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The Monetary Authority of Singapore (‘MAS’) recently issued new guidance on the licensing and registration of fund management companies to clarify the regulatory treatment for single family offices (‘SFOs’).

In the absence of a definition under the Securities and Futures Act (‘SFA’) or the Financial Advisers Act (‘FAA’), a SFO refers to an entity which manages assets for and on behalf of only one family and is wholly owned or controlled by members of the same family.

MAS confirmed that it has no intention to license or regulate SFOs and will therefore maintain the current class exemptions under the SFA and FAA subject to successful application by the SFO.

The first exemption is for a corporation which manages funds for its related corporations. Typically this would take the form of a group holding company having the sole and entire participation in the SFO and the Investment Fund managed by the SFO itself. The corporation may rely on the licensing exemption under paragraph 5(1)(b) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations.

Alternatively, a corporation that provides financial advisory services to its related corporations may rely on the licensing exemption under regulation 27(1)(b) of the Financial Advisers Regulations.

If the entity does not fall under the two above mentioned exemptions but in substance manages funds on behalf of a single family only, it may seek a licensing exemption from the MAS under section 99(1)(h) of the SFA.

The application for exemption to be a SFO, which can take between two and four months depending on the complexity of the arrangement, shall include the following information to facilitate MAS’ assessment:

• Names of the shareholders and directors of the SFO;
• A chart depicting the shareholding structure of the SFO;
• A description of how the SFO is related to the investment fund vehicle and the family/beneficiaries;
• A description of the profile of the family whose assets will be managed by the SFO; and
• A description of the nature of activities to be carried out by the SFO.

Broadly speaking, the typical SFO arrangements considered by MAS are as follows and it is therefore advisable to include such information when applying for licensing exemption:

• Where there is no common holding company, but the assets managed by the SFO are held directly by natural persons of a single family;
• Where assets are held under a discretionary trust, the settlor of the trust and the beneficiaries are members of the same family;
• Where a family trust is set up for charitable purposes, the charitable trusts are funded exclusively by settlor(s) from a single family;
• Where non-family members such as key employees of the SFO are shareholders in the SFO for the purpose of alignment of economic interest and risk-sharing, the initial assets and additional injection of funds are funded exclusively by a single family.

Singapore has demonstrated its top position as one of the world’s leading centres for investment funds and asset management, with approximatively US$1.8trn of total assets managed by Singapore-based asset managers, according to MAS 2015 data.

Its political stability, well respected regulatory standards and friendly tax system offer an attractive environment for local and international business.