoU has always been to track down transactions tainted by fraud and financial crime and not to target bona fide legitimate transactions. Appleby’s Mauritius office is focused on investment into emerging African and Asian markets through its general corporate practice. The firm is one of the only offshore legal, fiduciary and administration service providers with a major foothold in five of the world’s leading offshore business centres: Bermuda, the British Virgin Islands, Cayman Islands, Jersey and Mauritius as well as offices in London, Hong Kong and as of December 2008, Zurich.

Malcolm Moller

Frances Woo

Malcolm Moller Managing partner, Mauritius 8th Floor, Medine Mews La Chausée Street, Port Louis, Mauritius Phone +230 203 4300 Fax +230 210 8792 Email mmoller@applebyglobal.com Frances Woo Managing partner, Hong Kong 8th Floor, Bank of America Tower 12 Harcourt Road, Central, Hong Kong Phone +852 2905 5720 Fax +852 2524 5548 Email fwoo@applebyglobal.com

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FEATURE | intellectual property >>

IP: from innovation to litigation ALB looks at which parts of the IP cycle have been keeping firms occupied of late

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s Asia enters uncharted economic waters, the burning question on the lips of inhouse counsel is not so much how IP can be leveraged to achieve business expansion, but more what value IP lawyers can provide in a downturn.

Workflow: no dramatic drop

There is often a time lag before the legal industry feels the full effects of an economic event. When asked about the impact of the economic downturn on his IP practice, Morris John, managing director of Drew & Napier, said Morris John, that it was very much a Drew & Napier case of wait and see. “So far, it’s mainly the financial sector that’s been affected. The manufacturing sector, where a lot of patent work originates, is yet to be as badly hit,” he says. “But we are starting to see a decline in the level of defensive filing and patent maintenance. Companies used to apply for patents even if an invention did not seem immediately marketable, but now we’re seeing a more careful approach to filing as companies try and cut costs.” Sheena Jacob, head of IP and technology at ATMD, says that IP litigation has been very active of late. She says it has a momentum that has been building over the past year, with ATMD, fresh from its “global association” with Bird & Bird, seeing a 50% increase in this area of work. It would be easy to link this trend to the traditional rise in litigation during an economic downturn, but Jacob points out that the litigation relates to the enforcement of IP rights and not debt recovery actions. “Litigation to protect patents and trademarks is up across a broad range of industries,” she says. Jacob attributes the trend to a number of factors, including a rise in awareness on the part of local companies of the importance of IP rights and increasing activity by multinational companies, some of which have only recently arrived in the Asia region. Asian Legal Business ISSUE 9.2


FEATURE | intellectual property >>

Research and development

Singapore firms will be particularly interested in the effect that the downturn has on research and development since R&D has a solid base in the Lion Nation. “Following the SARS epidemic, the Singapore government took steps to jump-start the economy and to develop an R&D capacity in areas such as pharma therapies, lab diagnostics and IT. Four to five years later, this strategy has paid off,” says John, and adds that there was a consistent increase in patents work over recent years from local companies. ATMD has also seen a good work volume from R&D agreements. “We’ve seen quite a few of these, particularly in the biotech area,” says Sheena Jacob. “Clients are still proceeding with R&D projects as these don’t require the same level of extensive investment as other projects. A number of projects have government involvement and access to reliable government funding.”

Where’s the work?

China, India and the US are the traditional source markets for IP work for Asia firms and Jacob says that she has not detected any deviation from this pattern. “Vietnam has recently improved its IP regime, but that has not attracted a lot of client interest to date,” she adds. Singapore’s IP regime is regarded as a model for the region, so IP enforcement work for Singaporean firms has traditionally been not so much about protecting IP in Singapore but more Singapore-based companies protecting their IP in other jurisdictions such as Indonesia, Thailand and Vietnam. Depending on in-house capacity and local relationships, some companies deal with separate law firms in each jurisdiction for IP work whereas others prefer to have one firm coordinate work for them across the region. ATMD, for example, coordinates enforcement work for clients such as Nokia and HP across a broad range of Asia jurisdictions. But large-scale enforcement work in Singapore itself has never been a major source of work for firms. www.legalbusinessonline.com

