Jurisdiction - Singapore
Reports and Analysis
Singapore – Amendments To The Rules Governing Collective Investment Schemes And Closed-Ended Funds.

10 April, 2013


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


On 26 December 2012, the Monetary Authority of Singapore ("MAS") issued a consultation paper relating to proposals to amend the Securities and Futures (Offer of Investments) (Collective Investment Schemes) Regulations 2005 (the "CIS Regulations"). A copy of the consultation paper can be found here.


The key proposals set out in the consultation paper were for:

  • enhanced disclosure obligations for the prospectuses of authorised and recognised collective investment schemes (i.e. funds marketed to retail investors in Singapore);
  • a new requirement for an information memorandum to be produced and filed in respect of "restricted schemes" (i.e. funds which are marketed under the lighter regulatory regime allowing offers to be made to accredited investors and other specified persons); and
  • the general extension of the regulatory regime for collective investment schemes to closed-ended funds.


Following conclusion of the consultation period in January 2013, MAS published its response to the consultation and amendments to the CIS Regulations on 1 April 2013. With certain clarifications and concessions, the amendments to the CIS Regulations adopt the position set out in the consultation paper. Compliance with the enhanced disclosure requirements for retail funds will require managers marketing such funds in Singapore to update their fund documentation. The amendments to the rules applicable to funds marketed to non-retail investors and to closed-ended funds represent more fundamental changes to the regulatory regime.


Enhanced disclosure requirements


The changes to the CIS Regulations include requirements to incorporate additional disclosure in a retail fund's prospectus in relation to:


  • biographical information on the directors and key executives of the manager (but not sub-managers or sub-advisors);
  • any delegation of investment management, administration or valuation functions by the manager;
  • disclosure of the financial supervisory authority which licenses or regulates the manager of the fund and certain managers and sub-managers of underlying funds;
  • information on custody arrangements; and
  • the valuation method to be adopted by the fund.


Information memorandum


MAS proposed to re-introduce the requirement for an offer of units in a restricted scheme to be made in or accompanied by an information memorandum. MAS's view is that the types of fund being offered to non-retail investors are becoming more complex and that these funds (particularly those that employ advanced strategies) may pose risks to investor protection and financial stability.


The changes to the CIS Regulations therefore require an information memorandum to be produced including, among other things, details about the fund's investment objectives, risks, regulatory status, redemption terms, policy on side letters, past performance and fees and charges. The responsible person for a restricted scheme is required to notify MAS prior to making an offer of its securities and to make an annual compliance declaration to MAS thereafter. As a transitional arrangement, MAS will only apply the new information memorandum requirement to a notification or annual declaration that is submitted on or after 1 July 2013. A copy of the information memorandum must be submitted to MAS for record.


Regulation of closed-ended funds


The changes to the CIS Regulations mean that closed-ended funds will be subject to the same regulatory regime as collective investment schemes. One result of this is that closed-ended funds marketed to retail investors in Singapore will be subject to investment restrictions, which among other things limit the types of investment that can be made to transferable securities, money market instruments and other specified liquid investments. They will also be required to be listed on an approved securities exchange and will need to prepare a prospectus in compliance with the requirements of the Singapore Securities and Futures Act. This new regime will apply to all closed-ended funds constituted on or after 1 July 2013.


Closed-ended funds which are marketed to accredited investors and other specified persons as restricted schemes will be required to prepare an information memorandum in the same way as open-ended funds, as described above. This may be significant in the context of international offerings of non-Singapore domiciled closed-ended funds, where it is sought to make an offer on a private placement basis to accredited investors in Singapore, thereby bringing the offshore fund within the scope of the restricted fund regime. While other private placement exemptions may be available, funds and intermediaries should take advice as to their application following the introduction of the new regime.


For further information, please contact:

Simon Taskunas, Partner, Herbert Smith Freehills
Stephen Newby, Herbert Smith Freehills



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