Qualifications and Experience for Fund Management Directors
Introduction of Qualifications and Experience for Fund Management Directors
Because the financial sector in Singapore is strictly managed, directors and key staff of a Fund Management Company (FMC) are essential in making sure the business operates well and investors’ interests are safe. There is close monitoring of suitability and abilities of potential fund managers by MAS to help keep Singapore’s place as a top fund management hub.
It looks at the basic rules, qualifications and required experience for directors and key people in a FMC. It plays a major role for businesses seeking a Capital Markets Services (CMS) license and serves as a deep dive into fund management in Singapore guide.
Understanding “Directors” and “Key Personnel”
Be sure to know who counts as directors and key members in the context of fund management rules before starting the requirements.
Who Are Directors?
A director in a fund management company is someone who has been formally appointed to the board as per the Companies Act 1967. These professionals are legally required to manage governance, risks and compliance matters.
Who Are Key Personnel?
Essential members of the management team are often:
- The title given to the senior-most person in a company is Chief Executive Officer (CEO).
- Executive Directors (EDs)
- Many Responsible Officers (ROs) hold this position, mainly in RFMCs and A/I LFMCs
- Portfolio Managers
- Compliance Officers
MAS evaluates these people based on how much impact they have on fund management, setting strategy and maintaining regulations.
Regulatory Framework: MAS Fit and Proper Criteria
The MAS reviews the fit and properness of directors and key staff using the “Fit and Proper Guidelines” (FSG-G01). MAS uses these guidelines on all FMCs that it regulates.
The major parts of a fit and proper assessment are:
- Honesty, integrity and reputation
- Being capable and confident
- Financial soundness
If a business person does not meet all of these requirements, they may not be allowed to become a director in an FMC.
Qualifications and Experience: General Expectations
1. Educational Background
Having a tertiary degree in finance, economics, business administration, law or accounting is usually necessary for directors and key staff members. Examples include economics and finance course Singapore for finance professionals.
- A Bachelor’s or Master’s degree in Finance, Economics, Business or a similar subject
- Certifications like:
- A Chartered Financial Analyst (CFA)
- Certified Public Accountant (CPA)
- Certified Chartered Alternative Investment Analyst (CCAIA)
- Financial Risk Manager (FRM)
Having these licenses is not required, but they make a person’s application for a CMS licence much stronger.
2. Professional Experience
MAS values a lot of relevant work experience in the industry. Specifically:
- A director should have no less than 5 years of experience as a senior manager, preferably in financial institutions, asset managers or fund structures.
- A Portfolio Manager or RO must have at least 5 years of experience in managing or deciding about investments in securities, derivatives or similar products.
- Before becoming a Compliance Officer, it is expected that they have worked in regulatory compliance related to fund management or other areas of capital markets.
The person should have worked with investments, rules and risk management in the last 10 years and demonstrate a deep understanding of them.
Role-Specific Requirements
A. Executive Directors
The Executive Director (ED) needs to:
- Place the company in Singapore.
- Ensure you are aware of and involved in how the FMC runs on a regular basis.
- Manage major strategies as well as the daily running of operations
- Show past involvement in managing funds, making investment decisions or taking care of risks.
LFMCs are required to designate at least 2 EDs and one should live in Singapore.
B. Responsible Officers (ROs) – For RFMCs and A/I LFMCs
It is a requirement of MAS to have at least 2 registered officers appointed. What is needed are:
- At least 5 years in finance, specifically with investments
- Experience in managing portfolios and understanding of a variety of investments
- Being responsible for making and carrying out investment strategies.
- Compliance obligations outlined by the Securities and Futures Act (SFA).
At least one RO has to live in Singapore and take part in daily management of the FMC.
C. Chief Executive Officer (CEO)
The CEO ought to:
- Get broad experience in leading in the financial services sector (typically for 10+ years)
- Familiarize yourself with company governance, how investments are organized and rules that protect investors
- Show skills in setting up controls internally and overseeing compliance.
- Have a base in Singapore (or be supported by an ED who is based there)
MAS will check if the CEO has enough time and authority to carry out their tasks which is important when a CEO holds two roles.
D. Compliance Officer
Important expectations are that:
- Familiarity with Singapore’s framework of rules (e.g., SFA, AML/CFT regulations)
- Capability to design, implement and keep track of compliance programs
- Previous work in compliance, legal or regulatory audit in the financial sector
- It is best to keep control of procurement separate from that of investment activities (larger FMCs should pay specific attention to this)
Supporting Documents Required by MAS
Megabank Asset Solution (MAS) expects FMCs to include the following when submitting an application:
- A full list of the directors’ and key personnel’s qualifications
- The Fit and Proper Declaration Forms (such as Form 11)
- School documents, including transcripts, qualifications and certificates
- Licenses like being a Certified Financial Analyst (CFA) or a Certified Public Accountant (CPA)
- You can provide additional reference letters or endorsements (they are not required, but can help).
MAS might ask for meetings or further information to gain more understanding during the evaluation.
Common Pitfalls to Avoid
- Lack of Relevant Experience
It might not be enough to have experience in general finance or accounting. MAS requires that companies mange funds themselves or have dealings in capital markets. - Passive Directors
MAS is concerned about directors who have a status as nominees or are not much involved in the management or running of the company. - Inadequate Local Presence
Not having an executive director or management staff on-site can make LFMCs ruled out for many investors. - Unfit Past Conduct
A person might still be seen as unfit, despite their excellent experience or knowledge, if they have any previous problems with regulators, bankruptcy or law court proceedings.
MAS’s Discretion and Enforcement
It is the responsibility of MAS to decide if directors and key appointments are approved or not. Even though MAS has approved the change, it can:
- Perform thematic or targeted inspection checks.
- Order issue bans for those who have been naughty
- Need to terminate or replace associates who are not suitable for their roles anymore
This emphasizes the need for FMCs to perform internal checks before appointing or nominating directors, officers or partners.
Best Practices for FMCs
To guarantee that aspects of regulation are followed and long-term compliance is maintained:
- Check the background of all applicants and check references if possible.
- Allocate time and resources for training and development to make sure the company complies with codes and fund governance.
- Find people for office who have proven they are honest and dependable.
- Make sure to stay organized and inform MAS at all stages while obtaining the license
Conclusion
The qualifications and experience that fund management company directors and staff have to meet are kept purposefully high in Singapore. Technical ability, related experience and following ethical standards are important for MAS to maintain confidence in the market and among investors.
Living up to the standards and using best practices, FMCs can gain regulatory approval and grow in a sustainable and respected way in Singapore’s busy fund management sector.
