MAS Consultation Paper on Repeal of the Regulatory Regime for Registered Fund Management Companies
On 24 October 2023, the Monetary Authority of Singapore (MAS) published a consultation paper on the repeal of the regulatory regime for registered fund management companies (“RFMCs”). The consultation closed on 31 December 2023. The MAS is now considering the responses.
In the consultation paper, the MAS discusses the end of the RFMC regime. Existing RFMCs will need to upgrade to become licensed fund management companies restricted to servicing qualified investors, namely accredited investors and institutional investors, (“A/I LFMC”) or stop carrying out fund management. Since 1 January 2024, the MAS does not accept any new applications for registration as an RFMC anymore. Importantly, the consultation paper does not consult if the regulatory regime for RFMCs should be repealed but only consults on the terms of this repeal. Hence, we may conclude that the regulatory regime for RFMCs will be repealed.
In the consultation paper, the MAS proposes that existing RFMCs will need to apply for and be granted a capital markets services (“CMS”) licence for fund management prior to the repeal of the regulatory regime for RFMCs. For this purpose, the MAS is preparing a special application form requesting basic information on the RFMC’s activities. The MAS will provide further information with respect to the timeline of the application and will respond to all applications from RFMCs within one month of submission. No application fee will be charged if applicants submit during the prescribed application window. Successful applicants will be issued a CMS licence upon the repeal of the RFMC regime. In contrast, RFMCs that do not hold a licence on the date of the repeal of the regulations must cease their fund management activity from that date onwards.
RFMCs are expected to convert to licensed fund management companies restricted to servicing qualified investors, namely accredited investors and institutional investors (“A/I LFMC”), the same restriction as an RFMC. Despite the upgrading of the licence, the MAS intends to maintain the cap of SGD 250 million in assets under management (“AuM”) for converted RFMCs. Converted RFMCs will later need to apply for the lifting of the restriction on AuM once they come close to exceeding the limit. In contrast, the restriction on the number of customers will not apply anymore.
The regulatory requirements and obligations for RFMCs and A/I LFMCs are largely aligned. The main differences between the A/I LFMC and RFMC regimes, apart from the lower fees payable by RFMCs, lie in the frequency and granularity of reporting requirements and the prior notification or approval of certain changes rather than an ex-post notification. The MAS advises fund management companies that do not have in-house compliance support to engage professional compliance service providers to assist them in complying with the applicable regulatory requirements.
In the consultation paper, the MAS has not indicated a date when the regulatory regime for RFMCs will be repealed. Given that the MAS stopped accepting applications for new RFMCs on 31 December 2023, we may assume that the regulatory regime for RFMCs will be repealed in 2024. RFMCs should follow the MAS’ announcements closely to ensure a smooth transition and timely application.
For any further information, please contact:
Rolf Haudenschild
Co-founder
Ingenia Consultants Pte. Ltd.