SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
4. Investors 4.1 Types of Investors in Alternative Funds In recent years, there is more interest in alternative funds from AIs, family offices and external asset man - agers. As investors become more sophisticated and strategic – looking for more attractive returns and to diversify their portfolios – such investors have ven - tured into PE, VC, RE and private credit funds. 4.2 Side Letters Side letters are permissible and not regulated. There is no special approval nor disclosure required except that the fund PPM should expressly state that side let - ters can be issued to cornerstone investors or inves - tors who commit a higher minimum subscription. 4.3 Marketing of Alternative Funds to Investors Alternative funds are typically non-retail funds. Alter - native funds can be offered to anyone in Singapore provided each offeree qualifies as an AI or II. 4.4 Rules Concerning Marketing of Alternative Funds Any entity, including distributors or placement agents, that distributes or markets the units or shares in any alternative funds in Singapore would likely be conduct - ing the regulated activity of dealing in capital markets products (DCMP) as defined in the SFA and would be required to hold a CMS licence for DCMP, unless otherwise statutorily exempted. Such entity might also be conducting the regulated activity of advising oth - ers, either directly or through publications or writings, whether in electronic, print or other form, concerning any investment product. This is a regulated activity that requires a financial adviser’s licence pursuant to the FAA, unless otherwise statutorily exempted. A Licensed FM can market in Singapore the alterna - tive funds that it manages or sub-manages, as well as the funds that such manager’s related corporations (as defined in the CA) manage without a CMS licence for DCMP. See 4.6 Private Placements .
4.5 High Net Worth or Retail Investors Alternative funds are typically non-retail funds. Alter - native funds can only be offered to AIs or IIs. Some financial institutions in Singapore offer alternative funds to their customers by acting as a platform or private exchange. These institutions typically hold a CMS licence for DCMP or are approved as a Recog - nised Market Operator (RMO) pursuant to the SFA. Such RMOs typically offer alternative funds as an investment asset class on their private exchange to provide visibility, liquidity and scalability for alternative funds. The customers of such RMOs are AIs and IIs. 4.6 Private Placements See 4.4 Rules Concerning Marketing of Alternative Funds . Statutory Exemptions Where alternative funds are offered to non-retail inves - tors, there are statutory exemptions from the require - ments of authorisation for the funds and registering a compliant prospectus, provided certain conditions are met. These statutory exemptions are discussed below. Small offers This exemption applies to personal offers of units in the fund where the total amount raised from such offers within any period of 12 months does not exceed SGD5 million. Private placements This exemption applies to offers of units in the fund where the offers are made to no more than 50 persons within any period of 12 months. Offers to institutional investors This exemption applies to offers of units in the fund where the offers are made solely to IIs. Offers to AIs and certain other persons This exemption applies to offers of units in the fund where the offers are made solely to: • AIs or certain relevant persons, including persons who are related to the offeror; or • a person who acquires the units as principal if the offer is on terms that the units may only
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