RESPONSE TO FEEDBACK RECEIVED - CONSULTATION PAPER ON CREATING A NEW FRAMEWORK FOR TRUST COMPANIES

On 19 July 2004, MAS issued a Consultation Paper inviting comments on key elements of a new regulatory framework for trust companies.  The Consultation Paper included a draft of the Trust Companies Bill (the "Bill"). The Annex sets out a list of respondents to the consultation paper.  We have carefully considered all comments received in our policy deliberation and where we have agreed with the comments, incorporated them into the Bill.  References to the "Act" refer to the new Trust Companies Act after it becomes effective.

The Bill was read for the second time in Parliament on 18 February 2005.  The President assented to the Bill on 28 February 2005.

We thank all respondents for their feedback.  Comments of wider interest and MAS' responses are highlighted below.

Please note that some of the exemptions discussed below have been moved from Section 15 of the Bill to the proposed Regulations.    

COMMENTS RELATING TO THE SCOPE OF REGULATION

1.  The Four Limbs of Regulated Activity

We proposed that the scope of regulated activity cover four limbs:  (i) acting as trustee for an express trust ("acting as trustee"), (ii) administering an express trust ("administering a trust"), (iii) creating an express trust ("creating a trust" or "creating") and (iv) arranging for persons to act as trustees of express trusts ("arranging for trustees" or "arranging").

(A) Scope. Some respondents agreed with our policy position.  Others viewed that creating a trust and arranging for trustees should not be regulated, as persons carrying out these activities cannot be tools for illicit purposes, and are already regulated as financial advisers. The higher costs involved in regulating these activities were also of concern. To cater to financial advisers, one respondent proposed to grant exemption to a person arranging for trustees so long as the trustee that person arranges for is a licensed trust company.   Some respondents suggested a different tier of licence for persons creating a trust and arranging for trustees.

(B) Terminology.  Several respondents sought clarifications on the definitions of "express trust", "carrying on business", "(conducting trust business) in or from within Singapore", "arranging for persons to act as trustees" and "creation of trusts". 

MAS' Response

(A)  Scope. 

Persons who create trusts and arrange for trustees should be regulated in order to ensure high standards of probity, professionalism and good business conduct. Creating a trust and arranging for trustees constitute the early stages of trust business.  If a trust business provides services below acceptable standards at this early stage, the trustee will have difficulties administering the trust in the future.  Beneficiaries and settlors may also find that a trust created or arranged below acceptable standards will not fulfill the wishes of the settlor or the rightful expectations of the beneficiary. We also wish to prevent the planning of money laundering^[1] activities that may take place at this stage.  

Often a financial adviser will create a trust or arrange for trustees.  Financial advisers who create trusts or arrange for trustees should be regulated under the framework for trust business and seek a trust business licence.

We agree in principle with the respondent's proposal for an exemption for arranging for trustees if the trustee is a licensed trust company, but the settlors may wish to engage a trustee outside Singapore. To account for this possibility, arranging for trustees must be regulated. To modify the respondent's proposal, we will grant exemption to persons who create trusts and arrange for trustees if those activities are effected under an arrangement with a licensed trust company.  Please see Part 6 below on "overseas persons" for discussion on the meaning of "effected under an arrangement".

We view the approach of having full licensing for those engaging in creation or arranging activities, coupled with exemptions where appropriate, to be the correct approach.  This approach applies a single high standard across all regulated activities.   

(B) Terminology.

"Express trust" is a trust that is created by the act of the settlor. 

"Carrying on business" is commonly used in statutes in Singapore and its precise boundary is a matter of judicial determination based on the facts of each case. 

"In or from within Singapore" is a geographical test.  Activity "in" Singapore is within the geographical boundaries of Singapore. Activity "from within" Singapore is intended to capture any person carrying on trust business geographically based in Singapore who may attempt to claim that the business serves no Singapore clients and is therefore not conducting business "in" Singapore.

