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Questions Every Business Owner Should Ask

QUESTIONS EVERY BUSINESS OWNER SHOULD ASK

The majority of entrepreneurs enjoy creating businesses based on their hobbies or interests. However, because business owners are not legal experts, start-up legalities may be annoying and perplexing. Corporate compliance, intellectual property laws, taxes, rules, and corporate liability are just a few legal issues that will arise as the company grows.

Of course, it’s best to consult a lawyer about your company’s needs, but knowing what to discuss helps.

Here are 8 conversation-starting questions which may be vital for your business’s growth and success.

1.  Why Is It Essential To Keep Business Records?

Small businesses must keep all tax receipts and paperwork. Depending on your business, some contracts may limit your liability if you are sued. Some of the other paperwork your company generates may be useful in the future because it demonstrates how well it is growing. So, talk to your lawyer about what company records to keep. Keeping accurate records from the beginning is easier than searching for them later.

2.  What Are My Risks of Getting Sued As A Small Business Owner?

Some businesses are more likely to be sued (for example, running a skydiving business will be riskier than working as a freelance blogger). A lawsuit could be filed for a variety of reasons. For example, contract disputes are a common source of business liability.

To determine your chances of being sued, you should learn how you could be held legally and financially liable. These risks should then be reduced or eliminated. You should consult a lawyer about these liabilities unless you have legal training.

3.  Can I Use Personal Assets In Running My Business?

Many small business owners do not draw a line between what is personal and what is business. Your business is a mix of your passions, hobbies, and profession.

Keeping business and personal assets separate is difficult but necessary. Even seemingly simple behaviours, like buying office supplies with your credit card, might threaten your assets. If you consider your personal and corporate identities being the same, why wouldn’t a creditor or court?

4.  How Do I Find Investors?

Investors may be interested in your company if it has growth potential. Investors provide small businesses with capital, connections, and information. Accepting investors is not something to be taken lightly. You must understand how the rules for receiving money will affect your business and your freedom as a business owner.

5.  What Qualities Make A Company Attractive To Work For?

Most workers want more than just a good wage and job security. Employees do better when they are provided freedom and respect space. An excellent dynamic employer-employee relationship starts with good leadership. Work with your lawyer to establish best practices before recruiting new team members. This involves clear HR regulations, the necessary paperwork (independent contractor and employment agreements, non-disclosure agreements, termination letters, etc.), and following up with each employee.

6.  How Can I Protect My Brand?

Your company’s reputation is its most precious asset, regardless of industry. Protect your brand from competitors and copycats. A lawyer can register your company’s brand name, logo, and other identifiers. They can aid with brand infringements.

7.  How Do I Ensure That My Business Is Compliant?

Every company must follow the rules and regulations of the country. If you break these laws, you could face fines, penalties, company liability, and personal liability. How do you know which laws affect your business? Without experience, it’s hard to tell if you’ve overlooked a law or rule. The regulations that apply to your business depend on the business entity you chose, where you formed it, and where you do business. If you want to ensure that your company is compliant, consult your lawyer.

 8.  How Do I Make Plans for My Family?

Many small business owners hope to transfer their company or its assets to their family eventually. However, depending on the structure of your business (and your family), this may not be as simple as you believe. A lawyer with experience in estate planning can assist you in ensuring the security and transferability of your business to your family.

Every business is different, and as such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of running your own company.

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Contract Review Made Simple

CONTRACT REVIEW MADE SIMPLE

What is the first thing you do when someone hands you a contract?

Anxious business owners who want to get the deal done may quickly flip through and scan the contract before signing it. Likewise, the more cautious business owners might want to read the contract before committing. But the thought of plugging through the agreement may be too daunting, so they shove it to the bottom of their work pile to read later.

Before committing, more cautious business owners might wish to read the contract. However, ploughing through the agreement may be too daunting, so they push it to the bottom of their work pile to read later. Does this sound familiar to you? You may have done one of these things as a business owner at some point.

Regarding contracts, it is always better to be safe than sorry. Therefore, reading through a contract before signing is essential to understand what you are agreeing to.

By signing a contract without reading, you have essentially agreed to all of the terms and conditions listed in the contract without any understanding. This can be a risky move, as you may not be aware of all of the potential consequences of signing the contract. In addition, if you encounter any problems or issues after signing a contract, it can be not easy to get out of the agreement. So, before you sign anything, be sure to read through it carefully.

Have you ever wondered how lawyers can review the lengthiest contracts at lightning speed?

Well, it’s no secret in our industry that we routinely use checklists when reviewing contracts. In our experience, checklists are essential when reviewing contracts for the first time, as it can be easy to overlook critical items. Using a list, we can ensure that no detail is missed.

You, too, can review your contract in 10 minutes.

