RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and Head of Capital Markets Ch'ng Li-Ling authored an article titled “Managing the pros and cons of dual-class listings a balancing act” for The Business Times. The article was first published in The Business Times dated 7 September 2016. Managing the pros and cons of dual-class listings a balancing act Singapore Exchange will need to carefully assess the requirements that should be imposed on companies seeking to list a dual-class share structure here. Source: The Business Times © Singapore Press Holdings Ltd. Date: 7 September 2016 Author: Tan Chong Huat & Ch'ng Li-Ling THE investment and business community has lately been abuzz with reactions to the recent move by Singapore Exchange (SGX) to consider the listing of dual-class shares. In its 2016 annual report, SGX revealed that "an overwhelming majority" of the members of its Listing Advisory Committee (LAC) voted in favour of permitting the listing of dual-class shares although this was qualified by the need to implement the relevant corporate governance safeguards to mitigate the inherent risks associated with a dual-class share structure. This is a timely update from SGX, following the amendment to the Singapore Companies Act which took effect in March this year, that enables a public company to issue different classes of shares if the company's constitution allows for such issue and if it sets out, in respect of each class of shares, the rights attached to that class of shares. The following briefly sets out the pros and cons of the listing of a dual-class share structure and considers some of the safeguards that may mitigate the risks. THE CASE FOR THE LISTING OF DUAL-CLASS SHARES Founders preserve power while getting access to capital For founders, a dual-class share structure retains some of the positive aspects of being a private company - it allows founders control over significant decisions of the company, while allowing them to access the equity markets for additional financing for the company. A dual-class share structure which has multiple votes for founder shares may also protect a company from hostile takeovers and act as a takeover defence mechanism. There is more flexibility in capital management and encourages innovation and the pursuit of long-term growth A company has greater flexibility in raising capital by issuing non-voting shares and shares with multiple votes. With control, the founders and management are afforded a certain degree of autonomy in strategic decisions, have the freedom to innovate (that is, take more risks) and are better able to focus on long-term growth, instead of being under shareholders' pressure to deliver short-term financial returns. For example, in Google's initial public offering letter, the founders highlighted that its share capital structure (under which the founders and management had 10 votes per Class B common stock compared to Class A common stockholders with one vote per share) was designed to protect Google's ability to innovate and to retain its distinctive characteristics; and while the Class A common stockholders would fully share in Google's long-term economic future, they would have little ability to influence Google's strategic decisions through their voting rights. THE CASE AGAINST THE LISTING OF DUAL-CLASS SHARES Bad management is insulated from market discipline, and problem of the "next generation" A dual-class share structure allows disproportionate control over a company, and shields a bad management from market discipline as shareholders and "white knights" hoping to make a corporate rescue will find it more difficult to remove the owner-management. In Singapore, there is also not yet an activist shareholder culture, compared to a market such as the US that can keep the management in check. There is also the uncertainty of the "next generation", when the founder retires and hands over the management (and weighted shares in the company) to his next generation, who may not drive the business as successfully. Risk to corporate governance structure and agency problem A dual-class share structure also exposes the company to the risk of the owner-management pursuing goals that are not in the interests of the company or the public shareholders. There may also be heightened risks in accounting and financial controls and in the prevalence of related or interested person transactions. When such a company is poorly managed, the perceived agency problem may ultimately be reflected in higher cost of capital when the company raises further financing. The minority public shareholders may be disenfranchised The dual-class share structure limits investors of their voting rights and, consequently, their ability to participate in shareholders' meetings. While there are statutory protections under the Companies Act to protect the interests of minority shareholders, the costs of litigation and the dearth of local case law on derivative actions brought against public companies are drawbacks that may prevent them from seeking recourse. With no or limited mechanism by which to effect change or to voice their opinions, shareholders would simply feel forced to sell and exit. If such a problem becomes prevalent in the stock market, it will in turn affect investor confidence and adversely affect the perception of our stock exchange. MITIGATING THE RISKS AND PROPOSED SAFEGUARDS The Companies Act contains basic safeguards as follows: (1) A public company shall not issue shares that confers special, limited or conditional voting rights or no voting rights, unless the issuance is approved by members by special resolution. (2) Where a public company has one or more classes of shares that confer special, limited, conditional or no voting rights, the notice of any general meeting required to be given must specify the rights (or the absence of rights) in respect of each such class of shares. (3) Holders of non-voting shares should be accorded at least one vote on a poll at a meeting of the company for a resolution to voluntarily wind up the company under section 290 of the Companies Act or a resolution to vary any rights