COVER STORY

16
ASIAN LEGAL BUSINESS
SEPTEMBER 2014 COVER STORY
16
ASIAN LEGAL BUSINESS
SEPTEMBER 2014
COVER STORY
17
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A
sia-Pacic M&A activity has picked
up over the last 12 months, with
the number and value of deals
expected to increase further as
the year progresses. In the rst half of 2014,
announced M&A volume in the Asia-Pacic
region in the rst half rose 67 percent from a
year ago to $378 billion, the highest volume
on record for the equivalent period, according
to Thomson Reuters data. The record comes
amid a boom in global M&A as improving
CEO condence, strong cash positions held by
corporations and an increase in risk appetite
is driving a broader mix of mega-deals across
regions and industry sectors.
In China, growth is slowing. If the country
is to meet its GDP growth target of about
7.5 percent in 2014, it will have to take some
steps to speed up the economy in the second
half of the year. However, lawyers note that
outbound M&A, especially in the energy and
resources sectors, remains strong. In addi-
tion, Chinas Internet giants have been on
a buying spree in recent months. Top deals
include Alibaba Groups $1.5 billion acquisi-
tion of digital mapping and navigation rm
AutoNavi Holdings and its $1.2 billion invest-
ment in the merged video platform Youku
Tudou, as well as Tencent Holdings $736
million investment in 58.com Inc.
In North Asia, Japanese and Korean com-
panies are increasing their footprint overseas.
Buoyed by strengthening brand images,
healthy balance sheets and cheap valuations
abroad, these companies are increasingly
looking towards Southeast Asia and Europe.
At the forefront of outbound M&A activity are
the Japanese and South Korean technology
giants, life insurance companies as well as
consumer goods companies.
Southeast Asia remains a high-growth
area. The region has seen a rise in M&A activ-
ity over the past couple of years and a visible
surge in the rst half of 2014. The encourag-
ing growth rates, attractive manufacturing
costs and burgeoning middle class of several
Southeast Asian jurisdictions are likely to
further stimulate dealow in the region.
Meanwhile, India has struggled with slug-
gish growth for several years, with the current
rate below 5 percent. However, the election of
the countrys new Prime Minister, Narendra
Modi, in May could turn things around, law-
yers say. Modi has vowed to revive economic
growth and construct new roads, factories,
power lines, high-speed trains and even 100
new cities. Lawyers and market watchers
are cautiously optimistic about the next 12
months, and expect M&A activity to pick up
slowly but surely.
A signicant upcoming development is
the integration of the 10 members of the
Association of Southeast Asian Nations
( ASEAN) i nto the ASEAN Economi c
Community (AEC). Expected to launch by the
end of 2015, the AEC will create a trading bloc
of more than 600 million people with a GDP
exceeding $5.6 trillion, which would make it
the seventh-largest economy in the world.
Few predict the AEC to be an immediate
game-changer in the region, however, as for-
eign ownership restrictions are not expected
to change substantially in the blocs early
days. Nevertheless, the AEC should provide
structural opportunities to those who know
how to navigate it, particularly in areas such
as nancial services, telecoms and consumer
goods. Real estate will also be a focus, along
with its corollary markets of construction and
building materials.
With an average age of around 30 and a
middle class of 150 million, ASEAN is poised
for sustained economic expansion. This is
fueling increasingly erce competition for
deals that benet from the emerging con-
sumer class.
In addition to the M&A Rankings 2014,
ALB has released its first M&A quarterly
report. The detailed report, the first in a
series of M&A Reviews, provides companies
with the insight and analysis to support their
strategic investment decisions, and also help
law rms identify new business opportunities
and develop their practice areas.
Drawing on the extensi ve data and
research of Thomson Reuter s Deal s
Intelligence, ALBs analysts have identied
the countries and industries which are ben-
eting most from M&A, the primary factors
that will continue to fuel this activity, and
the risks that exist in the way of successfully
securing these opportunities.
