Media Releases
Published Date: 14 August 2003

Explanatory Brief: Securities and Futures (Amendment) Bill and Financial Advisers (Amendment) Bill

The Minister, Prime Minister's Office and Second Minister for Finance, and Deputy Chairman of the Monetary Authority of Singapore ("MAS") today moved two Bills for first reading in Parliament, namely:

  • The Securities and Futures (Amendment) Bill ["SF(A) Bill"]; and
  • The Financial Advisers (Amendment) Bill ["FA(A) Bill"].

2   The Bills represent the first of a two-phase review of the Securities and Futures Act ("SFA") and Financial Advisers Act ("FAA").  The SF(A) Bill implements recommendations of the Company Legislation and Regulatory Framework Committee ("CLRFC") and introduces some technical amendments.  The FA(A) Bill implements technical modifications to clarify MAS' administration of the FAA as well as improve the consistency of requirements between the FAA and the SFA.

3    MAS conducted a public consultation exercise on earlier drafts of the Bills in April 2003.  MAS has considered the comments received and incorporated them into the Bills.  MAS' response to the public consultation is published on its website at

4   The second phase of amendments for the SFA and FAA will be carried out in the later half of 2004.  This will include legislative changes arising from more substantive policy reviews, as part of MAS' efforts to keep our regulatory framework responsive and conducive to developments in capital markets.


5   The SF(A) Bill implements the recommendations made by the CLRFC, which were accepted by the Government on 22 October 2002.  These recommendations seek to facilitate capital raising and improve Singapore's international competitiveness.  The CLRFC recommendations implemented in the SF(A) Bill are as follows:-

a)  Replacement of abridged prospectus requirement - The requirement to lodge an abridged prospectus in respect of a renounceable rights issue by a Singapore-incorporated company will be replaced with a requirement to lodge an offer information statement which will be a simpler document.

b)  Exemption for foreign takeovers - Offers of securities made in connection with a takeover where the target company is a foreign-incorporated corporation not listed on the Singapore Exchange will be exempted from the prospectus requirements, if the offer is in compliance with the relevant laws and requirements of the country of incorporation of the target company.

c)  Exemption for covered warrants - The following issues of covered warrants will be exempted from the prospectus requirements:-
     (i) primary issues of listed covered warrants over securities listed on the Singapore Exchange; and

    (ii) issues of listed covered warrants where the underlying securities are previously issued and listed on a recognised international exchange.

d)  Exemption for offers under share investment offer or schemes - The exemption from the prospectus requirements in respect of offers to employees in accordance with a share investment offer or scheme (including a share option scheme) will be extended to exempt offers to employees, former employees, directors, former directors, consultants and advisers of the issuer or its related corporation, and the spouse or children of such employees, former employees, directors or former directors.

e)  Lodgement of information memorandum and Form 3 - The current requirement to lodge an information memorandum to be used for an offer to sophisticated investors and the requirement to lodge a notice (Form 3) to invoke an exemption from the prospectus requirements under the SFA will be dispensed with.

f)  Register of exempted issues - The current requirement that a Singapore-incorporated issuer must maintain a register of securities issued under exemptions from the prospectus requirements will be dispensed with.

g)  Repeal of section 244 and clarification that deposits are not "debentures" - Section 244 of the SFA, which stipulates additional disclosure and other requirements in respect of offers of debentures, will be repealed.  Section 239 will be amended to clarify that deposits are not "debentures" for the purposes of Part XIII (Offers of Investment) of the SFA.

h)  Statutory requirements on trustees for debenture holders - The statutory requirements under the SFA pertaining to the appointment of trustees and prescribed covenants for public offerings of debentures will be repealed.  The MAS, the Singapore Exchange Securities Trading Limited and debenture holders will be conferred the right to apply to the court to compel a trustee to perform his duties as set out in the trust deed.