Our intention with the words "arranging" and "creation" is to regulate all the planning and documentation activities that are carried out in the preparation of a trust.  There may be some overlap between what constitutes "arranging" and what constitutes "creation", but since these two activities are treated the same throughout the regulatory framework there should not be situations where a distinction needs to be made.  The activities that constitute "trust administration services", "arranging" and "creation" will be described in guidelines.

2.  Exemption for Lawyers and Accountants

We proposed that lawyers and accountants receive an exemption for activities solely incidental to their practice.  We viewed arranging for trustees or creating trusts to be incidental to their practice. We viewed acting as a trustee or providing trust administration services as not incidental to the practice of law or accounting. 

Several respondents agreed with our proposal. Some respondents, however, were of the view that lawyers should be granted wider exemption, stating that lawyers have the competence to and already do act as trustees and administer trusts.

MAS' Response

MAS will propose in forthcoming Regulations exemptions for accountants and lawyers to engage in limited trust business:  arranging for trustees, creating trusts and procedural and non-discretionary trust administration.  We will set out in further detail what types of services may be considered procedural and non-discretionary in guidelines.  The proposed exemption will also include the giving of professional advice.  This will give more precision than the previous proposal to exempt "incidental" activities.

In addition, we will propose a second exemption for lawyers to carry on full trust business, subject to certain limits on the number of clients per lawyer and the amount of assets that may be settled into trust for a client.  This exemption will allow lawyers to carry on the limited amounts of trust business they currently carry on without seeking a licence under the Act.

3.  Exemption for Private Trust Companies

We proposed giving an exemption to private trust companies ("PTCs").  We proposed defining a "private trust company" to be a company that (i) provides trust business services solely to connected persons and (ii) does not hold itself out to the public as carrying on trust business.  We proposed requiring them to notify MAS of the nature and scope of their activities and to comply with AML due diligence requirements. We also proposed requiring them to engage a licensed trust company to administer the trusts for which they act as trustee. 

Some respondents said that PTCs should not be made to give notification of their activities to MAS, nor to hire a licensed trust company to administer their trusts.  These respondents noted privacy concerns with PTCs, and the internal competence of PTCs to manage their own affairs.

Some respondents noted that the definition of "connected persons" needed further development.

MAS' Response

We agree that it may not be necessary for PTCs to give notification to MAS or to engage a licensed trust company to administer their trusts, since PTCs do not hold themselves out to the public as carrying on trust business. However, an unregulated PTC may be abused and there must be some way to ensure that an entity relying on this exemption complies with AML due diligence requirements. We will propose in upcoming consultation on Regulations that a PTC must engage a licensed trust company to perform AML due diligence.  If this proposal is accepted, then there should be no need for the PTC to also notify MAS of its commencement of business, because our AML concerns will be managed by the licensed trust company.   We are of the view that since licensed trust companies regularly carry out AML due diligence in a trust context, they would be the appropriate entities to perform AML due diligence for PTCs.

We are also considering giving further definition to the concept of "connected persons" served by a PTC. The definition of "connected persons" previously set out in Section 2 of the Bill would be expanded to cover more blood and family relations and would be set out in Regulations.  To qualify as a PTC under the new proposal, (a) each settlor of a trust for which the PTC acts as trustee must be a connected person to every other settlor, and (b) each beneficiary of a trust for which the PTC acts as trustee must be a connected person to the settlor of that trust.

4.  Exemption for Banks and Merchant Banks

We proposed that banks and merchant banks be exempted from separate licensing as a trust company if they only arrange for persons to act as trustees or create trusts. We also proposed that a bank or merchant bank be required to give notice to MAS within one month after commencing any regulated activities.

Although some respondents agreed with our proposal, some respondents disagreed that bankers have the necessary expertise to create trusts.  Many respondents also pointed out scenarios, which would be considered as administration of trusts, where banks and merchant banks should be given exemption.  Others suggested a full exemption for banks to engage in all types of trust business.  Some also suggested removing the requirement for banks and merchant banks to give notice if commencing activities regulated under the Act.

