SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
Local Regulatory Requirements for Non-Local Managers Non-local managers may launch and manage alterna - tive Singapore funds, except VCCs. Alternative Singa - pore funds that are managed by non-local managers will not enjoy the tax incentives available to alternative funds (eg, under Sections 13O and 13U of the ITA). See 2.4 Tax Regime for Funds . 2.10 Anticipated Changes for Funds The MAS is proposing to amend certain notices and guidelines in relation to AML/CFT requirements for financial institutions and VCCs to clarify and strength - en the regulations. The MAS is also considering providing retail access to private market investment funds, to allow retail inves - tors to have access to this asset class. In respect of new tax incentives for alternative funds/ fund managers, the following tax incentives will be introduced. • An enhanced concessionary tax rate of 5% under the Financial Sector Incentive – Fund Manage - ment Award (FSI-FM) (see 3.4 Tax Regime for Managers ) on qualifying income of fund managers who achieve (or their holding company achieves) a primary listing on a Singapore exchange and it remains listed for five years, provided other eligibil - ity conditions are met. • A corporate tax exemption on a fund manager’s qualifying income arising from funds that invest substantially in Singapore-listed equities, provided other eligibility conditions are met. New funds must maintain at least 30% of their AUM in Singapore- listed equities while existing funds must also meet the additional requirement of having their annual net inflows be equivalent to at least 5% of their AUM in the preceding year.
appoint a local manager for the purposes of discharg - ing the relevant obligations attaching to the LP. Funds, being the investment vehicle and not an oper - ating entity, generally do not have their own employ - ees nor business premises. The fund manager, which is appointed by the fund to make investment deci - sions on behalf of the fund, would and should have employees and business premises. Where the alternative funds are applying for local tax incentives, there will be other local requirements as part of the incentive conditions. See 2.4 Tax Regime for Funds . 2.9 Rules Concerning Service Providers Alternative funds can appoint service providers from any jurisdiction. However, to qualify for tax incentives, the fund must appoint a local fund manager and local fund administrator. Generally, local service providers that do not conduct any regulated activities in Singapore are not subject to Singapore licensing legislations or registration require - ments. Currently, fund administrators and compliance officers are not regulated and do not require a licence. Custodians that provide custodial services for speci - fied products (as defined in the SFA) require a CMS licence for providing custodial services pursuant to the SFA. Alternative funds structured as a trust must appoint a trustee. Such trustee must have a trust licence pursuant to the TCA. See 4.4 Rules Concerning Marketing of Alternative Funds and 4.6 Private Placements . For non-local service providers that carry out business activities in Singapore that are regulated under the SFA (eg, sub-management, sub-advisory or custody), licensing and registration requirements would depend on whether the relevant activities are deemed to be conducted in Singapore pursuant to the SFA, which has certain extraterritorial provisions (namely Section 339). Where such relevant activities are deemed to be conducted in Singapore, the parties must apply to the MAS for the requisite CMS licence, unless otherwise statutorily exempted.
3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds
In the last few years, it has been observed that pro - moters and sponsors of alternative funds usually
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