Page 23 – fivehundred

February 1, 2021

Focus on… Doing Business In a Post-COVID-19 World, Luther

When it comes to starting a new business in Myanmar or expanding an existing one, what steps should be taken?

It is important to note that despite the ongoing liberalization process, foreign investors may experience investment restrictions even in sectors which should be open to investments. Whether due to outdated laws, lack of clear regulations or unofficial policies, many business activities and licenses will in practice still only be available to Myanmar citizens or permitted for Myanmar companies. It is therefore of utmost importance to confirm prior to any investment or expansion that the intended activities can indeed be carried out.

If the intended business is permitted, the applicable legal requirements (e.g. joint venture with a Myanmar partner), approvals (e.g. by the line ministry) or licenses should be confirmed with the relevant authorities. If a joint venture with a Myanmar partner is required, a proper due diligence on the partner is advisable.

The establishment of a business in Myanmar has become reasonably fast. Companies can be established within a matter of days, and even large investments requiring ministerial approval and a permit of the Myanmar Investment Commission will often be approved within a few months.

Once the new business has been established and commenced operations, investors should ensure proper legal and regulatory compliance (including corporate, tax and labour compliance), which can at times be more complex and difficult than in other countries due to outdated, often manual procedures of the relevant authorities.

What are the most common forms of legal entities in Myanmar?

As in most jurisdictions, foreign corporations are not allowed to carry out activities in Myanmar without having registered a legal presence in the country. The relevant legal restrictions can be found in various laws, such as the Myanmar Investment Law (2016) and the Myanmar Companies Law (2017), which stipulate registration requirements for foreign corporations wishing to establish a place of business or carry out business in Myanmar.

Foreign investors tend to establish a private Company Limited by Shares for their business activities in Myanmar. A Company is a fully-fledged, independent legal entity providing for limited liability of its shareholders, which may carry out any legal business activities in accordance with the laws of Myanmar.

It is also possible to register a branch office of a foreign corporation in Myanmar. This can be beneficial for shorter-term projects or investments in certain sectors (such as finance or insurance), but generally does offer few benefits over a limited company.

When registering a business presence in Myanmar, generally three options exist:

· Registration (only) under the Myanmar Companies Law (2017);

· (Additional) registration under the Myanmar Investment Law (2016); or

· (Additional) registration under the Special Economic Zone Law (2014) for businesses located in a Special Economic Zone.

What labour and employment laws should be considered when expanding into Myanmar?

Myanmar employment law is governed by both old and new laws and regulations, as well as internal policies and practices of the Department of Labour of the Ministry of Labour, Immigration and Population. Many laws dating back to the colonial and post-independence periods are, with more or less changes, still in force.

Since its political and economic opening, Myanmar has embarked on a comprehensive reform process and is currently overhauling its legal framework. Existing laws were revised or replaced, and new laws enacted. In practice, employer-employee relationships are, however, heavily influenced by the policies and practices of the Ministry of Labour, Immigration and Population. Regulations and notices issued by the Ministry and its departments provide for the interpretation of the existing laws, but also additional requirements imposed on employers and employees.

The authorities in Myanmar remain very employee-friendly, often deciding in favour of the employees. Most notably, labour disputes are however often not (only) addressed in the official labour dispute settlement bodies, but also on social media, posing a considerable reputation risk particularly for international investors.

Are there any available tax credits/incentives when investing in Myanmar?

Tax incentives are available particularly for projects meeting the requirements stipulated in the Myanmar Investment Law (2016) and investments in one of the special economic zones in accordance with the Special Economic Zone Law (2014).

Subject to meeting the requirements set out in the respective laws, investors may be eligible for corporate income tax holidays of up to seven years, import tax and duty exemptions on machinery, equipment and construction materials, deductions for research and development, exemptions for re-invested profits as well as other tax benefits.

When developing a new brand, what copyright or data protection legalities should I be aware of?

Myanmar recently enacted new intellectual property laws, including the Trademark Law (2019), establishing the framework for a comprehensive trademark registration and protection system. Other new laws include the Patent Law (2019), Industrial Design Law (2019) and Copyright Law (2019).

On 28 August 2020, the Ministry of Commerce issued Order No. 63/2020 stipulating the procedures for the new online trademark filing system. The new trademark registration system will be implemented in two phases:

(i) From 1 October 2020, only trademarks already registered with the Registration of Deeds Office and trademarks which have been put to actual use within Myanmar (without any registration) will be accepted for re-filing under the new system; and

(ii) In the second phase, new trademarks may be registered under the new system.

While Order No. 63/2020 remains silent on the duration of the first phase and the commencement date of the second phase, the first phase is expected to last several months.

