On 31 July 2023, the Monetary Authority of Singapore ("MAS") issued a public consultation paper (P009 - July 2023) entitled "Consultation Paper on Proposed Framework for Single Family Offices", inviting comments and feedback on the:
proposal to harmonise the criteria for Single Family Offices ("SFOs") to be exempt from licensing under the Securities and Futures Act ("SFA");
proposal to introduce new notification and annual reporting requirements to better monitor SFOs operating in Singapore; and
proposed transitional arrangement and implementation timeline for SFOs to comply with the proposed framework.
Proposal to harmonise the criteria for SFOs to be exempt from licensing under the SFA
The MAS proposes to introduce a structure agnostic class exemption for SFOs to replace the current exemption regime.
To qualify for the proposed class exemption, the SFO must meet all of the following criteria:
the SFO is wholly owned (whether by directly or indirectly) by members of the same family. For the purposes of this exemption, MAS proposes to define family members as lineal descendants of a common ancestor (living or deceased), including current and former spouses, adopted children and current and former stepchildren.
the SFO carries on business in fund management for or on behalf of (a) family members, including family trusts and corporations wholly owned by and for the sole benefit of the family, (b) charitable organisation(s) funded exclusively by the family, and (c) key employees of the SFO (which refers to the SFO's chief executive officer and executive directors). MAS noted that the inclusion of key employees of SFOs is consistent with the growing trend where key employees, who are non-family members, invest alongside the family for purposes of alignment of economic interest and risk-sharing.
the SFO is incorporated in Singapore.
the SFO establishes and maintains business relations with at least one of the specified MAS-regulated financial institutions ("FIs"). This requirement seeks to ensure adequate anti-money laundering and countering the financing of terrorism ("AML/CFT") safeguards over SFOs operating in Singapore as these SFOs would accordingly be subject to beneficial ownership requirements for Singapore-incorporated companies under the Accounting and Corporate Regulatory Authority ("ACRA"), and AML/CFT checks by MAS-regulated FIs.
MAS has also clarified that there is no intention to grant case-by-case exemptions to SFOs that do not meet the above qualifying criteria upon the introduction of the proposed class exemption.
Proposal to introduce new notification and reporting requirements to better monitor SFOs operating in Singapore
Under the proposed framework, the SFO will be required to notify MAS and confirm its ability to comply with the qualifying criteria under the proposed class exemption, within 7 days of commencement of its operations in Singapore. The SFO should obtain a legal opinion supporting its qualification of class exemption criteria 1 and 2 listed above.
In this initial notification to MAS, the SFO will have to furnish the following information:
key particulars of the SFO, specifically (a) the name, UEN and date of incorporation of the SFO, (b) the name, country and date of incorporation of the fund vehicle; (c) name(s) of MAS-regulated FI(s) that the SFO has established and maintained business relations with; (d) name of law firm that provided the legal opinion that the SFO qualifies under the class exemption criteria; and (e) amount of assets to be managed by the SFO;
signed declaration by all the family members who own the SFO ("Ultimate Owners"), CEO and director(s) to MAS that:
its Ultimate Owners are currently not the subject of any investigation by authorities, or the subject of any civil or criminal proceedings whether in Singapore or elsewhere;
its Ultimate Owners, CEO and director(s) have never been convicted of a serious crime or been involved in money laundering/terrorism financing/proliferation financing; and
it does not and will not engage in any activity with designated persons or entities (i.e. individuals or entities in the United Nations lists or any other list found on the MAS website under "Lists of Designated Individuals and Entities"), whether directly or indirectly; and
signed declaration by the Ultimate Owners, CEO and director(s) to MAS that it fulfils all the conditions to be exempted under the class licensing exemption criteria.
On an annual basis, the SFO must submit an annual return within 14 days after the end of each calendar year to report (a) its total assets under management, and (b) name(s) of MAS-regulated FI(s) with whom the SFO has established and maintained business relations with as at the end of the calendar year.
Proposed transitional arrangement and implementation timeline for SFOs to comply with the proposed framework
MAS proposes a six-month transitional period for existing SFOs operating in Singapore to comply with the proposed framework. In particular:
existing SFOs will need to notify MAS of the information required for initial notifications (as described above) within six months from the effective date of the proposed framework; and
existing SFOs who have applied for tax incentive under the Section 13O or Section 13U of the Income Tax Act, and furnished a legal opinion to MAS as part of their application, will be required to obtain a new legal opinion that the SFO qualifies under the proposed class exemption criteria.
Following the implementation of the proposed framework, new SFOs that wish to commence operating in Singapore will be required to file the initial notification (as described above) within 7 days of commencement of their operations in Singapore. MAS' acknowledgement of the notification would not be required for these SFOs to commence operating in Singapore.
Please refer to the consultation paper at the following link for full details on the proposed framework for SFOs. The public consultation will end on 30 September 2023.
Please contact us if you have any questions or would like to discuss the potential implications of the proposals in the consultation paper.