MAS' Response

The private banking departments of banks and merchant banks are likely to have skills relevant to the creation of trusts and arranging for trustees and, in limited circumstances, the administration of trusts. 

We agree that the exemption to banks and merchant banks for creating trusts and arranging for trustees should be extended to also exempt trust administration activities that are procedural and non-discretionary in nature. We agree that there are situations in which a private banker may need to provide trust administration services in relation to an express trust.  However, to be exempted under the Act, the trust administration services they provide should be procedural and non-discretionary in nature. In other words, the trust administration should be routine and not require professional judgment. Those who engage in discretionary and non-procedural trust activities will need to be licensed under the Act. We will set out in further detail what types of services may be considered procedural and non-discretionary in guidelines.

The notice requirement is to ensure that MAS is aware of the exempt activity so that MAS may regulate as needed.  We will preserve this requirement.

5.  Exemption for Fund Managers and Custodians

We proposed that fund managers and custodians should receive an exemption from the Act for engaging in their normal scope of activities for which they are regulated under the Securities and Futures Act ("SFA").  Fund managers and custodians could fall within the proposed definition of regulated activity of the Act for administering trusts.  We proposed that if the fund manager or custodian wishes to engage in trust business activities that are beyond the normal scope of activities of a fund manager or custodian, it will either be required to seek a licence, or it will be subject to conditions and restrictions under the Act to regulate these trust business activities.

Several respondents agreed with our policy position.  Some respondents viewed that this exemption should be expanded to include approved trustees for collective investment schemes ("CISs") under the SFA.  One respondent asked for greater clarity on the permissible activities. 

MAS' Response

Fund management and custodial services for securities form an integral part of trust business activities.  They are also the core activities of fund managers and custodians, respectively, licensed or exempted under the SFA.  The Act will exempt them from licensing in respect of these activities. However, if a fund manager or custodian were to engage in trust business above and beyond its core business of fund management or custodial services for securities, it would need a licence under the Act or otherwise to be subject to full regulation under the Act as a trust company. 

We agree that trustees of CISs approved under the SFA should be exempted from licensing under the Act.  We will propose in forthcoming Regulations that they be exempt.  Trustees of CISs technically fall within the scope of the Bill, but the activities they undertake are different from those undertaken by trustees that the Bill seeks to regulate.  The regulatory framework under the SFA for trustees of CISs specifically provides for the regulation of these activities.  MAS is of the view that we can continue to regulate trustees of CISs under the SFA, without also regulating them under the Act.

6.  Exemption for Overseas Persons

We proposed exempting persons who are based overseas and visit Singapore ("overseas persons") to conduct trust business, but limiting the scope of activity that may be engaged by an overseas person to arranging for trustees or the creation of a trust. We also proposed that the activities of overseas persons be effected through a Singapore-licensed trust company, or a person or entity exempted under the Act, so that a person or entity in Singapore will be responsible for each overseas person. 

Some respondents agreed with our position, but others viewed that overseas persons should not be regulated for any activities carried out in Singapore, or that they need not conduct their activities through a local entity.  The respondents' primary concern was that such a regulation would create a business-unfriendly environment and reduce the amount of trust business in Singapore.  Other respondents sought more clarity on the meaning of "effected through".  One respondent also noted that a system similar to section 339 of the SFA and the accompanying paragraph 9 of the Third Schedule of the SFA could be used.

MAS' Response

When carrying out trust business in Singapore, there must be a way to ensure that overseas persons comply with high standards of professionalism and do not engage in money laundering.  The exemption for overseas persons must take this into account and construct an appropriate way to manage these issues. 

In forthcoming Regulations, we will propose some changes to our original proposal. We are considering amending "effected through" to "effected under an arrangement between" the overseas person and the licensed trust company or exempt entity^[2], to increase the clarity of the language.  By "effected under an arrangement between", we mean that the overseas person must carry out its activities through a licensed trust company or exempt entity. In effect, MAS would be placing responsibility on the licensed trust company or exempt entity to perform background checks on the overseas person, review the adequacy of the AML procedures used by the overseas person and review the standards of professionalism of the overseas person.   MAS will issue a Notice in which it will set out these minimum requirements.

