The Venture Capital Fund Managers Regulatory Regime
The Monetary Authority of Singapore (“MAS”) released the much expected regulatory regime for managers of venture capital funds (“VC Managers”) and the consequential legislative amendments to the relevant Regulations and Notices on 20 October 2017 with immediate effect.
Simplified Approach and ongoing obligations
The Venture Capital Fund Managers (“VCFMs”) Regulatory Regime sets clear criteria for entry into the regime and ongoing obligations for licensed VC managers.
The MAS has simplified the means by which VCs are regulated in Singapore now, reducing qualification/experience & capital requirements, as well as business conduct rules, amongst others.
Key areas to take note of for new VCFMs and for LFMCs and RFMCs who qualify for the VCFM Regulatory Regime, are as follows:
One of the main changes under the regime is that qualifying venture capital fund managers are not required to have directors and representatives with at least five years of experience in fund management. However, just like other Singapore asset managers, venture capital managers are required to comply followings:
- Incorporated in Singapore -Permanent office
- Capital Markets Services Licence – Fund Management
- Fit & Proper Criteria – Shareholders, Directors, Representatives & Employees
- Disclosure to Investors- VCFM is NOT subject to all regulatory requirements imposed on other fund management companies
- AML/CFT Requirements- Comply with MAS AML/CFT
- Notice and Guidelines – Periodic Returns, Form 25A Annual Declaration for VCFMs, •Form 23A Notification of Change of VCFM’s particulars
VC managers will also not be subjected to the capital requirements and business conduct rules that currently apply to other fund managers. With regards to business practices, it is no longer mandatory for VC managers to satisfy MAS with regards to the following ongoing business conduct requirements:
independent valuation; compliance capability; internal audit; risk management; custody of assets; conflicts of interest; independent annual audit
Key conditions to qualify for a Venture Capital Fund
the VC manager has to invest in funds that meet the following criteria:
(a) invest in business ventures that are not listed on a securities exchange;
(b) invest at least 80% of committed capital in securities that are directly issued by start-ups that are no more than ten years old;
(c) units of the funds are not available for the new subscription after the close of fund-raising, and can only be redeemed at the end of the fund life; and
(d) are offered only to accredited and/or institutional investors.
What is the next step for VC managers:
- Existing VC managers- Notify MAS of intention to be a VC manager via Form 1V – Application for a CMS license to operate as a VCFM
- New VC managers- Apply for a Capital Markets Services (“CMS”) licence to operate as a VCFM via Form 1V
Argus is here to assist:
We provide the full spectrum of services for VC’s to establish themselves in Singapore. We are able to advise on these new regulations as and when they fall due. We can:
- Assess your eligibility to qualify for the VCFM Regime;
- Apply for a CMS license to operate as a VCFM,
- Develop the compliance framework
- Train stakeholders to comply with regulations imposed and best practices; and
- Support your annual declaration to the MAS by conducting a review of your minimum compliance
Please get in touch with our experts.