The Monetary Authority of Singapore ("MAS") has just published its Response to Feedback on the Proposed Framework for Single Family Offices (“SFOs”). This response paper contains MAS' response to feedback, and further details, on its proposed framework for SFOs, which aims to harmonise the criteria for SFOs to be exempt from licensing under the Securities and Futures Act and address potential money laundering and terrorism financing risks posed by SFOs.
The proposed framework introduces a structure-agnostic fund management licensing class exemption which applies as long as the SFO and its managed assets are owned by members of the same family. Key changes to the initial proposals include: (a) allowing SFOs to manage up to 10% of their total assets for non-family key employees, allowing such key employees to own a non-controlling stake of up to 10% in the SFO, and expanding the definition of key employees to include the Chief Financial Officer and investment professionals of the SFO (in addition to the CEO and executive directors as initially proposed); (b) allowing trusts and foundations managed by the SFO to designate as beneficiaries, charities which are not exclusively funded by the relevant family, provided that they do not have any control over the trust or foundation assets and are merely designated to receive benefits; and (c) requiring fund vehicles managed by the SFO to open and maintain an account with a MAS-regulated bank (in addition to the requirement for the SFO to do so).
Existing SFOs will be given a transitional period of 12 months to make the necessary notifications under the new framework – this 12 months only starts to run from the date the new framework comes into force, which has yet to be confirmed by MAS. As part of the notification, SFOs will also require a legal opinion from a Singapore law firm confirming its compliance with certain criteria. To be clear, all existing SFOs (regardless of whether they are currently relying on the "related corporation" licensing exemption or an ad-hoc licensing exemption granted by MAS) will be required to transition to the new framework as the existing exemptions on which they are relying will be withdrawn at the end of the transitional period.
The Response Paper can be accessed here. Our Financial Services Regulatory Practice has advised on a broad range of issues that concern Financial Institutions. Feel free to reach out to our Partners Elaine Chan, Rosabel Ng, Chan Jia Hui, Tian Sion Yoong, if you have any questions on the above or require assistance with the new framework for SFOs. You may also find out more about our practice here.