In comparison, legislation addressing data protection remains very limited and can primarily be found in sector-specific laws (e.g. the Telecommunication Law (2013)). Apart from such sector-specific laws, the Law Protecting the Privacy and Security of Citizens (2017) provides for certain prohibitions, which could be triggered by a misuse of personal data. Further, the Constitution contains general provisions on the protection of privacy and security of communications.

About Luther

Luther provides the full range of legal and tax advisory services in Yangon, Myanmar. With its team of more than 50 professionals, comprising of international and Myanmar lawyers, corporate secretaries and tax advisors, Luther has the competency and expertise necessary to comprehensively assist and advise clients in all stages of the business lifecycle. This includes the structuring of international investments, establishment of Myanmar businesses, ongoing legal and tax advice as well as the dissolution of corporations.

Due to its extensive international and regional experience as a European law firm active in Myanmar and six other Asian countries, Luther is well prepared for the various challenges of the frontier market Myanmar. Since commencing operations in Yangon, Luther has assisted more than 500 clients in Myanmar, including private investors and international corporations, local conglomerates, international development and non-governmental organisations as well as development banks and foreign embassies.

While Luther Myanmar is a full-service law firm with a dedicated M&A and finance team, its key expertise is compliance with Myanmar’s rapidly developing legal and regulatory framework and the challenges resulting from the country’s outdated administrative system.

Firm timeline

February 1, 2021February 1, 2021

Focus on… Doing Business In A Post-COVID World, Kudun & Partners

Before COVID-19, Thailand’s pursuit of a high-tech, high-income future was in full swing. Its ambitions were being propelled and shaped by Thailand 4.0, the economic development plan designed to transform the country from a middle-income manufacturing, agriculture and tourism-centric economy into a high-income, value-based hub of innovation. This project centres on ten core industries—including robotics & automation, digital economy and medical tourism—and multibillion infrastructure projects like the Eastern Economic Corridor (EEC) and China’s Belt and Road Initiative (BRI).

However, like most plans, it faced mammoth levels of disruption in the face of COVID-19. The pandemic, and individual governments’ responses to it, has redefined the global business environment, shifting priorities, restructuring supply chains and shutting down entire industries while others thrive.

Thailand has undeniably suffered. Together, exports and tourism account for some 70% of GDP, and both industries have been severely impacted by the pandemic. At the time of writing, the Central Bank of Thailand is predicting the economy will contract 7.8% compared to 2019.

However, the country’s robust response to the outbreak—which, at the time of writing, has seen it record fewer than 4,000 total cases—has allowed certains parts of the economy, including some targeted by Thailand 4.0, to thrive amid global uncertainty. Looking forward, these sectors may become exciting opportunities, as long as Thai businesses are prepared to modernise and keep up with an increasingly agile global business environment.

What trends are law firms seeing and how would they advise their clients to conduct business as usual?

COVID-19 has added a sense of urgency to a much-needed and hoped-for digital transformation in Thailand. Prior to the pandemic, many businesses—particularly small to medium entreprises (SMEs)—were not equipped with the technology required to operate remotely. With mandatory quarantines and social distancing regulations in place throughout the year, companies have been forced to adapt as a matter of survival. Thailand and its neighbours have seen a surge in the use of digital services as a direct result of the pandemic, with more than 40 million people coming online for the first time this year to use e-commerce, food delivery and online payment platforms across South-East Asia.

The pandemic has also accelerated global supply chain diversification—an ongoing trend, particularly in South-East Asia, over the last few years. Thailand is an established manufacturing hub—dubbed ‘the Detroit of Asia’—and has been steadily carving out a space for itself as an alternative to China amid the US-China trade war. Although China’s supply chains recovered quickly from the massive disruption suffered at the outset of the pandemic, this disruption exposed a need for a more agile global supply chain

moving forward. With a sophisticated and ambitious manufacturing industry, a strategic geographic position, positive trading relationships with partners across the globe and ever-expanding infrastructure, Thailand is an attractive alternative route that has been given a highly unusual moment in the spotlight this year.

There are valuable lessons to be learned from Thailand’s victories in 2020. In business terms, COVID-19 has certainly been disruptive, but it has forced a spirit of innovation that arguably wouldn’t have been possible otherwise. To take advantage of this unearthed potential, it is vital that businesses in Thailand and those with an eye on the country maintain a sense of agility, adapting and diversifying to meet the needs of the global market.

How have governments reacted to protect businesses whilst encouraging investment?

Despite the somewhat unexpected opportunities presented by these drastic shifts in the global economy, the immediate impact on the Thai economy and workforce has been significant. In response to this, the Thia government has issued stimulus packages worth more than THB 2 billion (US$65.9 billion) targeting SMEs, workers, households and commercial banks. These are primarily made up of soft loans, tax relief and cash handouts.

