An overview of the Amended MAS Code on Collective Investment Schemes
The Monetary Authority of Singapore (MAS) amended the Code on Collective Investment Schemes (Code) on 9 March 2023, following section 321 of the Securities and Futures Act (the SFA) (Cap. 289).
The MAS updated Chapter 10 of the Code to include references to the ASEAN Sustainable and Responsible Fund Standards (ASEAN SRFS) where relevant. These standards guide fund managers in adopting sustainable and responsible investment practices, highlighting the Authority’s commitment to promoting these practices in Singapore’s financial industry. In effect, the updates would aid fund managers in enhancing their investment processes to develop a more sustainable financial system.
ASEAN Sustainable and Responsible Fund Standards
The ASEAN SRFS was developed to establish minimum disclosure and reporting requirements for collective investment schemes (CIS) seeking to qualify under the standard. The standards were implemented to increase CIS focused on environmental, social, and governance (ESG) investments.
These standards aim to ensure uniform and transparent disclosure of information, thereby reducing the risk of greenwashing in the industry. It also guides CIS or CIS operators on disclosing information important for sustainable and responsible investing.
What are Collective Investment Schemes?
The Code defines a CIS as a pooling of money by investors for investment purposes, such as unit trusts, investment funds, and limited partnerships. Such schemes must comply with the Code’s requirements, including best practices for managers, trustees, directors and custodians of a VCC or sub-fund, in addition to their existing duties.
A CIS is also defined as an arrangement in respect of any property which satisfies the following elements:
- Participants have no day-to-day control over the management of the property.
- Either or both characteristics are present:
- The property is managed as a whole by or on behalf of the manager,
- Participants’ contributions are pooled, and profits/ income from which payments are to be made are
- (Purported) purpose or effects of the arrangement is to enable members to participate in or receive profits/ income from the property.
Requirements for Offers of Collective Investment Schemes
Offers of units in a CIS are subject to regulations under Division 2 of Part XIII of the SFA. Unless exempted, an offer of units in a CIS must comply with the following requirements:
- The CIS should either be authorised by the MAS if it is constituted in Singapore or recognised if it is constituted outside Singapore.
- The offer of units in a CIS must be accompanied by a MAS-registered prospectus and product highlights sheet.
The submission process for prospectuses, offer documents, and applications for CIS authorisation or recognition and business trust registration in Singapore will be streamlined through the Offers and Prospectuses Electronic Repository and Access (OPERA) public portal.
Breach of Code
A breach of the Code does not automatically result in criminal proceedings against the responsible person. Nevertheless, the Authority may consider such a breach when deciding whether to revoke or suspend approval or acknowledgement of the scheme or refuse approval of new schemes proposed by the same responsible person.
Trustees or custodians of a VCC or a sub-fund who breach the Code may also face revocation of approval or prohibition from acting as trustees or custodians for new schemes, as determined by the Authority.
How Bolder can help
The revised Code on Collective Investment Schemes introduces significant changes that managers should be aware of. To prevent potential penalties or revocations, entities involved with the management of CIS must take the necessary steps to ensure compliance with the amended Code.
Bolder Group has a team of experienced experts that can offer regulatory services and assist you in navigating the updated Code to ensure your funds remain compliant.
Contact our team at the Singapore office now.