Section 339 of the SFA governs actions done overseas that have effects in Singapore and when those actions will come under the SFA.  This is appropriate for a statute governing market conduct.  However, as the Act will not regulate broad market conduct issues, the extraterritorial provisions set out in section 3 are sufficient. Since the overseas person exemption will be automatic, there is no need to create a scheme for approval of arrangements similar to that of paragraph 9 of the Third Schedule to the SFA.

7.  Exclusions from the Act

Some activities may technically fall within the scope of the definition of regulated activity under the Act, yet are not trust business as conventionally understood. We proposed excluding these activities from regulation under the Act.  The activities proposed for exclusion were:

• acting as a bare trustee; 
• acting as trustee-manager of a registered business trust;
• preparing or advising on wills; and 
• acting as executors or administrators of the estates of deceased persons.

Some respondents pointed out that the definition for "bare trustee" should be changed.  Others suggested adding various other exclusions, such as exclusions for trustees of collective investment schemes, exclusion for trustees acting for securitisations and exclusions for trustees of charitable trusts.  One respondent also suggested that the exclusion for trustee-managers of registered business trusts be expanded to include trustees or administrators of unregistered business trusts.  Another respondent suggested expanding the exclusion for executors to cover trustees of a trust arising from an estate.

MAS' Response

Our previous definition of "bare trustee" has been re-crafted as a trustee who has a nominal interest in the subject matter of the trust.

The matter of collective investment schemes is addressed above in section 5.  The matter of trustees acting for securitisations is similar to the matter of trustees in connection with the issuance of debentures, addressed below in section 20. 

As trustees should be subject to the same standards and AML provisions regardless of whether the trust is charitable, exclusion will not be given to trustees of charitable trusts. 

We agree that the exclusion for business trusts should be expanded to apply to all trustees and managers of business trusts, whether the business trust is registered or not.  We have added an additional exclusion for a "person acting as a trustee or an administrator of a business trust".  "Business trust" is as defined in the Business Trusts Act.  This exclusion will only apply to trust business in relation to a business trust, so any trustee or administrator of a business trust that also engages in other trust business will require a licence.   

We agree that the exclusion for executors should be expanded and have redrafted the exclusion for executors to include consequential matters, which would include trustees of trusts arising from the estate.

8.  Power for MAS to Petition to Wind Up a Trust Company

We proposed that MAS has the power to petition the Court to wind up a trust company, where MAS considers that the continued existence of the trust company will threaten the public interest. 

One respondent viewed that MAS should not have the power to petition the Court, as the powers that MAS will have to limit or stop trust company activity in the Act are sufficient. Another respondent viewed that MAS' power to petition the Court should be narrowly drafted, and that Court proceedings on the winding up of a trust company should be held in camera. (That is, the proceedings should be confidential.)

MAS' Response

We continue to be of the view that these powers should be included for the extreme circumstance where the affairs of any licensed trust company are conducted in a manner that may be detrimental to the public interest.

We do not see the need for winding-up proceedings of a licensed trust company to be carried out in camera.

9.  Cessation of Trust Business or Surrendering Licence

We proposed that a licensed trust company wishing to cease trust business or surrender its licence but having trusts that are wholly or partially unadministered should first either distribute the remaining assets in its trusts or find a new trustee for these trusts. In rare circumstances when a licensed trust company finds itself unable to locate a new trustee, the licensed trust company would be allowed to seek sanction from the Court to cease its trust business while still a trustee. 

One respondent viewed that the term "unadministered" found in the Bill is not a term of art and does not have a consistent meaning in the industry.  Therefore, to criminalise an act done if a trust is wholly or partially unadministered leads to confusion and could be unjust.

MAS' Response

A trust is wholly or partially "unadministered" if the trustee's administration of the trust in its capacity as trustee is incomplete.  The administration is incomplete if the trustee continues to have duties to perform in respect of the trust.

