Under the SFO framework, MAS will no longer be granting applications from SFOs for licensing exemptions on a case-by-case basis. Instead, MAS will introduce a class licensing exemption for SFOs. For an SFO to conduct fund management in Singapore under the class exemption, the SFO must be able to meet the following four key criteria ("Qualifying Criteria"):

1. The SFO must be wholly owned, whether directly or indirectly, by members of the same family

• SFOs may operate under various ownership structures. The proposed class exemption is intended to be structure agnostic. Accordingly, an SFO can be held via a trust, foundation or any other structure, so long as the funding for such structures originates exclusively (aside from the relevant key employees as elaborated below) from the family. For instance, if an SFO is held via a family trust or foundation, the settlor or founder must be a member of the family.
• "Family members" is proposed to be defined as lineal descendants of a common ancestor, whether living or deceased. Current and former spouses, adopted children, current and former stepchildren, parents-in-law and siblings-in-law are included in this definition.
• The family may define its members by reference to the lineal kinship to a designated common ancestor, but it should not be too remote. The common ancestor must not be more than five generations back from the youngest generation that established the SFO in Singapore, and all family members within the five generations can be served by the SFO. Thereafter, subsequent generations can be included and be served by the SFO.
• The SFO's executive directors, chief executive officer (CEO), chief financial officer (CFO), and investment professionals ("Key Employees") may own a non-controlling stake of up to 10% in the SFO, to provide some flexibility to an SFO to anchor its Key Employees, incentivize performance and long-term commitment, and ensure that the SFO continues to be primarily owned by the family.

2. Fund management must be conducted for or on behalf of the following:
   1. Family members, including any family trusts and corporations which are wholly owned by, and for the sole benefit of the family.
   2. Charitable organization(s) that are funded exclusively by the family. The MAS recognizes that family trusts and foundations managed by the SFO may also wish to designate charitable organizations as beneficiaries, and will allow such arrangements if these beneficiaries do not have control over the trust or foundation assets and are merely persons designated to receive benefits. These charitable organizations may include those not funded exclusively by the family, so long as the SFO is not appointed to manage the assets of the charitable organizations.

• The SFO will also be permitted to conduct fund management for its Key Employees. A limit of 10% on the percentage of AUM that can be attributed to non-family Key Employees will apply.

3. The SFO must be incorporated in Singapore.

• This is so that the SFO will be subject to beneficial ownership disclosure requirements under Singapore law. 

4. The SFO and its fund vehicle (FV) must establish and maintain business relations with at least one MAS-regulated bank.

• This is so that the SFO and the FV will be subject to anti-money laundering and countering the financing of terrorism checks by the MAS-regulated bank, as set out in the relevant MAS AML/CFT Notices (e.g., MAS Notice 626 for banks). The customer due diligence and ongoing monitoring checks conducted would be the same as those performed when the financial institution (FI) establishes or maintains business relations with a customer.
• Where the SFO has a foreign-incorporated FV, the FV must open and maintain an account with a MAS-regulated bank in Singapore or with a regulated bank in a jurisdiction that complies with AML/CFT requirements consistent with the standards set by the FATF.

Notification

New SFOs will be required to notify the MAS and confirm their ability to comply with the Qualifying Criteria within 14 days of commencing their operations in Singapore.

As part of the notification, SFOs must obtain a legal opinion supporting their exemption qualification. SFOs that applied for tax incentive under Section 13O or Section 13U of the Income Tax Act, and previously furnished a legal opinion to the MAS as part of their applications, will need to obtain a new legal opinion with reference to the class exemption. This is necessary as there are additional exemption criteria imposed on SFOs under the new framework.

In the notification to the MAS, an SFO will need to furnish the following:

1. Key particulars of the SFO, specifically:
   1. Name, UEN and date of incorporation
   2. Name, country and date of incorporation of the fund vehicle
   3. Name(s) of the MAS-regulated financial institution(s) that the SFO has established and maintained business relations with
   4. Name of the law firm that provided the legal opinion mentioned above
   5. Amount of assets to be managed by the SFO
2. A signed declaration by all Ultimate Owners ("Ultimate Owners"), CEO, and director(s) to the MAS declaring that:
   1. Its Ultimate Owners are currently not the subject of any investigation by authorities, or the subject of any civil or criminal proceedings whether in Singapore or elsewhere. Civil proceedings to be disclosed are limited to proceedings commenced by governmental and regulatory bodies.
   2. Its Ultimate Owners, CEO and director(s) have never been convicted of a serious crime or been involved in money laundering/terrorism financing/proliferation financing.
   3. It does not and will not engage in any activity with designated persons or entities (i.e., individuals or entities in the United Nations lists or any other list found on the MAS website under the "Lists of Designated Individuals and Entities"), whether directly or indirectly. 
3. A signed declaration by all Ultimate Owners, CEO, and director(s) to MAS declaring that it fulfills all the conditions to be exempted under the class licensing exemption criteria. 

Upon filing the notification, no acknowledgement from the MAS is needed to commence operations in Singapore, and the MAS does not intend to list SFOs on its Financial Institutions Directory.

Annual reporting

Additionally, SFOs will be required to submit to the MAS an annual return within four months of the SFO's financial year end to report the following:

1. Total assets under management
2. Name(s) of all the MAS-regulated bank(s) with whom they have established and maintained business relations with as at the end of the calendar year