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Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance internationa

THE LAW SOCIETY OF SINGAPORE. Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance international competitiveness . Mr Alvin Chen Chief Legal Officer and Director of Representation and Law Reform 7 June 2012. Insert document name.

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Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance internationa

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  1. THE LAW SOCIETY OF SINGAPORE Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance international competitiveness Mr Alvin Chen Chief Legal Officer and Director of Representation and Law Reform 7 June 2012 Insert document name

  2. THE LAW SOCIETY OF SINGAPORE Topics • Introduction • SLPs employing corporate structures • Lawyers practising concurrently or accepting executive appointments in related law corporations • Collaborations between SLPs and FLs/FLPs

  3. THE LAW SOCIETY OF SINGAPORE Topics • Introduction • SLPs employing corporate structures • Lawyers practising concurrently or accepting executive appointments in related law corporations • Collaborations between SLPs and FLs/FLPs

  4. Key Dates The Law Society Of Singapore 4

  5. Key Legislative Changes The Law Society Of Singapore 5

  6. THE LAW SOCIETY OF SINGAPORE Topics • Introduction • SLPs employing corporate structures • Lawyers practising concurrently or accepting executive appointments in related law corporations • Collaborations between SLPs and FLs/FLPs

  7. Summary of key changes Rationale: to encourage SLPs to form a related law corporation to benefit from 2 tax incentives: Development and Expansion Incentive (Annex A – MinLaw Press Release 31 May 2012) International Arbitration with Hearings in Singapore (Annex B – MinLaw Press Release 31 May 2012. Note: enhancements wef 1 July 2012) The Law Society Of Singapore 7

  8. Concept of “related” New/Subsidiary Existing/Parent Sole Proprietorship OR Partnership OR Limited Liability Law Partnership OR Law Corporation Law Corporation Rule 5 PCR Rule 1A LCR Rule 1A LLLPR Shareholder Director, consultant or employee Related The Law Society Of Singapore 8

  9. The Law Society Of Singapore 9

  10. The Law Society Of Singapore 10

  11. Concept of “related” New/Subsidiary Existing/Parent Sole Proprietorship Law Corporation Sole Proprietorship Related S1 SP1, C1 or E1 D1, C1 or E1 SP1, C1 or E1 The Law Society Of Singapore 11

  12. Concept of “related” New/Subsidiary Existing/Parent Partnership Law Corporation Partnership (2-man) Related S1, S2 S1=P1, S2=P2 D1, D2 D1=C1, D2=E1 The Law Society Of Singapore 12

  13. Concept of “related” New/Subsidiary Existing/Parent Partnership Law Corporation Partnership (3-man) Not Related S1=P1, S2=P2, S3=P3 S1, S2, S3 D1, D2, C1 D1, D2 and C1 not P, C or E The Law Society Of Singapore 13

  14. Concept of “related” New/Subsidiary Existing/Parent LLP/LLC Law Corporation LLP/LLC Related S1=LLP/LLC S1 D1, D2, C1 D1=P1, D2=P2, C1=P3 The Law Society Of Singapore 14

  15. Special rules applicable to related law corporations • Name of law corporation can be similar to related SLP: Rule 10 LCR • Concurrent appointments allowed: Rule 12 LCR/Rule 12 LLLPR • Confidentiality obligation relaxed: Rule 24(1) PCR read with Rule 11 LCR/section 81E LPA and Rule 10 LLLPR/section 81T LPA • Holding of shares: Rule 13 LCR/Rule 11 LLLPR The Law Society Of Singapore 15

  16. Possible Issues to Consider • Costs of setting up related law corporation (including PI) • Better to convert law practice to law corporation to get the benefit of tax incentives? • Apportionment of expenses/work for same matter handled by both subsidiary law corporation and parent law practice • Extent of benefit of tax incentive(s) • Type of work that can be done by a related law corporation The Law Society Of Singapore 16

  17. THE LAW SOCIETY OF SINGAPORE Topics • Introduction • SLPs employing corporate structures • Lawyers practising concurrently or accepting executive appointments in related law corporations • Collaborations between SLPs and FLs/FLPs

  18. Previous position Rule 5(1) PCR: Lawyer shall not practise either as consultant or member of more than one law practice. Rule 11 PCR: Lawyer shall not accept any executive appointment in any company. The Law Society Of Singapore 18

