Duane Morris & Selvam Advises on the Sale of Rs. 12,000 million (US$143 million) Equity Shares in Sansera Engineering Limited in a QIP

SINGAPORE, 5 November 2024 — Duane Morris & Selvam LLP acted as the U.S. counsel to ICICI Securities and Nomura Financial Advisory & Securities (India) in their role as the book running lead managers on the recent sale of approximately Rs. 12,000 million (US$143 million) of shares in Sansera Engineering Limited in a qualified institutions placement (QIP), including concurrent private placements outside India. 

Sansera Engineering is an engineering-led manufacturer of complex and critical precision-engineered forged and machined components across automotive and non-automotive sectors. Its shares are listed on the BSE and NSE.

Duane Morris & Selvam’s team was led by Jamie Benson, the head of the firm’s U.S. capital markets, U.S. venture capital and India practices. The deal team also included Ananth Balaji Sundararaman, senior associate, Ming Ze Yeo, associate, and Alison Lewis, associate.

Commenting on this deal, Jamie Benson, stated: 

“I was pleased we advised on this deal, having also advised the BRLMs on the sale of Rs. 12,830 million (US$173 million) of shares in Sansera Engineering’s in an IPO in India and concurrent private placements outside India, including in the U.S., in 2021.”

Khaitan & Co acted as Indian counsel to Sansera Engineering and JSA acted as Indian counsel to ICICI Securities and Nomura Financial Advisory & Securities (India).

About Duane Morris & Selvam LLP
Duane Morris & Selvam LLP is the joint law venture between Duane Morris LLP and Selvam LLC, with its headquarters in Singapore. By way of its global platform and extensive range of legal services, the firm helps companies conduct business in and out of Asia, the United States, Latin America, the United Kingdom and beyond. In addition to the excellent skills of its lawyers, clients benefit from the cultural fluency and key relationships that the firm has developed over many years of practising law throughout the region. The firm has a presence in the key markets of Southeast Asia, including Singapore, Hanoi, Ho Chi Minh City and Yangon, as well as an office in Shanghai. Supporting these regional offices, the firm operates a series of country desks for India, Indonesia, Korea and Japan. It is regularly ranked among the region’s leading law firms by Chambers & Partners, The Legal 500 and IFLR1000.

Redefining Boundaries: MAS Consults on New Regulatory Framework for Digital Token Service Providers under the FSMA

By Leon Yee and Sally Kim

On 4 October 2024, the Monetary Authority of Singapore (“MAS”) has published a consultation paper detailing the regulatory framework for Digital Token Service Providers (“DTSPs”) under the Financial Services and Markets Act 2022 (“FSM Act”). This framework addresses the licensing, anti-money laundering, countering the financing of terrorism (“AML/CFT”) requirements, and technological risk management for DTSPs, particularly those based in Singapore but offering services abroad.[1] To effect the objectives of Part 9 of the FSM Act, the MAS intends to prescribe or issue the following instruments: (a) the Financial Services and Markets Regulations (“FSM Regulations”); (b) AML/CFT notices under the FSMA; (c) other notices under the FSMA; and (d) guidelines.

The proposed regulatory framework is meant to complement Singapore’s existing crypto regulations under the Payment Services Act 2019 (“PS Act”). While both DTSPs and providers of digital payment token (“DPT”) services are regulated, they operate under distinct frameworks. The DTSP framework also supplements regulations under the Securities and Futures Act 2001 (“SFA”) and the Financial Advisers Act 2001 (“FAA”). Importantly, service providers already licensed under the PS Act, SFA, or FAA do not need an additional DTSP license for the same activities under the FSM Act.

The key aspects of the consultation paper are set out below.

1. Regulatory Approach for DTSPs

The FSM Act, passed in April 2022, provides the legislative framework for regulating individuals, partnerships, and corporations that provide digital token services (“DT services”) outside Singapore but operate from within Singapore. Part 9 of the FSM Act focuses on preventing regulatory arbitrage and minimising risks of DTSPs being used for illicit activities, such as money laundering or terrorism financing (“ML/TF”).

MAS’s approach aligns with Financial Action Task Force (“FATF”) standards, emphasising the risks associated with cross-border, internet-based token services. To mitigate these risks, MAS proposes a prudent and cautious approach to licensing, only granting a DTSP licence under limited circumstances. Applications will be reviewed on a case-by-case basis, with key considerations being economic justification, business model, and compliance with international standards.

