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Licensing and Setup advisory

Pre-Setup Advisory Services & Capital Market Services (CMS) license in Singapore

Capital Markets Services (CMS) License

Why you need CMS license?

All FMCs in Singapore are regulated by MAS under the Securities and Futures Act Regulations. To incorporate a FMC in Singapore, it is obligatory to have a CMS license. It is also important that appointments of individual representatives of the FMC represent the FI or CMS licensee. The persons who are acting on behalf of the exempt CMS entities, such as banking institutions or CMS licensees, their appointments as representatives are needed. The following activities regulated under the Securities and Future Act include:

  • Deals involving capital market products
  • Managing funds
  • Provision of custodial services for securities
  • Financing products

Why are annual fees requirement for CMS license?

There are two types of annual fees are as follows:

  1. Fees for the CMS license 
  2. Fees for the appointed representatives

The regulated activities that you are conducting are put into consideration; their total becomes annual fees.

Please refer following information on various types of regulated activities and their annual fees:

  • Dealings concerning capital market products: if you are dealing in Capital Market products, then the range of its annual fees is between S$2000 to S$8000. The exact number of fees depends on several things. There is a variable annual fee of $5 for every representative after the 100th one up to the last one at the start of the year, 1st January to be precise.
  • Others: They include advising on corporate finance, product financing, providing custodial services, REIT management, and provision of credit rating services. The annual fee payable is S$4,000. In counting the fixed annual fee, there is a variable annual fee of $5 for every representative after the 100th one up to the last one at the start of the year, 1st January to be precise.

Why are total processing time for CMS license?

MAS requires, at most, four to six months to assess whether your company meets the required criteria. However, that is only applicable if the business has a straightforward model, the applicants meet all the requirements, and the application is both clear and complete. On the other side, if your case is complex or the submitted information is inaccurate or incomplete, the review may take more time.

What is the CMS License Application Process?

To incorporate any type of FMC/FI in Singapore, a CMS license is required. The process for CMS license application is mentioned below:

  • Decide which financial service you want to provide: Before applying for a CMS license, a FI must decide which of the financial service (s) it wants to be provided in, as the license will cover only the mentioned business. A careful decision has thus to be made at the time of MAS application.
  • Prepare the application documentation: The FI should prepare the essential documents, which include the relevant MAS application form, business structure, financial estimates, compliance policy manual, etc.
  • Submission of the application: The applications must be submitted through the MAS’ electronic licensing system.
  • Review of submitted application: The MAS will re-examine the submitted application. If MAS thinks it is proper to conduct on-site examinations and discussions with relevant persons of the FI to assess the company’s compliance and risk management processes.
  • Approval or Rejection from MAS: The application may have been approved or rejected by the MAS. If the application gets rejected, the company will be informed of a cause for the rejection and may have the chance to appeal the finding.  

After issuance of the license from MAS, the FI need to follow the MAS’ essentials, which include ongoing reports and periodic checks for assurance of continued compliance.

Proper research and understanding of MAS’ CMS license application procedure and looking for expert advice when needed.

Who Conducts the Periodic Inspections?

MAS is the regulatory authority in Singapore. Hence, the MAS conducts a periodic check to make sure that compliance with regulatory requirements.

An FMC which desires to create trustworthiness and reputation with customers/investors should make sure to be prompt in MAS compliance throughout its existence. This process helps out to avoid business discontinuation that is damaging to its status, position, and reputation.

Pre-Setup Advisory

What is Fund Management Company (FMC)?

Fund Management Companies (FMCs) perform all the day-to-day fund management activities in investment funds.

A total of 660 Variable Capital Companies (VCCs) are incorporated or re-domiciled in Singapore for fund strategies till 14 Oct 2022. The Umbrella and Standalone VCC companies represent more than 1,300 sub-funds, and those are managed by 420 regulated Fund Management Companies.

The current MAS report states that there are new 146 new Registered Fund Management Companies (RFMC) & License Fund Management Companies (LFMC) in Singapore. As per the records of December 2021, a total number of firms 1108 are working.  

All the FMCs do work with Accredited Investors (A/I), which are also known as Qualified Investors and Institutional Investors. To perform Fund Management Services, FMCs needs the Capital Market Services (CMS) license issued by the Monetary Authority of Singapore (MAS)  

What are the requirements to form a FMC in Singapore?

