MAS simplifies rules for managers of venture capital funds to facilitate start-ups’ access to capital
Singapore, 20 October 2017… The Monetary Authority of Singapore (MAS) announced today that a simplified regulatory regime for managers of venture capital funds (VC managers) will come into immediate effect, following public consultation on the proposal earlier this year.1
2 The new regulatory regime will simplify and shorten the authorisation process for VC managers. MAS will no longer require VC managers to have directors and representatives with at least five years of relevant experience in fund management. VC managers will also not be subjected to the capital requirements and business conduct rules that currently apply to other fund managers. In admitting and supervising VC managers, MAS will focus primarily on existing fit and proper and anti-money laundering safeguards under the Securities and Futures Act. These safeguards remain important to uphold high standards of integrity in the industry. MAS will also retain regulatory powers to deal with errant VC managers.
3 The simplified regulatory regime takes into account the extent of contractual safeguards that are already present in typical contracts negotiated by VC managers’ sophisticated investor client base. To qualify for the VC manager regime, a VC manager has to manage funds that meet the following characteristics:
(a) invest in business ventures that are not listed on a securities exchange;
(b) invest at least 80% of committed capital in securities that are directly issued by start-ups that are no more than ten years old;
(c) units of the funds are not available for new subscription after the close of fund-raising, and can only be redeemed at the end of the fund life; and
(d) are offered only to accredited and/or institutional investors.
4 Mr Lee Boon Ngiap, Assistant Managing Director, Capital Markets, MAS, said, “The simplified VC manager regime recognises the lower risks posed by VC managers given their business model and sophisticated investor base. It will enhance the operating environment for VC managers to play a greater role in supporting start-up and growth stage businesses.”1 The public consultation on the proposed regulatory regime for VC managers was published on 15 February 2017.