Singapore: MAS updates licensing and conduct of business guidelines for fund managers

MAS has recently revised the Guidelines on Licensing and Conduct of Business for Fund Management Companies (Guidelines). These changes affect all companies that hold a capital markets services licence for fund management, i.e., Fund Management Companies (FMCs).

Overall, MAS has only made a few changes to the guidelines, although FMCs should take these into account in case they need to update any internal frameworks, policies and procedures to meet MAS’s expectations.

1. Amended definition of “Managed Assets”

The Guidelines now include a clear definition of “assets under management” (AUM). AUM includes: 

• all moneys and assets contracted to or drawn down by the FMC under discretionary management and in respect of which the FMC is carrying our fund management;
• all moneys and assets contracted to the FMC under non-discretionary management and in respect of which the FMC is carrying out fund management; and 
• moneys and assets contracted to the FMC but which have been sub-contracted to another party for management (whether discretionary or non-discretionary basis).

The definition contains specific clarifications on netting liabilities and on when assets should be considered contracted to an FMC.

FMCs should ensure that their AUM calculation (and relating reporting requirements) align with this revised definition.

2. Updated personnel requirements

The guidelines already contained a detailed table setting out the minimum competency requirements for FMCs. The new Guidelines update this table to include the following requirements: 

• Clarification on Executive Director experience: The guidelines already acknowledged that an FMC may have multiple Executive Directors, and only one of them has to meet the requirements to have five years of relevant experience in portfolio management. However, the revised guidelines confirm that every Executive Director must possess sufficient managerial and relevant experience for their intended roles.
• Updated personnel requirements for Venture Capital Fund Managers (VCFMs): Previously, VCFMs needed to have: (1) at least two directors (one must be full-time and resident in Singapore); and (2) at least two full-time professionals and representatives resident in Singapore (who may include the directors. In the new Guidelines, VCFMs must have:

1. a full-time CEO (who is a resident in Singapore) responsible for daily operations and resident in Singapore;
2. at least two directors, one of whom should be as an Executive Director; and 
3. at least two full-time professionals and representatives who are resident in Singapore.

These are generally minor changes, but it is critical that FMCs review their current personnel and their personnel policies and procedures, to ensure that they currently meet (and will continue to meet on an ongoing basis), these requirements.