Regulations on investment vehicles in Singapore.

Regulations on investment vehicles in Singapore

Singapore has strict guidelines and regulations regarding its financial sector industry, such as the Securities and Futures Act and Securities and Futures Regulations. These regulations may also apply to investment vehicles. In the following guide, we have listed some regulations on investment vehicles in Singapore.

Obtain a capital markets services license

An investment vehicle in Singapore must hold a capital markets services (CMS) license to engage in activities under the Securities and Futures Act.

Activities under the Act include:

  • Advising on corporate finance
  • Fund management
  • Real estate investment trust management
  • Product financing
  • Dealing in capital markets products
  • Providing credit rating services
  • Providing custodial services for securities

Companies applying for the CMS license must also appoint the following individuals:

  • Minimum of two directors, at least one director is a resident in Singapore
  • Chief executive officer with at least 10 years of experience and is a resident in Singapore
  • Minimum of two full-time Singapore-based individuals for each regulated activity, except REIT management. For REIT management, individuals are required to be appointed as representatives under the Securities and Futures Act.

To apply for the CMS license, you should submit form 1, but if your company already has a CMS license for a certain activity and your company wants to add another activity to the CMS license, you should submit form 5 under the Securities and Futures Regulations.

A non-refundable application fee of SGD 1,000 should be paid to the MAS when submitting the application.

Appoint a fund manager

Investment vehicles in Singapore must appoint a fund manager who is either:

  • A registered fund management company, inability to fund managers who carry on business in fund management for not more than 30 qualified investors and the total assets under management do not exceed SGD 250 million.
  • A licensed fund management company that holds a capital markets services license for fund management under the Securities and Futures Act.

Registered and licensed fund management company

According to the Monetary Authority of Singapore (MAS), when applying to be a registered fund management company or a licensed fund management company, the MAS takes into account the following factors:

  • Ability to meet the minimum financial requirements described under the Securities and Futures Act
  • Business models/plans and projects and the associated risks
  • Strength of internal risk management and compliance systems
  • Track record and fund management expertise of the applicant and its parent company or major shareholders
  • Fitness and propriety of the applicant, its shareholders and directors

The financial requirements for a registered fund management company as a minimum capital of SGD 250,000 and for the licensed fund management company in minimum capital of SGD 500,000 or higher.

To apply for the licensed fund management company, file and submit form 1A with a non-refundable application fee of SGD 1,000 and to register for the registered fund management company, submit form 22A. Both forms can be submitted online through the Corporate e-Lodgement System.

The processing time may take no more than four months to review and process the application the applicant qualifies, and the application is complete. In cases where information is not complete or correct, the MAS may take longer to process the application.

Conclusion

It is important that companies comply with regulations set out by the government to steer away from any trouble with the officials. Click here to read our guide on popular investment vehicles in Singapore.

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