 

5 Tips to Review Your Contract

  1. Note the specific requirements in the contract.
  2. Compare the requirements in the contract to the project specifications.
  3. Ensure that all the required information is included in the contract, such as contact information, payment terms, and delivery dates.
  4. Review the contract’s terms and conditions, and ensure they are acceptable.
  5. Ask any questions about the contract, and ensure your queries are answered.

What To Look for During a Contract Review

Contracts can be tricky, and crocodiles are always lurking in the dark. You need to know where to look for these crocodiles. Here are some places where you can find crocodiles during a contract review.

 

1.  Key Clauses & Terms

Confidentiality clauses protect sensitive company information, indemnification clauses protect the company from being held liable for any damages or legal costs, and termination clauses outline the conditions under which the contract can be ended. Dispute resolution clauses specify how any disputes will be resolved. Such clauses are all critical sections in an agreement and should be given extra attention to ensure the wordings are acceptable.

 

2.  Termination & Renewal Terms

Key clauses to look for include automatic renewal language and opt-out windows. Automatic renewals clauses usually mean that the contract will generally renew automatically at the end of the current term. While the clause usually allows for cancellation within a set notice period, many business owners forget to cancel before the deadline. They are then stuck in a contract they no longer want or need.

 

3.  Clear, Unambiguous Language

One issue that often arises when reviewing a contract is ambiguous language. This is when the wording of a sentence is unclear. This can lead to different interpretations by the parties involved. Vague or unclear terms can lead to conflict. It is, therefore, best to revise the wordings to be more precise, if possible.

 

4.  Default Terms

Default clauses set out the terms which would apply where one party fails to meet their obligations. Knowing the potential consequences can help prevent unpleasant surprises down the road.

When reviewing a contract, it is essential to remember to focus on your top 5 concerns and to be on the lookout for any potential crocodiles hidden in the agreement. By using this simple 10-minute review system, you can ensure that your contract will enforce your business deal and protect your interests.

Having difficulties reviewing your contract? We offer video consultation via Lawyer Anywhere so that you can get the help you need. Contact us today to get started.

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EAMs : The Alternative Investment Solution

EAMs : THE ALTERNATIVE INVESTMENT SOLUTION

Before the global financial crisis in 2008, external asset managers (EAMs) were virtually unheard of in Singapore, despite being well established in Europe.

With the growth in wealth in Asia and the decrease in trust from the big banks due to the financial crisis, the ultra-high-net-worth (UHNW) clients realised that they needed someone:-

  1. whom they could trust;
  2. who understood the bank;
  3. who would protect their interests;
  4. who would work with no conflict of interests; and
  5. who is independent and transparent in their dealings.

Given the demand of these UHNW clients who need alternative solutions in managing their monies, EAMs quickly came into the picture and eventually became ubiquitous.

Who are EAMs, and What do They do?

EAMs are usually small and tight-knit organisations staffed by experienced ex-private bankers (with a long tenure and proven track record) who generally moved because they were tired of pushing non-sustainable products to their clients or were looking for a better work-life balance.  EAMs operate differently from private banks; they tend to be leaner and more agile and are more competitive on pricing.

People might be hesitant to entrust their assets to an EAM because they are concerned about safeguarding their assets. They are worried about whether their assets will be safe in an emergency. The most significant advantage of an EAM is that the EAMs do not and cannot hold assets in custody like a bank.  As such, the clients do not have to deal with the hassle of moving their assets from their current bank and are assured that their assets stay safe and all asset management is handled by the EAM exclusively.

EAMs are not employed by banks but employed by their clients. They are independent of the bank and are not pressured to meet product sales targets.  They offer flexibility and personalised client services.  They are not pressured to meet targets for selling “the bank’s products”.  Instead, they can provide products and services from a wide range of service providers and propose a more flexible investment plan that fits their clients’ portfolios.

EAMs provide more than just investment advice; they provide bespoke services based on their client’s profiles and demographics.  UHNW clients are looking for more than investment advice; they want to be treated as individuals with unique needs and demands. Many EAMs also offer tax consultations, legacy planning and real estate planning.

While the EAMs can pivot faster to changing market conditions than the private banks, they are not a substitute for the private banks.  Instead, the EAMs act as a type of intermediary between the wealth holder and investment avenues. Since they rely on the banks’ expertise and resources to act as custodians, the relationship between the EAMs and the private banks is more collaborative than competitive.

The key to Singapore’s placement as one of the leading global financial hubs is the robust regulatory framework for the financial services industry. The regulatory framework in Singapore is designed to protect investors and consumers and consists of three main pillars: (1) a robust legal framework, (2) solid regulatory institutions, and (3) an effective enforcement regime.  As such, while the EAMs do not have to comply with stringent regulations like the banks, they are also subject to similar ever-changing laws.