In considering whether to grant a DTSP licence, the MAS will take into account whether the applicant meets the criteria set out below:

  1. The applicant must demonstrate an economically viable business model and provide valid reasons for not carrying on a business of providing DT services in Singapore, despite operating in or being formed or incorporated in Singapore;
  2. The applicant does not operate in a manner that is of concern to the MAS and is already regulated and supervised for its compliance with relevant internationally agreed standards;
  3. The MAS must not have concerns regarding the applicant’s business structure or its ability to meet regulatory obligations; and
  4. Any other criteria that may be relevant, as determined by the MAS.

MAS may impose additional licensing conditions if deemed necessary. Licensees will also be required to notify MAS of any significant changes to their operations or business models that may affect compliance.

The MAS does not plan to offer transitional arrangements for DTSPs. Once the DTSP regulatory framework is implemented, existing businesses operating or incorporated in Singapore that provide DT services outside of Singapore must either obtain a license from MAS or cease operations. Without a license or exemption, these entities will not be permitted to continue their activities.

2. Licensing and Ongoing Requirements

To ensure adequate supervision over DTSPs, MAS expects DTSPs to meet several key licensing criteria as follows:

  1. If the applicant is a corporation, it must appoint at least one executive director who is resident in Singapore. If the applicant is a partnership or limited liability partnership, it must respectively appoint at least one partner, or partner or manager, who is resident in Singapore;
  2. The applicant must satisfy MAS that it is “fit and proper”, in accordance with the Guidelines on Fit and Proper Criteria;
  3. The applicant must have a permanent place of business in Singapore;
  4. The applicant should perform a penetration test of its proposed DT services, remediate all high-risk findings identified, and conduct independent validation on the effectiveness of the remediation actions;
  5. The applicant should have adequate compliance arrangements commensurate with the scale, nature, and complexity of their operations; and
  6. The applicant should have in place adequate independent audit arrangements and be able to meet statutory annual audit requirements.

Further, the proposed requirements for licensees under the FSM Regulations are as follows:

  1. Control of provision of DT services – MAS proposes that a DTSP license will be granted on a perpetual basis, and license fees will be payable on an annual basis. If a licensee ceases to provide all authorised DT services and does not resume any of these services for six (6) consecutive months, such DTSP’s licence will lapse;
  1. Financial Requirements – the proposed minimum initial and ongoing financial requirements applicable to DTSPs are:

i. a base capital of $250,000 for corporate DTSPs;

ii. a total capital contribution of $250,000 for DTSPs that are partnerships or limited liability partnerships; and

iii. a $250,000 cash deposit for individual DTSPs

The components of base capital take into account losses such as interim losses or dividend pay-outs.

  1. Business Conduct – the FSM Regulations outline the duties of CEOs, directors, and partners of the licensed DPT service providers, as well as audit requirements.

3. AML/CFT Requirements

The consultation paper emphasises comprehensive AML/CFT requirements for DTSPs. Licensees will need to:

  1. Take appropriate steps to identify, assess and understand their ML/TF risks;
  2. Develop and implement policies, procedures, and controls (including those in relation to the conduct of customer due diligence (“CDD”), transaction monitoring, screening, suspicious transactions reporting and record keeping);
  3. Monitor the implementation of those policies, procedures, and controls, and enhancing them if necessary; and
  4. Perform enhanced measures if higher ML/TF risks are identified, to effectively manage and mitigate those higher risks.

MAS proposes to allow limited reliance on third-party customer due diligence, but only if those third parties are subject to FATF-compliant AML/CFT regulations. Licensees will be precluded from relying on certain third parties, such as payment services providers under the PS Act or financial institutions holding an equivalent licence and supervised by a foreign authority for compliance with AML/CFT requirements due to the uneven level of AML/CFT controls across the sector.

Additionally, MAS proposes specific rules around the handling of bearer negotiable instruments and cash payouts. Licensees will be prohibited from issuing bearer negotiable instruments and restricted from making cash payouts exceeding SGD 20,000, to reduce anonymity and ML/TF risks.

