Japan and Singapore go Western
Asia is playing catch-up against the Western world, with a number of new competition and corporate laws introduced across the region during the past month.
As first revealed by The Lawyer (23 January), foreign law firms in Singapore and Japan are gearing up for a wave of competition work following the introduction of new anti-monopoly laws in each jurisdiction.
The Competition Act 2004 came into effect in Singapore on 1 January this year. Modelled on competition law in the UK, the act focuses on prohibitions relating to anti-competitive agreements, abuses of dominant position and mergers that threaten to substantially reduce competition.
Singapore is required to introduce competition laws as part of its recently signed free trade agreement with the US.
Monckton Chambers and Brick Court Chambers acted quickly to establish their footholds in Singapore as early as 2004, when the laws were first passed.
Monckton senior clerk David Hockney joined a group of barristers on a successful meet-and-greet mission in Singapore last month.
“As leaders in the field, it seemed sensible to introduce ourselves to local law firms,” he says.
While some City-based competition lawyers are sceptical about the amount of work set to be generated from the new laws, Brick Court competition specialist Nick Green is optimistic.
“There may be only four million people in Singapore, but it’s an international hub within South East Asia,” he says. “They’re taking the new laws very seriously and over the next five to 10 years I think there’s going to be quite a surge in competition activity – there’s going to be a domino effect.”
Of the law firms getting in on the act, Linklaters and Lovells have been trailblazers.
Linklaters established a joint venture with Singapore giant Allen & Gledhill in 2000. When the new laws were announced in 2003, Allen & Gledhill decided to launch a competition and antitrust group.
Allen & Gledhill principal antitrust partner Daren Shiau spent months with Linklaters in London and Brussels learning about European competition law and how the changes were likely to affect local clients in Singapore.
A similar joint venture arrangement has also been set up between Lovells and Singapore firm Lee & Lee.
2006 set to become year of the whistleblower
Japan’s anti-monopoly laws have been revised for the first time in 28 years, with some senior corporate lawyers branding 2006 “the year of the whistleblower”, as reported in The Lawyer (23 January).
The new laws, similar to those in the US, have been brought in to expose cartels and include an offer of immunity to the first company in a cartel to own up.
Freshfields Bruckhaus Deringer partner Kazuki Okada says his firm was about to boost its corporate team in preparation for the work set to be generated by the new laws.
“We think it will lead to more competition work,” he predicts. “But this will most likely be done by corporate lawyers. We also expect an increase in the volume of shareholder litigation.”
Japan sets date for corporate law overhaul
The legislation frenzy continues in Japan, with sweeping changes set to be made to both commercial and corporate laws for the first time in 100 years.
As first reported by The Lawyer (30 January), foreign law firms are expecting an explosion in M&A work, with a complete overhaul of commercial and corporate laws scheduled to come into force between April and June.
Under the company laws, minor shareholders can be squeezed out to allow cash-out mergers, whereby money is awarded in lieu of shares.
Triangular, or ‘three-way’, mergers will also be permitted, allowing a foreign company to use its shares to make the Japanese company a subsidiary of its own.
Laws facilitating complex mergers are expected to come into effect in 2007. The Japanese Ministry of Justice was initially hesitant to introduce the laws amid fears of hostile takeovers. The delayed enforcement has been offered as a compromise to allow Japanese companies time to prepare suitable counter measures, such as poison pills and golden shares.
Corporate lawyers in Japan have big expectations for the revised laws, with some looking forward to a burst of interest in foreign investment and M&A activity.
Tokyo-based Linklaters corporate M&A partner Hidehiro Utsumi told The Lawyer that further laws could be introduced later on this year, which would make triangular mergers tax-free.
“If the tax laws are passed, we expect to see a dramatic increase in M&A work, because foreign firms want to invest in Japan,” he says. “These are the biggest changes to Japanese corporate laws in 100 years.”
Linklaters Asia managing partner Simon Davies adds: “These laws will certainly help in the development of the M&A market in Japan.”
Herbert Smith finance chief joins Simmons HK
While some lawyers have been cashing in on the changing legal environment throughout Asia, others have been jumping ship to get their piece of the action.
Former Herbert Smith banking and finance head Jonathan Moult quit Herbert Smith and joined Simmons & Simmons at the start of February as a partner, as first reported on www.thelawyer.com (2 February).
Moult spent seven years at Herbert Smith’s Hong Kong office before he was asked to return to London last year as part of the firm’s rotational policy. He later decided to return to Asia and opted for Simmons, having got to know the firm during his time in Hong Kong.
“After spending such a long time in Asia, it just became too hard to leave,” he says.
Lawyer: Chinese govt tried to kill me
Meanwhile, China’s most prominent human rights lawyer is claiming that Chinese authorities tried to kill him after they closed his law firm (The Lawyer, 30 January).
The matter raises questions about how liberal China’s legal market actually is.
Gao Zhisheng, who has a similar reputation in China to UK lawyers such as Shami Chakrabarti or Clive Stafford Smith, had the operations of his law firm, Shengzhi Law Office, suspended for a year by the Chinese authorities in November 2005. According to Amnesty International, Gao claims police officers and military personnel made an attempt on his life while he was driving his car on 17 January.
The alleged attempt on his life came after Zhisheng, the firm’s director, sent an open letter to Chinese President Hu Jintao, calling for an end to the persecution of Falun Gong (an ancient Chinese spiritual movement) practitioners in China. It is believed the firm’s closure was also linked with the letter.
The official reason given for the closure was that the firm had failed to notify the authorities about its change of address.
Shengzhi Law Office is one of a small number of law firms in China that have taken on cases involving human rights issues.
As well as campaigning on behalf of Falun Gong practitioners, the firm had also been involved in a number of high-profile cases, including a land dispute that has been recognised as a test case for local democracy in China.