In 2009, there were around 80 asset managers in Singapore with assets under management of S$864 billion.   

In 2015, the Monetary Authority of Singapore (MAS) reported 625 registered & licensed assets managers in Singapore, collectively managing around S$2.6 trillion.

Despite the COVID-19 pandemic, in 2022, the number of registered & licensed asset managers in Singapore grew to 1,313, and the assets under management (AUM) grew to S$4.7 trillion.

The financial crisis has opened the door to a whole new era of specialists who are knowledgeable and experienced in their field. Now individuals and organisations can fully believe in the flourishing external management sphere. The growth does not end here. We should expect at least another decade of expansion for the external management sphere.

Setting up an EAM can be a daunting task. We offer video consultation via Lawyer Anywhere so that you can get the help you need. We can walk you through the process and answer any questions you may have. Contact us today to get started.

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Have You Gone For a Legal Check-Up?

HAVE YOU GONE FOR A LEGAL CHECK-UP?

Have you ever missed your annual medical check-up? Have you ever forgotten to send your car for servicing? You need to know that your business is no different if you are a business owner.  A routine check-up can help you identify potential legal issues and risks your business may face. It can also help you ensure that your company complies with the laws.

A Business Legal Check-Up is a vital resource often under-used in the commercial world. This service is a comprehensive review of a business’s legal situation.  It can help business owners assess their current legal standing and identify potential legal issues that could impact their business. By taking a Business Legal Check-Up, business owners can save time and money in the long run.

When was the last time you did a Business Legal Check-Up?

1.  Who Needs A Business Legal Check-Up?

Regardless of age and gender, ever should benefit from routine medical check-ups. In the same way, every business needs to undergo a Business Legal Check-Up now and then. Every business owner should know whether or not their business operations comply with the law. All businesses, whether public or private, are subject to certain specific regulatory requirements which must be complied with. Though private companies are not required to meet the same high standards as public companies, they still must abide by the law.

Small and medium enterprises often lack access to legal counsel, which puts them at a disadvantage compared to giant corporations. This is because most small business owners are focused on increasing sales and reducing overheads and are reluctant to incur expenditure on risk management or regulatory compliance. However, small business owners may not realise that neglecting the legal aspects of operating a business puts them in a vulnerable position.

 

2.  Why Do You Need A Business Legal Check-Up?

No business is immune from legal trouble; even the smallest businesses can be sued if they aren’t adequately protected.

There are many things to think about when starting a business, from the initial planning stages to the day-to-day tasks of running the business. It’s easy to overlook some crucial aspects of running a business, especially regarding the legal aspects.

A business legal check-up can help identify potential legal issues and help you take the necessary steps to protect your business. One of the most important things to do when starting a business is to ensure you are organised and protected legally. This means taking the time to review business law’s basics and ensuring you have the necessary documentation. Things like a business licence, articles of incorporation, and bylaws can help protect your business from legal trouble.

Furthermore, a Business Legal Check-Up allows you to identify the strengths and weaknesses of your contracts, regulatory compliance, and other legal issues affecting your business. That’s why it’s critical to have a Business Legal Check-Up on a regular basis to ensure you’re on track and compliant with the law.

 

3.  How Often Should You Have A Business Legal Check-Up?

There’s no one-size-fits-all answer to how often you should have a Business Legal Check-Up.  The answer to this question depends on several factors, including the size of your business, the sector you operate in and the type of legal issues you might be exposed to.

For example, a small business operating in a low-risk industry, such as a retail store, might only need a legal check-up once or every other year. However, a company that operates in a high-risk industry, such as the financial industry, might need a legal check-up once every quarter.

No matter how small your business is, it would help if you always had a Business Legal Check-Up at least once a year. This is to ensure that your business complies with all laws. Larger companies should have a legal check-up at least every 6 months. This is because the laws are constantly changing, and ensuring that your business is up to date is essential. If you are not sure what laws apply to your business, you should consult with a lawyer. They can help you stay in compliance and avoid any costly fines or penalties.

 

4.  How Does A Business Legal Check-Up Work?

During a Business Legal Check-Up, your lawyer will usually review the following critical issues in your business:

  • Corporate Records, Filings & Registrations – ensuring that your business is registered correctly and all corporate records are up to date and accurate;
  • Relationships Among The Business Owners – reviewing the ownership and management structure of the business and identifying any potential issues or conflicts;
  • Relationships With Its Employees – reviewing the terms of employment and any relevant policies or contracts;
  • Contracts Used By The Business – ensuring that all key contracts are in order and that there are no potential legal issues;
  • Intellectual Property Created Or Owned By The Business – reviewing all intellectual property owned by the company and taking steps to protect it. To keep business ideas and innovations safe and to prevent others from stealing them, it is essential to have a plan in place for dealing with any potential infringements or unauthorised use; and
  • Insurance And Risk Management – review insurance policies to ensure that the business is protected from financial losses in the event of property damage, liability, or other unexpected events.