4. Technology Risk Management and Cyber Hygiene

Given the complex IT environments in which DTSPs operate, MAS outlines rigorous standards for technology risk management and cyber hygiene. MAS proposes that DTSPs must:

  1. Comply with periodic regulatory submission of information related to the licensees’ DT services on a monthly basis (such as, account statistics, transaction value, volume, value of DTs held for safeguarding or administration and other information required by MAS);

under FSM-N30:

  1. Establish frameworks and processes to identify critical systems;
  2. Ensure that the maximum unscheduled downtime for each critical system does not exceed 4 hours within any period of 12 months;
  3. Establish a recovery time objective of not more than 4 hours for each critical system;
  4. Notify the MAS within the hour upon discovery of a system malfunction or IT security incident that has a severe and widespread impact on the licensees’ operations or materially impacts the licensees’ service to its customers, and submit a root cause and impact analysis report to the MAS within 14 days;
  5. Implement IT controls to protect customer information from unauthorised access or disclosure;

under FSM-N31:

  1. Secure administrative accounts against any unauthorised access or use;
  2. Establish security standards;
  3. Implement security patches in a timely manner;
  4. Put in place network perimeter defence and malware protection; and
  5. Implement multi-factor authentication for administrative accounts of critical systems and all system accounts used to access customer information through the internet.

5. Conduct, Disclosures, and Communications

Under the FSM Act, DTSPs must comply with conduct and disclosure requirements to ensure that customers understand the risks associated with using their services. MAS proposes a mandatory risk warning statement that DTSPs must provide to customers, along with a requirement that DTSPs accurately represent their regulatory status under the FSM Act.

Licensees must also ensure that they have a Singapore-based representative available to respond to customer complaints or AML/CFT queries at least 10 days per month, for at least eight (8) hours per day during business hours.

6. Guidelines and Transitional Arrangements

MAS intends to amend existing guidelines, such as the Guidelines on Fit and Proper Criteria and those on risk management practices and business continuity. These amendments will apply to DTSPs once the DTSP provisions under the FSM Act come into force.

Conclusion

MAS’s proposed regulatory framework reflects Singapore’s commitment to maintaining a high level of oversight for DT services provided from within the country but aimed at overseas markets. The consultation seeks to strike a balance between enabling innovation in the digital assets sector and protecting Singapore’s reputation against financial crime risks.

The MAS will take a cautious approach in issuing DTSP licenses, with approvals granted only in limited circumstances, based on economic viability, compliance with international standards, and sound business structures.

As FSM Act rolls out, existing licensees and unlicensed affiliates must review their operations to ensure compliance, especially multi-jurisdictional groups handling digital asset services and derivatives, which may now fall under FSM Act’s regulatory scope.

Next Step

Stakeholders are invited to provide feedback on the consultation paper by 4 November 2024. DTSPs and related entities should closely review the proposed requirements, especially in areas related to AML/CFT compliance, technology risk management, and capital requirements.

For more information, you may refer to the full MAS Consultation Paper (P010-2024) here.


[1] (a) an individual or partnership conducting business that provides any type of DT service outside Singapore from a place of business within Singapore; and (b) a Singapore corporation conducting business, whether from Singapore or elsewhere, that provides any type of DT service outside Singapore.

For More Information
If you have any questions about this article, please contact Duane Morris & Selvam Chairman Leon Yee or Associate Sally Kim if you would like to discuss this update.

About Duane Morris & Selvam LLP
Duane Morris & Selvam LLP is a joint law venture between international firm Duane Morris LLP and Singapore-based firm Selvam LLC. Duane Morris & Selvam runs a unique Latin American-Asian practice out of Singapore, with a team of international lawyers qualified in multiple jurisdictions including Singapore, the U.S., the U.K., Canada, Mexico and Colombia, with substantial experience in international transactions and disputes. Duane Morris & Selvam also has cooperative relationships with some of the best Latin American and Asian law firms
.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

美国《公司透明度法案》报告提交日迫近,美国/外国企业需做这些准备!

按照2024年1月1日生效的美国《公司透明度法案》(“CTA”)的要求,所有在美国注册成立和/或注册开展业务的美国和外国企业(包括某些信托公司)需向美国财政部下属的金融犯罪执法网络(“FinCEN”)提交报告,披露其拥有所有权或控制权的受益所有人的身份信息。CTA旨在防止罪犯、恐怖分子和腐败寡头在美国藏匿非法资金或其他财产。如果企业符合CTA中所列出的23项豁免条件之一,可免于申报。

Continue reading “美国《公司透明度法案》报告提交日迫近,美国/外国企业需做这些准备!”

