exclusive aiam workshop for asset/wealth/fund managers 2017 · exclusive aiam workshop for...

Asian Presence. Global Reach.

Tan Woon HumPartner

Head of Trust, Asset & Wealth Management

Exclusive AIAM Workshop forAsset/Wealth/Fund Managers 2017

14 November 2017


Shook Lin & Bok LLP is one of the leading full service law firms in Singaporewith a strong Asian presence and global reach. We have close to a centuryof rich legal heritage with a number of partners who are eminent lawyers intheir respective areas of expertise.

We believe that our success lies in our team of well-trained andexperienced lawyers who are innovative and effective in solving complexand difficult legal issues, and who are able to provide customised andvalue-added legal services to our clients. Over the years, we have built astrong base of clients comprising both local and international financialinstitutions, as well as large multinational corporations.

Introduction

2


• What is the SFA definition of fund management

• Can we do segregated mandate accounts or managed accounts

• Is non-discretionary mandates or advisory accounts permissible

• When do we need an exemption for financial advisory under the FAA

• Can we manage funds; do we need MAS approval to manage funds

• Can we advise a client on fund raising (via placements or IPO)

• Can we advise clients on investing in Private Equity

• Can we conduct crowd funding

• Can we conduct family office business

• Can we conduct non-regulated activities

1. What does our CMS licence for fund management or RFMC status allow us to do?

3


• Can we set up a subsidiary or an overseas branch

• Can we invest in another entity or take a minority stake

• Can we market or service clients in other jurisdictions

• Can we have part time staff or consultants

• Can our staff be based overseas

1. What does our CMS licence for fund management or RFMC status allow us to do? – Con’t

4


• Must we get the directors and representatives to complete the Fit &Proper Criteria checklist

• Must we independently check/verify

• How often do we have to refresh the declarations

2. Must we ensure that our directors & representatives are fit & proper? How do we carry this out?

5


• We are EAMs, can we rely on the private banks or custodian banks tocheck

• Can we just rely on the self-declarations of the client without furtherchecks

• What is required by the MAS

• How often do we need to refresh the checks

3. Must we conduct KYC/AML/CFT/CDD checks? How do we carry this out?

6


• Can we use third parties to introduce or refer clients or prospects to us

• Does it help that we do not pay these introducers or referral agents

• Does it help if we only use overseas introducers or referral agents

• Can we introduce or refer clients to other asset/wealth/fund managersor financial institutions

4. Can we use introducers/referral agents?

7


• Can we pay retrocessions/trailer fees/commissions to third parties

• Can we receive retrocessions/trailer fees/commission from third parties

• If permissible, what must we do to ensure regulatory compliance

5. Can we pay/receive retrocessions/trailer fees/commissions?

8


• What is a fund

• Difference between onshore and offshore funds

6. What can we do about funds? Formation, management and distribution?

9


Regulatory Framework for Asset/Fund Managers

10

Fund

Investors

Fund Administrator,

Custodian & Trustee

Investments

Fund Manager

Fund managementFinancial adviceDealing in securitiesMarketing CIS

Dealing in securities

Custody services for securitiesTrustee services


• Onshore-Offshore Model or virtual offshore fund manager

• Not permissible, in breach of the laws & regulations

• Be aware of Section 339 SFA which has extra-territorial effects

• 3 main risks

Legal

Regulatory

Tax

• Is the position different in Hong Kong?

Regulatory Framework for Asset/Fund Managers

11

Cayman

Fund

Foreign Investors

Fund Administrator,

Custodian & Trustee

Global / Regional

Investments

Cayman Fund

Manager

Locally Based GPs, Advisers,

Consultants


• Singapore Fund

Flexible Structure– Company, LP, unit trust, or “SPC”

– Look out for new proposed Singapore Variable Capital Companies regime

Efficient & low cost to set up & maintain

Compliant

– FATCA IGA Model 1, with greater efficiency & certainty

– Member of OECD

– Common Reporting Standards & Automatic Exchange of Information adopter

– Base Erosion Profit Shifting protocol adopter

Benefits of a Singapore Onshore Fund versus Offshore Fund

12


• Singapore Fund

Tax Incentives– Income/gains of Fund is taxed at 17% but there are 2 tax incentives giving zero-

rated tax (subject to conditions)

– There is some GST leakage (notional)

Treaty Country– Double-Tax Agreements with more than 70 countries

– Facilitate more tax efficient downstream investments by the Fund

Onshore Substance– Recognised as an International Financial Centre & onshore funds centre

– Full eco-system for financial & fund services & professional advice

Benefits of a Singapore Onshore Fund versus Offshore Fund

13


Launching a Fund in Singapore

14

Fund

Investments Investments Investments

Fund

Fund Fund Fund

Umbrella Fund

Sub Fund Sub Fund Sub Fund

Feeder Fund

Master Fund

Investments Investments Investments

“Segregated PortfolioCompany” Fund

SP SP SP

Standalone Fund Master Feeder Fund

Umbrella Fund Fund of Funds “Segregated Portfolio Company”

Fund


• Can we set up a fund

• Can we manage a fund

• Can we sub-manage a fund

• Can we sub-advise a fund

• If we manage a fund, can we appoint a sub-manager or sub-adviser

• Can we distribute our fund without additional licence

• Can we distribute funds managed by our related corporations

• Can we distribute third party funds

6. What can we do about funds? Formation, management and distribution?

15


• Restrictions of clients for CMS licence for fund management (restrictedto AI & II) and RFMC

• Current definition of AI

• Proposed expanded definition of AI

• Issue with AI Trusts

7. What is the current definition of Accredited Investors? What are the proposed changes?

16


• Do we need to conduct due diligence on the investment product, legaldocumentation and issuer

• Do we need to conduct due diligence on the private equity or propertythat we advise clients to invest in

8. What is the expectation of due diligence on investment products?

17


• We are not affiliated with any financial institution, can we use the word“independent”

9. Can we use the word “Independent”?

18


• Singapore’s latest development in the funds industry

• Final piece of the Singapore funds puzzle

• Comparable to the Cayman Segregated Portfolio Company structure

• Allows legal segregation of each sub-fund within a single corporate fundstructure

• Open-ended and variable capital structure

• Can only be used for funds

• Must have a Singapore regulated fund manager

• Foreign funds can re-domicile into SVACC

• Improved operational and tax efficiency – can use S13R and S13X taxincentives

10. What is the SVACC?

19


• Capital of SVACC will always be equal to its net assets

• Existing SFA requirements for funds will also apply to SVACC

• Must have at least one Singapore resident director for non-authorizedschemes; at least three directors for authorized schemes

• Must have registered office in Singapore

• Must have Singapore based company secretary

• Subject to audit by Singapore based auditor, must present financialstatements

• Can be used for traditional and alternative funds

• Can be used for mutual funds, hedge funds, PE funds and real estatefunds

10. What is the SVACC?

20


Disclaimer:

This information is provided for generalinformation purposes only and does notconstitute legal or other professional advice. Itis not comprehensive. Specific advice shouldalways be sought in relation to any legalissue. Shook Lin & Bok LLP does not accept anyresponsibility for any loss which may arise fromreliance on the above presentation.

21


Questions?

22


1 Robinson Road #18-00 AIA Tower Singapore 048542 Tel: +65 6535 1944 Fax: +65 6535 8577 E-mail: [email protected] Website: www.shooklin.com

Thank You

23

Tan Woon Hum

Partner

Head of Trust, Asset & Wealth Management

T: +65 6439 4898

E: [email protected]

exclusive aiam workshop for asset/wealth/fund managers 2017 · exclusive aiam workshop for...

Documents