After thoroughly examining such documents, your lawyer will usually deliver a report describing their findings and recommendations. From the report, you will learn of problems that require immediate attention and those that will benefit your business in the long run. Your lawyer may also recommend that you update your contracts and agreements to reflect the current state of your business. Additionally, they may suggest changes to your documentary processes to make them more efficient and cost-effective.

 

5.  What To Do If You Find A Problem?

As a business owner, it is essential to keep your business legal. This means having regular check-ups to ensure that everything is in order. If you find a problem, it is vital to address it as soon as possible. This could mean hiring a lawyer to help you fix the problem or taking steps to come into compliance. Ignoring a legal issue could lead to severe consequences for your business.

A Business Legal Check-Up is an integral part of maintaining the security and longevity of your business.   It will help you become familiar with business law’s basics and the rules and regulations involved. A Business Legal Check-Up can help identify potential risks and liabilities and provide a roadmap to avoid or mitigate any legal issues.

By consulting with an experienced lawyer, you can help ensure that your business is on the right track and that you are fully protected against any legal challenges that may come your way.

Want to get a Business Legal Check-up? Skip the hassle of waiting to make an appointment with a lawyer. Speak to us over video consultation via Lawyer Anywhere.

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Family Office in a Nutshell

FAMILY OFFICE IN A NUTSHELL

The family office market is one of the fastest-growing segments in the wealth management services industry. However, despite the growth, the industry is often misunderstood, with many people believing it to be either a small niche business or a differentiating factor for the ultra-high-net-worth.

The idea of a family office is nothing new. Royal families have been establishing them for decades to manage the financial affairs of the royal household and their real estate holdings. Meanwhile, billionaires have also been setting up family offices to handle the operation and management of their financial assets. But more recently, affluent individuals, far from being billionaires, are also establishing them.

1.  What Is A Family Office?

The definition of a family office varies, but Forbes says it’s “a private office that handles the financial and personal affairs of high-net-worth families.” Additionally, the family office tends to be private and insulated from public relations. It’s typically mission-based, highly confidential, and takes on personal tasks that ensure the wealthy family would not be exposed to public scrutiny.

 

2.  What Are The Purposes Of A Family Office?

As the responsibilities of a family office vary from one to another, it’s safe to state that there is no standard set of duties. A family office typically takes care of:

  • Consolidates and integrates financial activities of the family members – Rather than letting each family member manage their wealth, a family office can consolidate all the related activities and businesses. This includes investment management, accounting, tax planning, insurance, and philanthropy. Of course, the family office might still work with external advisers for some related activities, but the family office coordinates all the activities.
  • Ensures tax efficiency of the estate by planning distributions from inherited investment
  • Helps to insulate the family from inappropriate business and personal entanglements – The family office can be involved in all the financial and business transactions of the family. As a result, it can prevent unwanted deals by screening them beforehand.
  • Provides professional management of family commercial and real estate holdings – A family office can oversee the management of dairy farms or vineyards. It can also be involved in the day-to-day operations of a luxury hotel. A family office can also manage non-family-owned companies (e.g. corporate startups) or even charities.
  • Provides a central location for coordinating family information – Family members who delegate their business and personal affairs to a full-time family office will enjoy having a one-stop shop for their many requirements. This can include managing emails and maintaining confidentiality regarding their matters.
  • Provides security and safety for the family – This includes providing safekeeping for valuables and precious documents, as well as monitoring the health of family members.
  • Offers complete infrastructure and basic human needs for family members – This includes providing health insurance, managing travel, arranging educational opportunities for children, and so forth.

 

3.  Why Create a Family Office?

Family offices are excellent for managing wealth and holding it within a family circle. They are not meant to serve the entire spectrum of personal, discretionary, and non-discretionary affairs. Those who need comprehensive estate-planning services should look for a full-fledged office suite consisting of an attorney, accountant, and broker-dealer.

 

4.  Key Roles of a Family Office

  • Trustee  :  Discretionary trusts are those wherein beneficiaries can petition the trust maker for funds—for any purpose. However, non-discretionary trusts are set up so that the beneficiaries are only entitled to receive funds upon the trust maker’s death. This is where a family office comes in handy. Since families tend to be protective of their wealth, they can ensure that subjects don’t have access to the trust funds until they are proven worthy. Family offices act as trustees of discretionary trusts for external stakeholders.
  • Investment Agent  :  Certain families feel brokers and financial advisers are not catering to their needs.  Some want to invest in obscure funds or markets that are off-limits to the general public. Others want to hold onto certain assets. Family offices act as investment agents for the assets in question in these cases.
  • Directional Guidance  :  Even though heirs are legally entitled to receive the trust funds at the time of the trust maker’s death, discretion can be used in guiding them. For example, the contingent-inheritance scheme may dismiss children from previous marriages. Similarly, the family office may approve or reject future spouses (by will). This allows them to approve or reject future beneficiaries quasi-judicially.
  • Business Owner Shielding  :  Some high-net-worth families use family offices to shield their business assets from future entrepreneurs looking to claim them. Children are not savvy enough to run a profitable business, so the family office assists in vetting. This allows families to choose the entrepreneurs who will run the companies in question in the event of the trustee’s death.

