Singapore’s regulatory regime for Registered Fund Management Companies (“RFMCs”) is targeting repeal on 1 August 2024. Jek-Aun Long, Partner and Asia Head of Funds at Simmons & Simmons*, summarizes key points for managers to note:
The Monetary Authority of Singapore (“MAS”) has put in place transitional arrangements in the lead up to the abolishment of the RFMC regime. Existing RFMCs who intend to continue with regulated fund management activity must apply to become licensed fund management companies that are restricted to serving accredited and institutional investors (“A/I LFMCs”), by submitting the MAS’ Form 1AR by 30 June 2024.
While no supporting documents are needed at the point of submission, applicants should be prepared to furnish these upon the MAS’ request. The MAS will inform RFMCs of the outcome of their application within a month of submission, and successful applicants will be issued a licence within the week of 29 July 2024 to become A/I LFMCs, with an assets under management cap of S$250 million (“AUM cap”) imposed as a licence condition. Upon licensing, A/I LFMCs may submit a request to the MAS to lift the AUM Cap if needed.
To facilitate the transition, RFMCs applying to become A/I LFMCs during this period will not have to pay any application fee for the corporate entity, nor any fee for the notification of existing representatives. RFMCs should familiarize themselves with the stricter regulatory requirements applicable to LFMCs, as these will take immediate effect upon being issued the licence. Some requirements to note include quarterly regulatory filings and prior approval for appointment of key personnel (such as the CEO, directors and representatives) in the fund management company. The MAS’ website contains resources that provide further guidance, such as the Compliance Toolkit for Approvals, Notifications and Other Regulatory Submissions to MAS for Fund Managers.
Brandon Tee, managing director of BTPLaw (an associate member of COPFA) commented:
“Although the ongoing requirements for RFMCs and A/I LFMCs are not vastly different, some of the differences can have practical implications for transitioning RFMCs, such as having to review and update their compliance manuals for consistency with the A/I LFMC requirements and having to monitor risk-based capital requirements on an ongoing basis. These, together with the higher annual fees payable to the MAS for A/I LFMCs, could result in a high compliance cost for transitioning RFMCs. For RFMCs seeking to transition to an LFMC, the main requirement is for the RFMC to be managing a meaningful amount of third-party AUM in the six months preceding the application to the Monetary Authority of Singapore. Monies committed by investors but not drawn down are generally excluded from the computation of AUM, and as such, RFMCs that manage funds which have raised capital on a capital commitment basis but have yet to draw down on those capital commitments at the time of the application to the Monetary Authority of Singapore should clarify their status with the Monetary Authority of Singapore before submitting the application.”
Eddie Lim, managing director of Credence Consulting Pte Ltd (an associate member of COPFA) added:
“In our experience there are two key aspects that RFMCs looking to convert require the most assistance and expertise: Policy Upgrades and Reporting Obligations. Ensuring that policies relating to Anti-Money Laundering, Technology Risk Management (TRM) and Business Continuity Management (BCM) meet the compliance requirements of the A/I LFMC license is vital. Reporting obligations increasing from annual to quarterly significantly increases the amount of resource required by fund managers.”
*Simmons & Simmons is a founding member of COPFA.
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