Jurisdiction - Singapore
Reports and Analysis
Singapore – Proposed Regulatory Treatment Of Closed-End Funds.

9 March, 2013


Legal News & Analysis – Asia Pacific – Singapore  Investment Funds 


• Definition of CIS to include closed-end funds 


Currently, closed-end funds are not subject to the CIS regulatory regime as they do not fall within the statutory definition of a “collective investment scheme” as provided in the Securities and Futures Act (SFA). Accordingly, closed-end funds are exempt from the authorisation/recognition requirements, prospectus requirements, investment restrictions and business conduct rules that CIS offered to retail investors are subject to.  


In light of the similarities between closed-end funds and other CIS, as well as the practice in other jurisdictions, the MAS is  proposing to include closed-end funds under the CIS regulatory regime.  


To ensure that the regulatory net is not cast too wide, the MAS has 
clarified that its intention is to regulate those entities whose primary 
purpose is to generate profit/return for its investors through its investment based on a “defined investment policy”.   


The MAS will consider the following elements in determining whether a 
closed-end fund has a defined investment policy: 


  • the final form of the investment policy is fixed by the time investors' commitments to the entity become binding on them; 
  • the investment policy is set with the intent to give investors the benefit of the results of the investments; 
  • the investment policy is part of, incorporated in, or referenced in the entity’s constitutional documents;  
  • a contractual relationship between the entity and the investors binds the entity to follow the investment policy; 
  • the investment policy contains a series of investment guidelines; 
  • the investment policy is clearly set out and disclosed to investors; and 
  • any change to the investment policy is disclosed to the investors and may require their prior consent. 


• Listing on a securities exchange 


Currently, investors in closed-end funds are restricted in their ability to exit their investments as the units are non-redeemable. To enable investors to exit more expediently on the secondary market, the MAS is proposing to require closed-end funds offered to retail investors to be listed on an approved securities exchange.  



For further information, please contact:

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









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