“Clients expect solutions, not just advice” Sheena Jacob, ATMD John says that on average only one patent enforcement case per year goes to full trial. “There’s no significant patent infringing activity domestically as local manufacturers are respectful of IP rights. Another factor is partly due to the expense of patent litigation but also because Singaporean law is virtually identical to that of common law jurisdictions such as UK or Australia,” John explains. “So if a case is litigated elsewhere, it would be understood that the same result was likely here.” He says that trademark and copyright enforcement actions are comparatively less expensive and have a higher litigation rate. The difference, however, is not dramatic: such cases are brought four or five times a year.

India perspective

The story of the recent development of IP practices in India perhaps runs parallel to the development of that waking giant’s IP laws. Improved laws and a cultural shift in the way businesses understand IP has generated more demand for IP-related legal services. As a member of the World Trade Organization, India has amended its IP laws to become TRIPS (TradeRelated Aspects of Intellectual Property Rights) compliant, and Manjula Chawla, founding partner of Phoenix Legal, says that the laws provide solid protection over a range of ‘new technology’ areas such as biotech, plant varieties and geographical indication of goods. The missing piece, she says, is the absence of a specific law for data protection. “The absence of data protection legislation is a big concern for foreign companies which transfer data to the

Indian BPOs,” says Chawla. “Presently, in the absence of a specific law, parties have to rely on the contracts negotiated with the Indian outsourcing companies or on measures implemented by the BPOs to protect their data.” Chawla says the government has recently taken a step towards closing loopholes related to data protection by amending the Information Technology Act 2000 in an attempt to prevent cyber crimes and protect individuals’ personal information. A data protection Bill is currently before parliament, but Chawla says it is unlikely to be passed before the upcoming national elections. But the fact that such IP laws are in demand is an indication of how far India has come. “In the past, smaller companies in particular were not overly concerned about confidentiality or IP protection,” says Chawla, “and if you approached an enforcement body, such as the police, with a complaint about infringement, they may not have been able to understand the significance of the issue. That’s all changed now.” That cultural shift has kept lawyers busy, generating work such as standardisation of business contracts so as to provide some consistency in the provisions relating to IP. Such work is naturally not immune to the global downturn, but Chawla says that India is still faring relatively well compared to other jurisdictions.

An evolving discipline

Evolving technology can result in confusion as jurisdictions respond in an inconsistent matter, says Jacob. She cites IP in software as an example, pointing out that in some jurisdictions software can be protected by a patent whereas in others this is not possible. There are also implications for the nature of the relationship between lawyer and client. “Lawyers certainly need to have a much more advanced understanding of business and technology than previously,” says Jacob. “Clients expect solutions, not just advice.” ALB 69


Legal Counsel The job : • Draft and review a varied range of commercial, financing and corporate agreements • Review and advise rights and liabilities of existing commercial, financing and corporate agreements • Advise on regulatory and compliance issues for a listed entity • Provide legal support and deal with external legal counsels for business development activities, including overseas M&A and joint ventures Requirements : • At least 5 years post-qualification experience in corporate legal work (including M&A and joint ventures) either in a law firm and/or in an in-house position in a corporation • Experience in compliance issues and requirements in an SGX public listed corporation.

CitySpring Infrastructure Trust is the first listed infrastructure business trust and a pioneer in a new asset class in Singapore. The Trust aims to be a leading player in the growing infrastructure sector by achieving significant growth through acquisitions. We are looking for a dynamic, proactive individual to join our growing team.

Interested applicants are invited to send or e-mail a full and detailed resume stating current and expected salary together with a recent photograph to :Human Resource Manager CitySpring Infrastructure Management Pte Ltd 111 Somerset Road #02-05 Singapore 238 164 Email address : hr@cityspring.com.sg


Sign off >> US GCs get thrifty

S

eventy-five per cent of US general counsel surveyed recently said that their legal departments face budget cuts of almost 35%. The greatest concerns in legal spending were (in rank order): outside counsel costs; the unpredictability of legal spending; and litigation risks.