Families come in all shapes and sizes, just like family offices.  As such, there can be no template for family office structures since they are tailored to the priorities and facts of each family.

The creation of a family office usually takes place when a considerable amount of wealth has been created.  The nature and function of the family office are generally set out by its founder with a specific purpose in mind.  The services of the family office can change over time, as the family grows in size or as the family’s needs change over generations. 

The key function of the family office never changes – it is there to preserve the family’s wealth. 

The best family office is the one that achieves the family’s objectives and visions. 

When protecting your family, it’s vital to get the right advice. If you’re not sure whether you need to appoint a fund management company or MFO or even to set up your own SFO, speak to us over video consultation via Lawyer Anywhere. We can discuss your needs and recommend the best solution for you.

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Guide to Lasting Power of Attorney

GUIDE TO LASTING POWER OF ATTORNEY

A Lasting Power of Attorney (LPA) is a legal document that appoints someone you trust to make decisions on your behalf if you can no longer make them yourself. Getting legal advice from a lawyer when creating your LPA is vital, as some specific forms and procedures must be followed. Our team has years of experience dealing with the Office of Public Guardian, so we can guide you through the process and ensure your LPA is correctly created and registered.

1.  Who Are The People Most Affected?

Around 10% of the Singapore population is at or above retirement age. Many of them are fit, healthy and capable of looking after themselves. But illness and accident can strike anyone, anytime, when least expected.

 

2.  How Can A LPA Help Me?

Many people plan for the future by saving, investing, and buying insurance. They want to be prepared for any possible scenario. Few people think about the possibility of losing their mental capacity which is a real challenge to our physical and emotional well-being. Planning for this event can undoubtedly help reduce stress for our family members.

A LPA helps you appoint people you trust to act on your behalf if you should lose mental capacity. A LPA can give you peace of mind, knowing that your wishes will be carried out even if you cannot communicate them when you are mentally incapacitated.

 

3.  What Is the Difference Between A LPA And A Power of Attorney?

A LPA is only effective when you lose your mental capacity.

A Power of Attorney is only effective when you still have your mental capacity and the scope of powers of your Attorney to act within the powers given by you. If you lose your mental capacity, the powers granted under the Power of Attorney shall be invalid or ineffective.

 

4.  What Could Happen If I Don’t Make A LPA?

Losing one’s mental capacity is not just for the elderly; younger people may become incapacitated through accident or illness. When someone suffers a loss of mental capacity, they can no longer make decisions for themselves and need someone else to do so. This can be difficult for both the individual and their loved ones.

Without a LPA, your family will have to apply to the court to get access and take control of your assets and finances. Applying to the court can be expensive and time-consuming, and there is no guarantee that the court will grant authority to your family members. Making a LPA ensures that your wishes are carried out quickly and efficiently if you become incapacitated.

 

5.  When Does A LPA Take Effect?

A LPA will only take effect if you lose mental capacity and a registered medical practitioner has verified your condition.

 

6.  How Do I Make A LPA?

To make a LPA, there are 2 forms which you can use.

 

LPA Form 1 – Standard Form

The standard form is the most commonly used, allowing the Donor to grant general powers to the Donee with some basic restrictions. 98% of Singapore Citizens who have made a LPA used the LPA Form 1.

The 2 general powers granted in LPA Form 1 are:-

(a)  the Personal and Welfare “power,” deals with matters that involve the person’s well-being. The decisions about the person’s health, where they should be cared for and how. It also involves the medical decisions that may have to be made. These decisions could even have life or death implications.

(b)  the Property and Affairs “power,” deals with matters that involve a person’s belongings and financial situation. It can be pretty mundane, like paying bills, checking that their bank account is in order, looking after investments, etc.

 

LPA Form 2 – Customised Form

The comprehensive form is more complex, allowing the Donor to grant specific powers to the Donee. It also includes more detailed restrictions on the use of the power. Only 2% of Singapore Citizens who have made a LPA used the LPA Form 2.

 

6.  Whom Can I Appoint As My Attorney?

You may appoint anyone you trust to make decisions on your behalf, in your best interests, as your Attorney as long as (1) they are over 21 years old; (2) not bankrupt, and (3) are willing to take on the role as your Attorney, which is a serious responsibility.

