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Why you should not buy IPOs As Sheng Siong is launching its IPO next month, I expected a few calls as whenever an IPO is launching. And if you are my client, you know my answer. I decide to write this article so everybody can benefit...

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Questions to ask your Financial Adviser Every Sunday morning when I read the newspapers, I always see articles or advertisements regarding "Financial Advisers". Nowadays, just like the once prestigious word "Banker", which is misused in the...

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Revision to Nomination of Insurance Nominees Regulation With the onset of the Mental Capacity Act ("MCA") coming into effect on 1st March 2010, the Insurance (Nomination of Beneficiaries) Regulations 2009 ("the Regulations") will be amended to effect 2 changes: The...

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The ABCs of the Financial Advisers Act The title, Financial Adviser, is always mis-used in the industry and misunderstood by the consumers. On 10 October 2002, the Financial Advisers Act came into effect and all financial institutions are...

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Moratorium Underwriting by Aviva It is a common that insurance companies do not cover pre-existing condition. Typically, pre-existing conditions will be excluded with little or no chance of them being covered, even after a number of treatment-free...

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SGX announced further measure to differentiate between direct replication ETFs and synthetic replication ETFs

Category : Law & Regulations

On 22 August 2011, SGX announced “Further measure to improve investor awareness of exchange traded fund (ETF) structures“.

Recent attention given to the embedded risks of synthetic replication exchange traded funds (ETFs) has raised awareness on the importance of understanding the structures, features and risks of a product for informed investment decisions.

To make it easier for investors to differentiate between direct replication ETFs and synthetic replication ETFs, representing the two broad structures of ETFs, the Exchange has arranged for the trading name of all synthetic replication ETFs to be tagged with an ‘X’, which appears next to the ‘@’ used to mark Specified Investment Products (SIPs). This improves visibility of all the synthetic replication ETFs on trading screens and the SGX live prices website.

I am glad this has finally been done as I always feel ETF is oversold in the past two years. Investors have a lot of misconceptions about what ETF is about.

ETF is merely an investment instrument, but it was marketed as a strategy by the ETF sellers. Investors are not aware that, many times, ETFs fail to deliver what they are marketed for. If investors are informed about what happened to synthetic ETFs during Japan Earthquake in March and Silver price slump in May, they should have better idea of the risks in their portfolio.

MAS Issues Response to Feedback on Proposals to the Regulatory Regime for Investment Products

Category : Law & Regulations

Singapore, 21 October 2010…MAS has issued its response to feedback on the proposals in the Consultation Paper on the Regulatory Regime for Listed and Unlisted Investment Products, which was published on 28 January 2010.

3. MAS’ response addresses feedback on the following proposals:

(i) Financial advisers to put in place formal policies and procedures on the sale of investment products;

(ii) Intermediaries to conduct a Customer Knowledge Assessment prior to a sale to assess whether a customer who wishes to purchase an unlisted investment product has the relevant knowledge or experience to understand the risks and features of the product;

(iii) Intermediaries to conduct a Customer Account Review to ascertain whether a customer who wishes to purchase a listed investment product has the relevant knowledge or experience to understand the risks and features of derivatives, before approving the customer’s account for trading such products;

(iv) Training of representatives and introducing a new Capital Markets and Financial Advisory Services (“CMFAS”) examination module for an expanded scope of product knowledge; and

(v) Requirements for Product Highlights Sheet.

Source: MAS Website

What is Deposit Insurance Scheme and how it can help you

Category : Financial Industry Update, Law & Regulations

You must have read the liquidity problems of America’s two troubled mortgage finance giants, Freddie Mac and Fannie Mae. Have you wondered, If your Singapore bank is liquidated, what will happen to you?

Singapore consumers enjoy the benefits of a sound banking system. Banks and finance companies licensed in Singapore are supervised by the Monetary Authority of Singapore (MAS). It is MAS’ aim to ensure the stability of the banking system in Singapore and to require financial institutions to have sound risk management systems and adequate internal controls.

However, MAS does not guarantee the soundness of individual financial institutions. Therefore, a Deposit Insurance Scheme has been set up to protect the core savings of small depositors in Singapore in the event a full bank or finance company fails.

The Singapore Deposit Insurance Corporation (SDIC) administers the Deposit Insurance Scheme in Singapore . SDIC is a company limited by guarantee under the Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).

In the event a Scheme member bank or finance company fails, all of your eligible accounts with that member are aggregated and insured up to S$20,000, net of your liabilities to the member.