Survey snapshot If facing a budget cut or a smaller increase: • 53.4% would use lower priced legal counsel for some work • 65.0% would bring more work in house Greatest concerns in regards to company’s legal spending: • 45.2% – inefficiency of hourly billing system • 80.9% – lack of predictability • 80.9% – outside counsel costs In the next 12 months, do you plan to increase or decrease your use of outside counsel?

Another day, another knight

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igel Knowles is the man who has helped take DLA Piper from a small law firm in Leeds to one with about 3,750 lawyers in 27 countries and a blooming practice in both the US and UK.* And now, he’s also a knight. The 52-year-old co-chief executive of DLA Piper recently joined an elite group of private practice solicitors when he received a knighthood in the Queen’s New Year Honours list for services to the legal profession. This is just another notch on Knowles’ already lengthy list of achievements. The keen golfer is also chairman of the Managing Partners Forum and the Legal Sector Alliance, a member of Business in the Community’s environment leadership team and – a father of two children.

* Not withstanding the recently announced 140 redundancies in the firm’s UK offices

Solicitors in store on the web D

oncaster-based firm Beresfords Solicitors recently launched Britain’s first ‘legal services supermarket’ in the form of a web portal which screens cases submitted by users and distributes the resulting workload among paying subscriber law firms. The website, titled mysolicitor.com, has some competition from similar sites such as Injury Lawyers4U and moneysupermarket.com, and was reportedly backed by a £15.8m television advertising campaign. Firms wanting to get in on the ‘action’ will have to pay a fee of around £43,500 per annum to be on the referral list. Not sure Increase

Decrease No change

Source: Altman Weil (www.altmanweil.com/dir_docs/ resource/5f6a3b0b-e3f8-4104-b240-fc18db17f5cb_ document.pdf)

Barristers’ brews

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nationwide poll of almost 2,000 Brits conducted on behalf of international development charity ActionAid to promote its ‘24 Hour Tea and Coffee Break’ event has revealed that lawyers are big on… tea. According to the survey, those working in law on average drink more cups of tea per day than those in all other professions – with 70% of legal workers drinking more than three cups per day and 20% sculling more than six servings per day. 76

Royal ex joins A&O C

helsy Davy – aka Prince Harry’s former love – recently snagged a training contract with Magic Circle firm Allen & Overy and is set to join the firm on completion of her legal training. The 23-year-old has an economics degree from the University of Cape Town, and is currently taking a postgraduate law course at the University of Leeds. According to reports, the Zimbabwe-born heiress will receive a starting salary of around £37,000, which is likely to rise to £65,000 or so once she qualifies.

Asian Legal Business ISSUE 9.2


Legal Opportunities – Singapore Talent2 International Limited, an Australian-Listed entity, is Asia-Pacific's first end-to-end Human Resources Outsourcing (HRO) solutions business and one of the leading recruiters of choice for a growing number of businesses across the region. Led by the hugely successful and visionary Geoff Morgan and Andrew Banks (formerly of Morgan & Banks), Talent2 combines a contemporary and ethical approach to recruitment with a lineage stretching back more than 20 years.

Singapore – Legal Head of Legal, (Healthcare)

> 5 PQE

Legal Counsel, Banking

> 3 PQE

»» Our client, a U.S listed healthcare services entity is seeking an experienced corporate lawyer to head their regional legal function. »» Ideally, you would have substantial corporate and commercial legal experience either in-house or within practice. This position will be responsible for building a legal function within their Asia business which is newly-acquired. »» You will have very strong communication skills conjoined with a consensus-building approach to negotiations Candidates with experience in JV/M&A and business integration experience are encouraged to apply. Ref: ALB 22799/PJ

»» O ur client, one of Asia’s top investment banks is presently seeking a legal counsel to join a growing regional legal function based in Singapore. »» The role involves supporting a corporate legal function focusing on merchant banking, commercial issues and general corporate legal matters. »» Candidates with prior banking experience are advantaged for this role, however, Candidates with excellent academic credentials and general corporate experience would also be strongly considered. Ref: ALB 22525/PJ