The government has also provided investment incentives to protect food security and support the manufacture of additional medical equipment, leading to a THB 12.69 billion (US$400 million) influx of project applications in the first six months of 2020.

Looking forward, the government is also hoping to capitalise on Thailand’s aforementioned potential as an alternative partner in the global supply chain, with Deputy Prime Minister Somkid Jatusripitak instructing the Board of Investment (BOI) to redesign incentives for businesses to relocate their factories to Thailand.

What risk mitigation factors can be advised and what technology is available to assist in-house and directors?

Unsurprisingly, the biggest priority in future-proofing operations in a post-COVID world should be communication. Deloitte estimates that up to 47.8 million people in the ASEAN-6 region (comprising Indonesia, Malaysia, Singapore, Philippines, Thailand and Vietnam) may work remotely beyond the pandemic. Separately, PwC Thailand found that 20% of Thai companies have introduced policies for permanent remote working. However, developing and newly industrialised economies in South-East Asia are notably less prepared for the logistics of remote work.

Thai companies are essentially attempting several years’ worth of digital transformation in the space of a few months to adapt to the so-called ‘new normal’. While it’s imperative that these companies quickly adopt digital communication and collaboration tools in order to survive, rushing large-scale digital transformation can lead to expensive failures. In order to keep pace with the post-COVID global business environment without overcomplicating processes, directors and in-house teams should focus on technology that enables fast and effective communication above all.

About the author

With a career spanning more than 25 years in Asia, Troy has extensive experience in acting as a trusted legal and business advisor to a broad spectrum of Thai and international clients on domestic and cross-border mergers and acquisitions, foreign direct investment and market entry strategies, private equity investments and venture capital, joint ventures, project and corporate financings, real estate developments, energy projects, and general corporate matters. Troy obtained his B.A. and LL.B. degrees from Monash University, Australia, and is admitted to practice law in Australia, Hong Kong, and England & Wales. Based in Bangkok since 1999, Troy is fluent in Thai, and holds dual Thai and Australian citizenship. Prior to joining Kudun and Partners, where he heads the firm’s international practice, Troy was a partner at White & Case in Bangkok and later at Weerawong, Chinnavat & Partners, where he focused on domestic and cross-border investment and general corporate transactions. Troy was also a partner and general counsel of Avalerion Capital, a venture capital firm based in Singapore. In 2019 and 2020, Troy was named in Asia Business Law Journal as one of Thailand’s Top 100 Lawyers. He has also been recognized as a “Leading Lawyer” in Banking and Finance, Projects and Energy by The Legal 500 (2009- 2014) and “praised for his in-depth knowledge and experience of pan-Asian markets” (The Legal 500, 2012) and “respected for his expertise in corporate matters” (IFLR100, 2014).

About the firm

Legal 500 rankings

· Tier 4 in Corporate and M&A (including Capital Markets) by The Legal 500 Asia Pacific 2020

· Tier 3 in Dispute Resolution by The Legal 500 Asia Pacific 2020

· Tier 3 in Projects and Energy by The Legal 500 Asia Pacific 2020

· Tier 3 in Tax by The Legal 500 Asia Pacific 2020

The Legal 500’s Southeast Asia Awards 2020 (Announcement in June 2020)

Shortlisted for:

· Corporate and M&A Team of the Year

· Thailand Law Firm of the Year

· Rising Law Firm of the Year

Major landmark deals

Capital Markets

· Acting as legal counsel and business advisor to B.Grimm Power Public Company Limited as the issuer of one of largest IPOs in Thailand in 2017 with major power plants in Thailand, Vietnam and Laos with an offering value of THB 11.5 billion (USD 371.6 million).

· Representing Khonburi Sugar Public Company Limited (KBS) on the establishment of an infrastructure fund, Khonburi Sugar Power Plant Infrastructure Fund (KBSPIF), with an aggregated transaction value of THB 2.8 billion (approximately USD 93 million).

Corporate and M&A

· Representing Stark Corporation PCL. in connection with its cross-border acquisition of 100% of the charter capital of Thipha and Dovina, the largest inbound private sector industrial transactions in Vietnam in the last three years.

· Representing Eka Pak Company Limited, one of the world’s largest producers of rigid-barrier plastic packaging products, in connection with the acquisition of packaging companies in the People’s Republic of China from Printpack US.

Dispute Resolution

· Defending one of the eight subsidiaries of one of the largest wind farms in Southeast Asia with a total capacity of over 700MW and over 10 licenses from EGAT (Electricity Generating Authority of Thailand).

· Representing Advanced Info Service Public Company Limited (AIS) on its claims against a former state enterprise of the Thai government.