  19. Now Rule 5(3) PCR: Lawyer may practise concurrently in 1 law corporation and another law practice related to the law corporation. Rule 11(1)-(3) PCR: Lawyer shall not accept any executive appointment in any company other than: - a company of which each shareholder is the sole proprietor or partner of the law firm OR a LLP/LLC OR a partner of the LLP/director and shareholder of the LLC; or - the LLC. The Law Society Of Singapore 19

  20. Rationale for new Rule 11 PCR To allow SLs working in a SLP to hold executive appointments in companies set up by the SLP for related activities e.g. patent agent and other IP related services. The Law Society Of Singapore 20

  21. Possible Issues to Consider • Company under Rule 11 PCR need not be a related law corporation? If so, no concurrent practice allowed (if company is merely a law corporation)? • Can company carry out non-law related activities? If so, still limited by section 83(2)(j) LPA, Rule 10 PCR and Council PDs. • Is lawyer holding executive appointment in company still bound by PCR? • Meaning of “executive appointment”. • PC implications for concurrent practice. The Law Society Of Singapore 21

  22. THE LAW SOCIETY OF SINGAPORE Topics • Introduction • SLPs employing corporate structures • Lawyers practising concurrently or accepting executive appointments in related law corporations • Collaborations between SLPs and FLs/FLPs

  23. 4 categories • SLPs which employ foreign lawyers in their local practices • SLPs which tie up with FLPs based overseas • SLPs which tie up with FLPs based in S’pore either through JLV or FLA • QFLPs The Law Society Of Singapore 23

  24. Foreign Collaboration Requirements Rule 3A ISR: 1. SL:FL ratio of at least 2:1 2. SL partner: FL partner ration of at least 2:1 3. MP must be SL and at least 2/3 of voting rights in management/executive committee must be held by SLs 4. At least 2/3 of firm’s equity share held by SLs 5. At least 2/3 of voting rights in firm vest in SLs 6. Cumulative amount of payment out of profits by SLP to FLs and/or FLPs during any financial year not to exceed 1/3 of SLP’s profits (1-5: general; 6: profit) The Law Society Of Singapore 24

  25. SLPs which employ FLs within their local practices • FLs can take higher profit and equity share in SLP – from 25% to 33%. • FLs with existing approvals to hold up to 25% need to apply to AG for approval to increase holdings to 33%. The Law Society Of Singapore 25

  26. SLPs which tie up with FLPs based overseas • FLs within overseas FLP can take higher profit and equity share in SLP – from 25% to 33%. • FLP based overseas can also take profit and equity share in SLP up to 33% • Concurrent partnerships permitted in SLP and overseas FLP for lawyers who are partners in overseas FLP and granted approval to take profit and equity share in SLP  AG’s approval required for all The Law Society Of Singapore 26

  27. SLPs which tie up with FLPs based in Singapore • enhanced FLA framework • FLs and FLP can take up to 1/3 share of profit and equity of SLP • FLs can concurrently be partners in SLP and FLP BUT AG must be satisfied that no actual or potential conflict of interests • QFLPs can enter into FLAs with SLPs  AG’s approval required for all The Law Society Of Singapore 27

  28. SLPs which tie up with FLPs based in Singapore • enhanced JLV framework • FLs and FLP can take up to 1/3 share of profit and equity of SLP • both FLs and SLs can concurrently be partners in constituent SLP and JLV BUT AG must be satisfied that no actual or potential conflict of interests • QFLPs can enter into JLVs with SLPs  AG’s approval required for all The Law Society Of Singapore 28

  29. Possible Issues to Consider • Is profit-sharing between SLP and FL/FLP allowed?: see sections 130B(7), 130C(7), 130L(1) & new 130L(6) LPA (overrides Rule 39 PCR). • Sharing of client information between SLP and FLP in JLV/FLA: see sections 130B(7), 130C(7) • Sharing of office premises between SLP and FLP – Council’s approval required? See amended Rule 9 PCR. • Concurrent practice in a SLP and FLP based in Singapore not allowed in non-enhanced JLV/FLA scenarios? The Law Society Of Singapore 29

  30. Enquiries Contact the Representation and Law Reform department at: represent@lawsoc.org.sg

  31. THE LAW SOCIETY OF SINGAPORE Thank You

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