SINGAPORE Law and Practice Contributed by: Doos Choi, Pierre Dzakpasu, Janelene Chen and Pieter de Ridder, Mayer Brown
prohibited from providing financial assistance, unless they undertake one of the whitewash pro - cedures in the CA, which may include one or more of the following actions: • a board resolution is passed that such finan - cial assistance is in the best interests of the company; • all the directors of the company make a solvency statement in relation to the giving of the financial assistance; • a special resolution is passed by the share - holders of the company; and/or • the giving of such assistance does not mate - rially prejudice the interests of the company or its shareholders, or the company’s ability to pay its creditors. 5.5 Other Restrictions Unless the parties are operating in a regulated sector (eg, insurance), there are no particular consents required for the grant of security or guarantees. Hardening Periods Hardening periods in Singapore are as follows. • Transactions at an undervalue – within three years before the commencement of judicial management or winding-up of the company. • Unfair preference – within one year before commencement of winding-up proceedings of the company. This period is extended to two years if the unfair preference is given to a person connected with the company. • Avoidance of floating charges – within one year before commencement of judicial management or winding up proceedings of the company. This period is extended to two years if the floating charge is created in favour of a person connected with the company.
• Extortionate credit transactions – within three years before the commencement of judicial management or winding-up of the company. • Transactions defrauding creditors – no hard - ening period. Retention of Title Singapore recognises “retention of title” (RoT) clauses with the primary legislation having appli - cation to such concepts being the Sale of Goods Act 1979. RoT clauses may not work where the original buyer has on-sold the relevant goods to a third-party bona fide purchaser for value without notice. The effectiveness of such provi - sions may also be limited in an insolvency of the buyer where the relevant goods have been transformed or incorporated into other products. Anti-Assignment Singapore law recognises anti-assignment pro - visions. As such, if security is intended to be taken over contractual rights, the underlying contract should be examined to ensure that there are no such provisions, or that, if they exist, the relevant consents are obtained. In addition, rights under contracts that are “personal” to the contracting parties (eg, an employment contract) are not assignable. For completeness, note that, as a matter of pub - lic policy, it is not generally possible to assign (by way of security) a bare right to sue or litigate. 5.6 Release of Typical Forms of Security Security is typically released by way of a deed of release between the parties in respect of which the security was entered into. For any registrations applicable to the grant of security which are noted in 5.1 Assets and Forms of Security ,there will be a corresponding de-registration process.
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