attached to the non-voting shares and conferred on the holders. The additional safeguards for public listed companies may include: permitting only companies with a large market capitalisation, such as a high minimum valuation to be eligible for the dual class share structure; restrictions on transfers; cap on votes per share; loss of superior voting rights after a vote by independent shareholders; and board structure with a greater proportion of independent non-executive directors. The above safeguards were considered by the Hong Kong Stock Exchange (HKSE) when it reviewed a proposal to allow the listing of dual-class shares and may be further examined. Other safeguards may include a "sunset provision" for founder shares with multiple votes, where the rights to multiple votes terminate after a specified period of time or upon the occurrence of a specified event (for example, where the founder retires or transfers his shares). In addition, it may be appropriate to require the appointment of a compliance officer to further strengthen the independent director regime under our Code of Corporate Governance. The authors believe that each of these and other safeguards proposed by the LAC may be further enhanced or tweaked depending on the LAC's holistic assessment of the listing aspirant, for example cap on votes per share. It is noteworthy that despite the recommendations of the HKSE, the Securities and Futures Commission of Hong Kong (SFC) rejected HKSE's draft proposal as the (i) high expected market capitalisation does not guarantee that an issuer would treat its shareholders fairly, and (ii) the "enhanced suitability" criteria proposed by HKSE to determine which listing applicants are eligible to adopt the dual-class shares are subjective and vague, which can lead to regulatory uncertainty and inconsistent and unfair decision-making. The concerns by the SFC are valid and in our case, SGX will need to carefully assess the requirements that should be imposed on companies seeking to list a dual-class share structure in Singapore. It will be a delicate balance between the need to remain competitive and relevant in an evolving global landscape, the need to be able to effectively mitigate the increased governance risks in the market, and the need to remain true to the general principles of the listing rules which require, among others, the fair and equitable treatment of shareholders.

RHTLaw Taylor Wessing’s Managing Partner Tan Chong Huat shared his views in this week’s topic in the Business Times’ weekly column, Views from the Top. This article was first published in The Business Times on 5 September 2016. Doing away with cash and cheques Source: The Business Times © Singapore Press Holdings Ltd Date: 5 Sep 2016 THIS WEEK'S TOPIC: How ready is your organisation for an electronic payments society? What challenges do businesses face in going cashless? Tan Chong Huat Managing Partner RHTLaw Taylor Wessing LLP MAS's focus in promoting a national electronic payments architecture is timely, aligned with Singapore's aspiration to be have a smart financial centre, and a smart economy. An efficient and secure payment system is a key infrastructure for both the financial system and the broader economy. MAS's proposed single regulatory framework for the licensing, regulation and supervision of all payments services, including stored value facility holders, remittance companies, and virtual currency intermediaries is conceptually sound, perhaps a little overdue. A more efficient national payment infrastructure will bring tangible benefits for both businesses and consumers. Businesses should see transitioning into more efficient payment mechanisms as sound investment.

RHTLaw Taylor Wessing Partner Napolean Rafflesson Koh was featured in The Straits Times article titled "Support from family and friends helps". The article was first published in The Straits Times on 4 September 2016. Support from family and friends helps Source: The Straits Times © Singapore Press Holdings Ltd. Date: 4 Sep 2016 Author: Zhaki Abdullah While many mid-career lawyers are dropping out, some that stay on are thriving. Mr Napolean Rafflesson Koh is eight years into his career and in July, the 32-year-old was made a partner at RHTLaw Taylor Wessing, which he joined two years ago as a senior associate. Mr Koh, who specialises in building construction, infrastructure and engineering disputes, graduated in 2009 from the National University of Singapore and worked at WongPartnership, one of Singapore's Big Four law firms, for the first five years of his career. He acknowledged that the job comes with a steep learning curve. Shortly after being called to the Bar in 2009, he had to fly to the Middle East every two weeks to help resolve an airport dispute. "Lawyers need a lot of good support from their families, friends and the work environment," said Mr Koh, adding that his parents saw him off at the airport every time he had to go overseas. He said the job got easier after the first three years when he better understood his work, learnt how to better achieve his targets in terms of billable hours and how to better handle clients. It also helped that he got to practise an area of law that he preferred. Mr Koh developed an interest in construction law after having been an intern on the construction team at an international law firm in 2005. Given the amount of time spent at the office, he believes it is essential that the workplace be a "collegiate" environment. "It's important to have a network of friends who understand what you're going through and whom you're able to share your problems with," said Mr Koh, who is single. He said young lawyers should not dwell too much on trying to achieve work-life balance. "Work is very much a big part of who you are. "If you don't try to differentiate between your work and private life, I think it makes things easier." He admitted though that the long hours could take their toll. "Sometimes, you have to stay past midnight for months on end," he said, adding that lawyers needed to learn how to pace themselves so as not to get burned out. "If you can go home early, just go home."

