Offering Collective Investment Schemes in Singapore
Offering Collective Investment Schemes in Singapore
A "collective investment scheme" is an arrangement in respect of any property where: (a) the participants do not have day-to-day control of the management of the property; (b)(i) the property is managed as a whole by or on behalf of the manager; and/or (ii) contributions of the participants and profits/income from which payments will be made to participants are pooled; and (c) the purported purpose or effect of the arrangement is to enable the participants to participate in or receive profits/income arising from the relevant property.
If a collective investment scheme is offered to investors in Singapore it will be regulated under the Securities and Futures Act (Chapter 289) of Singapore and, subject to certain exemptions (discussed below): (a) the collective investment scheme must be either authorised (if constituted in Singapore) or recognised (if constituted outside Singapore) by MAS; and (b) the offer of units in the collective investment scheme must be made in, or accompanied by, a MAS-registered prospectus and product highlights sheet. The collective investment scheme, its manager and trustee/custodian must also comply with MAS Code on Collective Investment Schemes.
Authorisation and Recognition
A collective investment scheme established in Singapore may apply for authorisation (using Form 1 on OPERA) if, among others, the manager holds a capital markets services licence for fund management and there is a trustee approved under section 289 of the Securities and Futures Act that acts as the trustee for the scheme (where the scheme is a unit trust) or is appointed as its custodian (where the scheme is a variable capital company or a sub-fund of an umbrella variable capital company). (For further information on licences and approvals please refer to the Establishment in Singapore page). A collective investment scheme established outside Singapore may apply for recognition (using Form 2 on OPERA) if, among others: (a) the laws and practices of the jurisdiction in which the collective investment scheme is constituted affords investors in Singapore equivalent protection to that provided by authorised Singaporean schemes; (b) the manager is licenced or regulated in its principal place of business and is a fit and proper person; and (c) a Singapore representative is appointed.
Offers of Collective Investment Schemes Made in Reliance on an Exemption
The offer of units in a collective investment scheme will be exempt from the authorisation/recognition and prospectus requirements if the offer is made in reliance on an exemption. Some of the more common exemptions are as follows:
the offer is targeted at "institutional investors" only. (For further information on institutional investors, please refer to the Establishment in Singapore page);
the collective investment scheme is a "restricted scheme" that is offered to inter alia "accredited investors". (For further information on accredited investors and institutional investors, please refer to the Establishment in Singapore page);
the offer is made via private placement to no more than 50 persons within any period of 12 months (i.e. the "Private Placement Exemption"); or
the total amount raised within any period of 12 months does not exceed SGD 5 million (i.e. the "Small Offer Exemption").
The exemptions are subject to compliance with various conditions (e.g., no advertising and specific investor disclosures), which are set out in Subdivision 4 of Division 2, Part XIII of the Securities and Futures Act and the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations. In the case of restricted schemes, a prior notification of the offer of the restricted scheme must be made to the MAS, and annual filings must be made for the restricted scheme at each anniversary of the initial filing of the notification for the restricted scheme (if units in the scheme will continue to be offered to persons in Singapore after the relevant anniversary date).
For further information and guidance on offering collective investment schemes in Singapore, please to the MAS guide to Offers of Collective Investment Schemes