SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
investment into the alternative fund, it is possible that it would not be subject to local income tax. 3.7 Outsourcing of Investment Functions/ Business Operations Fund managers can outsource non-fund management functions to service providers or third parties. Fund managers can also outsource a portion of their fund management functions to third parties, provided that the relevant third parties have the requisite licence or exemption in the jurisdiction in which they operate and the fund manager retains a substantial role and con - ducts substantial fund management activity in general and with respect to the alternative fund that requires partial outsourcing. Any outsourcing by the fund manager must comply with the Guidelines on Outsourcing (Financial Institu - tions other than Banks) issued by the MAS. 3.8 Local Substance Requirements See 3.3 Regulatory Regime for Managers . 3.9 Change of Control An entity (whether resident in Singapore or outside Singapore) must not obtain effective control of the Licensed FM unless it has obtained the prior approval of the MAS pursuant to Section 97A of the SFA. The application for approval must be made in writing, and the MAS may approve if it is satisfied that: • the applicant is a fit and proper person to have effective control of the Licensed FM; • having regard to the applicant’s likely influence, the Licensed FM is likely to continue to conduct its business prudently and comply with the provisions of the SFA and directions made thereunder; and • the applicant satisfies such other criteria as may be prescribed. In addition, the Licensed FM must make a similar application for approval to the MAS. Specifically, the Licensed FM’s CMS licence typically contains conditions that require it to obtain the prior written approval of the MAS for any change of its members or shareholdings of its members which will result in any entity, alone or acting together with any connected party, being in a position to control equal to or more
than 20% of the voting power in the Licensed FM or hold interest equal to or more than 20% of its issued shares. The CMS licence may also contain conditions that require the Licensed FM to obtain the prior written approval of the MAS to acquire or hold, whether directly or indirectly, an interest of 20% or more of the share capital of any corporation, or establish any branch (whether in Singapore or elsewhere) or to give at least seven days’ written notice to the MAS for the purchase, sale, merger or any other business combi - nation of all or any part of the business in a regulated activity under the SFA for which its CMS licence is granted. In general, the Licensed FM should consult and inform the MAS of any proposed major corporate action, especially pertaining to a major restructuring, acqui - sition, divestment, joint venture or partnership. 3.10 AI and Use of Data There is currently no express legislation nor MAS guid - ance on a fund manager’s use of artificial intelligence, predictive data or big data either for investment pur - poses or for operational/compliance purposes. The MAS has published several information papers, set - ting out foundational principles (the FEAT (Fairness, Ethics, Accountability and Transparency) Principles) on the responsible use of artificial intelligence and data analytics (AIDA), to guide financial institutions in assessing and updating existing frameworks or imple - menting new ones to govern their responsible use of AIDA. The MAS has shared some of its observations and recommendations from its thematic review of selected financial institutions. Fund managers intend - ing to use AIDA should familiarise themselves with the FEAT Principles, establish robust governance struc - tures and be able to demonstrate how their internal controls meet the FEAT Principles. Further MAS guid - ance is expected in the near future. 3.11 Anticipated Changes for Fund Managers See 2.10 Anticipated Changes for Funds .
280 CHAMBERS.COM
Powered by FlippingBook