· Representing one of the leading telecommunications providers and its subsidiary in Thailand in defending the case, which includes a challenge on a request by the plaintiffs to apply class action procedure to this case concerning more than 41 million users in the amount totalling approximately THB 19 billion (USD 577.6 million).

Restructuring and Insolvency

· Representing a total of 87 savings co-operatives consisting of state-owned enterprises, universities, corporations and hospitals, the largest group of creditors of Thai Airways International Public Company Limited (THAI) in THAI’s business rehabilitation proceeding, holding an aggregate debt of THB 45.65 billion or approximately 65% of the airline’s debenture debts and 13% of the airline’s total debt.

· Representing approximately 400 debenture holders with a total defaulted debt of not less than THB 1 billion, which totals up as a major creditor group and played an important role in objection to the rehabilitation petition of Rich Asia Corporation Public Company Limited, a manufacturer and distributor of structural steel products, on the ground of suspicious financial status of the company.

February 1, 2021February 1, 2021

Interview with… Kudun Sukhumananda, Kudun & Partners

How has your role / involvement in client-facing work changed since setting up your firm?

Established since 2015, my role and the firm’s take have been the same since its inception; to be a legal service provider with a business mind. More than ever since our inception, we delve deep into understanding our client’s business and the root cause of their problems and find solutions to their problems. We still and firmly believe in shifting the traditional paradigm of offering more than just legal advice to our client, balancing our advice with commercial practicality and finding out-of-the-box remedies, and in return gaining the client’s trust and their confidence to continuously engage us for their legal matters.

Our rates are competitive in the market but at the same time, we provide flexibility for clients in providing different pricing options as we understand clients no longer find it justifiable to be paying through the nose for legal services.

Over five years, we have grown from just 4 partners to 11 partners with over 40 associates and 40 business support professionals. Senior lawyers from some of the largest international law firms such as Allen & Overy, Baker McKenzie, Herbert Smith Freehills and Hunton Andrews Kurth have since joined us because they believe in the same vision as Kudun and Partners. With them on board, we have expanded a full-service law firm, catering to the needs of our clients requiring a one-stop service solution provider in different areas of law including capital markets and securitization, corporate and commercial, financing, mergers & acquisitions, dispute resolution, litigation and arbitration, and tax and restructuring.

What are the biggest challenges facing firms in Asia Pacific and specifically in Thailand?

On the macro level, Asia Pacific has long been embroiled in an extended global policy uncertainty and trade distortion due to geopolitics, impacting the way businesses are conducted in Asia Pacific. The biggest challenges currently faced by firms in Asia Pacific — stiff competition and pricing pressure. Due to the tremendous growth in Asia Pacific over the years, led by China, India and Indonesia, global firms have been looking toward this region for expansion. With the influx of businesses pouring into Asia Pacific and specifically in Thailand, we have seen the entrance of global and regional law firms taking advantage of the burgeoning need for legal services. Of recent, we have seen Nishimura and Asahi’s acquisition of SCL Group, Thailand to further expand their presence in the kingdom, causing many law firms focusing on Japanese clients scrambling to keep their clients.

With the COVID19 pandemic turning the world upside down, firms are further strained to keep up with their existing overheads and ensuring profitability. It is no longer easy to be demanding billable hours nor continue to serve only your existing clients. It is becoming critically important to have the ability to expand to cover new blue ocean practices and innovate.

The global pandemic has clearly changed the way in which organizations tend to operate. What impact has this had on your clients and your approach to advising clients?

Based on WorldBank’s latest update, Thailand’s GDP is expected to shrink by at least 5 percent in 2020 and will take more than two years to return to pre-COVID-19 GDP output levels. While many Thai companies are trying hard to sustain their business with hopes of weathering the storm, some are taking a hard stance to re-organize and re-strategize their long terms plans. Some industries which are directly impacted by the pandemic are forcing companies to reconsider their business model. We have been approaching our clients, both existing and new, to reevaluate plans intended for expansion or fund raising, and to consider restructuring their business to be more sustainable and pandemic proof, and to diversify their reliance on a single source of income.

What do you do differently from other firms? What do you think separates you from your competitors?

We treat our clients like partners. We believe we are only successful when our clients have successfully achieved their goals. We ultimately want to solve our client’s problems, not merely just be a legal advisor. We continuously add value to our services, as we draw upon strategic and commercially sound advice from our senior partners in our core practices; Banking and Finance, Capital Markets, Corporate and M&A, Dispute Resolution, and Tax and Restructuring. We believe with every problem, there is an opportunity in disguise and we help find that for our clients.

On the inside, our four mottos are:

· Passion – We are passionate in our client’s business and are focused on providing the best of services and commitment for excellence to our clients.

· Daring – We believe for every problem, there is an opportunity in disguise. We dare to offer the most compelling and innovate solutions for our clients.