Topics covered include:
Surging M&A: Where the growth is happen-
ing, and whats driving it
Volatility in certain markets and the impact
it could have
The ASEAN Economic Community: What it
entails and how you can benet
Best practices
Case studies
Visit the webpage for more information:
http://www.legalbusinessonline.com/news/
alb-launches-quarterly-ma-report/66380
OUR RANKINGS
Our rankings are based on the following
metrics:
Volume, complexity and size of work
Firms visibility and profle in the mar-
ketplace
Presence across Asia and in individual
jurisdictions
Key clients and new client wins
ALB drew results from rm submissions,
Thomson Reuters M&A data, editorial re-
sources and market suggestions to identify
and rank the top rms for M&A in Asia.
COVER STORY
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COVER STORY
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ASIAN LEGAL BUSINESS
SEPTEMBER 2014
I NTERNATI ONAL
Tier 1
Clifford Chance
Freshelds Bruckhaus Deringer
Linklaters
Skadden, Arps, Slate, Meagher & Flom
Weil, Gotshal & Manges
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Allen & Overy
Baker & McKenzie
Cleary Gottlieb Steen & Hamilton
Davis Polk & Wardwell
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Kirkland & Ellis
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Slaughter and May
Sullivan & Cromwell
Paul Hastings
Paul, Weiss, Rifkind, Wharton & Garrison
Tier 3
Ashurst
Bingham McCutchen
Deacons
Debevoise & Plimpton
Dentons
DLA Piper
Mayer Brown JSM
Milbank, Tweed, Hadley & McCloy
Morrison & Foerster
Norton Rose Fulbright
Orrick, Herrington & Sutcliffe
Reed Smith Richards Butler
Ropes & Gray
Sidley Austin
White & Case
Firms to watch
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Berwin Leighton Paisner
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CMS, China
Eversheds
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Squire Patton Boggs
Stephenson Harwood
Vinson & Elkins
Vivien Chan & Co
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Han Kun Law Ofces
Jun He Law Ofces
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AllBright Law Ofces
Commerce & Finance Law Ofces
Global Law Ofce
Jingtian & Gongcheng
Tian Yuan Law Ofces
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Dacheng Law Ofces
DaHui Lawyers
Grandall Law Firm
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Guantao Law Firm
Jincheng Tongda & Neal
Llinks Law Ofces
Firms to watch
AnJie Law Firm
Duan & Duan Law Firm
Liu He Law
Shimin Law Ofces
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Tier 1
Assegaf Hamzah & Partners
Hadiputranto, Hadinoto & Partners
Soemadipradja & Taher
Tier 2
Ali Budiardjo, Nugruho, Reksodiputro
Hiswara Bunjamin & Tandjung
Melli Darsa & Co
Soewito Suhardiman Eddymurthy Kardono
Tier 3
DNC Advocates
Ginting & Reksodiputro
Hanaah Ponggawa & Partners
Lubis Ganie Surowidjojo
Oentoeng Suria & Partners
Susandarini & Partners
Firms to watch
Makarim & Taira S
Makes & Partners
Roosdiono & Partners
REUTERS/Beawiharta
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ASIAN LEGAL BUSINESS
SEPTEMBER 2014
Tier 1
Clifford Chance
Freshelds Bruckhaus Deringer
Linklaters
Simpson Thacher & Bartlett
Skadden, Arps, Slate, Meagher & Flom
Slaughter and May
Weil, Gotshal & Manges
Tier 2
Allen & Overy
Baker & McKenzie
Cleary Gottlieb Steen & Hamilton
Davis Polk & Wardwell
Deacons
Fried, Frank, Harris, Shriver & Jacobson
Herbert Smith Freehills
Hogan Lovells
Kirkland & Ellis
Latham & Watkins
Mayer Brown JSM
Morrison & Foerster
Norton Rose Fulbright
O'Melveny & Myers
Shearman & Sterling
Sullivan & Cromwell
Paul Hastings
Paul, Weiss, Rifkind, Wharton & Garrison
Tier 3
Ashurst
Bingham McCutchen
Debevoise & Plimpton
DLA Piper
King & Wood Mallesons
Milbank, Tweed, Hadley & McCloy
Orrick, Herrington & Sutcliffe
