How to Start a Hedge Fund in Singapore?

How to Start a Hedge Fund in Singapore?

Being a rapidly growing country, a wise investor will consider Singapore a worthwhile business opportunity, no doubt. One such area to venture into is starting a hedge fund in such a country. After all, it is one of the few fields that can make you rich within no time. It is also not quite demanding as it entails investing other people’s money. Many people have become filthy rich, courtesy of hedge funds, including John Paulson, Carl Icahn, and George Soros. So, without further ado, let’s look at how to start a hedge fund in Singapore.

 

 

Licensing

There is a licensing exemption if the qualified investors are less than 30 qualified investors. You need a License of Capital Markets Services from MAS if your market is the retail investors. However, you can only get it upon reaching the minimum capital requirement. For offshore hedge funds serving Singapore domestic investors, the regulations of the principal place apply.

For the advisers, the License of Financial Adviser is mandatory. If you issue investment reports, market unit trusts, or provide life insurance products; you need that license. It is also applicable to advisers in investment products such as foreign exchange contracts and life insurance policies.

Some activities require the regulation of the Security and Future Acts. Therefore, you need a license to do business, such as trading futures contracts and dealing in securities and foreign exchange. It is also necessary to provide custodial services, securities financing, managing funds, and advising on corporate finance.

Minimum capital requirement

Protected or capital guarantees hedge fund has no limitation as far as money is concerned. As for a hedge fund-of-fund, the minimum is S$20,000. The single hedge fund has a minimum capital requirement of S$100,000.

Managers Regulations

A single hedge fund needs a manager experienced in such schemes. If a company outsources an adviser or a sub-manager, they should also have the expertise. The manager needs at least two executives with five years of experience in managing hedge funds.

Investors Regulations

Only accredited investors, as per the Securities and Futures Act, can get the services. They need to have a certain amount of total net asset size or annual income, if not more. Otherwise, the minimum amount per transaction can’t be less than S$200,000.

Reports Regulations

A hedge fund should share with its trusted accounts and audited reports. They should be prepared quarterly, semiannually, and annually, and disclose the hedge fund’s money paid or payable. Other vital contents are the portfolio statement and the top10 holdings of the scheme.

Taxation

As long as you source income in Singapore, you must pay income tax to Singapore’s government. That’s regardless of whether the income is coming from a foreign source. As long as you are receiving it in Singapore, you are required to pay tax.

Conclusion

These are conditions necessary to start a hedge fund in Singapore. Some apply before you create one, while others should happen after. Others only apply to a particular group. Regardless, regulations shouldn’t be taken lightly, mainly if you are operating in Singapore. After all, that could cost you a lot.