SINGAPORE Law and Practice Contributed by: Joseph Chun, Shook Lin & Bok LLP
Sustainability-Linked Loans and Bonds These are financing instruments that involve favour- able terms for achieving agreed-upon sustainability performance targets during the tenure of the financ- ing. They are typically aligned with the Sustainability- linked Loan Principles of the LMA, APLMA, and LSTA, as well as the Sustainability-linked Bond Principles of the ICMA, respectively. Incentives provided by MAS to promote the adoption Covers the costs of pre-issuance external reviews or ratings and post-issuance external review or reporting work performed by external reviewers in Singapore for qualifying green, social, sustainability, sustaina- bility-linked, and transition bonds issued and listed in Singapore aligned with any internationally recog- nised green, social, sustainability-linked principles or standards. Sustainable Loan Grant Scheme Defrays the expenses of engaging independent ser- vice providers to validate sustainability credentials of qualifying loans by offsetting up to SGD125,000 of expenses incurred for external reviews of eligible green, social, sustainability, sustainability-linked, and transition loans, as well as promoting the adoption of internationally recognised standards and taxonomies. Taxonomy of green finance are as follows. Sustainable Bond Grant Scheme The Singapore-Asia Taxonomy for Sustainable Finance (2023 Edition) (“Taxonomy”) was published by the Green Finance Industry Taskforce (replaced with Singapore Sustainable Finance Association), a cross-industry body established by MAS to acceler- ate Singapore’s development as a leading centre for sustainable finance. It provides guidance on what are considered green, transitional, and ineligible activities. To be considered green or in transition under the Tax- onomy, activities must: • contribute substantially to an environmental objec- tive by meeting the relevant technical screening criteria (“TSC”) set out in the Taxonomy for the environmental objective. Currently, the only envi-
Submitting a false or misleading sustainability report can be considered an offence and may result in a civil penalty under the Securities and Futures Act 2001 (SFA). This applies if a statement in the report is mate- rially false or misleading; and if it leads others to sub- scribe for securities, buy or sell securities, or impacts the market price of securities and if the individual who made the statement did so without caring whether it was true or false, or if they knew the statement was false or misleading. If a person contemporaneously with such contraven- tion of the SFA by the statement maker, subscribed for, bought, or sold securities, and suffered loss by reason of the contravention, that person may seek compensation from the statement maker. 16.2 Public Environmental Information There is no freedom of information legislation or free- dom of environmental information legislation in Sin- gapore for obtaining environmental information from public authorities. 16.3 Corporate Disclosure Requirement Companies may be required to disclose environmen- tal information related to financial risks in their sustain- ability reports (see 6.5 ESG Requirements ). The directors of a company may be required to con- sider disclosing in the company’s annual report, envi- ronmental information that affects the ability of the company’s financial statements to give a true and fair view of the financial position of the company (see Companies Act 1967). 16.4 Green Finance Green finance arrangements are voluntary, and some These are use-of-proceeds financing instruments and are typically structured to be aligned with the Green Loan Principles of the Loan Market Association (“LMA”), Asia Pacific Loan Market Association (“APL- MA”), and the Loan Syndication and Trading Asso- ciation (“LSTA”); and Green Bond Principles of the International Capital Markets Association (“ICMA”), respectively. of them have been outlined below. Green Loans and Green Bonds
394 CHAMBERS.COM
Powered by FlippingBook