Category: Law

Business Times – 26 Mar 2012
Deals in Q1 down to 187 from 273 a year ago, while their value fell 36.5%

By LYNETTE KHOO

(SINGAPORE) A bleak picture on the local merger and acquisition (M&A) scene has emerged, showing M&A activity involving Singapore-domiciled companies sliding to the lowest level in value since the second quarter of 2009.

The total value of announced Singapore M&A deals in the first quarter registered year-on-year and quarter-on-quarter declines of 36.5 per cent and 24.6 per cent, respectively, to US$5.7 billion, latest data from Thomson Reuters shows.

The number of deals stood at 187 in the first quarter, down from 273 in the same period last year.

A similar trend unfolded in the South-east Asian region, with the total deal value slipping 19.2 per cent from a year ago and 11.9 per cent from the fourth quarter to US$20.3 billion.

Wong Ai Ai, principal at Baker & McKenzie.Wong & Leow, noted that deals are taking a longer time to negotiate and close due to gaps in pricing expectations and buyers’ concerns over risks. ‘Deals that were being looked at in the last half of 2011 have either not been completed or have fallen away for these reasons,’ she said.

Singapore companies have slowed down their buying spree abroad, with the overseas deal count falling from 104 in the first quarter last year to 68 this year, though the aggregate value of these deals were 12.3 per cent higher year-on-year at US$2.9 billion.

The total deal value was bolstered by United Fiber System’s proposed acquisition of Indonesia’s Golden Energy Mines through a reverse takeover valued at US$987.8 million.

At the same time, Singapore companies were also less targeted by overseas acquirers, with 30 announced inbound M&A deals in the first quarter compared to 50 deals in the same quarter last year.

This resulted in a 91.6 per cent plunge in the aggregate value of inbound M&A deals to US$224.3 million – the lowest quarterly level since the first quarter of 2004. Chinese acquirers still accounted for the bulk of Singapore’s inbound M&A deals with a 35.1 per cent share.

According to data from Thomson Reuters, Malaysian companies are most targeted in the region by acquirers, followed by Indonesia, Vietnam and then Singapore.

‘There’s been a lot of recent excitement over deals announced across the Causeway, and over the potential assets for sale in Indonesia, so relative to all that activity, Singapore may not look so exciting or well-priced,’ Ms Wong said.

‘But a lot of deal structuring is being done through Singapore, even though the companies involved may not be Singapore companies.’.

Private equity (PE) firms closed smaller M&A deals in the first quarter, with PE-backed deals involving Singapore companies falling by 95.4 per cent year-on-year to US$10.2 million although the deal count remained at five.

In the South-east Asian region, PE-backed M&As marked a 87.8 per cent fall to US$70.2 million while the number of deals declined from 19 in the first quarter last year to 13 this quarter.

Than Su Ee, head of Mezzanine Capital Unit (Private Equity & Special Opportunities) at OCBC Bank, noted that the let-up in M&A activity among PE funds in the last six to nine months is a reflection of the uncertainties surrounding global economic conditions.

‘This is changing as investors are increasingly of the opinion that the eurozone crisis and US economic troubles may have turned the corner,’ he said.

With improvements in economic climate and market liquidity, PE investors are expected to take advantage of better market conditions to undertake M&A financing or exit from their investments, he added. ‘Unless there are any major global economic or political surprises, we should see a return of private equity funds activities in M&A over the next 24 months.’

Slower M&A activities in the first quarter has translated to lower fees for advisors. Estimates from Thomson Reuters/Freeman Consulting Co show M&A advisory fees from completed transactions involving Singapore companies fell 39 per cent from a year ago to US$50 million this quarter.

Leading the pack is Morgan Stanley, which chalked up fees of US$4 million and accounted for 8 per cent of total fees. Daiwa Securities enjoyed the highest jump in estimated fees, enjoying an increase of more than 19-fold from a year ago to US$1.7 million in the first quarter.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

18 August 2009 2107 hrs (SST)
CNA

SINGAPORE: Parliament has passed amendments to the Legal Profession Act to make it easier for returning lawyers to practise in Singapore. The changes will also ensure Singapore continue to grow as a legal hub.

