How Corporate Lawyers Can Help SMEs in Singapore
Singapore is a reputable business hub and a world-leading financial centre. One of the main reasons is a fair and stringent legal framework – with strong laws and fair courts investors and entrepreneurs alike flock to Singapore to start their businesses, reassured that our excellent legal system provides adequate protection for their investments.
But a rigorous legal framework is not without its difficulties – how can small businesses in Singapore navigate the web of legislation and emerge unscathed and on top? The answer: having a great corporate lawyer by your side makes a world of difference.
This article will cover:
How to Find a Good Corporate Lawyer in Singapore
Here are some factors to consider before you make your selection:
- Experience: Ideally, you will want to find a lawyer who understands your business and has had experience dealing with other firms in the same field. The lawyer should also have expertise in the special regulatory requirements of your industry.
- Specialisation: Some corporate lawyers devote themselves to practising in a specific field (e.g. project financing, banking or mergers and acquisitions). Others handle a broad range of matters in multiple fields. Which lawyer you choose depends on whether you require advice in a one-off matter, or general recurring advice in the course of your business dealings across a range of issues.
- Resourcefulness: No lawyer can be an expert in every area of law – but a great lawyer can find an answer to any issue he is met with and become knowledgeable in that field within a short period of time.
- Awards and appointments: Legal industry publications, such as Legal 500 and Asian Legal Business, regularly publish reports and rankings, highlighting the best lawyers in their respective fields. Hiring the best corporate lawyer in a niche area may cost a bomb but could be worth every penny. A lawyer’s CV can reveal a fair bit – appointments such as board directorship, review panel membership, or teaching tenures, evince industry-leading competency and experience in their areas of practice.
- Referrals: Great referrals from their past clients are the best form of quality assurance.
- Timeliness and responsiveness: It is not unheard of that some lawyers take on more cases than they can handle. If your corporate lawyer takes days to answer your emails and has a schedule packed two weeks in advance, it may be time to consider a change of lawyers.
How to Find an Affordable Corporate Lawyer in Singapore
The legal fees charged by corporate lawyers depend on a variety of factors, such as:
- The experience of the lawyer (whether you are working with a junior associate, senior partner or even a senior counsel); and
- Whether you are dealing with a big firm or a small legal practice.
The size of a law firm is judged by the headcount of its lawyers. Most firms publish a list of their practitioners on their webpage. The bigger law firms tend to charge premiums over their smaller rivals.
Engaging the services of a small law practice may be a good idea, especially for SMEs. This is because some lawyers (including many outstanding ones) leave the big firms after accumulating years of experience to set up their own practices. These talents can often match their big-firm counterparts in terms of competency and experience, and may even do a better job in the way of cost-effectiveness.
Generally speaking, smaller firms also tend to be more flexible in fee payments and may be more open to negotiations and informal arrangements.
Some law firms provide retainer services for a stipulated period (e.g. one year) and advise their clients on any legal issues that crop up within this period. Engaging a law firm on a retainer basis is an economical alternative to maintaining a legal department or hiring an in-house counsel for your business.
A law firm may offer different types of retainer packages. Some packages may include regular telephone consultations; others may include the review of basic recurring legal documentation used by the client.
Before engaging a corporate lawyer, find out how the lawyer charges – be it hourly billing, flat fees or retainer packages. It is a good idea to shop around and compare prices. Remember to ask in advance whether there will be a charge for the first consultation. Do note that the Law Society of Singapore can also hear complaints of unfair charging practices by lawyers in Singapore.
What Services Can Corporate Lawyers Provide?
General contracts for businesses
Most corporate lawyers worth their salt would be familiar with the usages of the following types of contracts:
- Advisor agreements
- Distribution agreements
- Employment agreements
- Founders agreements
- Independent contractor agreements
- Joint venture agreements
- Company constitutions
- Non-disclosure agreements
- Partnership agreements
- Sale and purchase of shares and businesses
- Shareholder agreements
Contracts for web service providers
Contracts for specialised services
- IT services agreements
- Franchise agreements
- Licence agreements
- Reseller agreements
- Sale and purchase agreements
- Website or application development agreements
The main legislation in Singapore dealing with corporate governance is the Companies Act. The Companies Act spells out provisions dealing with corporate structures, disclosure requirements, reporting and compliance requirements of companies in Singapore, as well as the duties and responsibilities of directors, senior management, auditors and company secretaries.
Additionally, other legislative enactments may stipulate additional corporate governance regulations for specific industries. Examples include the Financial Advisers Act, the Insurance Act, the Workplace Safety and Health Act and the Factories Act.
Corporate lawyers will be familiar with, and will be able to advise on, the various compliance requirements that your business has to adhere to when conducting operations in Singapore.
Where a business establishes a presence in a foreign country, or otherwise enters into transactions with foreign entities, foreign laws may come into play. Foreign taxes, fundraising, securities holding and other assorted legal issues may surface. Where disagreements arise, cross-border dispute resolution becomes essential.
A well-drafted contract provided by a corporate lawyer can spell out a dispute resolution mechanism (such as international arbitration) that adequately protects the interests of your business.
