Articles & Events Summary

Variable Capital Companies (“VCC”) – Gateway for Investments into Singapore

On 01^st October 2018, the Parliament of Singapore passed the bill for a new corporate structure, i.e. the Variable Capital Company Bill (“VCC”). This summary provides a break down on the structure & advantages of the Variable Capital Company.
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How to set up a Fund Management Company

Overview of setting up a Fund Management Company in Singapore, along with the various tax incentive schemes that apply here.
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Argus’ Participation in Accounting and Finance show

Mr. Sachin Gandhi, CEO of Argus Global Pte. Ltd. had presented his views in the Accounting and Finance show on the 26^th October 2018 on the topic “Accounting & Technology – Past, Present, and Future”. His viewpoints showcased the influence of technology on accounting as a whole, which has seen a phenomenal growth in recent times.
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Argus’ Participation in Financial Services Event – Venture Capital Fund Management

Mr. Rajiv Premkumar, the Director-Compliance at Argus Global Pte. Ltd., had presented his views on the Venture Capital Fund Management Regime in Singapore. Rajiv spoke in great depth about the recent changes in the capital markets and also about the increased scrutiny of the regulators, which incidentally brought about the new Venture Capital Fund Management Regime.
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Industry News

MAS Issues Guidelines to Facilitate Provision of Digital Advisory Services

This article highlights the attention & oversight that the MAS is now giving to digital advisory services and the fact that greater scrutiny and control measures are required to ensure the efficient deployment of such businesses.
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MAS Proposes Ways to Enhance Financial Sector Cyber Resilience

The Cyber Security Advisory Panel (“CSAP”) of the MAS has provided their concerns regarding the increase of cyber threats, and also how they could harness the advantages of the incoming new technologies while remaining cyber-resilient. The CSAP also discussed some points to increase cyber security such as the use of public cloud, Application Programming Interface (“API”) etc. Visit the link below for information on the topic.
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U.S. SEC warns corporate cyber weakness could violate federal law

The Securities & Exchange Commission (“SEC”) has warned public sector companies to tighten up their cybersecurity control, as the failure to do so would lead to a violation of the law.
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Asia Key to Future Global Crypto Regulatory Framework

This article tells us about the illegal trades which takes place through the use of Cryptocurrencies, prompting the Financial Action Task Force (“FATF”) to come out with regulations aimed at deterring such actions, particularly in Asia.
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EU adopts tougher rules on money laundering

The European Council recently strengthened the existing rules on money laundering by introducing a new AML Directive that further prevents criminals from access to funds.
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New York fines UAE’s largest bank over lax money-laundering safeguards

The State of New York has recently fined the Dubai based Mashreq Bank on the grounds of being not compliant. It had cleared millions of dollars, without the check for money laundering or terrorist financing. As per the investigations by the DFS and New York Federal Reserve Bank found deficiencies in the bank policies, without the due diligence checks as to how a transaction was deemed acceptable.
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MAS Regulatory Updates – Highlights

The new amendments to the Securities and Futures Act (“SFA”), & Financial Advisers Act (“FAA”) came into effect in October 2018, taking into account the new requirements that have been established for the benefit of the financial industry in Singapore.

  1. The amended SFA legislation can be found here
  2. The amended FAA legislation can be found here

The amendments that have taken place in October 2018 also extends to the Forms that current and new Financial Institutions would normally use as a means to communicate changes (license applications, change of address, an update of representative information, etc.) to the MAS.

Summary of some key regulatory updates – October 2018

23rd October 2018 – Guidelines on Applications of Arrangements under Paragraph 11 of the First schedule of the Financial Advisors Act [Guidelines No. FAA – G06]
This regulation is applicable to foreign companies that provide financial advisory services, specifically to arrangements between such a foreign entity and its related corporation which is licensed under this act, where such an arrangement is approved by the authority. These guidelines specify the news assessment criteria and application process for the approval of such arrangements

23rd October 2018 – Guidelines on Applications of Arrangements under Paragraph 9 of the Third Schedule of the Securities & Futures Act [Guidelines No. SFA04 – G03]
This regulation a foreign company to carry on any regulated activity which is effected under the arrangement between the foreign company and its related cooperation licensed under the MAS. These guidelines specify the assessment criteria and application process for the approval of such arrangements