· Family – We have a highly collegial working environment. Our senior partners are always available to assist our lawyers whether it is a client-facing or personal matter. We communicate both ways.

· Respect – We respect the needs, motivations and expectations of everyone we work with.

Are clients looking for stability and strategic direction from their law firms – where do you see the firm in three years’ time?

As rules and regulations continue to evolve to adapt to the new normal with increased demand for service excellence, law firms are no longer seen by companies as an outsourced entity providing third party services only when needed, but part of a company. By understanding our client’s business deep down, fostering a relationship beyond business but friendship, we can then only offer the best solutions to them.

Our firm has grown exponentially over the years and while many companies have frozen their headcount or retrenched employees in this situation, we still retained our headcount as we believe our employees are our asset and without the family and friendship we have fostered over the years, we are nothing. In three years’ time, I foresee further growth in headcount, recruiting experts from different practices we are lacking and further expansion in practice areas that we have yet to cover. At this moment, we have just launched our new Startup practice in collaboration with a startup advisor and a financial advisor, aptly called Entrepreneur Advisory Center that primarily focuses on helping Startups achieve their goals through a single point of resource.

February 1, 2021

Interview with… Nigel N. T. Li, Lee and Li

How has your role / involvement in client facing work changed since becoming managing partner/setting up your firm?

Being the Managing Partner of Lee and Li is a tremendous responsibility. He or she is responsible for the sustainable operations of the firm. I assumed the position with great humility because I feel the weight of the firm’s long history, our commitment to our employees’ welfare, and the trust that our clients continue to place in us. Without a doubt, Lee and Li’s capital comes directly from our employees and the clients’ trust. Listening to their needs and feedback on our operations and services is vital to our longevity.

In more concrete terms, my key concerns are driving business growth and setting and achieving strategic goals. We will strive to do that while adhering to the firm’s core values: “We Care, We Serve, We Excel.”

What are the biggest challenges facing firms in Asia Pacific and specifically the market in which you operate in?

The China–U.S. relationship exerts gravitational influence in the Asia Pacific region. The rivalry between the two countries is expected to have a polarizing effect globally, forcing investors and businesses to take sides. And whether the incoming Biden administration will have a stabilizing effect and bridge differences in the international spheres remains to be observed. In these times of change, clients operating in Asia are looking for clarity and experience, and Lee and Li is perfectly positioned and qualified to contribute to their operations.

Furthermore, with the proliferation of online communication tools, including social media, clients now expect a shorter turnaround time. To stay responsive, we are tapping into an arsenal of new tools, including artificial intelligence, to enhance our work.

The global pandemic has clearly changed the way in which organizations tend to operate. What impact has this had on your clients and your approach to advising clients?

Taiwan is one of the handful of countries that have contained the spread of the coronavirus. As a result, we have not experienced the lockdowns or severe business interruptions that are observed elsewhere in the world.

Still, during the peak of the limited outbreak in Taiwan, we discouraged in-person meetings and moved to videoconferencing to interact with clients. We further mandated a strict mask-wearing policy both for ourselves and visiting guests in our office building. Also, we had the foresight to have developed the IT infrastructure over the years that now allows us to work from home (as drills for potential lockdowns) and continue serving clients sans interruption. We are proud to say that clients have felt practically no difference in our service delivery before and during the pandemic. We are fully equipped to interface with our clients by videoconferencing, which is becoming the new normal.

What do you do differently from other firms? What do you think separates you from your competitors?

Lee and Li is the largest law firm in Taiwan and is renowned for its unparalleled legal expertise and unwavering dedication to clients. We are regularly recognized as a first-tier law firm by international institutions and have earned accolades from clients.

Our clients come from a wide range of industries, each with unique needs and intricate issues. The Lee and Li Practice Groups were conceived to leverage the considerable resources of a full-service firm to act like a boutique firm, giving each client the necessary attention and specialized consultation. Our Practice Groups include, among others, M&A, corporate/investment, tax, labor, competition laws, telecommunications/media, banking/capital market, personal data protection, dispute resolution, and patent/technology.

We are especially proud of the proprietary online database established by our Knowledge Management Division in 1980. It houses various types of legal documents and legal advice representing over 50 years’ worth of materials while keeping clients anonymous. It is a precious learning resource as our attorneys can access it quickly to familiarize themselves with an existing client, a previous matter or a given issue. Among the law firms in Taiwan, we may very well have the largest in-house knowledge management team.

Continued education and on-the-job training are vital to boosting individual growth and propelling us into the new decade in an environment of intense competition. Training sessions, both routine and ad hoc, are offered to our associates. They help our people stay current on industry developments and enhance our ability to identify and manage risks associated with clients’ business activities. We also provide workshops and seminars for our clients to impart the latest regulatory changes and risk-assessment skills.

