Details on the laws that will apply in GMC

The Bhutanese sent some questions to the Gelephu Mindfulness City Legal Team to get more details on the Laws that will apply in the GMC be it the Common Law of Singapore or the Abu Dhabu Global Market (ADGM) laws. Some FAQs sent by the GMC later on have also been incorporated into the answers.

1. What aspects of Singapore Common Law will apply in GMC under ‘GMC Law No. 1’ and how will it facilitate investments and regulation?

GMC: At present, GMC will incorporate Singapore common law as well as specific Singapore legislation relating to company incorporation, employment and taxation. These laws will create a strong and conducive environment for businesses to operate in, as Singapore law is regarded as well-established, clear and predictable.

By adopting Singapore common law and selected Singapore and Abu Dhabu Global Market (ADGM) legislation, and adapting these laws for GMC, GMC will provide a stable, predictable, and well-recognised legal framework for businesses to operate.

The Application of Laws Act 2024 is an Act of the Gelephu Mindfulness City Authority (GMCA) that declares the applicable laws in the GMC Special Administrative Region (GMC) and for purposes connected therewith.

The Singapore enactments applying in GMC, as specified in Schedule A are: 1. Companies Act 1967 2. Contracts (Rights of Third Parties) Act 2007 3. Customs Act 1960 4. Electronic Transactions Act 2010 5. Employment Act 1968 6. Employment of Foreign Manpower Act 1990 7. Goods and Services Tax Act 1993 8. Immigration Act 1959 9. Income Tax Act 1947 10. Insolvency, Restructuring and Dissolution Act 2018 11. Interpretation Act 1965 12. Official Secrets Act 1935 13. Personal Data Protection Act 2012 14. Property Tax Act 1960 15. Sale of Goods Act 1979 16. Spam Control Act 2007 17. Stamp Duties Act 1929 18. Unfair Contract Terms Act 1977.

2.  What aspects of Abu Dhabu Global Market (ADGM) laws will apply in GMC and what about any differences with Singapore Common Law?

GMC: ADGM laws will govern the regulation of financial institutions and the provision of financial services and virtual asset activities.

ADGM financial services laws specified in Schedule B include the Financial Services and Markets Regulations 2015 and related rules, such as the Anti-Money Laundering and Sanctions Rules and Guidance, Captive Insurance Business Rules, Conduct of Business Rulebook, and others.

In case of a conflict between a Singapore enactment and an Abu Dhabi Global Market financial services law, the Singapore enactment shall prevail, unless otherwise determined by GMCA.

3. How have the above two been merged and does it mean Singapore financial laws will not apply in GMC?

GMC: Companies looking to provide financial services in GMC will be evaluated based on ADGM laws regulating financial services and virtual asset activities, as adopted and adapted by GMC.     

Singapore financial services laws will not apply in GMC.

4. Please provide specific examples of how the combination of the above two legal jurisdictions may be implemented in GMC for a foreign company?

GMC: A foreign company seeking to conduct financial services or virtual asset activities in the GMC will have to apply under GMC financial laws (based on the ADGM financial laws) to obtain a licence to provide such financial services. It will also have to apply to be incorporated in GMC under GMC Company Law (which adopts and adapts Singapore Company Law).

5. Both Singapore Common Law and ADGM are grounded in English Common Law. Please explain why English Common Law is well-regarded by investors and how will it help GMC?

GMC: In general, the strong reliance on precedents in common law provides a clear and predictable legal environment for businesses to operate in, and also simplifies cross-border transactions as international partners are already familiar with common law.

6.      When will ‘GMC Law No 1’ be applied and does GMC have the necessary legal expertise and infrastructure to implement the law? Are there courts established for this purpose already? Who will administer the laws in the meantime and who will guide the application of laws in GMC and can the laws be modified?

GMC: The laws took effect from 26 December 2024. As the laws are already based on existing legal frameworks, investors will be familiar with these laws. GMCA will also be issuing guidance on GMC laws. The GMC Court will be established in due course.

Until the GMCA establishes separate executive and judicial bodies, all executive and judicial functions arising from the Act shall be carried out by GMCA or its authorized persons or bodies.

GMCA has the power to issue guidance on the application of laws in the GMC, including: 1. The general principles of interpretation applicable to any provision of the Act or GMC laws 2. The interpretation or resolution of any conflict between laws applied in the GMC 3. The specific effect of any provision of the Act or GMC laws 4. Giving effect to matters set out in Article 7 of the Act 5. Any other matter that the GMCA considers desirable to give guidance on.

The GMCA may modify or substitute provisions of laws applied in GMC, where it considers it necessary or expedient for the purpose of removing any difficulty or conflict, whether arising from local conditions or circumstances or otherwise.

7. Have potential investors shown interest  in the above laws and whether it influences their decision to invest in GMC?

GMC: Yes, having strong reliance on precedents in common law is helpful to potential investors as it provides a clear and predictable legal environment for businesses to operate in, and also simplifies cross-border transactions as international partners are already familiar with common law.

8.     It was mentioned earlier that major investors can take part in drafting regulations. How will GMC Law No 1 fit in that scenario?

GMC: While GMC aims to foster a highly investor-friendly environment, major investors will not have authority to draft regulations. GMC however promotes a collaborative process designed to ensure that investors can provide their input, feedback, and insights on the business landscape and operational frameworks. This participatory model will then help shape policies that facilitate business growth, but does not extend to regulatory drafting or altering core legal frameworks.

9.  How does ‘GMC Law No 1’ provide the governance framework for the Special Administration Region?

GMC: The Application of Laws Act sets the foundation for the establishment of the legal and governance framework for GMC. With the adoption of Singapore common law, investors will have familiarity with the legal system in GMC, and find it attractive to invest in GMC.

10. What are future laws and agreements that could be introduced in GMC?

GMC: Future laws and agreements could cover international trade and taxation agreements to make investing in GMC even more attractive. GMCA will continually review laws and agreements that would be beneficial for investors. More information will be provided at an appropriate time.