Secrets to Launching Your Own RFMC
Do you have any questions about launching your own Registered Fund Management Company (RFMC)?
To assist you, here are some of the frequently asked questions.
1. My Company Would Like To Operate As A RFMC. What Restrictions Are Related To Target Clients and Assets Under Management?
RFMCs are allowed to have up to 30 qualified investors (of which no more than 15 may be funds or limited partnership fund structures), AND the total value of the assets under management (AUM) can be at most S $ 250 million.
2. Who Are “Qualified Investors”?
Qualified investors have the financial status and knowledge to understand and bear the risks involved in a particular investment. The term “qualified investor” is built upon the “Accredited Investor” notion.
3. Who Are “Accredited Investors”?
- An Accredited Investor (Individual) is an individual with:
- net personal assets exceeding S$2 million;
- net financial assets exceeding S$1 million, or
- an income in the preceding 12 months is not less than S$300,000.
- An Accredited Investor (Corporation) is a corporation with
- net assets exceeding S$10 million; or
- its entire share capital, which is owned by one or more persons, each of whom is an Accredited Investor (individual).
4. What Happens If The AUM Exceed The Prescribed Limit Of S$250 million?
- RFMCs must periodically monitor the size of the managed assets to ensure that it complies with the limit of S$250 million.
- Any non-compliance can result in either a suspension or revocation of the RFMC status.
5. What Is The Headcount Required For My Company To Operate As A RFMC? Can the Same Person Take on Multiple Appointments Within The Same Company?
- The minimum headcount required for the operation of an RFMC is 2.
- A RFMC must appoint a minimum of 2 Directors (at least 1 resident in Singapore).
- In addition, it must appoint a Chief Executive Officer (CEO) and an Executive Director.
- Both the CEO and Executive Director must be residents of Singapore.
- There is no restriction for the same person to take on multiple appointments.
- As long as the person possesses the required qualification and experience, the CEO can be appointed as Executive Director and the Representative.
6. What Is The Difference Between An Executive Director And Non-Executive Director?
- Executive Directors are (employees) involved in the day-to-day running and making administrative decisions on behalf of the RFMC.
- As they are involved in the day-to-day management of the RFMC, Executive Directors must be residents of Singapore.
- Non-Executive Directors are (non-employees) who provide oversight as members of the Board of Directors.
- Non-Executive Directors are not involved in the day-to-day management of the RFMC.
7. What Relevant Work Experience Do CEOs, Directors And Relevant Professionals Need?
- The CEO and Executive Directors should have managerial experience or experience in a supervisory capacity.
- Executive Directors and Relevant Professionals should have relevant experience in the financial services industry.
- Non-Executive Directors should add value and make a meaningful contribution to the Board of Directors based on their past work experience, qualifications and track record.
8. How Long Would MAS Take To Process A Registration Application?
- The timeline for MAS to review, process and approve any registration application is subject to the business model.
- For straightforward cases where the applicant fulfils all the requisite criteria and the documents submitted are in order, it would take not more than 4 months.
9. Can My Company Commence Business As A RFMC After Submitting Its Registration To The MAS?
- The MAS maintains an online directory of RFMCs on its website.
- The RFMC will be listed in the directory if the MAS approves the registration.
- Before being listed on the directory, the RFMC should not:
- represent itself as being registered with MAS;
- enter into any investment management agreement; or
- receive or invest any customer money.
- The directory is available at this link: https://eservices.mas.gov.sg/fid
10. What Are The Common Reasons For MAS Rejecting Applications For Registration Of A RFMC?
The top 3 reasons are:-
- Lack of experience and track record of key personnel;
- Adverse records of shareholders, directors and key personnel;
- Lack of intent to conduct substantive fund management activity.
11. What Happens To RFMC Registration Status If My Company Delays The Commencement Of Fund Management Activity?
The RFMC registration status will lapse if it has not commenced business within 6 months from the date of issuance of the registration.
Do you have questions regarding how to start your RFMC? Speak to us over video consultation via via Lawyer Anywhere.
Important Disclaimer
The information contained here only provides general information on the covered subject. Nothing in this publication should be regarded as constituting legal advice concerning any particular business, operational or other situations you might face. Further, the law may have changed since the first publication, and the reader is cautioned accordingly. Please seek professional advice before taking any action.