We are as equally dedicated to the rights of the underprivileged and the evolution of Taiwan’s legal system as we are to our clients’ interests. A portion of our revenue is earmarked annually to support our pro bono services and public interest initiatives. Through the Lee and Li Foundation, we hold collegiate moot court competitions on both sides of the Taiwan Strait, carry out Project Citizen on university campuses in Taiwan, offer scholarships to law school students, and host seminars in cooperation with various academic institutions.

Are clients looking for stability and strategic direction from their law firms – where do you see the firm in three years’ time?

We plan for the long term, beyond the next three years. Not seeing far enough into the future could cost us the edge we have over our competitors.

The one constant in business is change, and that change today is accelerated by technological innovations, trade wars, the current pandemic, and regulatory pressures. Adding to that the ever-increasing complexity of deals, and you have a high level of anxiety in the boardrooms. Clients these days want one-stop shopping, and we are ready for that. Take the fastest-growing renewable energy market for example. As the Taiwan government is abandoning nuclear power for renewable energy by offering attractive feed-in tariffs so as to reach the goal of having 20% renewable energy by 2025, it has introduced various measures to attract investment in green energy, mainly onshore/offshore wind farms and solar power systems. Being the pioneer in virtually all new areas of legal practice, we are able to seize the lead in advising on this industry, providing urgently needed services to many international and domestic developers and investors.

Meanwhile, we are readying ourselves to capitalize on opportunities and advances foreseeable from the Internet of Things, including block chain technologies, artificial intelligence and fifth generation mobile network, all of which are expected to reshape the current business models. In fact, we have already immersed ourselves in these emerging tech issues and stand ready to grow with start-up clients.

It is already a cliché to say that AI will revolutionize the way we live, work, and play. But it is true. We are assessing how to utilize AI to enhance our legal services and our delivery of them. In particular, we are fast-tracking the integration of LegalTech and the existing legal service model to better serve our clients.

That is the technical aspect of our work. In terms of human resources, we are hiring professionals from a broad spectrum of specialties. Clients want far more than legal services nowadays. They are also looking for direction to boost their bottom line. To this end, we actively recruit talent from multiple areas of expertise. Moreover, we are busy building a team to provide risk management consultancy in response to the growing need of legal compliance. I predict that this platform, which is slated to go online soon, will be in high demand when it is ultimately unveiled.

As disruptive as the COVID-19 pandemic are the changes in Hong Kong and the China–U.S. dynamic. However, we do not believe the worldwide propagation of the rule of law will be curbed, which brings the rule of law in Asia to the forefront for us. With our professionalism and faith in the rule of law, we will continue to guide our clients through the uncertainties and tumult.

Nigel N. T. Li received LL.M. degrees from Harvard in 1983 and National Taiwan University in 1980 after obtaining his LL.B. degree from Soochow University in 1977. In addition to his role as a practicing attorney specializing in dispute resolution and arbitration, media law, human and civil rights, international litigation and constitutional law, he is also an adjunct professor at both the Graduate School of Law of Soochow University and the Department of Political Science of National Taiwan University. He teaches Constitutional Law, Human Rights, ADR and International Arbitration. As Chairman of the Chinese Arbitration Association, Taipei from 2007 to 2014, Nigel was instrumental in raising the quality of transnational arbitration and enhancing cross-Taiwan Strait and international exchanges. He is also registered as an arbitrator of the Chartered Institute of Arbitrators, the Hong Kong International Arbitration Centre and the China International Economic and Trade Arbitration Commission. Nigel is steadfast in his commitment to pro bono work. He was President of the Taipei Bar Association and sat on the Board of the Judicial Reform Foundation. His determination to preserve human rights and justice drove and sustained him in numerous cases applying for the Grand Justices’ interpretation of the Constitution and his appointment as a Member of the Presidential Advisory Committee on Human Rights. Education LL.M., Harvard (1983) LL.M., National Taiwan University (1980) LL.B., Soochow University (1977) Professional Former President, Taipei Bar Association Adjunct Professor, Graduate School of Law, Soochow University Adjunct Professor, Graduate Institute of Political Science, National Taiwan University Honorary Chairman, Chinese Arbitration Association, Taipei Former President, Chinese (Taiwan) Society of International Law Member, Presidential Advisory Committee on Human Rights

February 1, 2021

Focus on… Doing business in the post-COVID-19 world, Lee and Li

In response to the COVID-19 pandemic, the Taiwan government has loosened certain compliance requirements for companies. For example, Article 170 of the Company Act stipulates that a shareholders meeting should be held at least once a year and should be convened within six months following the end of a company’s fiscal year, unless otherwise approved by the competent authorities for legitimate grounds. Therefore, unless otherwise approved by the competent authorities, a company should convene a shareholders meeting prior to June 30, 2020. Given the COVID-19 pandemic, the competent authority made an announcement in April that the COVID-19 pandemic can be cited as a legitimate reason for postponing a shareholders meeting, in order to prevent possible spread of infection at the meeting. Moreover, for companies that adopted electronic voting, the competent authority also encourages shareholders to exercise their voting power through online platform in order to avoid the risk of infection.

