With its strong legal system and favorable tax regime, Singapore has become an attractive jurisdiction for investors looking to set up a fund. The country offers various advantages to those wishing to establish a fund, including a wide range of financial services and infrastructure, access to world-class capital markets, and a secure regulatory framework that provides investors with confidence in their investment.
Professional services firms play an important role in helping investors navigate the complex process of starting a fund in Singapore. Such firms are able to provide advice on the legal and regulatory requirements, as well as assist with the establishment of the operational infrastructure needed for the successful launch of a fund. In addition, they can provide ongoing support to ensure ongoing compliance with regulations and other relevant legislation.
For those looking to set up a fund in Singapore, engaging professional services is essential in order to ensure that all necessary steps are taken and that the venture is successful from inception through to completion. This article will provide an overview of the key considerations involved in setting up a fund in Singapore and outline how professional services firms can help ensure that all related processes are completed efficiently and effectively.
Establishing A Fund Management Company: Overview
Establishing a fund management company in Singapore requires a clear understanding of the local regulatory framework. The Monetary Authority of Singapore (MAS) is the primary regulator for such activities, and it has established certain requirements that must be met before a fund may operate in Singapore. In addition to MAS regulations, the fund manager must also ensure compliance with other legal requirements related to its chosen fund vehicle and its investors.
The first step for setting up a fund management company is to determine the appropriate fund vehicle or legal entity through which to operate. The most commonly used vehicles are companies limited by guarantee and limited partnerships; however, there are several other options available as well. Each type of vehicle has different tax implications and should be carefully considered based on an individual’s goals and objectives.
Once the appropriate vehicle has been selected, the next step is to identify qualified investors who can invest in the fund. Qualified investors must meet certain criteria as specified by MAS, including financial sophistication and net worth requirements. The fund manager should also ensure that all due diligence requirements are met in order to protect both the investors’ interests and those of the fund itself.
Due to Singapore’s robust regulatory environment, setting up a successful fund management company requires adherence to stringent rules and regulations while taking into account both local and global best practices. It is important for individuals interested in entering this field to seek professional advice when navigating through this process in order to maximize success potential while minimizing risk.
Options For Setting Up A Fund In Singapore
Setting up a fund in Singapore offers a number of options for fund managers and investors. In this section, we will outline the various options available to establish a fund in Singapore.
The most popular option is to set up a Fund Management Company (FMC). An FMC is an entity that is licensed by the Monetary Authority of Singapore (MAS) to carry out fund management activities. It must comply with MAS’s criteria on capital adequacy, corporate governance, liquidity and other requirements.
Another option is to set up a Variable Capital Company (VCC). A VCC is a company incorporated under the Companies Act that provides flexibility in managing investments as its capital structure can be adjusted without having to amend its constitutional documents. This makes it attractive for private funds and offshore funds as they are able to manage their funds more efficiently.
Lastly, there are also other types of funds such as Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) that can be established in Singapore. ETFs are funds that are listed on an exchange and track an index or benchmark while REITs are investments that allow investors to invest in real estate assets such as shopping malls, offices or industrial buildings through pooled investments.
These options provide fund managers with flexibility when establishing their own funds in Singapore and can help them achieve their investment objectives effectively. With the wide range of products available, investors have access to different types of funds which enable them to diversify their portfolios more easily.
| Option | Description | Advantages |
|---|---|---|
| FMC | Fund Management Company licensed by MAS | Compliance with MAS criteria; Corporate Governance; Liquidity |
| VCC | Variable Capital Company incorporated under Companies Act | Flexible capital structure; Private/Offshore Funds; Efficient management |
| ETFs | Exchange Traded Funds listed on an exchange | Track index/benchmark; Diversified portfolios easily accessible |
| REITs | Real Estate Investment Trusts pooled investments in real estate assets | Investment into real estate assets; Diversified portfolio easily accessible |
Requirements To Set Up A Fund Management Company In Singapore
Establishing a fund management company in Singapore requires a combination of legal, financial and operational expertise. Companies wishing to become part of the fund management industry must meet certain standards set out by the Monetary Authority of Singapore (MAS) and observe requirements such as obtaining a Capital Markets Services Licence (CMSL). Beyond this, companies should have an established business plan that outlines the services they will provide, as well as their goals and objectives.
To ensure that the fund management business is successful, companies must first determine if their products or services qualify for tax exemptions. This is something that should be discussed with the relevant authorities before any operations are conducted. Additionally, businesses must also consider how they will capitalise on opportunities to differentiate themselves in the market. This could involve recruiting experienced personnel, developing innovative products or services or building relationships with institutional investors.