A law graduate currently has to undergo pupillage at a law firm before being admitted to the Bar in Singapore. But some pupils may have little direct contact with their pupil masters.

Hence, a new Training Contract will replace the pupillage to ensure that trainees have a structured learning programme for six months. It will also ensure the law firms take greater responsibility in the pupil’s training.

Law Minister K Shanmugam said: “The current system doesn’t train pupils adequately and you need to impose that obligation on the law firms. If they are not resourced to train their pupils, we will try and find a way in which they can arrange with other law firms to go and get their pupils trained.

“But the pupils’ interests and the profession’s interest on the whole must not suffer. People should take on pupils with the clear idea that the pupillage period, the entire pupillage period, should be used to train the pupils (and) not to use them as additional labour.

“It is no answer really to say that the law firms may not be in a position to train the pupils. It is not fair to the pupils – which is why we now say we will provide the framework.”

Another change to the Legal Profession Act is the doing away with the existing overlapping powers between the Board of Legal Education and the Law Minister. This is in preparation for the establishment of the proposed Institute of Legal Education next year.

The change will give the Law Minister single exemption power and allow him to exempt lawyers from certain practice training requirements based on their experience and standing. This will shorten the training period and encourage more graduates to return.

The move, however, raised concerns among some members of the House. Ellen Lee, MP for Sembawang GRC, asked: “Why should the minister be the only authority to so decide without consulting the other relevant bodies? What KPIs are in place to measure the quality of applicants’ contributions?”

Mr Shanmugam said: “It’s a government policy. What sort of criteria can we waive? How many lawyers do we need? Should we expand the criteria? These are issues that the minister should decide and be answerable in Parliament here.

“And bearing in mind, currently the minister has and does exercise substantive powers of exemption. So, it’s not a new development.”

Mr Shanmugam said that many Singapore lawyers are sought after by international firms as they are well-educated and have a reputation for hard work.

In view of the fact that Singapore firms are also short of lawyers, it is important to ensure that those trained overseas can come home and practise here, without too many hurdles.

On increasing the intake of law students here to meet aspirations, Mr Shanmugam said that the National University of Singapore (NUS) has almost reached its optimal level. The Singapore Management University (SMU) has also expressed that it wants to keep the cohort small.

Singapore acts to lure overseas-trained lawyers back home
By Imelda Saad | Posted: 13 February 2009 1755 hrs
CNA

SINGAPORE: Major changes are on the cards for Singapore’s legal education system.

The changes are aimed to ensure Singapore has an adequate supply of local lawyers who can compete against global competition and to strengthen Singapore’s position as a key regional legal education hub.

Law Minister Law Minister K Shanmugam announced the changes in Parliament on Friday.

In hoping to attract overseas-trained Singapore lawyers to come back and practise law at home, the Law Ministry will abolish the one-year-long Diploma in Singapore Law course.

Mr K Shanmugam noted that the course, which is a requirement for all returning lawyers, has proven to be a disadvantage as lawyers feel they can pick up most of what’s taught during practice.

Hence, from June this year, such students will be offered an optional three-month conversion course.

To enhance legal training, measures include:

– revamping the Practice Law Course;

– replacing the pupillage system with training contracts, with the intention of putting the onus on law firms to ensure that trainees have a constructive and structured learning programme;

– the possibility of making continuing legal education mandatory to ensure practising lawyers are up to date on any changes to the law and are familiar with emerging areas of law.

To ensure a steady supply of lawyers, graduates with a Second Class (Lower) degree from approved universities will be admitted to the Singapore Bar without the two-year minimum legal experience requirement.

Adding to this, the Singapore Management University’s Law School will put in place additional measures to add to the pool of lawyers.

The first batch of graduates from SMU will join the industry in 2011.

The NUS Law Faculty will also increase its intake from 220 to 250 students a year.

Together, Mr K Shanmugam said, these moves will result in an almost 70 per cent increase in the number of local law graduates in a few years’ time – from 220 to 370 annually.

He added the incoming Qualifying Foreign Law Practices (QFLPs) will also bring in more lawyers as they consolidate their regional offshore work here.

