Compliance Toolkit For REIT Management

Compliance Toolkit For REIT Management

The REITs industry has risen in significance throughout Southeast Asia, with Singapore as a quick mover in the city, thanks to increased urbanization as well as a flourishing real estate industry. REIT transactions have increased in number and complexity, often incorporating novel and diverse problems inland, trusts, as well as financial regulation, and also cross-border factors.

Criteria for Licensing

• A Singapore-incorporated REIT manager must have a physical office in Singapore that is permanent.
• A REIT manager must demonstrate to MAS that it can carry out its responsibilities effectively, frankly, and equally.
• According to MAS’s Guidelines on Fit and Proper Criteria [Guideline FSG-G01], a REIT manager must demonstrate to MAS that its significant shareholders, directors, officials, and staff, as well as the REIT manager itself, are fit as well as proper.
• A REIT manager must demonstrate to MAS that its controlling owners, if appropriate, have at least 5 years of experience owning, engaging in, or consulting on the form of real estate that is going to be invested by REIT.
• A REIT manager must demonstrate to MAS that its controlling shareholders have strong rankings in their home countries, if necessary.
• In Singapore, a REIT manager can perform the following tasks in relation to REIT management:

1. Compliance
2. Accounting and
3. Interactions with investors.

• The REIT manager’s Singapore operations should play a significant role in the REIT management, in comparison to any other relevant organizations or subsidiary offices, as the case may be, that may also be responsible for the REIT management. The following non-exhaustive considerations are important to MAS evaluation of the Singapore operations’ position in the REIT management:

1. The REIT manager’s board of directors as well as management committees, and also their structure and mandate;
2. The degree to which the REIT manager’s Chief Executive Officer (“CEO”) and Singapore-based directors share in the formulation of investment plans and funding operations.

Criteria in respect of the CEO, Directors and Representatives

 

 

According to Section 96 of SFA, a REIT manager must receive MAS permission before:

• Appointing an individual as its Chief Executive Officer or director; and
• Changing the appointment’s nature of a director from the non-executive nature to executive nature.

A REIT manager’s Chief executive officer should be based in Singapore. However, if the REIT manager oversees a REIT that is predominantly invested in foreign assets, the REIT manager’s CEO might be based in the foreign nation where the REIT’s properties are mainly invested if the REIT manager convinces MAS that this structure is essential to have efficient governance and monitoring on the REIT portfolio.

A REIT manager can inform MAS of a director’s or the CEO’s resignation as soon as possible, but no later than fourteen days from the date of resignation.

Base Capital

A REIT manager must have a base capital of at least $1 million, according to Base Capital Regulation 3 and the First Schedule to the SF(FMR)R.

Financial Resources

The financial capital conditions set out in SF(FMR)R must be met by a REIT management.

Letter of Undertaking/Letter of Responsibility

MAS can enforce a requirement requiring the REIT manager to obtain a Letter of Responsibility1 or a Letter of Undertaking2 (in a manner acceptable to MAS) from its majority shareholder or parent organization under section 88 of the SFA.

Professional Indemnity Insurance

A REIT manager should obtain a technical indemnity policy that meets the minimum coverage criteria outlined in Annex 1.