Investment Funds Update

On November 10, at the launch of LATTICE80, the first innovation space in Singapore dedicated to and designed specifically to support fintech, Tharman Shanmugaratnam announced that the Monetary Authority of Singapore (MAS) is reviewing its regulatory regime for venture capital (VC) managers.

The announcement underscores the Singapore government’s continuing commitment and efforts to build a “Smart Financial Center” and to create a fintech ecosystem where innovation thrives. The MAS is working with the VC industry to grow the funding landscape for startups in Singapore.

As a part of its review, to encourage VC funds and VC fund managers to set up operations in Singapore, the MAS is studying the possibility of enhancing the existing incentives for funds and fund managers. The MAS is also reviewing the regulatory regime for VC managers, whereby it is looking to simplify and shorten the licensing process for new VC managers as well as to exempt them from the business conduct requirements that apply to fund managers in general.

The current key licensing requirements/eligibility criteria for fund managers in Singapore are set out below:

  • Singapore-incorporated company and permanent physical office in Singapore
  • minimum number, residency and experience requirements for directors, chief executive officer, relevant professionals, representatives
  • fit and proper criteria
  • base capital requirements
  • risk-based capital requirements
  • compliance arrangements commensurate with the nature, scale and complexity of business
  • risk management framework to identify, address and monitor the risks associated with customer assets managed
  • internal audit and independent annual audit requirements
  • professional indemnity insurance requirements

Timeline

The MAS will issue a public consultation regarding its proposals in January 2017 and plans to introduce legislative changes by next July. Sidley will follow up with another Update once the public consultation is issued.