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Singapore – Proposed Changes To The Securities And Futures Regulations For Collective Investment Schemes.

9 February, 2013

 

Legal News & Analysis – Asia Pacific – Singapore  Capital Markets

 

The Monetary Authority of Singapore (MAS) released a consultation paper in late December 2012 as part of its ongoing efforts to enhance and refine the regulatory framework for collective investment schemes (CIS or schemes).  

 

The MAS consultation paper sets out: (i) the proposed changes to the 
Securities and Futures (Offers of Investments) (Collective Investment 
Schemes) Regulations 2005 (CIS Regulations); and (ii) the proposed regulatory treatment of closed-end funds. We set out below a summary of the proposals. 

 

Proposed Amendments to the CIS Regulations 

 

Enhanced Disclosure Requirements for Offers of Units in CIS 

 

The CIS Regulations prescribes, among others, the information that must be set out in a prospectus for an offer of units in a CIS. Pursuant to the consultation paper, the MAS proposes to impose the following additional disclosure requirements: 

 

  • Information on scheme manager and its principals: The CIS Regulations currently require the name, address and track record of the manager of the scheme to be stated in the prospectus. To provide investors with additional information to assess the manager and its principals, the MAS is proposing the following further disclosures in the prospectus: (i) information on the manager’s directors and key executives (such as the working experience, educational and professional qualifications and areas of expertise); (ii) information on any functions that the manager has delegated to a third party; and (iii) the name of the financial supervisory authority which licenses or regulates the manager (as well as its underlying funds and submanagers, where applicable).

  • Information on custodial arrangements: There is currently no explicit requirement for a prospectus to describe the custodial arrangements of the scheme. To enable investors to have a better understanding of how a scheme’s assets are held, the MAS is proposing to require the disclosure of the identity of the entity responsible for safekeeping the scheme’s assets, as well as the custodial arrangements in place.

  • Valuation method for a scheme’s assets: Under the current regime, the valuation method of a scheme’s assets need only be set out in the trust deed of an authorised scheme. The MAS is proposing to require the disclosure of such valuation method in the prospectus in line with current market practice. 

 

Information memorandum to be furnished to investors in respect of an offer of units in a restricted scheme 

 

The MAS is proposing to re-introduce the requirement for an offer of units in a restricted scheme to be made in or accompanied by an information memorandum in light of the fact that certain types  of CIS (particularly those that employ advanced strategies) may pose risks to investor protection and financial stability, particularly given the growing complexity of CIS. 

 

The information memorandum should contain information to assist 
investors in making an informed investment decision in respect of the 
units being offered, including information on the scheme’s investment 
objectives, focus and investment approach, the risks of subscribing for 
units in the scheme, any redemption conditions or limits and gating 
structures, the past performance of the scheme, and the fees and charges payable by the investors and by the scheme.

 

  

For further information, please contact:

 
Joo Khin Ng, Partner, Stamford Law
 
Bernard Lui, Partner, Stamford Law

 

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