Family offices - Are you required to be registered or licensed in Singapore?

There has been strong growth in the number of family offices established in Singapore over the years. Depending on the nature and scope of activities, a number of these family offices have operated on the basis of certain exemptions whilst others have seen the need to be duly registered or licensed.

Previously, the formal regulatory treatment of family offices was not specifically addressed in much detail. But, recognising the importance of regulatory clarity in encouraging the growth of the family office industry, the Monetary Authority of Singapore (MAS) has recently clarified its views in certain FAQs on the Licensing and Registration of Fund Management Companies, which was updated on 06 February 2017.

What is a single family office (SFO)?

Generally, a family office is a wealth management company that serves ultra-high-net-worth families. The MAS has made clear that a single family office “typically refers to an entity which manages assets for or on behalf of only one family and is wholly owned or controlled by members of the same family”.

Who is “family”?

The MAS has also made clear that “family” may refer to individuals who are lineal descendants from a single ancestor, as well as the spouses, ex-spouses, adopted children and step children of these individuals.

Are you required to be registered or licensed by the MAS?

The MAS does not intend to license or regulate SFOs.

There are existing licensing exemptions available. For instance, SFOs may rely on the exemptions provided for corporations which manage funds for or provide financial advisory services to its related corporations (Related Corporations Exemptions). The relevant exemptions are set out below: 

 An illustration of the ownership structure for an SFO relying on the Related Corporations Exemptions is set out below:


What if you cannot avail yourself of the above statutory licensing exemptions?

Where your SFO, which is in substance managing funds on behalf of a single family only (as contemplated by the MAS and referenced above), is not able to fit squarely within any one of the existing licensing exemptions, you may apply for a specific licensing exemption from the MAS under section 99(1)(h) of the SFA.

The MAS would typically require the following information to assess an application for the above exemption:

• names of the shareholders and directors of the SFO
• a chart depicting the shareholding structure of the SFO
• a description of how the SFO is related to the investment fund vehicle and the family/beneficiaries
• a description of the profile of the family whose assets will be managed by the SFO, and
• a description of the nature of activities to be carried out by the SFO.

Arrangements which the MAS considers to be broadly typical of SFO arrangements include the following:

• where there is no common holding company, but the assets managed by the SFO are held directly by natural persons of a single family
• where assets are held under a discretionary trust, the settlor of the trust and the beneficiaries are members of the same family
• where a family trust is set up for charitable purposes, the charitable trusts are funded exclusively by settlor(s) from a single family, and
• where non-family members such as key employees of the SFO are shareholders in the SFO for the purpose of alignment of economic interest and risk-sharing, the initial assets and additional injection of funds are funded exclusively by a single family.

Should you have (or plan to have) any of the above arrangements, you should include such information in your application.

How long will your licensing exemption application under section 99(1)(h) take?

The MAS may take between two to four months to review your licensing exemption application. This would depend on, amongst other things, the complexity of the arrangement, the quality of the information submitted, and your responsiveness.

If you intend to establish an SFO, what should you do?

You should have regard to your current and future business plans in deciding whether to rely on any of the above licensing exemptions, or to apply to the MAS to be registered or licensed as a fund management company. Importantly, you should scrutinise your activities, arrangements and “audience” to see if your “family office” is what the MAS has in mind when contemplating SFOs for the purpose of the above licensing exemptions.