Do you find it perplexing to navigate the difficult terms of Singapore’s collective investment schemes (CIS)? Then, do not worry. In this blog, we will delve into the CIS’s intricacies and provide you with actionable insights into the scheme. But before delving into it, let us give you a brief insight into collective investment schemes. These investment vehicles pool money from multiple investors and invest in different asset classes. CISs in Singapore include Mutual funds, Exchange-traded funds (ETFs), Real Estate Investment Trusts (REITs), and any other investment management fund. But what about the security of these schemes? Is there any regulatory authority that monitors the CIS? Yes, the CIS is regulated by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (SFA). Let’s now understand the requirements for offers of Collective Investment Schemes:
What Are The Requirements For The Offer Of Units?
You are required to meet certain criteria in order to offer units of your investment vehicle to the public. These offers of units are regulated under Division 2 of Part XIII of the SFA. Unless an offer is specifically exempted, it has to follow the below-mentioned guidelines in order to sell units in a Collective Investment Scheme:
- If your CIS is in Singapore, it must have authorisation from the regulator; otherwise, it must be recognised by MAS.
- The solicitation to purchase units in a Collective Investment Schemes (CIS) must be presented with or include a prospectus and product highlights sheet registered with the Monetary Authority of Singapore. Also, make sure all the key managerial persons are required to comply with MAS’ Code on Collective Investment Schemes (CIS Code)
How To Get Authorisation?
To get authorisation of your Collective Investment Schemes, you need to apply CIS using Form 1 on OPERA. MAS will approve your authorisation status under two conditions:
- The manager of the fund holds a capital markets services license.
- If you have a trustee for the CIS, who has been approved under section 289 of the SFA.
Note: Authorisation can only be given to companies that are willing to constitute their CIS in Singapore.
How To Get A Recognition?
If you plan to open your collective investment schemes outside of Singapore, you need to apply for this. To get recognised, apply for recognition of a CIS using Form 2 on OPERA. However, there are three conditions you need to fulfill to get recognition status:
- The regulatory framework and procedures of the Collective Investment Scheme’s (CIS) jurisdiction offer Singaporean investors a safeguard comparable to that of sanctioned schemes.
- Collective investment scheme managers must be licensed or regulated at their main place of operation.
- A representative must be designated in Singapore.
Also read, JP Morgan’s Index Open Doors For Massive Investments
Exempted Offers & Restricted Schemes
Under certain conditions, your CIS will be exempted from the Authorisation/recognition of a CIS and prospectus registration for certain units of your collective investment schemes. Further, some schemes are only given to certain people and are referred to as restricted schemes. In this section of the blog, we explore these aspects of the schemes:
Exempted Offers
To avail of these offers, you need to meet the following conditions:
- If, in the last 12 months, the aggregate sum collected does not exceed S$5 million, you will get an exemption.
- If, in the previous 12 months, the private placement offers are restricted to a maximum of 50 individuals.
- If your offers are targeted to accredited or institutional investors.
Restricted Schemes
These schemes are exempted from the scheme authorisation or recognition and prospectus requirements. However, there are certain conditions you need to fulfill. As the name suggests, this scheme is offered only to “relevant persons” as defined in section 305(5) SFA, or at a minimum of S$200,000 per transaction.
In particular, restricted schemes must notify the MAS through the CISNet portal and be included in the MAS list of restricted schemes before making an offer. MAS will add a collective investment scheme to the list of restricted schemes if:
- The offer is presented with an information memorandum that includes key details about the restricted scheme.
- The manager is licensed or regulated to manage the scheme property in the jurisdiction of their principal place of business and is deemed fit and proper.
We have explained the collective investment schemes in detail and explained to you the requirements to start your own investment fund. However, remember that you do not adhere to the rules of an offer for CIS but also maintain a strict code of conduct on collective investment schemes.