Firms wishing to enter into the fund management space must also consider how they will manage risk and compliance in order to remain compliant with all applicable regulatory frameworks. As such, it is advisable to engage professional advisors who can help establish effective internal control systems and review existing policies and procedures in light of current regulations. Ultimately, these considerations are essential for any organisation aiming to enter the fund management industry in Singapore.
Benefits Of Establishing A Singapore Fund Management Company
Establishing a fund management company in Singapore provides numerous advantages to both local and foreign firms. By having a presence in the city-state, companies can benefit from a world-class infrastructure and business environment that are conducive for fund operations. In addition, Singapore’s robust legal and regulatory framework is attractive to investors, as it offers protection and assurance of their investments.
In particular, Singapore is an ideal location for setting up hedge funds, venture capital funds, private equity funds and other similar products. The country has developed an extensive network of professional services providers such as fund administrators who help to facilitate the launch of these kinds of funds. As such, these entities are able to access the vast pool of expertise needed to run a successful fund management business in Singapore.
Furthermore, Singapore also stands out among other jurisdictions due to its tax incentives which are designed to attract foreign investments into the country. By doing so, companies can enjoy competitively low corporate tax rates while maintaining full ownership over their assets. This makes Singapore an attractive option for international investors looking for a reliable jurisdiction when setting up their own funds. Thus, by taking advantage of this favourable environment, businesses can safeguard their investments and gain better returns in the process.
Applying For A Capital Markets Services Licence Or Registration
Establishing a fund in Singapore requires submitting an application for a Capital Markets Services (CMS) licence or registration. Depending on the fund structure, mutual funds, unit trusts and other investment products require either a CMS licence or registration. The application process includes submitting the required documents and developing an adequate business plan. The Monetary Authority of Singapore (MAS) will assess the applicant’s financial knowledge, operational capabilities, and compliance with applicable laws.
The MAS has specific requirements for applicants to be eligible for a CMS licence or registration. These include having a sound capital base and possessing sufficient experience in managing investment products. Additionally, applicants must demonstrate compliance capabilities to ensure that all applicable rules and regulations are followed. The MAS may also request additional information from potential applicants at any stage of the application process.
Successful applicants must be able to provide comprehensive services that cater to both retail and institutional investors. They must also demonstrate their ability to manage their clients’ assets with due care and diligence in accordance with the relevant regulatory framework. Furthermore, successful applicants must comply with prudent risk management protocols as well as establish adequate internal controls to ensure sound financial performance over time.
Tax Incentives For A Fund Management Company In Singapore
Singapore is an attractive jurisdiction for setting up a fund management company due to its tax incentives and pro-investment policies. To further incentivise the establishment of funds in Singapore, the government has implemented several tax incentive schemes to reduce the burden on fund management companies.
The table below outlines some of the most prominent tax incentives available to fund management companies in Singapore:
| Incentive | Description |
|---|---|
| Real Estate Investment Trusts (REITs) | REITs allow investors to enjoy a concessionary tax rate when investing in real estate |
| Tax Exemption Scheme (TES) | TES allows companies with income derived from qualifying activities to enjoy full exemption from corporate taxes on 70% of their taxable income for five consecutive years. |
| Double Tax Deduction for Internationalisation (DTDi) | DTDi allows companies to claim double deductions for expenses related to internationalization, such as overseas marketing and business development expenses. |
These incentive schemes provide tremendous opportunities for businesses seeking to establish funds in Singapore, particularly those involved in investments such as real estate. The availability of these incentives makes it easier for fund managers to attract investors and grow their businesses within Singapore’s economic environment. Additionally, fund managers can benefit from Singapore’s well-developed financial infrastructure, efficient regulatory regime and world-class professional service providers which make setting up a fund easier than ever before.
In summary, Singapore provides an attractive jurisdiction for establishing a fund management company due to its favourable tax incentives and other pro-investment policies. With these advantages combined with the country’s robust financial infrastructure and supportive regulatory regime, Singapore is an ideal destination for growing funds and attracting investors.
Goods And Services Tax (Gst) Remission Scheme For Funds
The Singapore Government offers a Goods and Services Tax (GST) remission scheme for funds to encourage their development. The limited company that sets up the fund can apply for GST remission on the services it provides. This includes fees charged by the fund manager and other related services such as accounting, legal advice, secretarial, audit and consulting services.
