Who are Accredited Investors?

Who are Accredited Investors in Singapore? – MAS Accredited Investor Definition & Criteria

Several situations prompted the Monetary Authority of Singapore (MAS) to strengthen the Securities and Futures Act (SFA) by redefining the MAS definition of Accredited Investor. Events like the 2008 global financial crisis and 2016 bond defaults revealed the need for tighter protection for accredited investors in Singapore. As a result, MAS revised the Accredited Investor Regime, implementing the MAS accredited investor criteria from 8th July 2018.

MAS Accredited Investor Criteria and Requirements in Singapore

If you are an individual, you have to meet one of the following criteria to become an accredited investor.

• Have personal net assets exceeding S$2 million (including primary residence capped at 50%) – a key requirement for accredited investors in Singapore
• Alternatively, earned an annual income of at least S$300,000 in the past 12 months – satisfies the income requirement for accredited investors
• Or hold net financial assets exceeding S$1 million, excluding primary residence – meets the S$1 million net financial assets accredited investor threshold

For corporations, they would be accredited investors if one of these conditions is met.

• If their net assets are more than $10 million according to its latest balance sheet
• Trustees of trusts with MAS approval
• Other people who have the MAS approval

When it comes to joint account accredited investor Singapore status, the following criteria apply to qualify under MAS regulations.

• At least one of its holders needs to be an accredited investor and above or opt-in for this status.
• The rest of the holders will also have to opt-in for the accredited investors despite having not qualified as individuals

Unlike the previous requirements, where only one is necessary, the two conditions apply for joint accounts.

How to Prepare for Accredited Investor Status in Singapore After MAS Approval

Satisfying the required conditions is not enough. It would be best if you prepared yourself mentally for you to succeed eventually.  Here is a discussion of what it takes to become an actually accredited investor.

1. Managing the risk well

Being an accredited investor is the beginning of having to strive in a financially competitive business world. It becomes crucial to have a high-risk tolerance to survive, leave alone thrive. Equally important, you need management skills that can help you manage that risk.

2. Following the 5% rule

High-risk investments could see you lose a lot. That’s why you should consider the 5% rule. It states that you can’t exceed that percentage of your portfolio when dealing with such investments.

3. You need not be selfish

As a great accredited investors, your focus shouldn’t be all about gaining financially. What should drive your interest to invest should be assisting other companies. That’s doesn’t mean not looking for financial gain but also seeing the bigger picture.

Types and Benefits of Being an Accredited Investor in Singapore

There are various categories under MAS regulations in which accredited investors in Singapore fall. These refer to individuals investors who earn annual incomes or assets with the value equal to or more than S$200,000, corporate investors with net assets over S$10 million, and so on. Knowledge of types of accredited investors in Singapore is critical because not all of them will have access to similar opportunities based on their status.

It is very profitable to become an accredited investor in Singapore. Accredited investors benefit from easier access to more types of investment products such as hedge funds, private equity and pre-IPO deals that non-accredited investors do not have access to. Often, these opportunities come along with increased risk (and potential rewards). Also, accredited investors enjoy a more lenient regulatory treatment, quicker execution, and fewer compliance demands which puts them at an advantage.

Individuals and corporations can diversify portfolios, have access to exclusive investment opportunities and establish themselves better in Singapore’s vibrant financial markets by qualifying for the MAS accredited investor criteria.

Conclusion

You have to meet specific criteria to be accredited investors in Singapore. However, you should also keep in mind that meeting them is just the beginning of what it entails. Your mental preparedness is equally important. Meeting the criteria doesn’t necessarily mean that you have what it takes. Keep in mind that there is more to it than just the status.