In addition, any foreign investment in Taiwan requires the approval of the Investment Commission (IC). Investors who are natural persons with residency in Taiwan or investors that are juridical persons with a registered branch in Taiwan are not required to appoint an agent for submitting investment applications. With respect to other investors, they should appoint an agent and submit an original legalized Power of Attorney (POA) to the IC. Given the COVID-19 pandemic, the IC allows investors to submit a scanned copy of the POA first with the original to follow thereafter if the legalization process or delivery service is affected by the pandemic.

Tax Relief in Response to COVID-19

Deferral of tax payments or installments

On March 25, 2020, the Ministry of Finance (MOF) announced a special guideline whereby taxpayers (including individuals and enterprises) having financial difficulties due to COVID-19 may defer their tax payments (including individual income tax, house and land transactions income tax, corporate income tax, and so on) for up to one year, or pay their taxes in installments over a period of up to three years, if the requirements are met. The special guidelines apply to tax payments due within the period from January 15, 2020 to June 30, 2021.

VAT Refund

Generally speaking, when input VAT exceeds output VAT, input VAT credits would not be refunded and would be applied to set off any future business tax liabilities (see section 8.5.1 of the Taiwan VAT Act). However, on May 13, 2020, the MOF announced special guidelines allowing the taxpayers to apply for a refund of excess input VAT if the requirements are met. The applicable period for such special guidelines is from January 15, 2020 to June 30, 2021.

Provisional Corporate Income Tax

Generally speaking, a company has to pay provisional corporate Income tax in the ninth month each fiscal year. The provisional tax is equivalent to one-half of the tax payable as shown in the previous year’s corporate income tax return (it could also be assessed based on the company’s taxable income of the first half of the current fiscal year if certain requirements are met). In this regard, on July 31, 2020, the MOF issued a ruling stipulating that a company may apply for provisional corporate income tax exemption if it meets certain requirements. The applicable period for this ruling is also from January 15, 2020 to June 30, 2021.

Employment Matters

Wages, compensation and leave for those under quarantine

To mitigate the impact of COVID-19 on the Taiwan economy, the Act Governing the Prevention, Bailout and Revitalization Packages in Response to COVID-19 Outbreak (the “Bailout Act”) was enacted on February 25, 2020 and amend on April 21, 2020. Except for the penalty provisions which took effect on February 25, 2020, the Bailout Act took effect retrospectively on January 15, 2020 and will expire on June 30, 2021. We summarize the key provisions on employment under the Bailout Act as follows.

Employers should grant “epidemic-prevention leave” to employees who are subject to quarantine at home or in designated facilities as well as those who need to care for their quarantined family members who are unable to take care of themselves; such employees shall not be deemed absent from work or be forced to take their personal leave or other types of leave; instead, they remain eligible for full attendance award and should not be subject to termination or other disadvantageous treatment for taking epidemic-prevention leave. Employers that violate those rules will be subject to a fine ranging from NT$50,000 to NT$1 million.

While employers are not required to provide full pay to employees on epidemic-prevention leave, those employers that provide full-pay epidemic-prevention leave to their employees will enjoy an income tax deduction equivalent to 200% of the salary paid to those employees on epidemic-prevention leave. On the other hand, employees who receive no pay or subsidy during epidemic-prevention leave (either for being quarantined or having to care for a quarantined family member who is unable to take care of himself/herself) may apply for “epidemic-prevention compensation” with the government; provided that the applicants are in full compliance with the quarantine rules.

Reduction of employees’ work hours in response to COVID-19

According to the ruling issued by the Ministry of Labor (MOL) on February 10, 2020, an employer which is affected by the outbreak of COVID-19 and having difficulties in operating its business may reduce work hours through negotiation with its employees under the Guidelines on Negotiation between Employers and Employees on Reducing Work Hours in Response to Economic Impact (“Guidelines”). We summarize the key provisions under the Guidelines as follows:

An employer should negotiate with its employees first and obtain the employees’ written consent to a reduction of work hours and salaries.

Before reducing its employees’ work hours, an employer that intends to reduce work hours through negotiation with its employees should first consider reducing the benefits and bonus of the responsible persons, directors, supervisors, general managers and/or other high-level managers.

An employer may not reduce its employees’ work hours for more than three months, unless an additional consent is obtained from the employees.