The GST remissions are available only to funds which are managed by a professional fund manager with an established track record and have a minimum of S$2 million of assets under management. Funds must also be registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore before they can apply for GST remission. Furthermore, applicants must meet certain criteria set out by the Inland Revenue Authority of Singapore (IRAS). These criteria include having a valid business registration number, maintaining proper books of accounts in accordance with IRAS guidelines, and filing timely returns.
Funds applying for GST remission should submit their applications to IRAS within one year from incorporation or registration as an approved fund manager. Upon approval, GST remission will be granted for services provided up to three years from the date of application. There may also be additional requirements imposed by IRAS depending on the type of fund being applied for. It is therefore important that potential applicants seek expert advice before submitting their applications to ensure they meet all necessary requirements.
Financial Sector Initiative (Fsi) And Fund Management (Fm) Awards
The Financial Sector Initiative (FSI) and Fund Management (FM) Awards are designed to recognize excellence in Singapore’s fund management industry. These awards provide a platform for funds to showcase their track records, strategies, and processes.
| Award | Description | Criteria |
|---|---|---|
| FSA Award | Recognizes outstanding fund managers | Track record of delivering strong returns, investor satisfaction, risk management strategies and processes |
| FM Award | Recognizes outstanding fund managers who have achieved sustainable performance over longer periods of time. | Long-term track record of delivering strong returns, investor satisfaction, risk management strategies and processes. |
To qualify for the FSI or FM Awards, the fund manager must demonstrate a consistent track record of delivering superior returns while managing risk effectively. The evaluation criteria includes factors such as investment performance, portfolio diversification strategy, risk management processes and procedures, client service quality and sustainability initiatives. Additionally, the applicant must demonstrate excellent corporate governance practices as well as an innovative approach to investing.
The FSI and FM Awards also serve as a platform for funds to build brand recognition among investors. This recognition is invaluable when it comes to attracting new investors or expanding existing investor portfolios. Furthermore, these awards can be used as marketing tools that differentiate the fund from its competitors in the market place.
Business Cessation Of A Fund Management Company
The process of business cessation for a fund management company requires careful consideration and planning. It is important to ensure that all necessary steps are taken to ensure the orderly dissolution of the company and its operations.
It is essential that all liabilities and obligations of the company are addressed prior to commencing the process of business cessation. This includes settling all outstanding debt, filing all required forms with relevant authorities, and distributing proceeds from liquidated assets in accordance with the terms of any applicable agreements or contracts. Additionally, it is important that any remaining funds be transferred to a designated bank account in order to avoid possible disputes or claims by creditors.
The most effective way of ensuring a smooth business cessation process is by engaging professional advisors who can provide guidance on regulatory requirements, as well as advice on how best to manage any tax implications associated with the dissolution process. Professional services firms will also be able to provide valuable assistance in dealing with any legal issues arising during this period. In addition, they can assist in preparing financial statements and other documents required for winding up of operations, as well as providing advice on how best to communicate details of the closure to stakeholders, customers and suppliers.
By engaging professional services firms when ceasing operations, organizations can ensure an orderly transition which minimizes potential risks while protecting their interests and those of their stakeholders. The services provided by such firms can help organizations achieve an efficient resolution for their closure, allowing them to focus on future growth opportunities and new ventures.
Fit & Proper Criteria, Audit, Anti Money Laundering Framework & Custody Arrangement
The setup of a fund in Singapore requires that the fund manager, custodian and other service providers meet the criteria specified by the Monetary Authority of Singapore (MAS). MAS has developed a set of “fit & proper” requirements which must be met. These include having sufficient financial resources, soundness of business practices, integrity and reputation as well as having adequate corporate governance structures in place.
In addition to these requirements, an audit must be conducted by an independent auditor on an annual basis to ensure accuracy and reliability of financial reporting. Furthermore, it is important for funds to have robust anti-money laundering frameworks in place which should include policies and procedures for detecting suspicious transactions. Finally, custody arrangements should be put in place which ensure that all assets are safely stored and accounted for.
These measures are designed to provide investors with assurance that their investments are secure and protected from any potential wrongdoing or mismanagement. By adhering to these standards, funds can demonstrate their commitment to providing transparency and accountability to their investors.
Forming A Fund Management Company Quickly, Easily And Efficiently
Forming a fund management company quickly, easily and efficiently has become an attainable goal in Singapore. The Monetary Authority of Singapore (MAS) has streamlined the application process for fund managers to register with them. This has been done through the introduction of a ‘Fast Track’ system that enables applicants to be approved within 14 days. Furthermore, MAS provides online guidance on the different procedures and processes involved in setting up a fund management company.