Legal Counsel (Private Banking/Derivatives) > 3 PQE

»» O ur client, a renowned private and investment bank is currently seeking a qualified lawyer to join their regional legal function supporting the private bank. »» The coverage of the role will include structured products, funds and f/x. In this role you’ll be responsible for drafting and reviewing legal forms and agreements, dealing with complex cross-border legal questions on the execution and settlement of structured products and investment funds. »» You will ideally have private banking expertise, but barring that, candidates with knowledge of derivatives (OTC or otherwise), exotic Options and Forward Strategies are encouraged to apply. Ref: ALB 20009/PJ

Senior Legal Counsel (Insurance)

> 5 PQE

»» O ur client, a global international insurance giant, is presently seeking to build up their regional (APAC) legal function. »» You will ideally have a mix of insurance litigation and corporate/ commercial experience within an in-house function. You would also leverage experience dealing with regional financial regulatory issues as there is also significant funds (both mutual and alternative) exposure. »» You will have key business responsibilities for managing the product development teams from a legal and regulatory perspective in regional markets. Ref: ALB 20007/PJ

Senior Legal Manager, (Property & Real-Estate) > 5 PQE

»» Our client, one of Asia’s largest property giants is seeking a legal counsel for their group legal function. »» Primary responsibilities include transactional advice on diverse matters such as structured lending, DCM-related work as well as advice on existing REIT structures. »» This is a great opportunity to move into one of the most highly-regarded corporate legal teams in Singapore. The ideal candidate will have top-tier law firm exposure as well as excellent academic credentials. Ref: ALB 23458/PJ

Legal Counsel (Private Banking/Derivatives) > 3 PQE

Our client, a renowned private and investment bank is currently seeking a qualified lawyer to join their regional legal function supporting the private bank. »» The coverage of the role will include structured products, funds and f/x. In this role you’ll be responsible for drafting and reviewing legal forms and agreements, dealing with complex cross-border legal questions on the execution and settlement of structured products and investment funds. »» You will ideally have private banking expertise, but barring that, candidates with knowledge of derivatives (OTC or otherwise), exotic Options and Forward Strategies are encouraged to apply. Ref: ALB 22365/PJ

Senior Legal Counsel, US IT MNC

> 5 PQE

Senior Legal Counsel, US IT MNC

> 5 PQE

»» Our client, an international business consulting MNC, is presently seeking a senior technology lawyer to join their regional in-house function based in Singapore. »» This role would revolve around the review, drafting and negotiating medium to complex client transactions. You’ll be tasked with identifying and advising senior management on legal and commercial risks associated with such transactions, assessing their potential impact and to provide proactive and creative solutions. »» Transaction experience within an IT environment is essential for this role. Ideally, you would hail from an IT services vendor environment and understand the industry from a holistic view. Ref: ALB20011/PJ

»» O ur client, an international business consulting MNC, is presently seeking a senior technology lawyer to join their regional in-house function based in Singapore. »» This role would revolve around the review, drafting and negotiating medium to complex client transactions. You’ll be tasked with identifying and advising senior management on legal and commercial risks associated with such transactions, assessing their potential impact and to provide proactive and creative solutions. »» Transaction experience within an IT environment is essential for this role. Ideally, you would hail from an IT services vendor environment and understand the industry from a holistic view. Ref: ALB 22456/PJ

Corporate Attorney, Technology & Internet > 5 PQE

»» This globally recognised ‘brand-name’ needs a commercial, creative, detail-oriented attorney to join their regional operations in Singapore. »» Ideally, you would be well-versed with technology and financial services with a critical eye towards risk and regulatory issues. You would have a broad range of experience ideally with financial services and/or technology background »» You will be working closely with the risk, product, marketing, compliance and business development teams regionally and report to a regional legal director. Ref: ALB 20014/PJ

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For a confidential discussion of any of these roles or if you’re considering a move, please contact

Prem John at Talent2 on (65) – 6511 8555 or e-mail him at prem.john@talent2.com Please visit: www.talent2.com


Asian Legal Business (Singapore) Feb 2009  

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