i)  Subsequent sale of securities first purchased pursuant to exemption - The subsequent sale of securities (both listed and unlisted), which were initially acquired pursuant to the institutional and sophisticated investor exemptions from the prospectus requirements, to retail investors will be allowed at any time after 6 months from the date of initial acquisition without a prospectus.  During the six?month restriction period, the shares or debentures can only be sold to institutional and sophisticated investors, unless accompanied by a prospectus.

j)  Subsequent sale of units of collective investment schemes ("CIS") first purchased pursuant to exemption - The SF(A) Bill will lift the prohibition on the transfer of units of CIS to facilitate their secondary trading.  However, the subsequent sale of units, which were initially acquired pursuant to the institutional and sophisticated investor exemptions from the prospectus requirements, will be restricted to institutional or sophisticated investors only.  This is to ensure that such CIS, which do not meet the requirements to be offered to retail investors, cannot be subsequently sold to retail investors.

6   During the second reading of the Securities and Futures Bill on 5 October 2001, DPM Lee Hsien Loong mentioned that given the complexity of the SFA, the SFA would need to be refined after taking into account implementation experience.  Having regard to industry feedback that MAS received since the implementation of the SFA in October 2002, the SF(A) Bill seeks to introduce technical amendments to improve its effectiveness and to cater to rapidly evolving business activities and models.  Some of the more significant changes are:-

a)  Clearing of over-the-counter ("OTC") derivatives - The SF(A) Bill will expand the scope of MAS' supervisory powers beyond facilities that clear exchange-traded securities and futures to include facilities clearing OTC derivatives that may pose regulatory or systemic concerns.

b)  Temporary licensing regime - Temporary licences will be issued to individuals (acting on behalf of a locally licensed entity) who only intend to conduct regulated activities in Singapore for a short time, subject to satisfaction of MAS' fit and proper tests.  This will enable financial institutions to employ individuals with specialist expertise, on a case-by-case basis, with greater ease and flexibility.

c)  Opportunity to be heard - Under the SFA, parties aggrieved by an administrative decision of MAS are given an opportunity to be heard, subject to certain listed exceptions.  The grounds under which MAS may deny the opportunity to be heard will be limited only to cases where the aggrieved party is clearly insolvent or has been convicted of an offence involving fraud or dishonesty.  Parties who are denied the opportunity to be heard will still have the right to appeal to the Minister or apply to the Courts for judicial review or both.

d)  Powers of the Authority - MAS will be given greater flexibility in exercising some of its powers, such as allowing MAS to delegate to its officers the power to grant and revoke exemptions and expanding the range of regulations to be prescribed.  This will enhance MAS' responsiveness to industry concerns and market developments.


7   The FA(A) Bill implements the following key changes:-

a)  Variation of Licence - Currently, a licensee may apply to vary only the type of financial advisory service that can be provided under its licence.  The FA(A) Bill will offer greater flexibility to licensees by allowing them to vary their licences according to the type of investment products on which they advise.

b)  Disclosure of interests in securities - Currently, the FAA requires a licensee to disclose his interest on all documents that contain recommendations on securities and to sign such documents.  The requirement for the licensee's signature on such documents will be removed to ease the administrative burden. 

c)  Representatives of financial advisers - There is ambiguity as to whether corporates can act as representatives of financial advisers.  The FA(A) Bill addresses this issue by clarifying that only natural persons can act as representatives of financial advisers. 

d)  Definition of "life policy" - The term "life policy" will be redefined to exclude any contract of reinsurance from the scope of the definition, as life reinsurance activities are already regulated under the Insurance Act.  With this amendment, any person conducting any activity involving contracts of reinsurance will only need to comply with the requirements under the Insurance Act, and not the FAA.

8   The FA(A) Bill also introduces amendments relating to opportunities to be heard and delegation of MAS' powers to its officers.  These amendments are similar to those in the SF(A) Bill which are outlined at paragraphs 6(c) and (d) above.