To oversee the legal education in Singapore, a new statutory board – tentatively called the Institute for Legal Education – will be set up.

Mr K Shanmugam said: “Most essential for a vibrant legal sector are good quality lawyers. Therefore ensuring that legal education and training is top notch is extremely important”.

The minister also gave an update on moves to free up legal services in Singapore.

The Law Ministry notes that despite the current economic crisis, there is potential in the medium term for the legal sector to expand in certain areas.

One example is arbitration as Singapore is fast becoming an arbitration venue of choice.

By mid-2009, Singapore will have the Maxwell Chambers to house arbitration hearings under one roof.

Mr K Shanmugam said: “Our advantage is our connectivity and world class infrastructure, our judicial philosophy in respect to arbitration and being accessible at a much lower expense than some of the other popular arbitration centres.”

Another good sign is that international law firms have been setting up new offices in Singapore in recent months.

In the past four months alone, four new firms opened up offices here, one of them among the Global Top 40.

Another two firms have already registered with the Attorney-General’s Chambers and have announced plans to open new offices in Singapore.

ST Aug 27, 2008
Young lawyers get to practise with global firms and gain exposure
By Selina Lum

CHANGES to the Legal Profession Act passed in Parliament yesterday will now open up the hitherto protected legal sector to allow foreign firms more leeway to operate here.

The presence of strong local and foreign law firms will strengthen Singapore’s reputation as the region’s legal services centre, said Law Minister K. Shanmugam.

Young and talented Singaporean lawyers too stand to gain as they will now have more opportunities to practise in big international firms and gain international exposure, he said.

The amendments to the Act follow recommendations made last September by a committee, headed by Justice V. K. Rajah, tasked with developing the legal sector.

They come nine years after the Government first sent signals that the sector should be liberalised.

Three key changes will result from yesterday’s legislative amendment:

Come October, five foreign law firms will be allowed to hire Singapore-qualified lawyers to practise Singapore law in certain areas, namely high-end work in corporate and banking sectors.

Second, an existing scheme in which a local firm ties up with a foreign one has been enhanced, among other things, allowing the foreign part of the venture to share up to 49 per cent of the local constituent’s profits.

Third, the scope of work that foreign firms can carry out in international commercial arbitration involving Singapore law has been widened.

Four of the five parliamentarians who spoke on the issue yesterday were practising lawyers. To a man, the latter expressed concern about the impact of the liberalisation on local law firms. They also had reservations about whether the moves would really benefit Singapore as envisioned.

Mr Shanmugam said he understood their concerns about competition but pointed out that a number of areas would continue to be ‘ring-fenced’ beyond the reach of foreign firms.

These include constitutional and administrative law, conveyancing, criminal law, family law, succession law, trust law for individuals and litigation.

Local firms also stood to benefit if the economy as a whole prospered. ‘We must remember that the decision to liberalise was taken because we believe that it is in the overall economic interest of Singapore. It should also benefit the legal services sector as a whole,’ he said.

Explaining a key driver behind the moves, Mr Shanmugam noted that financial-sector representatives had asked ‘very strongly’ for the legal market to be liberalised.

‘We survive as an economic entity by reason of being open, by reason of being economically competitive. The financial services sector is one of the key pillars of our economy and we have to listen to the feedback from that sector,’ he said.

He later addressed a point made by Mr Sin Boon Ann (Tampines GRC), who was concerned that top local firms could become ‘footnotes in our history books’.

Mr Shanmugam, a partner in Allen & Gledhill until he became Law Minister earlier this year, said he would be the last person to disagree with the point that the major law firms contribute significantly to the legal heritage and legal culture in Singapore.

But when dealing with policy issues, one had to look at things in terms of the benefit to the public, he said.

Singapore’s interest was best served by allowing competition, enabling more choices for young lawyers and creating a more vibrant economic legal market.

‘When that calculation comes through, it cannot be dominated by emotion,’ he said.

To Nominated MP and accountant Gautam Banerjee, who asked for even more liberalisation, he said: ‘We start at five (foreign firms). I think it’s better for us to proceed cautiously and make sure we get it right.’