ISSUES TO CONSIDER

1.  Whom do you wish to be your Attorney?

2.  Do you want to appoint more than 1 Attorney?

3.  If your Attorney cannot act, do you want to appoint a replacement Attorney?

4.  If you have more than 1 Attorney, do you want them to make joint decisions (i.e. cannot act separately), or can they make decisions separately?

Speak to us over video consultation via Lawyer Anywhere for assistance with your LPA. We can walk you through the process and answer any questions you may have.

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Capital Markets Licence Overview

CAPITAL MARKETS LICENCE OVERVIEW

Singapore is the only Asian country with a “AAA” rating from all 3 major credit rating agencies – Standard & Poor’s, Moody’s and Fitch. This strong credit rating has enabled Singapore to become an international financial centre and one of the leading global financial hubs, with a whole range of international banks setting up head offices and regional headquarters in Singapore.

The key to Singapore’s success is the robust regulatory framework in place for the financial services industry. The industry’s primary regulator is the Monetary Authority Singapore (MAS). All financial institutions operating in Singapore, including banks, insurance companies, stockbrokers, and fund managers, must be licenced by the MAS.

Businesses wishing to conduct any regulated services under the Securities and Futures Act (SFA) must obtain a Capital Markets Services Licence (CMS licence).

The regulated activities are:

  • Dealing in Capital Markets Products
  • Advising on Corporate Finance
  • Fund Management
  • Real Estate Investment Trust Management
  • Product Financing
  • Providing Credit Rating Services
  • Providing Custodial Services for Securities

To obtain a CMS licence, you must fulfil the following requirements.

1.  Services Provided / Target Clientele 

When you are planning to start a business in the financial industry, there are 3 main issues you must consider. First, you need to determine which markets (regulated activity) your business falls under. Second, you must evaluate the expected assets under management (AUM). Thirdly, you will need to determine who are your target clientele.

 

2.  Company Structure and Office Space

Your business entity must be structured as a company incorporated under the laws of Singapore. In addition, you should ensure that the business entity must have a permanent physical office in Singapore that is dedicated, secure and accessible only to your directors and staff. 

 

3.  Company Personnel

To protect and safeguard the interest of investors, the MAS requires that key personnel in the company, such as the shareholders, CEO, directors, and employees are “fit and proper” and possess the experience and track record to carry out the regulated activity. It should be noted that the experience of investing one’s own money is not relevant.  

 

4.  Company Financial Standing

To ensure that the company is committed to the long-term sustainability of the business, the MAS requires the company to meet specific financial requirements, namely base capital and risk-based capital requirements. Any CMS licence holder company should have a reasonable amount of additional capital buffer it needs, bearing in mind the scale and scope of its operations.

 

5.  Company Compliance Arrangements

The key objective of the MAS regulatory framework is to ensure that financial institutions conduct their business with integrity and prudence and are appropriately supervised to minimise the risk of harm they may pose to the financial system and the economy. It also ensures that financial institutions offer a high level of consumer protection and service.

To ensure that the CMS licence holder companies conform with regulatory requirements, the MAS requires such licence holders to implement a compliance structure appropriate for its operations’ size, complexity, and nature and a practical framework for managing risks. The company also needs a robust internal audit and an anti-money laundering framework to discover, assess, comprehend, and manage its money laundering and terrorism funding threats.

 

6.  Internal Audits

The MAS expects all CMS licence holders to be subjected to adequate internal audits. “Adequate internal audits” are those that take into account the scale, nature, and complexity of the licence holder’s operations.

 

7.  Independent Annual Audits

Where applicable, CMS licence holders are subjected to annual audit requirements. Such audit arrangements should commensurate with its operations’ scale, nature and complexity. 

There are stringent requirements that must be met before any company can be granted a CMS license in Singapore. 

The MAS’s timeline for reviewing, processing, and approving any CMS licence application is determined by the business model. It would take no more than 4 months for straightforward cases where the applicant meets all of the required criteria and the documents submitted are in order.

The CMS licence has an indefinite validity period as long as the holders comply with ongoing obligations such as payment of annual licence fees and continued compliance with conditions, rules, and directions as set out by the MAS. Any non-compliance can result in the CMS licence being suspended or revoked.

The list of all CMS licence holders in Singapore can be found in the Financial Institution Directory on the MAS website.

If you want to obtain your CMS Licence, you may be wondering where to start. Speak to us over video consultation via Lawyer Anywhere, and we can help you with your CMS Licence application.

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Shareholders’ Agreement – What’s In It For Me?

SHAREHOLDERS’ AGREEMENT – WHAT’S IN IT FOR ME?

