Exempt Corporate Finance Adviser License Singapore – MAS Requirements & Exemptions
If you are familiar with Singapore’s finance licensing landscape, you may already know that some entities can qualify for an Exempt Corporate Finance Adviser License Singapore. As the name suggests, an Exempt Corporate Finance License allows a firm to operate without holding a full Capital Markets Services (CMS) license under the Securities and Futures Act (SFA). The Monetary Authority of Singapore (MAS) provides specific regulatory exemptions—such as the Paragraph 7(1)(b) SFA exemption Singapore—to promote innovation while maintaining compliance for qualified corporate finance entities.
The Monetary Authority of Singapore uses some standards to define if a corporation is viable for exemptions. This feature demonstrates MAS stable regulatory framework that ensures that it creates a friendly ecosystem that promotes innovation and efficient services. Are you wondering about the corporate finance licenses and the exemptions? If yes, this piece is the best place to find reliable information about the exempt corporate finance license. Check it out!
What Is an Exempt Corporate Finance Adviser in Singapore? (Under SFA)
Singapore is no secret among the top countries with a world-class regulatory framework giving guidelines on how businesses operate. And the finance sector needs the right licensing except for the exemptions. This detail means that corporate finance runs smoothly without the CMS licensing that corporate finance firms apply for to become legit. Note that despite being exempted, these corporations must follow the basic market practices demanded by the MAS.
Who Can Become an Exempt Corporate Finance Adviser in Singapore? Requirements & Entities
All corporate finance firms are governed by the MAS and follow specific regulations and require the CMS license. However, some firms can apply to become an exemption to the permit depending on the entities they operate. Some of these entities include:
- Financial institutions, including banks, finance companies, and insurance companies, already operate under other MAS legislation. The MAS is among the most stable regulatory bodies globally because it creates the best environments for all the companies; hence, since all these financial institutions already governed by other legislation, they are exempt from corporate finance licenses.
- Individuals who are working for people who are exempts from the licenses. Since these people are working for an exempt party, it is only fair that they don’t require the permit for their operations
- Individuals working for CMS license holders: For instance, a custodian working for a corporate finance firm with a license doesn’t require to get a permit; after all, they are working under the permit of their employer.
- People working under exempt financial institutions: Since these FIs are exempt from the licenses, all their staff don’t need them. However, these individuals must apply for the Singapore Exchange Derivatives Association membership.
The Corporate Finance licensing is under the Securities and Futures’ act, whose primary goal is to create standard rules among all participants of the finance sector. As a result, even the exempt corporate finance firms need to follow some guidelines, including the requirements of the market practices.
Benefits of the ECFA Status
Obtaining Exempt Corporate Finance Adviser (ECFA) status in Singapore makes it easier for companies to give advice on corporate finance without having to go through the full licensing process required under the Capital Markets Services (CMS) license. This exemption, covered by the Securities and Futures Act (SFA), mainly applies to groups that give advice to institutional investors, experienced investors, or a few wealthy investors.
One of the main benefits of ECFA is that countries will have to follow fewer rules in trading with each other. Firms do not need a license for their CMS, which saves them from having to go through a long licensing process, pay yearly fees, and go through some MAS audits. As a result, firms can save money and get to market faster, which entices small advisory businesses, family offices, and private equity consultants.
Additionally, ECFA status lets financial advisors give mergers, IPOs, and private fundraising advice for their clients, as long as the clients are allowed by the law. Because of this exemption, companies can be flexible in their business procedures while still sticking to MAS requirements such as anti-money laundering rules and fit and proper requirements for employees.
Lastly, ECFA companies get to use Singapore’s good reputation in the financial world and follow a simpler set of rules for doing business. With this exemption, firms can use FRA to grow quickly, achieve credibility, and assure their effectiveness on the market.
Limitations and Key Considerations for ECFA Status
Though the status of Exempt Corporate Finance Adviser (ECFA) lets firms enjoy flexibility and reduced rules, it means the firms must know all the rules and guidelines before applying for this exemption.
ECFA is only available to firms who are authorized to advise institutional investors, accredited investors, or expert investors. This results in such firms not being able to serve retail clients, narrowing the business’s operations and possible income levels. Exempt firms also have to comply with the Monetary Authority of Singapore’s guidelines, including requirements related to AML/CFT, risk management, and supervising fit and proper employees.
A further factor to take into account is that most of these services do not require a formal license. While having an exemption makes running a business smoother, it can lead to some challenges when dealing with foreign regulators or other businesses that look for formal licensing. Firms have to send Form 22 to MAS, and they also need to file annual declarations to stay exempt.
Moreover, MAS can withdraw the exemption if the firm fails to keep up its duties or tries to provide something that is not allowed under their status. Any change regarding business models, such as taking on new client types, is generally followed by a license to use the CMS software.
To maintain ECFA status and escape penalties, a company should be transparent, follow the law carefully, and follow good governance practices on an ongoing basis.
Conclusion: Setting Up an Exempt Corporate Finance Firm in Singapore
Recent reports claim that Singapore is among the best places to set up a corporate finance firm since it is among the most prominent finance markets in the world. However, the country demands the utmost respects to the set rules by the Monetary Authority of Singapore. There may be exemptions in applying for corporate finance licenses, but every business person must keep the primary market rules in mind.
