Singapore Fund Management Director Residency
Introduction of Singapore Fund Management Director Residency
Singapore is now recognized around the world for being a top asset management hub, due to its well-designed laws, advanced infrastructure and supportive business policies. At the center of the framework is MAS which oversees FMCs within Singapore under the SFA.
One must give special attention to the qualifications and location of directors at a fund management company in Singapore. The MAS requires special rules so that local accountability, supervision and compliance with rules are upheld.
This article looks closely at the rules for directors of LFMCs regarding their residency requirements. It covers the reasons for these requirements, defines what a resident director is and describes what happens if a company doesn’t comply, offering customized fund management solutions for director residency.
Understanding the Types of Fund Management Companies in Singapore
Management companies in Singapore are mainly divided into three categories:
- Retail Licensed Fund Management Company (Retail LFMC)
Is equipped to manage the funds of all investors, including those who are retail. - Accredited/Institutional Licensed Fund Management Company (A/I LFMC)
Allowed only to oversee assets for people or organizations considered accredited investors (AIs).
All company types are regulated to an extent and all have the same requirement: that directors live in Singapore.
What Are the MAS Residency Requirements for Directors?
1. Minimum Number of Directors
Every LFMC must appoint at least two directors. Still, MAS adds that at least one of the directors must have a Singapore address.
As a result of this requirement, fund management companies have real value and are responsible in Singapore. It is important for MAS to interact with senior executives at market entities for regulatory checks, inspections or guidance.
2. Executive Director Residency Requirement
Of note, an executive director, among other things, must serve as one of the directors.
- Has daily obligations related to the way the business is run.
- Is considered an ordinarily resident of Singapore.
The person must live in Singapore for a long time to help manage and uphold the regulations and operations.
Who Qualifies as a “Resident” Director?
MAS and ACRA, one of Singapore’s main government regulators, define a “resident” director as someone who:
- Someone who is a Singapore Citizen,
- A Singapore PR,
- A person with an Employment Pass (EP) or an EntrePass who lives in Singapore.
Having a local figurehead named because of their Singaporean citizenship is not enough; MAS wants them to truly represent Singapore in banking.
Key Considerations:
There are important factors to think about when selecting a Resident Director in Singapore which depend on the individual’s status. When you are a Singapore Citizen, you are automatically given the role of Resident Director. Singapore Permanent Resident (PR) status works the same, as long as they are living in Singapore. As long as you are a valid EP Holder living in Singapore, you qualify for this incentive. Still, a Dependant Pass Holder is not suitable, unless they also own an Employment Pass as well. Similarly, because they do not meet MAS criteria, a Foreign Director living abroad is unable to become a Resident Director.
Why Does MAS Impose Residency Requirements?
There are many important reasons why the residency requirement is needed.
1. Operational Oversight
MAS would like to see FMCs having real business and operations in Singapore. An executive director who lives in the country watches over the company’s investments and compliance activities each day.
2. Regulatory Access
Local directors give MAS the flexibility to check conditions, talk with people and do investigations whenever needed. It means you can react faster and gain stronger transparency.
3. Business Continuity
During business disruptions such as problems with finance, regulations or major staff leaving, the resident director acts as the main contact for others.
4. Anti-Shell Entity Measures
MAS has put these residency requirements in place to stop false or sham companies from using Singapore’s reputation for loose banking control. Financial management companies need to show active and authentic work.
Implications for Foreign-Based Fund Managers
A large number of international fund managers choose to set up a subsidiary or branch in Singapore. Investors from overseas are still required to obey local regulations such as appointing:
- At a minimum, there need to be two directors.
- There is just one executive director based in Singapore.
Hiring a Local Director
Managers of foreign investment funds may select a suitable executive director in Singapore who fulfills the MAS’s requirements. This individual should not be involved only at the superficial level.
Transferring Existing Talent
If a company wishes, it may bring experienced staff members to Singapore on an Employment Pass. The person must then make their home in the country and actually manage tasks within the company.
How to Demonstrate Compliance with Residency Requirements
When granting a license or registering an FMC, MAS asks for several things of them.
- Reveal all the company’s directors and top management people.
- Show which director (or directors) have their residential address in Singapore.
- Submit documents written by experts such as:
- Copies of your Employment Pass
- The Singapore PR document
- Name, home address and phone number
- Describe how directors are assigned their tasks.
- Explain the part that the resident executive director takes in running the organization.
Incorrect or misleading information could lead to unneeded delays, your application being rejected or further steps taken against you by the government, highlighting the importance of flexible learning formats for compliance professionals.
What Happens if the Resident Director Leaves?
If the resident executive director leaves office or moves out of the country, the FMC should:
- You must tell MAS immediately.
- Choose someone to be a director who satisfies the residency and fit requirements.
- Maintain compliance with rules and the smooth operation of everything.
MAS tends to let members fix the problem, but if that doesn’t happen, consequences can follow.
- The suspension of a driver’s license or registration
- Administrative penalties
- The status of operating is revoked.
Best Practices for Fund Management Companies
FMCs must regularly take steps to avoid falling out of compliance.
- Always have a plan lined up for future leadership among executive directors.
- Make sure to have several resident directors to help buffer the university.
- Make sure local regulations and compliance are both reliable and strong.
- Keep checking the validity of the residency and level of activity among directors.
Conclusion
A fund management company director in Singapore is required to fulfill residency requirements. An executive director, who is ordinarily resident in Singapore, must be present for each FMC, whether licensed or registered, according to MAS. The requirement is meant to help local areas take charge, regulate activities and assure stable operations.
If residency requirements are not followed, the company may not get or keep its license or registration. Because of this, managers of funds based abroad need to be serious about these rules and include them in their company’s strategic and operational planning.
Singapore’s FMCs are all legally required to have at least two directors. An executive director who lives in Singapore is required among the directors. To comply with this requirement, firms must show real business substance and be accountable and is monitored by the MAS. The position of resident director is available to Singapore citizens, permanent residents (PRs) or people on an Employment Pass (EP) who are physically located in Singapore. FMCs must have arrangements in place to cover possible breaks in a resident director’s employment, showing the importance of having constantly compliant management.
