Singapore legislation

Regulation 23

of Legal Profession (Professional Conduct) Rules 2015

Regulation 23

Prohibited borrowing transactions

Subregulation 1

Subject to paragraph (2), a legal practitioner or law practice must not do any of the following:

(a)

enter into a prohibited borrowing transaction;

(b)

instruct, procure, provide security for or arrange for an associated party to enter into a prohibited borrowing transaction;

(c)

knowingly allow an associated party to enter into a prohibited borrowing transaction which the legal practitioner or law practice has the power to prevent.

Subregulation 2

Paragraph (1)(a) does not apply to a prohibited borrowing transaction, if —

(a)

both of the following apply:

(i)

every party to the transaction (other than the legal practitioner or law practice) has received independent advice before the transaction was entered into;

(ii)

the legal practitioner or law practice has made full disclosure of each interest of the legal practitioner or law practice in the transaction;

(b)

both of the following apply:

(i)

the legal practitioner or law practice does not act for any client of the legal practitioner or law practice in the transaction;

(ii)

any client of the legal practitioner or law practice that is a party to the transaction is represented, in the transaction, by a legal practitioner from a different law practice or by a different law practice; or

(c)

the Council determines (whether before or after the transaction was entered into) that paragraph (1)(a) does not apply to that particular transaction.

Subregulation 3

Paragraph (1)(b) and (c) does not apply to a prohibited borrowing transaction, if —

(a)

both of the following apply:

(i)

every party to the transaction (other than the legal practitioner or law practice or the associated party) has received independent advice before the transaction was entered into;

(ii)

the legal practitioner or law practice has made full disclosure of each interest of the legal practitioner or law practice, and of the associated party, in the transaction;

(b)

both of the following apply:

(i)

the legal practitioner or law practice does not act for any client of the legal practitioner or law practice in the transaction;

(ii)

(c)

the Council determines (whether before or after the transaction was entered into) that paragraph (1)(b) and (c) does not apply to that particular transaction.

Subregulation 4

In this rule —

Definition

“associated party” means —

(a)

in relation to a legal practitioner —

(i)

any individual who is an immediate family member of —

(A)

the legal practitioner; or

(B)

the sole proprietor, or any partner, director, consultant or employee, of a law practice in which the legal practitioner practises law; or

(ii)

any body corporate, partnership, syndicate, joint venture or trust in which any of the following individuals has any beneficial interest, whether vested or contingent:

(A)

the legal practitioner;

(B)

any individual who is an immediate family member of —

(BA)the legal practitioner; or

(BB)the sole proprietor, or any partner, director, consultant or employee, of a law practice in which the legal practitioner practises law; or

(b)

in relation to a law practice —

(i)

the sole proprietor, or any partner, director, consultant or employee, of the law practice;

(ii)

any immediate family member of the sole proprietor, or any partner, director, consultant or employee, of the law practice; or

(iii)

any body corporate, partnership, syndicate, joint venture or trust in which any of the following has any beneficial interest, whether vested or contingent:

(A)

the sole proprietor, or any partner, director, consultant or employee, of the law practice;

(B)

any immediate family member of the sole proprietor, or any partner, director, consultant or employee, of the law practice;

Definition

“client”, in relation to a legal practitioner or law practice, includes (in addition to a client as defined in section 2(1) of the Act) —

(a)

any person who has an existing lawyer-client relationship with the legal practitioner or law practice;

(b)

any person seeking to invest money through the legal practitioner or law practice; and

(c)

any person approached by or on behalf of the legal practitioner or law practice to invest money through the legal practitioner or law practice;

Definition

“excepted person” means any licensed or authorised bank, finance company or other similar entity the business of which includes lending money to members of the public;

Definition

“full disclosure” means such disclosure in writing by a legal practitioner or law practice as would be necessary for a trustee transaction;

Definition

“independent advice” means advice —

(a)

which was given in relation to a transaction by a legal practitioner or law practice that —

(i)

is not a party to the transaction; and

(ii)

does not represent any associated party in the transaction; and

(b)

which the legal practitioner or law practice has certified in writing that the legal practitioner or law practice has given;

Definition

“prohibited borrowing transaction” means any transaction under or by virtue of which money or valuable security is borrowed (whether directly or indirectly, and whether with or without security) from a client (not being an excepted person) of a legal practitioner or law practice —

(a)

by the legal practitioner or law practice; or

(b)

by an associated party of the legal practitioner or law practice.

Read in full context — Legal Profession (Professional Conduct) Rules 2015 →