In the Guidelines,
– The assessment for foreign-related corporations have been modified
– The target clientele has been modified

09th October 2018 – Securities and Futures (Offers of Investments) (Use of Term “Real Estate Investment Trust”) (Amendment No.2) Order 2018
This order has come into operation on 08th October 2018. MAS has amended Paragraph 2(1) in the Securities and Futures (Offers of Investments) (Use of Term “Real Estate Investment Trust”) Order 2007

08th October 2018 – Securities and Futures (Offers of Investments) (Shares) (Exemption for Units of Shares) Regulations 2016 (G.N. No. S 408/2016)
These amendments will come into effect on 08th October 2018. There are amendments made to regulations 2 and 3. For more insights kindly get in touch with us.

08th October 2018 – Guidelines on the Interpretation of “Persons who commonly Invest” in Division 3 of Part XII of the Securities and Futures Act [SFA 12-G01]
The objective of the is elaborating the stance taken by the MAS on the statutory definition of common investors as in section 24 of Securities & Futures Act, along with providing the guidance on its interpretation as it is used in section 215 and 216 of Securities & Futures Act.

08th October 2018 – FSG-G01 Guidelines on Fit and Proper Criteria
The MAS has issued guidelines on the fit & proper criteria, applicable to relevant persons who want to carry out any activity which would be regulated by MAS

The MAS has included
– Fit & Proper for Authorized benchmarks and designated Benchmarks,
– Along with definition for an Exempt institution
– Addition of points in the definition of an exempt financial institution

08th October 2018 – Guidelines on Provision of Digital Advisory Services [CMG-G02]
The MAS has guidelines on the Digital Advisory Services, these guidelines incorporate feedback from public consultation from various industry experts. These guidelines will provide which apply to digital advisory services that are either exempt from or fall within the Financial Advisors and Securities & Futures Act.

08th October 2018 – Securities and Futures (Modification of Definition of “Securities” in Section 81SF of Act) Regulations 2018
The MAS has modified the definition of to include the below
– Any unit in a collective investment scheme; and
– Any derivatives contract

08th October 2018 – Securities and Futures (Clearing of Derivatives Contracts) Regulations 2018
In this regulation for clearing of derivative contracts, the MAS has specified the prescribed time when the contracts are entered, the exemptions to the act and to how to keep books & other information. This regulation has already been in effect since 08^th October 2018.

08th October 2018 – Guidelines on Switching of Designated Investment Products [Guideline No. FAA-G10]
The guidelines issued by the MAS are to provide guidance on the process and procedures, which are expected of the licensed and exempt financial adviser, to implement in order to monitor switching of Designated Investment Products, mainly to ensure that representatives do not advise clients to switch from one investment product to another in such a way that would prove detrimental to the client.

08th October 2018 – Guidelines on Addressing Conflicts of Interest arising from Issuing or Promulgating Research Analyses or Research Reports [FAA-G13]
These guidelines pertain to the potential conflicts of interest which may arise from issuing or promulgating research analyses or reports, along with the standards and practices which are expected of a financial institution and their representatives to maintain when addressing such conflicts.

08th October 2018 – Guidelines for Conduct of Business for Execution-Related Advice [Guideline No. FAA-G08]
The guidelines are set up for dealers and trader who provide execution related advisory in relation to any capital market product. These guidelines do not apply to a trader or dealer who listens to their client’s instruction in order to buy or sell any product without providing any recommendation or giving any advice.
There are modifications made in the definition of capital markets products to include specified products.

08th October 2018 – Practice Note on the Disclosure of Remuneration by Financial Advisers [Practice Note No. FAA-PN01]
This practice note clarifies the necessity and mechanics of disclosing remuneration received by a financial advisor when making any recommendation of an investment product or executing a sale or purchase of a designated investment product on their client’s behalf, as well as exceptions thereof.

08th October 2018 – CMI 01/2011: Due Diligence Checks and Documentation in Respect of the Appointment of Appointed, Provisional and Temporary Representatives.
This circular provides updated guidance on the required due diligence and documentation for fit and proper checks prior to the appointment of appointed, provisional and temporary representatives.