In order to be eligible for the Fast Track process, certain criteria must be met. These include having a minimum capital requirement of S$250,000 and appointing at least two executive directors who are fit and proper persons. Additionally, audited financial statements must be provided along with other documents such as Know Your Client (KYC) information and tax clearance certificates. All documentation is required to be submitted within the stipulated deadline of seven days from submission date.
Once all documents have been verified by MAS, they will issue an In-Principle Approval within 14 days of submission date. Following this, all registration formalities must be completed before commencement of operations can take place. This includes filing for corporate taxes, obtaining any additional licenses required as well as opening corporate bank accounts for the fund management company. With these steps complete, you will then have a fully operational fund management business ready to start trading in Singapore.
Frequently Asked Questions
What Is The Minimum Capital Requirement To Set Up A Fund Management Company In Singapore?
The minimum capital requirement to set up a fund management company in Singapore is an important factor for businesses looking to operate in the jurisdiction. Investing in a fund management company requires significant resources and understanding of the legal, regulatory, and operational challenges associated with operating such a business. In this article, we will examine this topic in more detail and provide an overview of what is required to be compliant with Singapore’s regulations.
First, it is necessary to understand the regulatory framework that governs fund managers in Singapore. The Monetary Authority of Singapore (MAS) regulates all activities related to funds, which includes setting up a fund management company. MAS requires that fund managers hold a minimum capitalisation of S$2 million before they can begin operations. This capital must be maintained throughout the life of the fund manager, as it serves as protection against potential losses or liabilities incurred by its investments. Additionally, any assets held by the manager must be segregated from those held by investors so that they are not commingled if losses occur.
Furthermore, MAS imposes additional requirements on fund managers that are designed to ensure their long-term viability and protect investors’ interests. These include submitting statements on a regular basis detailing their financial position and providing disclosures about any material changes to their business model or investment strategy. Fund managers must also adhere to guidelines concerning risk management practices and customer service standards. Finally, they must comply with anti-money laundering regulations aimed at preventing illicit activities such as terrorism financing or fraud.
In short, setting up a fund management company in Singapore requires considerable resources and expertise due to the stringent regulations imposed by MAS. Businesses must meet certain requirements related to capitalisation and risk management before being allowed to operate lawfully within this jurisdiction. It is therefore essential for businesses considering this option to take into account all relevant aspects before making any decisions regarding their investments or operations in this country.
How Long Does It Take To Form A Fund Management Company?
Forming a fund management company can be a complex process, and understanding the timeline involved is essential for success. Generally speaking, it can take anywhere from 8-12 weeks for the entire process to be completed. This timeline assumes the application is fully compliant with Singapore’s regulatory requirements and all documents are in order.
The first step in forming a fund management company is to submit an application to the relevant authority. This includes providing information on the company’s business plan and structure, as well as documentation such as board resolutions and statutory declarations. Once submitted, the authority will review the application and request further documents if needed. After this stage, they will decide whether or not to grant approval.
After obtaining approval, there are still several steps that must be taken before a fund management company can officially begin operations. These include registering with Singapore’s Accounting and Corporate Regulatory Authority (ACRA) and setting up a bank account in Singapore; both of which require additional documents such as Memorandums of Understanding (MOU). Finally, the last step is to obtain a capital markets services license from the Monetary Authority of Singapore (MAS).
It is important to note that each of these stages requires time for processing and review by regulatory authorities; therefore it is essential to ensure there are no errors or omissions in any of the documents submitted. Furthermore, working with experienced professionals who understand these processes can help expedite timelines and ensure compliance with all applicable regulations.
What Are The Tax Incentives For Setting Up A Fund Management Company In Singapore?
Setting up a fund management company in Singapore can provide numerous advantages, including tax incentives. This article will explore the various tax incentives available to those considering setting up a fund management company in Singapore.
Firstly, there is the Corporate Income Tax (CIT). Under the CIT regime, companies are subject to a flat corporate income tax rate of 17%. Furthermore, this rate can be reduced to as low as 8.5% for new start-up companies that meet certain criteria. This means that companies with profits from qualifying activities can enjoy a significant reduction in their income tax burden.
In addition to CIT, Singapore also offers several other tax incentives. Companies may also benefit from the Pioneer Incentive Scheme which provides additional tax relief and exemptions for businesses involved in certain activities such as research and development or intellectual property investments. Companies may also qualify for Double Tax Deduction for Internationalisation Scheme which allows them to deduct twice their expenses incurred during internationalisation activities. These include expenses related to market research and overseas training programmes.