Bad debts are one of the most frequent causes of cash flow problems in SMEs. Debt collection firms are one option you could pursue. But there is a limit to their effectiveness – debt collectors are limited to using pressure or negotiation tactics that are legal. A crafty debtor may be particularly thick-skinned, or especially adept at staying uncontactable.
Legal recourse may sometimes provide a firmer solution to your bad debts. The Small Claims Tribunals (SCT) may be explored if the debt is small and if your claim falls within its jurisdiction. If the SCT cannot hear your claim, you may have to hire a lawyer to pursue your claims in the civil courts. Where a debt owed to your business goes unpaid, a lawyer can issue a letter of demand, and subsequently commence legal proceedings on your behalf to recover the debt.
Read our other article to learn more on whether you should hire a debt collector or a debt recovery lawyer to help recover your debts.
The Companies Act and the common law imposes stringent duties on the conduct of a director in a Singapore company.
For instance, a director owes fiduciary duties to act in the best interest of a company. Some transactions between the company and the director are also forbidden unless authorisation from the shareholders is obtained.
A corporate lawyer can provide crucial advice to help directors comply with these duties, or render assistance if you suspect a breach of director’s duties in your business.
You can also read more on directors’ duties in Singapore in our other article.
Disputes can arise in a wide variety of matters, such as debt recovery, breach of contract or even shareholder disagreements. In commercial disputes, legal representation could be sought to either initiate or defend legal claims.
In addition to commercial litigation in the Singapore courts, corporate lawyers can also provide advice and representation in matters involving arbitration and mediation.
Financing and fund-raising
There are several ways a company can raise funds – via bank loans, venture capital, private equity, the capital markets and the debt markets. For instance, in a bank loan facility, the corporate lawyer can offer legal advice on the terms of the loan, in the form of an opinion letter.
To issue securities, compliance with various legislation, such as the Securities and Futures Act, is also essential. Corporate lawyers can guide the company through the thicket of regulation and structure a transaction in a compliant, tax-efficient manner.
Incorporation and corporate secretarial services
Before incorporation, issues such as shareholders’ rights, share allotment, capital contribution, and management rights need to be spelt out clearly. Constitutional articles, such as the company constitution, can apportion these rights clearly. Shareholder and founders agreements can also achieve similar objectives.
After incorporation, an experienced corporate lawyer can be appointed as a company secretary to manage the secretarial matters of the company. For more complex corporate structures, legal advisers may be appointed to offer advice on incorporation in overseas jurisdictions for tax benefits and the like.
IP lawyers offer expert advice in the drafting and filing of trademark applications, legal representation in trademark and copyright disputes, and contractual matters involving licensing, franchising, and IP transfers, to name a few examples.
Mergers and acquisitions
Corporate lawyers are essential in the advising of sales and purchases of shares or businesses. In terms of due diligence, financing, securities, documentation, and legislative compliance, legal professionals provide vital value to ensure the smooth operation of M&A transactions.
The following are examples of some legislation that SMEs in Singapore ought to be familiar with in the course of their business dealings:
- Consumer Protection (Fair Trading) Act (CPFTA)
- Personal Data Protection Act (PDPA)
- Unfair Contract Terms Act (UCTA)
The PDPA imposes data protection obligations on Singapore organisations handling individual personal data, the contravention of which invites severe sanctions. Legal advisers may be appointed to guide an organisation in the creation of an internal data protection policy. Read more in our essential PDPA compliance guide.
The CPFTA contains provisions, such as the lemon law regulations, designed to protect consumer interest in Singapore. The UCTA contains provisions limiting the use of unfair contractual terms in Singapore.
For businesses with physical premises, rental is usually the biggest component of their fixed costs and overheads. Accordingly, the tenancy agreement (and in particular, the termination clauses) should be carefully scrutinised and negotiated to safeguard the interest of the business.
Winding up, judicial management and schemes of arrangement
When a business meets with financial difficulties, the first port of call may be to appoint a consultancy firm proficient in turnaround management.
- A scheme of arrangement is a court-sanctioned process to rearrange the rights of creditors and members of a company and give the ailing company a second chance at recovery.
- Judicial management is the appointment of a judicial manager to manage the company’s affairs in the interim and to provide a proposal to rehabilitate the company.
There will be occasions when a business’ demise is inevitable. If so, the winding up process may be commenced to terminate the business’ operations and realise its assets to pay off the various creditors and members.
Corporate insolvency lawyers can advise on these various matters when a business is facing financial difficulties. Where a creditor company is pursuing a debt against a failing business, the legal adviser can also represent the creditor against the debtor undergoing insolvency processes.
Contact Experienced Corporate Lawyers in Singapore
At SingaporeLegalAdvice, we offer a Find a Lawyer service for you to contact up to five corporate lawyers at once. After liaising with these lawyers and obtaining their quotes, you can decide which corporate lawyer has the expertise for dealing with your corporate matter and at a suitable price point.
Find a Lawyer is free to use, so get in touch with our experienced corporate lawyers today.