08th October 2018 – Guidelines on the Product Highlights Sheet for Offers of Debt Securities, Hybrid Instruments and Equity Securities [Guideline No. SFA 13-G13]
This aims to provide guidance to issuers and their professional advisers in preparing the product highlight sheet for the offer of
– Debt securities,
– Preference shares, perpetual securities, or convertible bonds (hybrid instruments)
– Ordinary shares, units in real estate (“REIT”) or units in a business trust
The Product highlight sheet should be prepared by issuers as a summary of the offering documents for the investor’s benefit.

08th October 2018 – Lodgment Practice Note for retail Collective Investment Schemes
The Securities & futures Act says that no person can offer CIS units unless a prospectus for the same has been lodged with the Monetary Authority of Singapore. This practice note gives us guidance on the application for authorization or recognition of the scheme, at the same time it also provides input on the method of lodging a new prospectus for registration.

08th October 2018 – Guidelines on the Advertising Restrictions [Guideline No. SFA 13-G15]
The MAS has issued guidelines with respect to the Securities & Futures Act on the scope of advertising restrictions under section 272A, 272B, and 275. This includes communication to the relevant person along with the guide to the application for advertising restriction to offers of securities or securities-based derivatives contract made through a crowdfunding platform.

08th October 2018 – Guidelines on the Product Highlight Sheet
This aims to provide guidance to issuers and their professional advisers in preparing product highlight sheet for the offers of the following, where they are accompanied by a prospectus.
– debentures in the form of debentures or units of debentures issued pursuant to a securitization transaction (“asset-backed securities”) and structured notes (including exchange-traded notes) where the offer is made in or accompanied by a prospectus; and,
– Unlisted collective investment schemes (“CIS”) and exchange-traded funds where the offer is made in or accompanied by a prospectus.
The Product highlight sheet should be prepared by issuers and be furnished to investors.

08th October 2018 – Guidelines on Personal Offers made pursuant to the Exemption for Small Offers [SFA 13-G19]
The guidelines elaborate on instances when prospectus and debentures requirements under S. 272A (1) of the SFA will not apply to personal offers of securities or securities-based derivatives contracts of an entity, as well as the kind of relationships which would or would not be considered as a “personal offer”.

08th October 2018 – Guidelines on Maintaining Records of Approval for Advertisements or Publications [SFA 13-G16]
This document provides guidance on maintaining records of approval for advertisements or publications in respect of offers or intended offers of securities, units or derivatives of units in a business trust, or units in a collective investment scheme.

08th October 2018 – Guidelines on Disclosure of Financial Information in Prospectuses [SFA 13-G18]
The guidelines aim to provide clarity on the disclosure of financial information in prospectuses in order for investors and their professional advisors to make an informed assessment of the financial position, performance, and prospects of the entity or business trust that is to issue or has issued the securities or securities-based derivatives contracts in question.

08th October 2018 – CMI 02/2015 Circular to Broker-Dealers on Enhancing Anti-Money Laundering & Countering the Financing of Terrorism Measures and Business Conduct
The Circular lays out the appropriate measures and practices to be followed by Broker-Dealers when conducting their day to day business.

08th October 2018 – Lodgment Practice Note for Securities and Securities-based Derivatives Contracts [SFA PN-04]
The practice notes set out administrative procedures for the lodgments of the prospectus and other documents with regards to Securities and Securities-based Derivatives

08th October 2018 – Guidelines on the Application of Section 339 (Extra-Territoriality) of the Securities and Futures Act [Guideline No. SFA 15-G01]
The MAS has provided guidance on the application of Section 339 with respect to Markets, Clearing Facilities, Capital Markets License & Representative License, and Offers of Investment. The main purpose of this guidelines is to elaborate the stand of the MAS on the scope and application of section 339 in relation to cross-border activities which could constitute an offense under parts II, III, IV, VIII and XIII of the SFA.

08th October 2018 – Guidelines to MAS Notice on Risk Fact Sheet for Contracts for Differences (“CFD’s”)
The MAS has issued guidelines for CMS license holders and exempt financial institutions in the preparation of a risk fact sheet for contracts for differences required under the MAS Notice on Risk Fact Sheet for Contracts for Differences.

