If enacted as drafted, Fund Managers meeting all three of the following will be in scope:
- The funds they manage must directly invest in unlisted businesses that have been established or incorporated less than five years as at the time of investment
- The funds must be closed-ended, and
- They must be offered only to investors that are Accredited Investors (A/I) or Institutional Investors (II), as defined.
Licensing process and conditions
First and foremost, MAS promises to make the licensing process more expeditious for VC Managers – currently it can take around 3 months for RFMCs (longer for LFMCs).
Further, a number of the existing licensing conditions are set to disappear, removing many barriers to entry. Two of note are the capital requirements of at least S$250,000, and the need for directors and representatives to have at least five years’ experience in fund management.
MAS also proposes that some of the current ongoing regulatory requirements are disapplied for VC Managers, significantly reducing the cost of compliance:
- The requirement to have in-house compliance capability
- The internal audit requirement
- The need for assets under management to be subject to independent valuation and reporting to investors
- The disclosure and management of conflicts of interest
- Putting in place a risk management framework
- Examination requirements, and
- The submission of annual audited accounts to MAS.
The ongoing requirements that will remain in place
MAS is keen to ensure that Singapore’s VC sector remains clean and sound. To this end, it proposes that the following ongoing requirements for fund managers remain:
- The fit and proper criteria, which apply to directors, representatives, substantial shareholders, the CEO, and the FMC itself
- Certain notifications to the Regulator, including changes in shareholdings
- The anti-money laundering requirements contained in Notice SFA04-N02, and
- An annual declaration to MAS confirming that they continue to meet the criteria to benefit from the VC Regime, along with other data such as AUM.
Further, MAS will retain its powers to inspect VC Managers and to issue directions, for instance to deal with directors who are not fit and proper.
How we can help
Once the regime has been finalised, expected later in 2017, we can help new fund managers to obtain authorisation under the VC Regime and to put in place a compliance framework which meets the expectations of both MAS and of investors.
We can also provide assistance to existing VC FMCs who wish to benefit from the Regime to streamline their compliance frameworks in a way which keeps both MAS and investors happy.