While applying to become an RFMC, LFMC, or VCFM, MAS considers the following conditions:

  • Competence and capability of the applicant, its shareholders, and directors.
  • Track previous and current records and fund management expenses of the applicant and its parent company or major shareholders of FMC.
  • Ability to maintain the minimum financial requirements mentioned under the SFA Singapore.
  • The capability of internal risk management systems and compliance systems.
  • Business model/ plans, projections, execution, and the associated risks.

To conduct business in fund management activities, the Company must need either of the following licenses issued by MAS:

  • Capital Market Services License (CMS) as a Registered Fund Management Company (RFMC)
  • Capital Market Services License (CMS) as a Licensed Fund Management Company (LFMC)
  • Venture Capital Fund Manager (VCFM)

For RFMC, the limit for Qualified Investors are 30 Accredited Investors and Asset Under Management (AUM) below 250 Million Singapore Dollars.

The minimum base capital is 250,000 SGD for RFMC.

RFMC license is issued by Singapore’s government to perform business activities in regulated fund management services. RFMCs and LFMCs (A/I) are closely equivalent in reference to maintaining base capital and type of investors.

In Singapore, Fund Management Companies (FMCs) are regulated by the Securities and Futures Act (Cap. 289). To conduct the regulated activities in fund management; the Company must obtain either Registration or License from MAS as a:

  • Registered Fund Management Company (RFMC),
  • Capital Markets Services License (CMSL) as a Licensed Fund Management Company,
  • Venture Capital Fund Manager (VCFM),
  • Or be expressly exempted from holding a license.

Registered fund management company (RFMC) or. Licensed fund management company (LFMC). Managers of venture capital funds may also apply to operate under the venture capital fund manager (VCFM) regime.

(For RFMC the limit is 30 Accredited investors and AUM below 250 Million Dollars).

Every RFMC is required to have a minimum base capital of 250,000 SGD.

Singapore Registered Fund Management Company (RFMC) License is a permit from Singapore’s government for a business to perform regulated fund management services. RFMC is closely related to LFMC (A/I) regarding the minimum base capital and the type of investors.

What are validities of the license or registration of FMC?

The license or registration of FMCs is valid till:

  • The fund manager ceases conducting all the regulated fund management activities mentioned in the CMS license, and the license is called off by MAS or breaks off to conduct business as an RFMC.
  • The license or registration as FMC invalidates by MAS.

We will assist you with the below-mentioned requirements:

  •      Setting up your business as FMC– We will incorporate the significant structure.
  •      License Application as FMC – We will examine your business type and assist you in putting a regulated business objective together with your license application to MAS. We’ll also check and confirm all your relevant documentation need to provide to the MAS prior to the submission of your license application.
  •      Compliance Policies and Procedures for FMC – We will confirm that your policies and procedures are adequately suitable for your business strategy.
  •      Risk Management and Corporate Governance for FMC – We will set up your Risk Management Framework & Compliance Monitoring Plan to make sure that the performed policies and procedures are executed the same.
  •      Compliance Monitoring and Ongoing Compliance for FMC –Alpha team will contact you at your fingertips to make sure that any queries or questions relating to your compliance technicalities are resolved promptly.

Licensing & Registration of FMC in Singapore

Alpha team has a deep understanding of the rules, regulations, guidelines, relevant forms & documents, and processes in relation to getting licenses and registrations in MAS. Alpha follows the process diligently and assists you from the initial business setup to maintaining all ongoing regulated activities mentioned in our services.

We will direct and guide Financial Institutions (FIs) such as fund managers, financial advisers, insurance brokers, and trust managers on the respective licensing requirements to ensure an effortless application process.

  • Our team of Compliance Professionals can assist in the following areas:
  • Advising on the required licensing requirements
  • Advising on regulatory minimum base capital requirements and other financial requirements
  • Preparation and submission of FMC application forms
  • Negotiation with license conditions with relevant authorities
  • Preparation and submission of all documentation relating to operations, corporate governance, and risk management obligations
  • Maintains communication with local regulators.

Frequently Asked Questions

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