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Offering Foreign Collective Investment Schemes In Singapore
December 2008 | Corporate | Business Bulletin

Collective investment schemes are commonly offered by foreign fund managers in Singapore as a means of tapping the local investor market.

There are two ways in which a foreign collective investment scheme constituted outside Singapore can be offered in Singapore: (1) as a retail scheme whereby the units may be offered to any member of the public; and (2) as a restricted scheme which can only be offered to “sophisticated” investors.

Before a collective investment is offered as a retail or a restricted scheme to investors in Singapore, an application must be submitted to the Monetary Authority of Singapore (“MAS”) for registration.

Retail schemes

The following conditions should be satisfied in an application for recognition or authorisation as a retail scheme:

• The laws and practices of the jurisdiction under which a collective investment scheme is constituted and regulated affords to investors in Singapore a level of protection at least equivalent to that provided to them under the Securities and Futures Act (“SFA”).



• There is a manager for the scheme which is licensed or regulated in the jurisdiction of its principal place of business and is a fit and proper person in the opinion of MAS.



• There is a representative to administer the scheme (“representative”) who is an individual resident in Singapore, or a company, or foreign company registered with the Accounting and Corporate Regulatory Authority of Singapore under the Companies Act.



• MAS has been furnished with information regarding the name and contact particulars of the representative and such other information as MAS may prescribe.



• A copy of the prospectus, prepared in accordance with the Third Schedule of the Securities and Futures (Offers of Investments)(Collective Investment Schemes) Regulations 2005 as required under section 296 of the SFA, is lodged and registered with MAS.



• The manager of the scheme is managing at least S$500 million of discretionary funds located in Singapore.

It should however be noted that, notwithstanding compliance with the above, MAS may refuse to recognise the scheme where it determines that it is not in the public interest to do so.

Restricted schemes

Units in a restricted scheme may only be offered to relevant persons.

A “relevant person” includes (1) an accredited investor; (2) a corporation the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; and (3) a trustee of a trust the sole purpose of which is to hold investments and each beneficiary of which is an individual who is an accredited investor.

In the case of an individual, an “accredited investor” means a person whose net personal assets exceed in value S$2 million (or its equivalent in a foreign currency), or whose income in the preceding 12 months is not less than S$300,000 (or its equivalent in a foreign currency).

In the case of a corporation, an “accredited investor” means a corporation with net assets exceeding S$10 million (or its equivalent in a foreign currency), as determined by the most recent balance sheet of the corporation. An “accredited investor” may also mean a trustee of such trust as MAS may prescribe, when acting in that capacity, or such other person as MAS may prescribe.

A restricted scheme must comply with the following requirements:

1. The offer of units in the restricted scheme is not accompanied by an advertisement making the offer or calling attention to the offer or intended offer.



2. No selling or promotional expenses are paid or incurred in connection with the offer other than those incurred for administrative or professional services, or by way of commission or fee for services rendered by a licensed or exempt securities dealer.



3. The offer is made in or accompanied by an information memorandum which:
   
   
   1. contains the statement that the offer or invitation is not allowed to be made to the retail public, and that the information memorandum is not a prospectus as defined in the SFA; and
   
   
   
   2. states the following particulars in respect of the scheme:
      
      
      1. the investment objectives, focus and approach of and risks of subscribing for or purchasing the units in a restricted scheme;
      
      
      
      2. whether the offer of units in the restricted scheme is regulated by any financial supervisory authority and, if so, the title and jurisdiction of the legislation under which the restricted scheme is regulated and the name and contact details of the authority;
      
      
      
      3. in the case of a restricted scheme which is a corporation, its place of incorporation and business address;
      
      
      
      4. in the case of a restricted scheme which is not a corporation, the name and place of incorporation or registration of the manager for the restricted scheme and, where applicable, the trustee or custodian of the restricted scheme; and
      
      
      
      5. whether the manager for the restricted scheme and, where applicable, the trustee for the trust are regulated by any financial supervisory authority and, if so, the name and contact details of the authority.

Exemptions from registration with the Monetary Authority of Singapore

Apart from registration as a retail scheme or a restricted scheme under the SFA, offers of investment in a foreign fund may be exempted from registration in certain circumstances prescribed under the SFA. These include, among others:

• offer and sale of units made on a private placement basis to no more than 50 persons within any period of 12 months;



• offer and sale of units in a scheme if little or no consideration is or will be given for the issue and the sale of the units;



• offer and sale of units in a scheme whereby the total amount raised by the scheme for any period of 12 months does not exceed S$5 million; or



• offer and sale of units in a scheme to an institutional investor.