Mr Deputy Speaker
Retrospective legislation, and the principle of certainty
Passing legislation which has or is seen to have retrospective effect must not be taken lightly. This is especially so when it adversely affects the rights and interests of persons, and has the potential to hurt Singapore’s reputation for certainty, stability and predictability of our commercial laws. It should not be taken lightly, and the Workers’ Party’s position when the Constitution was amended a year ago as a precautionary measure reflects our general concern over retrospective amendments.
In this case, while it is true that MAS approval of Allianz’s proposed acquisition of 51% of Income remains pending, we note that the transaction had previously been signed and announced, albeit conditional upon receiving regulatory approval. It can thus be seen to be a ‘live’ transaction.
Thus, I believe that there is a risk that the amendments proposed in this Bill – along with their urgent nature – would be seen to be retrospective by players in our corporate finance landscape. For this, I specifically refer to Clause 2 of the Bill which contains the proposed section 33A(9) of the act, which states that QUOTE “this section also applies to a relevant application received by the Authority before the commencement of the Insurance (Amendment) Act 2024, that is still pending as of that date.” UNQUOTE
Even if some were to argue that this Bill’s acts do not fall within the realm of having retrospective effect, there is a second principle of legal and regulatory certainty in the context of Singapore’s corporate finance landscape to consider. This was alluded to by members Liang Eng Hwa and Joan Pereira in their speeches. Having worked on a number of highly complex billion dollar M&A and structured finance transactions across multiple jurisdictions spanning the globe, I know how invaluable it is to have certainty. In such deals, there are many moving parts and a number of complicated regulatory regimes ranging from takeover codes, listing rules, merger control, catch-all laws governing national interest and also financial rules for lawyers and other financial advisors to consider. It is also why it is also standard practice for parties to engage with regulators early on in the preparatory process, long before any public announcements are made, so that parties can understand potential impediments to their transactions, assess the risk of a regulator blocking the transaction, and to address these through their structuring of the transaction – including on occasion, giving irrevocable and legally-binding undertakings to do or not do certain things for a fixed time period post-completion. This is also the case here in Singapore, and my Sengkang colleague Jamus Lim has also covered this.
It is also fair that we ask whether the amendments proposed in the Bill, especially under a certificate of Urgency (which was last used under Covid) are in fact strictly necessary to provide the Government – through MAS – the legal power to block the Allianz acquisition of Income. After all, according to the offering circular, the long-stop date was nine months after the announcement date, which would have taken us until some time next year.
MAS’ powers are contained in sections 26 and 27 of the Insurance Act 1966. These sections provide that MAS may approve an application to obtain effective control or become a substantial shareholder of a licensed insurance company if MAS is satisfied that, first, the applicant is a fit and proper person, and second, that having regard to the likely influence of the person, the licensed insurer concerned will or will continue to conduct its business prudently and comply with the provisions of this Act.
The Act also does not say that MAS cannot take into account other factors relevant to its mission, which would include the overall health of Singapore’s financial sector as a whole for example – including the provision of insurance services to the public – and whether the people’s interests in having access to affordable and reliable insurance policies and products are served.
Additionally, I note that although Income is said to have a “social mission”, it is also clear that its mission is to provide insurance, which is most definitely a financial service. Thus, whether Income – in whatever form it morphs into in the future – conducts its financial services business in a manner that benefits the people of Singapore on the whole is something that MAS can already take into account in considering whether to give approval under Sections 26 and 27 of the existing Insurance Act.
Therefore I hope that the Government can address legitimate concerns raised about how this Bill and its passage may be perceived as harmful retrospective legislation with its attendant negative impact on our reputation as a financial and corporate hub with certainty over laws and regulations. How specifically does the Government hope to address concerns that future parties may have about the risk that their “live” transactions may suddenly find themselves blocked by urgent, retrospective legislation being passed in the middle of a live transaction, after an announcement is made in accordance with applicable listing rules and takeover codes, and pending regulatory approvals?
I would now like to turn to some questions arising from the proposed Allianz-Income transaction which provided the impetus for this Bill. Some of the points will be matters that fall within the domain of MCCY, but I believe it is impossible to disentangle MCCY’s role in this matter from MAS’s role as the approving authority for the transaction. Indeed, the very purpose of the Bill is to enable MAS to consider the view of the MCCY Minister.
The S$2 billion surplus
First, from the MCCY Minister’s statement, it is evident that one important consideration behind the Government’s decision to block the transaction as currently structured was based on representations that Income made at the time of its corporatisation as to why it should be allowed to keep a substantial surplus of some S$2 billion.
Would the Government thus clarify four points about this.
First, the Retention of Surplus Due to Legal Form Change: Given that Income was not being dissolved but merely changing its legal structure, would this fact alone have been sufficient for MCCY to grant Income’s request to keep the surplus?
Second, the Justification Provided by Income: If the above reason wasn’t sufficient, what specific representations did Income make to MCCY that justified allowing it to retain the surplus? Did Income detail any new business lines or initiatives it planned to pursue that would require significant capital, thereby justifying the need to keep the surplus?
Third, the Link Between Surplus and Social Mission: Was there an understanding between MCCY and Income that retaining the S$2 billion surplus was tied to Income’s commitment to its social mission? If so, could the Government provide more details on this agreement and how the surplus was intended to support that mission?
Fourth, Future Restrictions on Returning Surplus to Shareholders: Can the Government clarify if its position is that because of the circumstances under which Income was originally allowed to keep the surplus, the company is now restricted indefinitely from returning any part of that surplus to its shareholders?
What is Income’s social mission?
The philosophical question underlying these 4 specific questions is: What, really, is Income’s social mission? During Monday’s Ministerial Statement, the MCCY Minister also referred to a lack of assurance that Income would preserve its social mission post-completion should Allianz become its majority shareholder. Could the Government elaborate on this and articulate again what it sees as Income’s social mission now, and going forward into the future? After all, landscapes have changed dramatically since its founding over 50 years ago in 1970.
Specifically, would Income’s social mission lie in the area of life insurance policies, or whether other areas such as health insurance may be more important and the focus of a socially-oriented Income. It is important that this issue be viewed looking at the overall big picture. We can point to Allianz’s offer document which mentions that it would continue to honour Income’s participation in national level insurance programmes, continuing its charity commitments, providing low-cost schemes to union members, pledging $100 million over 10 years from 2021 to promote social mobility and support the well-being of seniors as worthy moves to be sure. However, if we leave the question of what is ‘social mission’ unanswered, it risks presenting these specific (and perhaps narrow) matters as central, while missing the wider picture of how Income is fundamentally able to fulfil its social mission as an insurer.
WP position
To conclude, the Workers’ Party supports the Government’s blocking of the proposed acquisition in its current form on public interest grounds, and based on publicly-available information, especially given the concerns that my colleagues and I had raised in this Chamber in August. Therefore, we will not be rejecting the Bill. However, we believe that the downsides to whether this Bill will be seen to be rushed and retrospective legislation-making, and this assault on legal and regulatory certainty that changing legislation in the middle of a major, live transaction, means that we would need to register our abstention on this Bill.