10.  Minimum Capital Requirements

We proposed that a licensed trust company that is locally incorporated should have a minimum paid-up capital of $500,000. In the case of licensed trust companies that are branches of overseas trust companies, minimum paid-up capital is not feasible.   We proposed that a branch maintain assets in Singapore in an amount equivalent to what it would have to have as minimum capital if it were incorporated here. 

Some respondents agreed with our proposals. Some respondents suggested that the level of minimum capital be lowered in order to allow for lower start-up costs for new trust companies.  Other respondents also suggested that asset maintenance requirements could be removed or replaced by commitments from the head office of the branch.

MAS' Response

The minimum capital requirement is set out so that a trust company may show its commitment to Singapore and that it has adequate capital to operate.  For trust companies that are incorporated in Singapore, we will propose in forthcoming Regulations to lower the minimum capital level to $250,000. 

Trust companies that are branches of foreign trust companies should maintain assets in Singapore for the same reason that local entities should maintain minimum capital, and under the new proposal we would reduce the amount of assets to a minimum of $250,000. 

In addition, for a licensed trust company that is a branch or subsidiary of a foreign trust company, we propose to require a letter of responsibility from the parent or head office regarding its responsibilities for the licensed trust company, including its responsibility to meet, pay and settle all present and future obligations and liabilities of the licensed trust company.  However, we do not view a letter of responsibility to be sufficient to replace asset maintenance requirements. 

11.   Professional Indemnity Insurance

We proposed that a licensed trust company must have adequate professional indemnity insurance ("PI insurance") that covers an amount determined by MAS, typically in the range of 1% to 3% of assets under trusteeship. We proposed that if the licensed trust company is a branch or subsidiary of a foreign trust company, this requirement may be waived if

• the head office gives a letter of comfort or undertaking and MAS is satisfied with the financial strength of the head office; or
• the head office or parent extends its insurance coverage to the branch or subsidiary in the required amount.

Some respondents raised issue with the requirement to have professional indemnity insurance, noting its expense. Others viewed that the amount to be determined by MAS would not necessarily be commensurate with risk, since risk may vary significantly even with the same amount of assets. 

MAS' Response

We agree that it may not be appropriate to set an insurance requirement based on a percentage of assets under trusteeship. Each licensed trust company is in the best position to determine whether the amount of PI insurance it has to cover negligence arising out of the discharge of its duties as a licensed trust company is commensurate with the levels of risk involved. Therefore, we will propose in upcoming consultation that MAS not set a fixed percentage of assets to be covered by insurance. Instead, MAS would require the more senior resident manager and a director of the licensed trust company to certify upon licensing and annually thereafter that its PI insurance is adequate. 

We proposed accepting letters of undertaking from a head office or parent in substitution for a branch's or subsidiary's insurance coverage. However, since the revised PI insurance requirement would be more flexible than our original proposal, this substitution would now not be allowed.  On the other hand, we also proposed extending the parent's or head office's insurance coverage to the subsidiary or branch.  This would still be allowed, so long as the more senior resident manager and the signing director view the coverage as adequate.

12. Requirements for Resident Managers

We proposed that a licensed trust company must be managed by at least two executive officers, called "resident managers", who will be residents of Singapore. We proposed that the resident managers should meet minimum standards of education and experience, including a university degree or equivalent and a minimum level of relevant experience in the trust business. We also proposed requiring continuing professional development.

Most respondents generally agreed that resident managers should meet standards of education and experience, although many respondents viewed that a university degree should not be necessary.  Some respondents agreed that there should be two resident managers, while some viewed that one resident manager is adequate.  One respondent viewed that continuing professional development should not be required.

MAS' Response

We agree that a university degree or equivalent should not be mandatory in the education requirements for resident managers.  MAS will assess the qualifications and experience of resident managers in their totality when reviewing applications.

We continue to believe that continuing professional development is proper to ensure that resident managers keep abreast of developments in the industry and acquire new skills and knowledge relevant to their activities. 

