Central bank of Singapore wants to set up new framework for investment funds
By Michael Tegos for TechinAsia
The Monetary Authority of Singapore (MAS) continues to make it easier for investors to set up new funds and operate in the city-state. Today it announced it has opened a public consultation on a new corporate structure for investment funds. People can submit their comments on a number of questions posed in the consultation paper.
At the moment, investment funds in Singapore use three types of legal structures: unit trusts, entities formed under Singapore’s Companies Act, and limited partnerships. MAS is proposing a new structure called the Singapore Variable Capital Company (S-VACC). The new structure will offer fund managers more flexibility and lower costs, according to minister for national development and second minister for finance Lawrence Wong.
The new structure will offer fund managers more flexibility and lower costs.
The announcement was made today during the Investment Management Association of Singapore’s 20th Anniversary conference.
The S-VACC structure is proposed only for investment funds. To qualify as one, a company is required to have a fund manager regulated by MAS. The framework would allow fund managers to segregate assets and liabilities of sub-funds within an umbrella structure – a single entity comprised of several funds. This helps them lower costs by gathering administrative functions for all sub-funds at the single legal entity level.
The framework would cater to both open-ended and closed-end funds. The former allow for new subscriptions by new investors at any time and allow investors to redeem their investments at any time. Closed-end funds have a fixed number of shares and don’t allow for early redemption.
Previously, MAS announced it would relax the regulatory framework for setting up new venture capital funds in Singapore, following recommendations from the Committee for the Future Economy report, in a bid to attract more investment in the Lion City. Singaporean VCs welcomed the move.
MAS will hold this consultation open until April 24.