(Update: This has been increased to $50,000 since Sep 2010 Followed by MAS announcement)

The main functions of SDIC are to collect premium contributions from Scheme members, manage the Deposit Insurance Fund, compensate insured depositors and educate the public on the Scheme.

Moneys held in bank deposits under the CPF Investment Scheme are separately insured up to S$20,000.

How to file Small Claims

1

Category : Law & Regulations

The Small Claims Tribunals are part of the Subordinate Courts of Singapore. The Tribunals were established on the 1st of February 1985, to provide a quick and inexpensive forum for the resolution of small claims between consumers and suppliers.

Jurisdiction of the Small Claims Tribunals

The Tribunals have jurisdiction to hear claims not exceeding $10,000, where the claims relate to disputes arising from:

  1. a contract for the sale of goods; or
  2. a contract for the provision of services; or
  3. tortious damage to property (but not including damage arising in connection with motor vehicle accidents)
  4. Any contract relating to a lease of residential premises not exceeding 2 years

Where the Claimant and the Respondant consent in writing, the jurisdiction can be raised to $20,000. (Memorandum of Consent)

All claims must be lodged or filed at the Small Claims Tribunals within one year from the date on which the cause of action accrued.

All claims to be lodged or filed with the Small Claims Tribunals have to be within the Jurisdiction of the Tribunals. For some general assistance on this, you may wish to refer to this checklist.

Parties lodging or filing a claim would have to pay claim fees as follows;

 

Not exceeding $5,000

Exceeding $5,000 but not exceeding $10,000

Exceeding $10,000 but not exceeding $20,000

Consumer

$10.00

$20.00

1% of claim amount

Non consumer

$50.00

$100.00

3% of claim amount

Claim forms can be obtained from the Tribunals in person or by fax through the teleresponse system at 64355937. The claim form can also be obtained from here.

 A person or company who wishes to make the claim is referred to as the “Claimant” while the person or company claimed against is referred to as the “Respondent”. The party you claim against can also claim against you in the same claim. This is referred to as a “Counterclaim”.

A claim can be lodged or filed in person at the Tribunals or through the fax at 65364478 or 64355994. Currently, certain authorised users are allowed to lodge or file their claims via the Internet. If you are a frequent user of the Tribunals making numerous claims a year, you may apply in writing to the Registrar of Small Claims Tribunals for approval to utilise the electronic filing.

Payment for claims lodged via fax may be made in person or by post. If in person, payment can be made by cash, NETS or crossed cheque. If by post, payment is only to be made by cheque. Only local cheques will be accepted. For crossed cheque, it should be made payable to the “Registrar, Subordinate Courts”. All payments must be made within 7 days of lodgment, or the claim will be deemed withdrawn. Claim forms would have to be submitted in quadruple when lodging a claim in person and parties would have to provide one copy each of all supporting documents. For claims lodged via fax only, parties would have to provide one copy each of the claim form and the supporting documents.

Parties claiming against a company or a business would have to produce the instant information search of that company or business. This can be obtained at the Accounting and Corporate Regulatory Authority’s the service bureau at 6th Floor, Apollo Centre, Havelock Road , Singapore 059763.

Even after a claim has been filed, the parties can still attempt to resolve the matter between themselves before the Consultation / Mediation date and should there be a settlement they may write in to withdraw the Claim.

The parties would first attend a Consultation / Mediation before a Registrar of the Small Claims Tribunals. If the matter is not resolved at that stage, the parties would then have to attend a Hearing before a Referee.

Source: subordinate court

The rule in Foss v Harbottle

Category : Law & Regulations

During the famous defamation suit against SPD Chief Chee Soon Juan, his lawyer argued that a political party cannot sue or be sued for defamation.

Although the court did not agree with him, this reminds me of Foss v Harbottle‘s case, which I think is very important for business owners to understand.

The facts of this case are that two minority shareholders initiated legal proceedings against, amongst others, the directors of the company. They claimed that the directors had missapplied the company’s assets. The court dismissed the claim and held that when a company is wronged by its directors, only the company has standing to sue.

That means since the right to legal action belongs to the company, an individual shareholder has no right to commence action.

However, in exceptional situations, the law may allow an individual shareholder or some other person to commence an action in the name of the company. Such an action is known as a “derivative action” under Sections 216A and 216B of the Companies Act. The court may in its discretion allow a shareholder to commence the derivative action if:

  • He has given 14 days’ notice to the director of his intention to apply
  • He is acting in good faith, and
  • It is prima facie in the interests of the company that the derivative action be brought.