We continue to believe that there should be two resident managers. This is a control measure to prevent any single individual from having the ability to engage in unnoticed illicit activity. We will consider having a differing set of standards for the two, so that one resident manager may meet a relaxed set of standards.

Each resident manager, should, however, reside in Singapore.  "Resident" does not indicate citizen or permanent resident status.  Rather, being "resident" means living and working in Singapore, and an employment-pass holder would not be rejected on that basis.

13.  Power for MAS to Remove Officers

We proposed powers for MAS to remove an officer of a licensed trust company (including a director, resident manager or other officer) if the officer:

• contravened the Act;
• failed to enforce compliance with the Act; 
• failed to discharge the duties of office;
• entered into bankruptcy or similar financial arrangements; or
• was convicted of a crime involving fraud or dishonesty. 

This list targets persons who may be unfit to continue in office.

Some respondents suggested removing items from the list above. One respondent suggested additional items for the list.  One respondent suggested that subsections 14(1) (b) and (c)^[3] are too vague, and that 14(1)(b) places a duty on each officer of the licensed trust company to ensure that the trust company complies with the Act.

MAS' Response

MAS will only remove an officer after careful consideration of the circumstances of the matter.  Where an act or failure is sufficiently grievous, MAS should have the power to remove such officers.

We feel that most of the additional triggering events suggested are already broadly covered in the wording of the Bill. 

Subsection 14(1)(b) is not intended to and should not be read as placing a requirement on each officer to ensure that the entire trust company complies with the Act.  Each officer will be responsible to enforce compliance with the Act in line with that officer's duties.  We are of the view that 14(1)(c) is clear. 

14.  Shareholder Approvals

We proposed requiring persons and entities to get our approval in order to become a 20% shareholder or 50% shareholder, either directly or indirectly.  In addition, we proposed that where the licensed trust company is a branch of a foreign trust company, notification should be required rather than approval.

Some respondents viewed that notification should be sufficient for potential shareholders of Singapore-incorporated licensed trust companies as well as branches of foreign trust companies.  Other respondents viewed the opposite, that approval should be required for all potential 20% or 50% shareholders.

MAS' Response

For Singapore-incorporated licensed trust companies, we maintain our view that approvals should be sought, so that the probity of potential shareholders can be examined.

We maintain our position that approval for shareholders of a company that is not a Singapore-incorporated company would be onerous on the company and difficult to enforce. 

15.  Appeals

We proposed to provide for appeals from decisions by MAS on the: 

• refusal to grant a licence;
• revocation or suspension of a licence;
• revocation of an exemption;
• refusal to approve a person as director or resident manager; or
• direction to remove an officer from the trust company's employment.

We proposed that appeals be to the Minister, and that the Minister be assisted by an Appeals Advisory Committee, which is an appointed group of experts. 

Some respondents suggested other areas for appeals, including the:

• level of capitalisation of a trust company;
• refusal to give approval for the acquisition of a controlling interest;
• exercise of the power to reprimand; and
• decision not to approve a significant shareholder.

MAS' Response

The matters for which appeals are granted are all matters relating to the ability of the company to start or continue trust business, or matters directly affecting the persons managing the trust company.  The suggested areas for appeals are supervisory matters that should not be subject to appeal.

16.  Inspecting of Books

We proposed that MAS has powers to inspect the books of a trust company, as well as the books of the trusts kept by each company.  We also proposed that MAS has powers to investigate.

Respondents noted that inspection powers will cause some clients to feel uncomfortable since they are concerned about confidentiality.  They asked that inspections be limited to trust company books only, replaced by paper reporting, limited in scope or even omitted altogether.  Many respondents suggested stating the reason for inspections explicitly in the Act.

MAS' Response

Following the feedback received, we amended the provision to reflect that MAS' inspections are conducted for the purpose of ensuring compliance with the Act. 

17.  Information on Trust Accounts

We proposed that specified information from a licensed trust company on the accounts it holds as trustee be submitted to MAS periodically. We also proposed that information identifiable to individual trusts will not be required to be submitted; rather, MAS would only require information covering all trusts in aggregate to be submitted. 

