Welcome to Herbert Smith Freehills' monthly private wealth industry updates in Asia.
Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format. The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.
Hong Kong
SEHK issues circular on trading arrangements of SPACs
The Stock Exchange of Hong Kong (SEHK) published a circular on trading related arrangements for special purpose acquisition companies (SPACs). The circular notes that SPAC shares and SPAC warrants are traded separately from the date of an SPAC's initial listing until a de-SPAC transaction, and reminds exchange participants that only professional investors are allowed to subscribe for and/or buy SPAC shares and SPAC warrants listed on the Main Board, and only SPAC exchange participants registered with the SEHK are allowed to conduct trading of SPAC shares and SPAC warrants. In order to mitigate the risk of price volatility in SPAC shares and SPAC warrants, they will be included as Volatility Control Mechanism Securities with various triggering thresholds and price bands within the cooling-off period. The thresholds may be updated from time to time.
SFC and HKMA issues joint circular on VA-related activities
The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) released a joint circular on intermediaries' virtual asset (VA)-related activities, replacing the circular of 1 November 2018 on distribution of VA funds. The circular focuses on the distribution of VA-related products and the provision of virtual asset dealing and virtual asset advisory services. In particular, intermediaries distributing VA-related products that are considered complex products (except those considered to be complex exchange-traded derivatives) should comply with the SFC requirements which govern the sale of complex products, including ensuring the suitability of VA-related products, irrespective of whether or not there has been a solicitation or recommendation.
HKMA issues circular on regulating AIs' interface with VAs and VASPs
The HKMA issued a circular to provide authorised institutions (AIs) with regulatory guidance on what they should pay attention to when dealing with matters relating to VAs and virtual asset service providers (VASPs). The circular focuses on three areas, being HKMA's prudential supervision, anti-money laundering and counter-terrorist financing risk, and investor protection. As AIs' businesses may interface with VAs and VASPs through proprietary investment or provision of banking and investment services to customers, which may present a range of risks, the circular notes that the HKMA adopts a risk-based approach to supervising AIs' VA activities in line with applicable international standards and based on the principle of “same risk, same regulation”.
Insurance Authority issues circular on VAs and VASPs
The Insurance Authority issued a circular to provide guidance to authorised insurers in relation to activities related to VAs and VASPs. It reminds authorised insurers to fully discharge their obligations under the Guideline on Enterprise Risk Management in evaluating and addressing risks associated with VA-related activities, such as considering whether involvement with such activities are within the limits of the risk appetite statement. It also considers other risk areas such as investment risks and cyber risks.
Singapore
MAS issues guidelines to discourage cyptocurrency trading by the general public
The Monetary Authority of Singapore (MAS) issued guidelines giving effect to MAS's expectations that cryptocurrency service providers, including payment institutions, banks and other financial institutions, and applicants under the Payment Services Act, should not promote their cryptocurrency services to the general public in Singapore. The new guidelines clarify MAS's expectations that cryptocurrency service providers should not engage in marketing or advertising of cryptocurrency services in public areas in Singapore such as through advertisements on public transport, public transport venues, public websites, social media platforms, broadcast and print media, provision of physical ATMs, or through the engagement of third parties, such as social media influencers, to promote cryptocurrency services to the general public in Singapore. Further, cryptocurrency service providers can only market or advertise on their own corporate websites, mobile applications or official social media accounts.
MAS publishes keynote address to asset management industry
The MAS published the keynote address delivered by Mr Tan Keng Heng, Executive Director, MAS, at the Investment Management Association of Singapore's 8th Regulatory Forum. Mr Heng discussed green finance and the management of environmental risk, highlighting in particular the asset manager's increasingly vital role in facilitating green finance and sustainable investing. He also discussed the global trend of digitalisation, observing that financial institutions embracing digital transformation and innovation will be better placed to capitalise on the gradual economic recovery and seize new opportunities in the post-pandemic world. He also stressed the continuing importance of maintaining sound fundamentals in governance and risk management, in particular technology risk management and liquidity risk management.
India
Budget imposes tax on crypto-assets
On 1 February 2022, the Minister of Finance presented the Union Budget for financial year 2022-23, which announced a 30 per cent tax on any income from the transfer of any virtual digital assets, with effect from 1 April 2023. No deductible expenses in respect of any expenditure or allowance will be permitted while computing such income, except cost of acquisition. Further, a loss from transfer of virtual digital assets cannot be set off against any income. In order to capture the transaction details, the Minister proposed to provide for a 1 per cent tax deducted at source on payments related to the transfer of virtual digital assets. The Minister also proposed that the Reserve Bank of India launch its own digital currency in 2022-23.
SEBI issues circular on AMC audit committees
On 9 February 2022, the Security and Exchange Board of India (SEBI) issued a circular setting out the requirements for asset management companies (AMCs) of mutual funds to constitute audit committees. The audit committee is to be responsible for oversight of financial reporting process, audit process, the company's system of internal controls, compliance with laws and regulations and other related process, with specific reference to operation of the mutual fund business. The circular also sets out the membership and the other features of the audit committee. The circular will come into force on August 1, 2022.
Thailand
BOT, SEC and MOF set guidelines on usage of digital assets
The Bank Thailand (BOT), the Securities and Exchange Commission (SEC), and the Ministry of Finance (MOF) announced that they deemed it necessary to regulate the usage of digital assets as a means of payment for goods and services, to avert potential impacts on the financial stability and economic system. They considered the use of digital assets could pose further risks to consumers and businesses through price volatility, cybertheft, personal data leakage, or money laundering. The regulators will consider exercising power in accordance with the relevant legal frameworks to limit the widespread adoption of digital assets as a means of payment for goods and services, and will issue further regulatory guidelines for certain digital assets that are supportive of the financial system and financial innovation while not posing systemic risks.
BOT, TBA and GFA announces launch of dStatement service
The BOT, the Thai Bankers' Association (TBA), and the Government Financial Institutions Association (GFA) jointly announced the launch of the dStatement (digital bank statement) service, which is a financial information exchange service for sending and receiving bank statement data directly between banks in a machine-readable digital format. It allows financial service customers, who need to submit their bank statement as supporting documents, to request and send their bank statement data directly from one bank to another using their own mobile banking apps or via other servicing channels.
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