美国财政部发布限制某些美国对华投资的行政令的拟议规则

2024年6月21日,美国财政部发布了一份拟议规则的通知,以执行2023年8月9日发布的第14105号行政令(EO 14105)。美国欲借助该行政令来防止一些受关注国家利用美国的对外投资来发展对军事、情报、监视或网络能力至关重要的敏感技术或产品。

该拟议规则将对美国在有关国家(包括中国)涉及半导体和微电子、量子信息技术或人工智能的某些投资施加通知要求,在某些情况下还将施加禁止要求。

Continue reading “美国财政部发布限制某些美国对华投资的行政令的拟议规则”

剖析美对华新关税:中国商品出口对墨西哥及美国的影响

美国对中国商品征收新关税

2024 年 5 月 14 日,拜登政府结束了根据1974 年的《贸易法》301条款采取的对中国贸易行为的法定审查。白宫的公告确认将保留现行的 301 条款对中国进口商品征收的关税,并概述了对从中国进口的 180 亿美元商品(占美国从中国进口商品总额的 4.2%[1] )征收额外关税。此次调查由美国贸易代表办公室(USTR)进行,是特朗普政府 2018 年对中国商品实施关税后四年评估的一部分。

Continue reading “剖析美对华新关税:中国商品出口对墨西哥及美国的影响”

智利矿业部启动私人锂项目的信息请求程序;智利锂矿:摘要和后续步骤

智利矿业部启动锂项目的信息请求(RFI)程序:第907号豁免决议详细说明程序和例外情况

2024年4月15日,智利矿业部根据智利政府先前制定的“国家锂战略”发布了第907号豁免决议(“决议”),批准了由矿业部领导的信息请求(“RFI”)程序的启动,以了解市场和行业对开发从盐湖或其他未被排除的矿床中勘探、开采和生产锂及其衍生品项目的意向。这些信息将有助于智利政府制定机制,以确定与之签订特殊锂业务合同 (“CEOL”) 的私人承包商,以及为此目的而优先考虑的盐滩或其他锂矿床。

Continue reading “智利矿业部启动私人锂项目的信息请求程序;智利锂矿:摘要和后续步骤”

Navigating Representations and Warranties in Share Purchase Agreements

By Leon Yee and Sally Kim

When buying or selling a company or part of its shares, the intricacies of representations and warranties within a Sale and Purchase Agreement (“SPA”) play a pivotal role. Representations and warranties serve as assurances provided by the seller to the buyer regarding the condition, status, and other relevant aspects of the target company. These provisions not only influence the negotiations but also significantly impact post-closing responsibilities and liabilities. Understanding the nuances of representations and warranties in SPA is crucial for both parties involved in the transaction. In this article, we explore the nuances of representations and warranties in an SPA, including drafting considerations, breach remedies, and indemnification provisions. Continue reading “Navigating Representations and Warranties in Share Purchase Agreements”

Duane Morris & Selvam Welcomes Intellectual Property Director Li Zheng in the Shanghai Office

Shanghai, 13 May 2024 ― Dr. Li Zheng has joined Duane Morris & Selvam LLP as a Director in the firm’s Intellectual Property Practice Group at its Shanghai office. Prior to joining the firm, he was with King & Wood Mallesons, one of China’s top tier law firms.

Continue reading “Duane Morris & Selvam Welcomes Intellectual Property Director Li Zheng in the Shanghai Office”

Claimants Banding Together: Is There Always Strength in Numbers?

joined hands

By Leonard Loh

Key Takeaway: While there are obvious advantages for potential claimants to band together, there are issues which must be fully considered in order for all potential claimants to make a considered decision. Independent legal advice is recommended, prudent and necessary before committing to a group litigation.

Potential claimants are now, more often and more effectively, harnessing the power of messaging apps, internet forums and social media to seek out others who have suffered similar plights under the hands of the same defendant(s), to organise themselves and to launch actions. However, it is important to ask: is there always strength in numbers?
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Duane Morris & Selvam Advises on the Sale of INR 6,000 million (US$72 million) of Equity Shares in Gokaldas Exports Limited a Qualified Institutions Placement

SINGAPORE, 30 April 2024 — Duane Morris & Selvam LLP acted as the special international counsel to IIFL Securities Limited in its role as the book running lead manager on the recent sale of INR 6,000 million (US$72 million) of equity shares in Gokaldas Exports Limited in a qualified institutions placement. Continue reading “Duane Morris & Selvam Advises on the Sale of INR 6,000 million (US$72 million) of Equity Shares in Gokaldas Exports Limited a Qualified Institutions Placement”

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