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat was quoted in a series of three articles in The Straits Times titled "Many mid-tier lawyers leaving the profession", "Billable hours not the only yardstick" and "Lighter workload, training among moves to retain staff". The articles were first published in The Straits Times on 4 September 2016. Many mid-tier lawyers leaving the profession Recently, Chief Justice Sundaresh Menon spoke to new lawyers about the challenges ahead, at a time when many of their seniors have called it quits. There is no quick fix to this 'hollowing out' of mid-career lawyers, say those in the legal community. Source: The Straits Times © Singapore Press Holdings Ltd. Date: 4 Sep 2016 Author: Amelia Teng It is a familiar tale - working past midnight then returning to the office hours later the next morning to plough through case notes and rush to meet deadlines. Anecdotes like this are common in the legal industry, which has in recent years seen an exodus of mid-tier lawyers, a point raised by Chief Justice Sundaresh Menon last month at this year's Mass Call, a proceeding that formally admits lawyers to the Bar. Citing statistics which showed mid-tier lawyers - those with seven to 12 years of experience - made up less than 10 per cent of the profession in the last five years, he said that such "burnout" has led to a "hollowing out" of mid-career lawyers. The Law Society says there were 423 mid-tier lawyers last year, compared with 1,909 junior ones with less than seven years of experience, and 2,502 senior lawyers with more than 12 years of experience. The number of mid-tier lawyers has gone up to 793 this year because of recategorisation, The Law Society said. Those with five to 15 years' experience now count as "mid-tier", as these years are when many associates become partners. Former lawyers told The Sunday Times that a combination of push and pull factors made them leave the sector. These include the long working hours and "transactional" nature of work - and for some, the desire to learn skills and find fulfilment outside the legal profession. Ms Kendra Liew, 28, a former matrimonial lawyer who quit at the end of 2014, said: "A lot of the work is time-sensitive and demanding with little room for flexibility and error. "I was not looking forward to work every day. I would wake up in the middle of the night to check e-mail and was constantly thinking about what to do the next day." Ironically, the 28-year-old who spent three years in practice joined the profession"to help people". She now runs a business creating organic skincare products. "When you go in with those ideals, and you experience practice, you get disillusioned and feel like you aren't making a difference." Mr Esmond Yue, who spent four years in corporate law in two firms, said his typical work day started at 7.30am and ended at 1am. "The latest is just going to the office gym to shower and continue working till the next morning. Maybe you'll doze off for half an hour." The 31-year-old, who was earning $10,000 a month by his third year, said: "The money makes up for the pain. But it becomes a tahan (Malay for 'endure') game." Some like Mr Mark Cheng said it was the high-stress nature of the work that was draining. Said the 30-year-old, who spent two years in litigation at a mid-sized firm: "People are paying the lawyer to solve their problems and take their stress away. Suddenly you become that person with everyone's problems. That is very stressful. It's like a glorified sweat shop. Junior lawyers have a mountain of work that is tedious and time-consuming." Some former lawyers said they found little ownership and meaning in their work. Mr Yue added: "You see only the legal aspects - a small part of a business - and you work on deals that seem so far-removed." Work improved after he joined a foreign firm. "But I realised that's as good as it gets... I felt I wanted to learn more outside the law, like dealing with people, management skills," said the co-owner of a Japanese food business. A 27-year-old lawyer who declined to be named tendered her resignation last month after three years in corporate law at one of the Big Four law firms. "You don't have time for yourself, for family... It's common to have to work on weekends and settle things from home," she said, adding that she will return to the sector. "I still like some of the work I'm doing... but this is something like a personal sabbatical. I just need a change in environment." Mr Tan Chong Huat, managing partner of RHTLaw Taylor Wessing, acknowledged the increasing demands: "Competition and the demands of a more sophisticated clientele - the global climate aside - are shaping how firms behave. "We become more productive and efficient and this puts a lot of pressure on our mid-tier lawyers." Mr Edmund Koh, 31, who spent four years at one of the Big Four law firms in banking and financial disputes, left the field last year to co-run a start-up to help lawyers with legal research. "I liked the intellectual challenge of law, but I wanted to have more exposure to business," he said. "A lot of people go in to law not knowing what the practice of law is like. Perhaps they are misled by the glamour of lawyers portrayed on TV. "For every moment you spend in court, there are countless hours spent preparing for it."   