Singapore’s Small & Medium Enterprises (SMEs) account for more than 97% of businesses in Singapore. The absence of Shareholders’ Agreements among SMEs is a huge stumbling block that often results in costly and time-sapping disputes between the business owners and, if unresolved, may lead to the eventual breakup of a thriving business. The lack of a Shareholders’ Agreements also hinders the growth of companies as investors shun uncertainty.

What Is A Shareholders’ Agreement?

A Shareholders’ Agreement is an agreement between the shareholders of a company.

The Shareholders’ Agreements are crucial because it helps define the relationship between the shareholders and helps to ensure that everyone is on the same page regarding the running of the company.

This document can also help clarify how decisions are made and how shares in the company must be dealt with.

If you are a shareholder in a company, it is crucial to have a Shareholders’ Agreements in place.

 

Benefits Of A Shareholders’ Agreement

For the benefits they provide, the Shareholders’ Agreements is an extraordinarily cheap and yet effective way to minimise disputes between owners. The common uses of a Shareholders Agreement include:

 

1.  Provision of Clear Structure – When starting a company, it is essential to have a clear structure. This can be done through a Shareholders’ Agreement. This document would outline the structure of the company, how it is financed, who are the members of the Board, how the company is to be managed, and any other relevant details. A Shareholders’ Agreements can help prevent shareholder disagreements and ensure that the company runs smoothly.

 

2.  Minimising Uncertainty – For any business with multiple shareholders, a Shareholders’ Agreement can help minimise the uncertainty that can come with the death, disability or retirement of a shareholder. A properly drafted Shareholders’ Agreement would provide a proper mechanism for transferring shares in the business. This helps keep the company running smoothly.

 

3.  Confidentiality – Shareholders may have different business interests, some being more active than others in the company. Confidentiality clauses in Shareholders’ Agreements help protect the company from releasing commercial information to competitors or other outsiders.

 

4.  Investor Relationship – When a company is looking for funding, it often turns to venture capitalists. These investors are willing to put up money in exchange for a piece of the company. The Shareholders’ Agreement, in such cases, spells out the rights and responsibilities of each party, including those of the management team and the investors. One of the primary purposes of these provisions is to ensure that the rights of the venture capitalists are protected. If things don’t go as planned, the investors can vote to remove the management team, sell the company, or take any other action they deem necessary. Having Shareholders’ Agreements in place, the investors and the management team can rest assured that their interests are being looked out for.

If you are considering starting a business with someone, you must have a Shareholders’ Agreement. This will protect you, your business, and your interests should anything go along the way. It is also essential to keep the agreement updated as your business grows and changes, as this will ensure that it continues to reflect your relationship with your co-shareholders accurately.

Need help drafting your Shareholders’ Agreement? We offer video consultation via Lawyer Anywhere so that you can get the help you need. We can walk you through the process and answer any questions you may have. Contact us today to get started.

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Types Of Fund Managers

TYPES OF FUND MANAGERS

Do you want to start a fund management company?  If so, it is an RFMC, VCFM, or LFMC? Are you confused by the different acronyms? This article aims to decipher such acronyms to help you better understand the different types of fund management companies in Singapore.

Fund management is one of the regulated activities as set out in the Securities and Futures Act (SFA). 

Fund managers must be registered or regulated to manage third-party investors’ money in collective investment schemes or invest it in securities, including equities, fixed income, and financial derivatives.

There are different types of fund management companies – the category in which they fall would depend on the expected assets under management (AUM) and the type of clients they serve. 

Category 

Registration/Licensing

Target Clientele/ Expected AUM

RFMC

  • Registered Fund Management Company 

Registered Fund Management Company Notification

Restricted to 30 accredited & institutional investors.


Restricted to S$250 million AUM.

 

VCFM

  • Venture Capital Fund Manager 

CMS Licence 

(Venture Capital Fund Manager)

Restricted to only accredited and institutional investors.


Manages venture capital funds only. 

A/I LFMC

  • Accredited/Institutional  Licensed Fund Management Company

CMS Licence 

(Fund Management)

Restricted to only accredited and institutional investors.


No restriction on AUM.

Retail LFMC

  • Retail Licensed Fund Management Company

CMS License 

(Fund Management)

No restriction on type/number of investors.

No restriction on AUM.

The financial and staffing requirements of each category of the fund management company are set out in the table below.

Category 

Financial Requirements

Staffing Requirements

RFMC

  • Registered Fund Management Company 

Base capital of S$250,000

2 full-time Singapore-based employees, each with at least 5 years of relevant experience.

VCFM

  • Venture Capital Fund Manager 

None

2 full-time Singapore-based employees.

Category 

Financial Requirements

Staffing Requirements

A/I LFMC

  • Accredited/Institutional LFMC 

Base capital of S$250,000


Required to maintain financial resources which are more than its total risk requirements

2 full-time Singapore-based employees, each with at least 5 years of relevant experience.


An Independent and dedicated compliance function in Singapore is required if AUM is at least S$1 billion.