Some respondents raised concerns with the submission of data on specific trusts.  Other respondents viewed that no data on trusts should be submitted to MAS.

MAS' Response

The information MAS requires to be submitted for trust accounts will be in aggregate form and not identifiable to any particular trust.  MAS requires the information for supervisory purposes.

18.  Requirement to Keep Accounts for Each Trust

We proposed that a licensed trust company must keep accounts for each trust for which it acts as trustee, and that such accounts must be in auditable form. The proposed requirement concerned only the form of the trust accounts, and did not require that the trust accounts actually be audited.

Many respondents viewed that this is not practical.  They viewed that creating such a requirement would be extremely burdensome, resulting in disproportionate costs for licensed trust companies and making it difficult to carry on business. 

MAS' Response

Following the feedback received, we have removed the requirement that trust accounts should be in auditable form. As trust accounts are not normally audited, there is no need for formal requirement of trust accounts in auditable form. As a matter of good practice, MAS expects that proper accounts for each trust be kept.

19.  Use of Words Indicating Trust Business

We proposed not to restrict the use of the words "trust", "trustee" or similar words in a company's name.

Some respondents disagreed, saying that the use of words indicating trust business should be restricted only to licensed trust companies. Respondents suggested various words and phrases that should be limited to use only by licensed trust companies.

MAS' Response

We are of the view that the restriction may be easily circumvented such that it would not have any practical effect. Furthermore, any restriction of words indicating trust or fiduciary business would also cover many legitimate non-trust businesses unintentionally.

20.  Debenture Trustees

Some respondents suggested that exemption be given to trust business in connection with the issuance of debentures.  The persons covered would include a debenture trustee in a typical issuance of debentures, and the persons creating and arranging for the transaction, as well as any administrative matters that are handled separately, such as payments to debenture holders.

MAS' Response

We agree and will propose in forthcoming Regulations to exempt trust business in connection with the issuance of debentures.  Debenture trustees technically fall within the scope of the Bill, but are different from the types of trustees that the Bill seeks to regulate. Debenture trustees have a limited role of acting as a collective agent for debenture holders, and the risks sought to be addressed by the Bill are lower in this context.

21.  Approval of Subsidiaries or Investments

Some respondents suggested that the section requiring our approval for a licensed trust company to take a 20% stake in another company is drafted too broadly.  A trust company often takes stakes in companies in its role as trustee, and these instances should not need our approval.

MAS' Response

We agree and have modified this section to clarify that our approval will not be required when the licensed trust company takes a stake in another company while acting as trustee.

[1] In this document, mention of "anti-money laundering" or "AML" also includes a reference to countering the financing of terrorism.

[2] For purposes of this exemption, the qualifying exempt entities will be banks and merchant banks only.

[3] 14. (1) Where the Authority is satisfied that an officer of a licensed trust company -  . . .

(b) has, without reasonable excuse, failed to enforce compliance with this Act;
(c) has failed to discharge the duties or functions of his office; . . .

LIST OF RESPONDENTS TO PUBLIC CONSULTATION ON CREATING A NEW REGULATORY FRAMEWORK FOR TRUST COMPANIES

1. The Bank of Tokyo-Mitsubishi Limited
2. Barclays Private Bank
3. Commerzbank International (Trust) Singapore Ltd
4. Credit Suisse Trust Limited
5. DBS Bank Limited
6. J G Goldsworth
7. HSBC Trustee (Singapore) Limited
8. ILC International Legal Consultants
9. Institute of Certified Public Accountants of Singapore
10. JP Morgan Chase Bank
11. The Law Society of Singapore
12. Lee Soo Chye
13. Lexington Trust Company
14. William Lexmond
15. Arthur Loke
16. Merrill Lynch International Bank Limited
17. The Mitsubishi Trust and Banking Corporation, Singapore Branch
18. OCBC Bank
19. Pictet Asia Trustees Limited
20. Portcullis Trust (Singapore) Ltd
21. Singapore Trustees Association
22. Wong Partnership

A number of respondents requested anonymity.