Reed Smith Richards Butler
Ropes & Gray
Sidley Austin
White & Case
Firms to watch
Akin, Gump, Strauss, Hauer & Feld
Berwin Leighton Paisner
Bird & Bird
Eversheds
K&L Gates
Stephenson Harwood
Vinson & Elkins
Vivien Chan & Co
Tier 1
Amarchand & Mangaldas
& Suresh A. Shroff & Co
AZB & Partners
J. Sagar Associates
Khaitan & Co
Luthra & Luthra
Tier 2
Desai & Diwanji
S&R Associates
Talwar, Thakore & Associates
Trilegal
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Economic Laws Practice
HSA Advocates
Kochhar & Co
Majmudar & Partners
Nishith Desai Associates
Phoenix Legal
Rajani, Singhania & Partners
Seth Dua Associates
Vaish Associates
Wadia Ghandy & Co
Firms to watch
A&M Law Ofces
ALMT Legal
Aureus Law Partners
Crawford Bayley & Co
DSK Legal
Finsec Law Advisors
Fox Mandal & Associates
IndusLaw
Mundkur Law Partners
S.H. Bathiya & Associates
COVER STORY
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SEPTEMBER 2014
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Anderson Mori & Tomotsune
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Nagashima Ohno & Tsunematsu
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Oh-Ebashi LPC & Partners
TMI Associates
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Squire Patton Boggs
White & Case
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COVER STORY
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SEPTEMBER 2014
Tier 1
Shearn Delamore & Co
Skrine
Wong & Partners/Baker McKenzie
Zaid Ibrahim & Co
Tier 2
Albar & Partners
Christopher & Lee Ong
Kadir Andri & Partners
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Zul Raque & Partners
Firms to watch
Abdullah Chan & Co
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Chooi & Company
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Zain & Co
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REGULATORY ENVIRONMENT OF ISLAMIC
FINANCIAL SERVICES INDUSTRY, COMPLIANCE &
SHARIAH NON-COMPLIANCE RISK
INCEIF
Assoc Prof Dr Ahcene
Lahsasna
Deputy Director for Centre of
Research and Publication
(603) 7651 4027
hasan@inceif.org
The regulatory environment of Islamic Financial Services
Industry is very dynamic putting higher levels of competition
and cooperation within a soundness and stability of the
nancial system. Regulation through supervision to ensure
Shariah compliance becomes one of the major concerns
of the regulators especially in Malaysia. This fact has been
demonstrated in the Islamic nancial Services Act 2013
where a great emphasise was given to Shariah compliance.
It is understood that failure to comply with Shariah triggers
non-Shariah compliance risk which lead to some negative
implication in nance and governance.
The purpose of regulation and governance in Islamic nance
is carefully specied to ensure that the objectives of Shariah
(Maqasid al Shariah) are met and achieved. This mandate
is the responsibility of the Board of directors, Shariah board
and the senior management of the nancial institution. The
said mandate is collective effort which is clearly mentioned in
various clauses of IFSA 2013. (Malaysia).
Shariah governance and Shariah compliance represent
twin aspects in Islamic nancial regulation and structure,
it can be further said that they are well integrated in the
nancial system, where are promoted to ensure the efciency
of the Islamic nancial systems and operation based on
certain structure and process within a sound and dynamic
regulatory environment. Strict compliance with Shariah
rules and regulation become a challenge for the Islamic
nancial institution (IFI) based on the regulation environment
where the IFI operate. The other challenge is meeting the
Shariah requirement and the economic activities along with
the industry practices, where sometimes the activities are
incompatible to Shariah.