08th October 2018 – Guidelines on Criteria for the Grant of a Capital Markets Services License Other than for Fund Management and Real Estate Investment Trust Management [Guideline No SFA04-G01]
The MAS has issued updated guidelines which provide the minimum licensing requirements under the SFA along with the minimum licensing criteria for persona applying for a CMS license to carry out a regulated activity other than Fund Management and Real Estate Investment Trust.

Some of the changes are
– Deletion of trading in futures contracts from the regulated activities
– Modifications in point 3.2 under the criteria for CMS license and deletion of point 3.3, 3.18,
– New base capital requirements in accordance with the specific regulated activity being carried out

08th October 2018 – Guidelines on License Applications, Representative Notification and Payment of Fees [Guideline No. CMG-G01]
The MAS has provisioned guidelines to elaborate on the updated procedures for license application, the appointment of a representative, and payment of fees, amongst others.

Some of the changes are
– Changes in Section II – Representatives section
– Procedures for application of new license (point 2.1, 2.3, 2.4, and 2.5)
– Procedures to add additional types of capital market products to an existing CMS license (in points 3.1, 3.4, 3.5, 3.6)

08th October 2018 / 17th September 2018 – Guidelines on Licensing, Registration, and Conduct of Business for Fund Management Companies [Guideline No. SFA 04-G05]
A major update in September in the guidelines is that an employee may invest as if he/she is an accredited investor, so long as he/she is an employee of the Fund Management Company they are investing with.

08th October 2018 – Code on Collective Investment Schemes
The MAS has issued an updated version of the code that sets out the best practices on the management, operation, and marketing of schemes that managers and approved trustees are expected to observe.

05th October 2018 – Notice on Annual Declaration for Notifications of Restricted schemes
This notice gives lays out the necessity and instances for the lodging of annual declarations on the anniversary or amended anniversary of a restricted Singapore/Foreign scheme.

05th October 2018 – Notice on Listing, De-Listing or Trading of Relevant Products on an Organized Market [SFA 02-N01]
This notice pertains to an exchange which operates in an organized market on which any relevant product will be listed or is listed or is permitted for trading, but it does not apply to an exchange in respect of any excluded warrants listed or is listed or permitted for trading.

05th October 2018 – Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers [Notice No. FAA-N13]

This notice shall apply to
– A person specified in regulation 4 as a financial adviser, as per the regulations in relation to the provision of any financial advisory service relating to any structured deposit
– A person specified in regulation 3 as a financial adviser (Exemption from Section 25 to 29 and 36), as per the regulations in relation to the provision of any financial advisory service relating to any investment product

05th October 2018 – Notice on Reporting of Suspicious Activities & Incidents of Fraud [Notice No. CMG-N01]
This notice on suspicious transactions applies to all who come under the purview of the Securities and Futures Act, and similar to its previous version lay out a format by which such transactions are to be reported internally and to the relevant authorities.

05th October 2018 – Notice to Capital Markets Intermediaries on Prevention of Money Laundering and Countering the Financing of Terrorism [MAS Notice SFA04-N02]
The MAS has issued an updated notice on the prevention of money laundering and CFT, to take into account new excepted categories of institutions that are still required to abide by this Notice.

05th October 2018 – Notice on Minimum Entry and Examination Requirements for Representatives of Holders of Capital Markets Services Licence and Exempt Financial Institutions
Update on the notice to take into account the new categorization of products being dealt with.

05th October 2018 – Notice on Risk-Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences [Notice No. SFA 04-N13]

This notice is issued in pursuant to the Securities and Futures Act Regulation and applies to all holders of capital market service licenses other than
– A holder of a capital market service license for only providing credit rating services or
– A venture capital fund manager
This update primarily provides for CFDs and derivative contracts.

05th October 2018 – Notice on Recommendations on Investment Products [Notice No. FAA-N16]
This notice applies to financial advisers and their representatives with respect to the recommendations made on an investment product and provides updates particularly relating to digital advisory services, as well as increased scrutiny of investor suitability assessments.

05th October 2018 – Notice on the Sale of Investment Products [Notice No. SFA 04-N12]
This Notice provides updates on the use of 3rd party Customer Account Reviews and Customer Knowledge Assessments, particularly with the introduction of Unlisted Specified Investment Products.

 

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