Corporate Track Record Requirements for Fund Management Companies

Within the fund management area of finance, regulators expect policy makers to focus on due diligence, governance and managing risks. In Singapore, the Monetary Authority of Singapore (MAS) ensures that only quality, trustworthy and skilled entities are given the authority to handle investors’ funds.

Before issuing a license, regulatory bodies focus a lot on the company’s past performance as a fund manager. In MAS, FMCs that want to get a CMS License are expected to show they have sound operational and regulatory histories, high levels of competence and integrity.

This article will look at the role of a corporate record, how to have a strong one, how it is reviewed by MAS and what managers can do to build a better profile before requesting a license.

Understanding the Importance of Corporate Track Record

A corporate track record means looking at how a firm has performed, how it is run, how it operates and if it has met regulations. MAS relies on PFS to tell whether a company will handle others’ funds suitably.

Why Corporate Track Record Requirements Matter:

• Looking after the security of investors
• Working to limit risks to the entire capital market system
• Keeping commonplace business activities in line with regulations
• Helping to ensure that Singapore’s fund management industry is both professional and confident

In looking at a company’s history, MAS studies both statistical and qualitative aspects, including how the business operates, its finances and who leads it.

When Are Track Record Requirements Most Relevant?

A company’s corporate track record matters most when it is seeking:

• A company registered under the License for Fund Management Company (LFMC)
• A VCFM license is also possible under somewhat less restrictive conditions.
• Raising your certificate from RFMC (Registered FMC) to LFMC
• Businesses started by companies outside of Singapore

The management of up to 30 qualified investors and assets of S$250 million by RFMCs is supervised by MAS, but the authority still expects them to have proficient people and operate with some experience.

What Constitutes a Strong Corporate Track Record?

When someone asks if a fund management company has a strong track record, here’s what you will likely find:

1. Proven Investment Management History

MAS wants to see evidence that the fund is experienced in handling funds or special projects. This includes:

• Amount of time a factory has been working regularly
• The nature and dimension of portfolios
• Although MAS doesn’t look at a managed portfolio’s returns alone, it looks at how the portfolio has performed in the past.
• Regularity in how investments are handled and who is served

Managing institutional or accredited investors’ money over an extended period will help your proposal.

2. Regulatory Compliance History

A firm’s regulatory record plays a significant role in the MAS framing. A track record in hand should display:

• Never been subject to regulatory violations or imposed actions by any country’s authorities
• A good history with the regulators of any other spaces you have been active in
• Complying with every relevant law, tax regulation and financial declaration

When a company or its affiliates have received disciplinary measures, MAS examines the situation, how severe it was and what steps were taken to solve the problem. Participating in regulatory compliance training for fund managers Singapore can also help demonstrate a proactive approach to maintaining high compliance standards.

3. Financial Soundness and Risk Management

To assess a corporate track record, its financial well-being and how it manages risks are examined. Targeting any of the following is possible for MAS:

• Financial statements from prior audit reviews
• The required amount of capital and available reserves
• The company deals with internal controls and audit systems.
• Planning for business continuity

This outlook allows MAS to check whether the firm is able to operate continuously and survive tough times.

4. Governance and Leadership Stability

MAS reviews management structure and how firm leaders stay in their positions as part of a company’s background. Signs that things are moving in the right direction are:

• Involvement of top executives over a long period
• No constant or unjustified departures of top-level managers
• Including boards of independent directors along with compliance committees

According to MAS, a company should show clear responsibilities for all roles and a stable core leadership team.

5. Reputation and Market Conduct

To assess a firm’s market reputation, MAS looks at various things.

• Declarations made in the news media
• A collection of comments from clients
• Proceedings taking place against the company or its directors
• Achieving distinctions by industry bodies, collecting prizes and earning accreditations

It’s easier for a business with a good reputation and no unethical past to receive a license.

Supporting Documentation for Track Record Assessment

Documents supported by the company’s history are generally expected by some fund management companies when assessing fixed income accounts.

• Audited financial statements for the past 3 years (if available)
• Client orders and documentation of AUM
• Manuals on following rules and risk management strategies
• Documents or letters of recommendation from people you have worked with
• Charts that explain how the organization is run
• AHR gives you information on directors and senior management through CVs and background checks.
• A list of former regulatory licenses is included in the historical documents.

These records enable MAS to see if the firm meets the standards required for operational maturity.

Track Record Requirements for Startups or New Entities

A frequent challenge comes up when the company has not been operating for a long time or has short experience.

MAS applies a useful and wide-reaching approach to such matters. The analyst looks at the achievements of specific people in charge of certain areas of the business. Specifically:

• Anyone leading or helping with fund management or financial analysis needs strong personal skills in fund management.
• MAS reviews the jobseeker’s qualifications, past experience and past positions.
• When a new entity is part of a global firm, MAS might reflect on that firm’s past performance in their assessment.

Still, if the team in charge has plenty of experience, it can make up for the business’s lack of history.

Special Considerations for Foreign Fund Managers

Most of the time, MAS assesses the merits of a foreign-based fund manager seeking access to Singapore.

• Overall, the parent firm’s achievements throughout the world
• Details of international licenses and the regulation history
• Cross-border guidelines and sets of controls
• There is a tie between the Singapore office and the head office in terms of who reports to whom and what areas are shared

MAS encourages MNCs to ensure their branches in Singapore have suitable local employees, not just serve as contacts for FMCs.

How to Strengthen Your Corporate Track Record Before Applying

When your firm is getting ready to apply for an MAS license and wants to bolster its background, try out the strategies listed below.

1. Advisory or RFMC operations are a good start if you want to eventually become an LFMC flight crew member.
2. Record every mandate, assess performance against goals and show how you comply.
3. From the beginning, set up important internal governance areas (such as compliance, audit and risk).
4. Senior people with experience managing funds should be hired.
5. Contact experienced consultants who can help you apply MAS rules properly.
6. Inform all counterparties, regulators and clients correctly by keeping your business record clean and clear.

Building MAS’s trust is closely linked with taking action to meet regulations and protect investors.

Conclusion

A solid history of achievements by a corporate entity is central to our process for MAS licensing for fund management firms Singapore. It demonstrates how well a business operates, follows laws, is financially secure and is trusted by leaders. When you are applying with seasoned founders or through an asset management group, proving solid and trustworthy experience can greatly help with receiving your license.

Key takeaways include:

• These central elements are: AUM history, compliance with regulations, governance and the company’s reputation.
• Both the business and the individual are assessed by MAS.
• At the beginning, startups ought to bring attention to the crucial skills possessed by their teams.
• Good records and openness with MAS are necessary.

When you achieve a valid reputation and conform to MAS standards, your business will easily go through licensing and be recognized in Singapore’s financial market.