Finally, Singapore’s Personal Income Tax (PIT) system is highly attractive, offering taxpayers progressive rates that range from 0% – 22%. This means that high earners who set up their own fund management company may benefit from lower PIT compared to other jurisdictions with higher marginal rates of taxation or flat rates of taxation. Additionally, personal income earned by non-residents up to S$105,000 per year is exempt from taxation in Singapore providing an incentive for foreign investors wanting to set up a fund management company in Singapore.
In summary, setting up a fund management company in Singapore provides lucrative tax incentives with specialised schemes allowing companies to reduce their taxes on corporate and personal income levels below that of many other countries around the world. The combination of low CIT rates and generous exemptions available through various schemes make it an attractive option for those seeking to establish a fund management business in Singapore.
What Are The Fit & Proper Criteria For Setting Up A Fund Management Company?
When establishing a fund management company, it is important to ensure that all requirements are met before operations can begin. Fund managers must meet the fit and proper criteria set by the relevant regulatory authorities. This includes having sufficient knowledge, experience and qualifications in relevant areas of finance and investment. It is also essential that fund managers demonstrate an understanding of fiduciary duties, market conduct and risk management principles.
The fit and proper criteria for setting up a fund management company must be adhered to in order to ensure compliance with legal and regulatory obligations. These include ensuring that the individual or organisation meets all necessary qualifications for the role, has not been convicted of any criminal offences, does not have any conflicts of interest, demonstrates financial probity, has sufficient insurance coverage and is capable of managing customer assets. All individuals who are involved in the running of the fund must also be properly trained to carry out their duties effectively.
In addition to meeting fit and proper criteria, potential investors should be informed about key points such as investment objectives and strategies, fees and expenses associated with investments, risk profile of investments as well as performance track record. Furthermore, it is important for funds to comply with other requirements such as having appropriate internal control systems in place. This will help ensure that customers’ investments are managed responsibly while providing an effective oversight over operational activities within the fund.
By adhering to these guidelines when setting up a fund management company, investors can rest assured knowing that their assets are being managed responsibly according to legal and regulatory standards. This will help them make informed decisions about their investments while protecting their interests in the long run.
Are There Any Audit Or Anti-Money Laundering Requirements For Setting Up A Fund Management Company?
Establishing a fund management company is a complex task with numerous considerations. Before setting up such a company, it is important to understand the fit and proper criteria as well as any audit or anti-money laundering requirements.
When setting up a fund management company, there are several regulatory requirements that must be met in order to ensure compliance with applicable laws and regulations. Specifically, any potential fund manager must meet certain fit and proper criteria which include having appropriate qualifications and experience, demonstrating financial soundness and being of good character. Additionally, fund managers must also adhere to anti-money laundering (AML) policy requirements which involve conducting customer due diligence (CDD) checks on investors.
Furthermore, fund managers should also be aware of the various audit requirements associated with establishing a fund management company. These include filing regular financial statements with the relevant regulatory authorities as well as performing independent audits to ensure compliance with internal and external policies. Such procedures serve to protect investors by providing assurance that their funds have been properly managed and accounted for.
It is therefore essential for those who wish to set up a fund management company to understand the necessary fit & proper criteria, AML policy requirements, and audit obligations in order to ensure compliance with relevant legal frameworks. Only then can they be confident that their company will operate within the confines of applicable laws while protecting investors’ interests at all times.
Conclusion
Setting up a fund management company in Singapore requires careful planning and execution. There are several regulations that must be taken into account, such as the minimum capital requirement, Fit & Proper criteria, tax incentives, and audit and anti-money laundering requirements.
Firstly, the minimum capital requirement for setting up a fund management company is S$250,000. This can be paid in cash or in kind – for example, approved investments or shares of an approved company. Secondly, the process of forming a fund management company typically takes 4 to 6 weeks depending on the complexity of the application. Thirdly, there are attractive tax incentives available for setting up a fund management company in Singapore such as exemption from corporate and withholding taxes on income derived from investment activities.
Lastly, applicants must meet certain Fit & Proper criteria including good character, ability to manage funds effectively and knowledge of financial markets. Furthermore, auditing and anti-money laundering requirements must also be met when setting up a fund management company.
In conclusion, while setting up a fund management company in Singapore may seem daunting due to the intricate regulations involved, professionals with expertise in this area can provide assistance so that applicants can navigate through the process with greater ease.