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Singapore – Launch Of The ASEAN CIS Framework: An Overview.

2 October, 2014

 

Legal News & Analysis – Asia Pacific – Singapore  Regulatory & Compliance

 

On 25 August 2014, the ASEAN Capital Markets Forum announced that the ASEAN CIS Framework (the “Framework“) for cross-border offering of collective investment schemes (“CIS”) is now operational in Malaysia, Singapore and Thailand (collectively, the “member jurisdictions”), following the signing of the Memorandum of Understanding for the Framework by the Securities Commission of Malaysia, the Monetary Authority of Singapore (“MAS“) and the Securities and Exchange Commission, Thailand in October 2013.

 

Overview Of The Framework

 

The Framework enables qualified fund managers operating in a member jurisdiction to offer CIS constituted and authorised in such jurisdiction to retail investors in the other member
jurisdictions under a streamlined authorisation process, providing a direct channel for the cross-border distribution of funds in the three markets.Operational aspects of the

 

Framework

 

A set of common ASEAN standards that govern the operation of the Framework (the “Standards of Qualifying CIS”) has been established to ensure that participating fund managers possess the necessary experience and track record in managing retail funds offered
under the Framework.

 

The member jurisdictions have also published the Handbook for CIS Operators of ASEAN CISs (the “Handbook”), which provides guidance to fund managers on the administrative and procedural aspects of the Framework.

 

The Handbook covers the following main operational aspects of the Framework:

 

  • The steps that a Qualifying CIS Operator1 that intends to offer a CIS in a host jurisdiction under the Framework should take to obtain approval from the home and host regulators for the cross-border offerings of its funds in a host jurisdiction.

 

A Qualifying CIS Operator is required to first apply for the CIS to be approved by its home regulator. In assessing whether a CIS is suitable to be an ASEAN CIS, the home regulator will review, inter alia, the qualifications of the CIS operator and trustee/fund supervisor; 

  • The factors that the home and host Regulators will consider when assessing the applications

 

 

After obtaining the necessary approvals from the home regulator, the Qualifying CIS Operator must submit an application to the host regulator for the CIS to be approved for public offer in the host jurisdiction;

 

  • The legislative and regulatory requirements of the participating member jurisdictions that are applicable to the offer of an ASEAN CIS in the respective jurisdiction.

 

 

As the laws and regulations governing the offering of CIS differ among the participating member jurisdictions, Qualifying CIS Operators must familiarise themselves with the applicable laws and regulations of the jurisdiction in which they intend to offer ASEAN CIS. A summary of the relevant laws and regulations of the participating jurisdictions is set out in Appendix V of the Handbook; and

 

  • The manner in which the funds may be distributed in the relevant participating member jurisdiction. 

 

Offering of an ASEAN CIS to the public in a host jurisdiction must be done through local distributors who are local intermediaries licensed or regulated in that host jurisdiction. Additionally, a host regulator may require the Qualifying CIS Operator of the ASEAN CIS to appoint a local representative who is regulated by or acceptable to the host regulator.

 

Qualifying CIS Operators must also comply with on-going notification, disclosure and reporting requirements in accordance with the Handbook.

 

In Singapore, the MAS has introduced a new Chapter 10 (“Chapter 10“) of the Code on Collective Investment Schemes (the “Code“) to provide for the implementation of the Framework in Singapore. Chapter 10 sets out, inter alia, the requirements imposed on (i) a fund manager who wishes to offer a CIS in other member jurisdictions pursuant to the Framework and (ii) a foreign fund manager who wishes to offer a CIS in Singapore pursuant to the Framework.

 

Generally:

 

A fund manager may offer a CIS in other member jurisdictions pursuant to the Framework only if:

 

  • the CIS is constituted in Singapore and has been authorised by the MAS under Section 286 of the Securities and Futures Act (Cap. 289) (“SFA”);
  • the CIS has been assessed by the MAS as suitable to be a qualifying CIS;
  • units in the CIS have been offered, or will be concurrently offered, in
  • Singapore;
  • the CIS, the fund manager and the trustee satisfy the requirements in the SFA and the Code that are applicable to an authorised CIS; and
  • the CIS, the fund manager and the trustee satisfy the Standards of Qualifying CIS.

 

A foreign fund manager may offer a CIS in Singapore pursuant the Framework
only if:

 

  • the CIS is constituted in a member jurisdiction and is permitted to be offered to the general public of that member jurisdiction;
  • the CIS has been assessed by a member jurisdiction as suitable to be a qualifying CIS;
  • the CIS has been recognised by the MAS under Section 287 of the SFA;
  • units of the CIS have been offered, or will be concurrently offered, in the jurisdiction in which such CIS is constituted;
  • the CIS, the fund manager and the trustee/supervisor satisfy the requirements in the SFA and the Code that are applicable to a recognised CIS; and
  • the CIS, the fund manager and the trustee/supervisor satisfy the Standards of Qualifying CIS.

 

ATMD Bird & Bird

 

For further information, please contact:

 

Joanna Teng, Partner, ATMD Bird & Bird

joanna.teng@twobirds.com

 

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