Singapore has introduced legislation to make it simpler for investment managers to register funds as the republic looks to attract a bigger slice of the global asset-management industry.
While many asset managers already have offices in the Lion City, most of their funds are registered elsewhere. Singapore’s corporate structure bill was tabled this week aimed to offer investors greater flexibility and it could be used for both traditional and alternative strategies, the Monetary Authority of Singapore (MAS) said.
The “Variable Capital Company” (VCC) framework would increase safeguards by requiring the assets and liabilities of each sub-fund to be segregated, while allowing funds to use Singapore and international accounting standards, MAS said.
The framework also provides safeguards against the commingling of assets and liabilities between sub-funds through the requirement to segregate the assets and liabilities of each sub-fund. MAS said a VCC would be subject to anti-money laundering and terrorism-financing requirements, and are also required to appoint a MAS-approved fund manager.
The variable capital structure of a VCC allows shares to be issued and redeemed without approval from shareholders, while also allowing dividends to be paid using its capital.
BlackRock and Fidelity Investments are among global fund managers operating in Singapore, which are seeking to capitalise on Asean’s growing wealth. Assets under Singaporean management rose 7 per cent to US$2 trillion in 2016, according to MAS.
“The growth of fund-domiciliation activities will create opportunities for a wide range of service providers such as lawyers, accountants, fund administrators and fund custodians,” said Ng Yao Loong of MAS.
In Singapore’s organised political system, the bill is highly likely to become law.
Traditionally, only unit trust structures and investment companies have been available to fund managers in Singapore. However, unit trusts are unfamiliar to much of the western world and investment companies are often considered too rigid.
“Compared to funds domiciled in offshore jurisdictions, which are coming under increasing scrutiny, funds domiciled in internationally recognised jurisdictions, such as Singapore, which has a strong focus on delivering sufficient transparency and protection, are viewed as more trusted and therefore more marketable,” said Armin Choksey, a Singapore-based partner at PwC.
Singapore sees itself as the gateway to the Asean market. Picture credit: Pixabay