For full-time employees who are on a monthly salary, their salary must not be lower than the minimum wage required by the MOL (i.e., NT$23,800 per month before January 1, 2021).

About Lee and Li

February 1, 2021

Interview with… Alexander Bohusch, Luther

How has your role in client facing work changed since setting up your firm?
We entered the Myanmar market shortly after its political opening to assist our clients with an initial focus on legal and regulatory compliance as well as Myanmar corporate and commercial law.
Following decades of political and economic isolation, this segment of Myanmar’s legal market was – and still largely is – characterized by a severe lack of experienced lawyers. Filling this niche allowed us to rapidly grow from an initial team of three to more than 50 European and Myanmar lawyers, tax advisors and consultants. Meanwhile, we are advising not only European investors, but many multinational corporations, international development and non-profit organizations, foreign embassies and Myanmar conglomerates.

After the initial years, during which Myanmar as “the” new frontier market attracted huge interest of foreign investors, political changes and challenges resulted in a slow-down of foreign direct investments. At the same time, we witnessed an increase of M&A and DFI activity. With our experience gained from working with hundreds of clients in Myanmar, we were well-prepared to advise on M&A and finance transactions, with a particular focus on post-transaction integration and assistance, which is often neglected by other firms focusing primarily on transaction work.
Over the past seven years, we have always strived to assist our clients to benefit from Myanmar’s economic liberalization and legal reforms, resulting in many “firsts” in the market. Looking at the trading sector as an example, we have successfully established the first foreign automotive trading company in 2015, incorporated the first wholesale trading company in the Thilawa Special Economic Zone in 2016 and obtained the first foreign retail trading license issued by the Ministry of Commerce in 2019.

In an effort to improve the further development of the country, we have also taken a more active role in Myanmar’s non-profit sector and are working with more than 100 international and domestic non-governmental organizations, charities and foundations.

What are the biggest challenges facing firms in Myanmar?
Myanmar provides numerous challenges for law firms and investors alike. After decades of political and economic isolation, practitioners are confronted with a rapidly changing legal framework comprising of old British laws dating back to colonial times, administrative policies implemented during Myanmar’s isolation and new laws enacted in recent years.
This is not only a difficult for foreign investors and lawyers, but also for Myanmar’s administrative bodies and regulators. Strengthening the Rule of Law has been a frequently-mentioned goal of the new government, but the reform and education of Myanmar’s administration will take time. Meanwhile, practitioners have to acknowledge the fact that statutory law and actual practice do not always match.
As a result, practical on-the-ground experience is often just as relevant as knowledge of the law, and management of expectations is an essential part of a lawyer’s duty to his clients.

The global pandemic has clearly changed the way in which organizations tend to operate. What impact has this had on your clients and your approach to advising clients?
Myanmar has closed its borders in April 2020, and many expatriates have since left the country. This is not only affecting the operation of (foreign) businesses in Myanmar, but also the administration of companies and compliance with statutory requirements.
While the liberalization of the telecommunication sector has enabled Myanmar to “leap-frog” its digital development, few administrative practices have yet been digitalized. Tax payments, stamping of legal instruments, registration of contracts and deeds, or the application of business licenses often require personal attendance at the administrative offices and submission of original signed documents. Covid-19 and the resulting lock-downs have painfully demonstrated the need for further reforms of Myanmar’s administrative procedures.
With Myanmar’s young economy heavily relying on export-oriented industries (particularly textile, agriculture and commodities) and foreign direct investments, all of which are affected by closed borders and lockdowns, the global pandemic will continue to affect the country’s development and international investments for the foreseeable future.

What do you do differently from other firms? What do you think separates you from your competitors?
Most law firms in Myanmar focus on transaction work and foreign inbound investments.
While Luther is providing transaction advice and has been involved in some of the country’s largest finance and M&A transactions, our focus has always been on local expertise, from assisting clients with the structuring of investments, to ongoing legal and regulatory compliance as well advising on Myanmar commercial law. Most law firms have yet to build teams with the necessary local expertise and experience to comprehensively advise on such matters.

This local knowledge also benefits our transaction practice, since we can rely on our experience with more than 500 clients from all industry sectors when advising on regulatory requirements and common pitfalls of doing business in Myanmar, which is particularly relevant during the planning of transactions and the post-transaction integration period.

Are clients looking for stability and strategic direction from their law firms – where do you see the firm in three years’ time?
Luther will continue to grow to meet our clients’ requirements.
With the ongoing reforms of Myanmar’s investment and corporate laws, labor regulations and tax rules, we expect compliance to gain even more importance both for foreign investors and Myanmar conglomerates. With our experienced team of more than 50 lawyers, tax advisors, company secretaries and professionals, we are well prepared to address the future challenges of this rapidly developing market.