Under the Securities and Futures Act (SFA), companies wishing to engage in the business of fund management in Singapore are either a licensed fund management company (LFMC) holding a Capital Markets Services (CMS) licence in fund management, or a registered fund management company (RFMC) with the Monetary Authority of Singapore (MAS). The business of fund management means that the company’s activities involve making investment decisions regarding a pool of moneys or assets, on behalf of customers.
Options to Set-up a Fund in Singapore
There are three possible legal forms for funds to be set-up in Singapore – unit trusts, private limited companies or limited partnerships, with each having its own advantages and disadvantages.
Funds as a Unit Trust
This is a popular choice for mutual funds and has an additional advantage of not being governed by the Singapore Companies Act. But the compliance cost may be higher as it is mandatory for unit trusts in Singapore to appoint a Licensed Collective Investment Scheme (CIS) Trustee.
Funds as a Private Limited Company (Pte Ltd)
This option is popular among private equity funds investing in Asia so as to take advantage of Singapore’s wide array of tax treaties with regions/countries across the world. Notably, the city-state’s cross-border tax treaties apply only to Pte Ltds.
A slight disadvantage is that Pte Ltds (referred as company/companies henceforth) in Singapore has to be complaint with Singapore Companies Act and fulfil the following requirements at all times:
- - Make annual filings to both ACRA (national registrar of companies) and IRAS (tax regulatory body).
- - All subscriptions and redemptions from the fund are subject to the Companies Act. This means that whenever an investor invests in funds structured as a company via redeemable preference shares in Singapore, the details must be updated with ACRA and relevant resolutions prepared.
Moreover, as some information about companies in Singapore are publicly available, this will apply to the newly set-up funds as well, which sometimes may be undesirable.
Read more about our guide to setting up a Singapore Fund Management Company at Rikvin.com.