As for the compliance it means to comply with all relevant
laws, rules, regulations, and regulatory guidelines.
Compliance refers to proper supervision and a competent
system of internal controls within an organisation to mitigate
the risk, and to preserve the nancial institutions reputation
as well as safeguarding of its assets and compliance with all
relevant regulatory requirements. Compliance risk can be
dened as the risk of legal or regulatory sanction, material
nancial loss, or loss to reputation a bank may suffer as a
result of its failure to comply with laws, regulations, rules,
related self-regulatory organisation standards, and codes of
conduct applicable to its banking activities.
Failure to comply with all applicable laws, rules, regulations,
and regulatory guidelines will constitute a breach. It may
result not only in the imposition of disciplinary, civil or
criminal sanctions against the IFI, but also in damaging one
of IFIs most important assets, its reputation. In addition, it
may also result in the banking license being suspended by
the regulator.
The compliance operation manual for the IFIs hopes to
achieve the following objectives:
Improve the quality and effectiveness of the compliance
function
Provide uniform practice guide on compliance, which
would serve as a basis for guidance and measurement
of performance of the compliance function by the
compliance ofcer
Facilitate the understanding and correct implementation
of compliance function and procedures
Ensure compliance offcer meet the minimum job
expectation level imposed by the Bank
Minimise the non-compliance to laws, rules, regulations,
Shariah rules and principles, and regulatory guidelines
that may result not only in the imposition of penalties,
rendering the contract null and void, and staff disciplinary
action, but also damage the IFIs reputation
Specifc compliance responsibilities that compliance
operation manual intends to convey is that compliance
should be looked upon as an entire system of the following:
Compliance with laws, rules, regulations, Shariah rules
and principles, regulatory guidelines, and standards
The compliance is promptly informed prompt reporting
of any compliance incidents (including Shariah non-
compliance)
Taking an appropriate action is taken if compliance
incidents occur.
The compliance operation manual normally applies
to compliance ofcer and all staff of the IFI. The scope
of compliance operation manual is one of the general
compliance standards and requirements that govern the
overall working and business within the IFI. It should neither
be interpreted as an all-encompassing manual which that has
exhaustively and conclusively listed out all the laws, rules,
and regulations which that the IFI is subjected to, nor is it the
s a substitute to the regulations. The areas of compliance for
business sector shall cover all regulatory (including Shariah
rules and principles) and statutory requirements.
As for the Shariah non-compliance risk, it is very a very
unique concept in Islamic nance. It is still an emerging
eld of knowledge in the area in Islamic nance literatures.
Shariah non-compliance management is regarded as an
important component in operational risk management that
needs to be observed, mitigated and managed. Shariah non-
compliance risk is the risk that arises from the IFIs failure to
comply with Shariah rules and principles determined by their
Shariah Boards or relevant body in the jurisdiction in which
these institutions operate.
The failure of the IFIs to comply with prescribed Shariah
rules may expose them to high risk which has an impact on
reputation, branding and protability. The IFSB highlighted
that Shariah non-compliance falls within a higher priority
category in relation to other identied risks. Failure of the IFS
to comply with Shariah rules and principles will result the risk
of cancellation of the truncation, and the income generated
shall be considered as illegitimate.
A: INCEIF
Lorong Universiti A,
59100 Kuala Lumpur
T: (603) 7651 4035
F: (603) 7651 4094
W: www.inceif.org
www.mifc.com
COVER STORY
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ASIAN LEGAL BUSINESS
SEPTEMBER 2014
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ASIAN LEGAL BUSINESS
SEPTEMBER 2014
Tier 1
Bae, Kim & Lee
Kim & Chang
Lee & Ko
Shin & Kim
Tier 2
Jipyong
Yoon & Yang
Yulchon
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Kim Chang & Lee
Lee International IP & Law Group
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Baker & McKenzie
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Chen & Lin
Formosa Transnational
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