Proposed changes to licensing regulations impact fund managers and financial institutions

The Monetary Authority of Singapore (the "MAS") released a consultation paper on 6 December 2012 proposing changes to the Securities and Futures (Licencing and Conduct of Business) Regulations (the "Regulations"), summarised below.

Amendments to the definition of "connected person" in the context of fund management licensing exemption

MAS has proposed to refine the definition of "connected person" referred to in Paragraph 5(1)(c) of the Second Schedule of the Regulations. Under the Regulations, an individual can be exempted from the requirement to hold a Capital Markets Services Licence ("CMS Licence") for providing fund management services to a "connected person".

The proposed definition of "connected person" would cover only immediate family members, and firms or corporations which the individual and his immediate family members, whether individually or jointly, have sole control of.

This is because the intent of the exemption is to only cover family members managing funds on behalf of their immediate family members.

Under the present Regulations, a "connected person" is defined in the Securities and Futures Act ("SFA") as:

the individual's spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother, sister or step-sister; or a firm, a limited liability partnership or a corporation in which the individual or any of the persons mentioned in sub-paragraph (i) has control of not less than 20% of the voting power in the firm, limited liability partnership or corporation, whether such control is exercised individually or jointly. The wide scope of the present definition for "connected person" has allowed people to use this exemption to conduct fund management services on behalf...