Billable hours not the only yardstick Source: The Straits Times © Singapore Press Holdings Ltd. Date: 4 Sep 2016 Author: Amelia Teng Some law firms said that they do not put too much focus on enforcing billing targets for young lawyers, as it can be counterproductive and may not be a good reflection of their capabilities. Most firms bill clients by the hour. Lawyers' bonuses can, depending on the firm, be based on their billable hours. What started as a transparent technique for charging clients has been "transformed into a powerful tool for measuring and controlling the work of employee solicitors", said Chief Justice Sundaresh Menon. "Time is money and an increasing emphasis on the latter means young lawyers are expected to sacrifice more of the former, with the only real outer boundary, it seems, being that there are only 24 hours in a day." Law Society president Thio Shen Yi called for a mindset change so "partners of a law firm aren't out to exploit every single billable hour they can get out of a lawyer". He added: "They need to invest in lawyers as people. To see them as long-term resources rather than as short-term factors of production." Mr Tan Chong Huat, managing partner of RHTLaw Taylor Wessing, said: "Focusing solely on billable hours without paying attention to developing young lawyers to be wholesome practitioners will be missing the point." It is one of many yardsticks, he said. Others include how a lawyer meets clients' needs and how he can grow and sustain his practice. Lawyer Gloria James-Civetta said the practice of billable hours is more strictly enforced in big firms and corporate law firms. At her mid-sized firm dealing with family and criminal law, junior lawyers have a guideline to bring in three times their monthly pay in revenue. She said: "It's just to gauge if they can handle a certain amount of work. We also look at abilities such as how they draft an affidavit, how they take instructions from clients and their time management skills."   Lighter workload, training among moves to retain staff Source: The Straits Times © Singapore Press Holdings Ltd. Date: 4 Sep 2016 Author: Amelia Teng There is no easy way to stop younger lawyers from leaving the practice, the legal community told The Sunday Times. In his address to this year's newly minted lawyers, Chief Justice Sundaresh Menon called for law firms to see themselves as "educational institutions with a duty to train their young lawyers into the very best version of themselves". In response, some law firms said they have made efforts to retain mid-tier lawyers, such as by training them early and letting them have input in designing policies. The Law Society is conducting a survey to study the stress that young lawyers face. The results are expected by the end of the year. Its president Thio Shen Yi said: "We hope we can use (the results)... to give us some real deep knowledge into what young lawyers face in terms of pressure, what drives them and what drives them away." It is "unrealistic" for lawyers starting their career to expect high salaries and independence, said Professor Simon Chesterman, dean of the National University of Singapore's law faculty. "But it's also short-sighted on the part of law firms that squeeze their junior staff for short-term performance rather than building careers." Lawyer Gloria James-Civetta suggested easing the workload by having longer deadlines and getting help from paralegals. At her firm, lawyers are paid "above market salary" and get pay rises every six to 12 months, depending on how they perform. Rajah & Tann Singapore started a service last year to match legal consultants to companies that need legal support on short-term contracts and project-specific work. "Lawyers who need a break from practice and want to try something different but still stay in the legal industry can tap on (this)," said deputy managing partner Patrick Ang. There have been 11 successful matches. Some firms said they try to meet the career aspirations of lawyers by giving them room to progress and have ownership in their work. Mr Bazul Ashhab, managing partner and head of dispute resolution at Oon & Bazul, said it has put in place policies in the last five years to encourage young lawyers to stay for the long haul. For instance, partners train them to manage clients and court expectations, and guide them in building their clientele so they have the skills to become partners later. The firm also has regular meetings and an annual retreat "where ideas are canvassed and new policies are formulated with input from younger lawyers". Mr Chia Ho Choon, human resources partner of Withers KhattarWong, said "high potential lawyers" have "career progression opportunities, management responsibilities as well as freedom to develop their practice". Some firms said that with recent mergers, more opportunities exist for young lawyers to be part of higher-level work. For instance, those who join Withers KhattarWong can get global exposure by working in 17 other offices abroad. Mr Lek Siang Pheng, deputy managing partner of Dentons Rodyk & Davidson, said lawyers can now be more involved in cross-border transactions and global disputes and arbitrations. His firm is one which has bucked the trend - its proportion of lawyers with seven to 12 years of experience grew from nearly 14 per cent in 2011 to close to 18 per cent as of last month. Mr Tan Chong Huat, managing partner of RHTLaw Taylor Wessing, said it is exploring automating aspects of work processes to be more efficient so as to ease the lawyers' workload. About 50 per cent of its lawyers have seven to 12 years of experience, compared with 60 per cent five years ago. But Mr Tan also highlighted that lawyers need to have passion, along with a supportive work environment, to "keep them aligned" and "help them fulfil their passions". Prof Chesterman said that pro bono, or voluntary, work - which is increasingly being adopted by many firms in the United States and elsewhere - can also help retain lawyers. He said: "A lawyer who is earning lots of money may actually be less satisfied than one who thinks he or she is making a difference. Carving out part of the week for work that does not pay, but has an impact on your community, can make the rest of the week feel more worthwhile."