Retail LFMC

  • Retail Licensed Fund Management Company

Base capital of S$500,000 or higher


Required to maintain financial resources which are more than its total risk requirements

3 full-time Singapore-based employees, each with at least 5 years of relevant experience.


CEO must have at least 10 years of relevant experience.


An Independent and dedicated compliance function in Singapore is required.

The business model will determine how quickly MAS assesses, processes, and approves applications. It shouldn’t take longer than 4 months in simple circumstances where the applicant satisfies all requirements, and the presented paperwork is in order.

Lawyer Anywhere is the perfect solution for busy entrepreneurs who want to get their business off the ground quickly and easily. With our help, setting up your fund management company will be a breeze. We’ll walk you through the process step by step and answer any questions you have along the way. Contact us today to get started!

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Drop-Shipping : Is It Legal?

DROP-SHIPPING : IS IT LEGAL?

Is drop-shipping legal? The simple answer is YES.

Drop-shipping is a legitimate business model many entrepreneurs have used to build successful eCommerce stores. However, there are some legal requirements and considerations you need to know before launching your website.

 

WHAT IS DROP-SHIPPING?

Drop-shipping is an arrangement whereby a supplier agrees to sell goods to a retailer, who sells the goods to customers. The retailer does not take possession of the goods but acts as an intermediary between the supplier and the customer. This type of arrangement is not specifically addressed by any law but is governed by general principles of contract law, agency law, and logistics.

A contract or agreement binds the supplier and the seller in a typical drop-shipping arrangement. Many major eCommerce platforms, such as AliExpress, Amazon, eBay, and others, have recognised and allowed drop-shipping, but with strict terms and conditions that the seller must follow. For example, Amazon does not allow a drop-shipping seller to sell items from suppliers like Amazon itself or suppliers already selling on the platform.

Singapore has no specific regulations or laws governing the drop-shipping industry, and this freedom and discretion allow sellers and suppliers to regulate their relationships as they see fit. While this lack of regulation may seem chaotic, it allows for a great deal of creativity and innovation within the industry.

 

KEY CLAUSES FOR DROP-SHIPPING CONTRACTS

When working with a drop-shipping supplier, you’ll need to pay attention to the following 3 key clauses.

1.  Delivery – You must be clear about the delivery terms. This means that you will need to agree on the delivery date and time, and you will also need to agree on who will be responsible for the delivery costs.

2.  Payment Terms – You must agree on the payment terms. This means you must agree on when and how the supplier will pay for the goods they provide.

3.  Refund and Cancellations – You must agree to the return policy. This means that you will need to agree on what will happen if the delivered goods are not as described or if they are damaged.

Like any other business, drop-shipping businesses are also susceptible to legal risks if they do not take the proper precautions. 

To reduce legal risk, you should take note of the following steps to protect yourself from legal liabilities:-

A.  Obtain A Business Licence

This goes a long way regarding taxation on your products and profits and limits your liability if an issue arises. In addition, it helps improve the legitimacy of your store in the eyes of consumers and suppliers.

B.  Create Documents That Outline Your Business Practices

This includes having a refund policy, outlining your legal agreements, website terms and conditions, privacy policy, and any product and practice disclaimers you may require.

C.  Follow Ethical ‘Best Practices’ In Marketing

Utilise eCommerce and social media platforms without manipulating the rules. Don’t be deceptive in your advertising; follow all email marketing rules and regulations.

D.  Sell Safe And Appropriate Products

Work with reputable drop-shipping suppliers. Only sell genuine products which you are authorized to do so, particularly those trademarked or branded.

Despite what some YouTube experts assert, drop-shipping is not a get-rich-quick scheme. Because of the low entry hurdles in drop-shipping, the market can be very competitive. You should do your homework before starting a drop-shipping business. An effective company strategy must include securing your earnings when purchasing and selling goods or services in/from other countries.

Every business is different. As such, the difficulties that you face will vary. We offer video consultation via Lawyer Anywhere and can help you navigate the ups and downs of starting and running your own company.

Susan Tan

Senior Legal Executive

Qualifications:

With more than 10 years of experience in the financial industry, Susan Tan, who joined us from one of the leading corporate and investment banks in Singapore, provides invaluable expertise and knowledge in corporate secretarial.

She is conversant and familiar with the local regulations and requirements for business entities in Singapore.

As a member of our team, Susan is responsible for maintaining and updating the Company’s statutory registers and records, filing all necessary documents and forms with the Accounting & Corporate Regulatory Authority (ACRA), Ad-hoc assignments such as allotment and transfer of shares, amendment of Company’s Constitution and submission of Annual Return to ACRA.

Apart from corporate secretarial work, Susan has considerable experience and expertise in compliance advisory matters, making her a valuable member of our firm.