In compliance with the restrictions and requirements on investments and activities, the property fund is only allowed on the following investment:
(1) real estate, whether freehold or leasehold, in or outside Singapore
(2) real estate-related assets, wherever the issuers, assets, securities, or units incorporated, located, issued or traded
(3) cash and cash equivalent items
(4) listed or unlisted debt securities and listed shares of, or issued, by local or foreign non-property corporations.
A property fund may invest in local or foreign assets, subject to the terms of its constituent document.

As a part of the operational obligations of the trustee as set out in the Code of Collective Investment Scheme, the trustee must send either hard copies of both the semi-annuals of accounts and reports to participants. The semi-annuals should be within two months from the end of the period covered by the accounts and report. While the annual accounts, report of the auditors, and the annual accounts and annual report relating to the scheme should be within three months from the end of each financial year of the scheme. Participants have the right to request hard copies of the accounts and reports, and the trustees should make it available within two weeks.

As defined in the Code of Collective Investment Schemes, the liquid is the ability of a financial instrument to be readily converted into cash at a value close to its fair price under normal conditions. The manager should consider the following factors to determine whether the financial instrument is liquid or not: transaction costs, bid-offer spread, size of the holding relative to issue size, settlement time, of market participants, and nature of the instrument.

The appointment of Variable Capital Company (VCC) Directors must adhere to the set-out conditions, wherein at least one VCC Director should have no connection of any business relationships that involve the VCC. The VCC director must also be independent of the manager and its related corporations. And have no relation to the VCC Custodian and or the substantial shareholders in the VCC.

Take note that a substantial holder in VCC has no substantial shareholding in a corporation under section 2(4-6) of the SFA.

In the Code of Collective Investment Scheme, the manager is in charge of maintaining the record of the instructions, if any, to the trustee as to how votes about investments of a scheme are exercised. It is also the responsibility of the manager to keep a record of all soft dollars received. In terms of transactions with related corporations, it must not invest monies of the scheme in the manager’s securities or securities-based derivative contracts or of its related corporations, unless if permitted. Also, it must not purchase real estate assets owned by the manager or its related corporations for the scheme unless such purchases are allowed.

In case a redemption request is made and the requisite documents and information by the close of dealing as specified in the prospectus, the manager will release the payment based on the formula (T+7), wherein T is the day of receiving the redemption request plus seven business days.

The manager should have made the payment (T = September 3 and add seven business days, excluding the weekends) on September 14.

Naming schemes and scheme’s class of unit must meet the set guidelines. First, schemes’ name can’t be inappropriate, undesirable, and misleading. The Authority set factors to determine whether the name of the scheme is appropriate, desitable, or not misleading. These requirements are as follows:
(1) uniqueness which means the name is not similar with another scheme
(2) the merits are justified
(3) the manager has particular qualities that are justified
(4)consistency of the name with its investment objective or approach
(5) implies that the scheme is a collective investment scheme
(6) don’t mislead prospective participants into thinking that persons, other than the manager, the VCC or the VCC Directors, as the case may be, are responsible for the scheme

Take note also that “capital protected” and “principal protected” are prohibited to be used.

The constituent document of a property fund, in terms of general meetings provisions, should be: (1) may be convened at the request in writing of a minimum of 50 participants or participants representing at least 10% of the issued units in the property fund. (2) An annual general meeting will be held only once in every calendar year and to be conducted not more than 15 months after the holding of the last preceding annual general meeting. In case a property fund holds its first annual general meeting within 18 months of its date of authorization, it need not hold it in the year of its constitution or in the following year, it should not be holding it in the year of its constitution or in the following year. In each annual general meeting, the appointment of an auditor or auditors is required and its fees and expenses will be fixed by the general meeting or by the manager if authorized.

In case of changes made to a scheme that constituted as a VCC, the manager needs to inform the Authority and existing participants not later than one month before the changes took place. The significant changes might be the following:

A change in the investment objective or focus of the scheme or the investment approach of the manager
An increase in the remuneration payable to the manager or trustee
An increase in any other fees or charges payable
An amendment to the constituent document of the scheme or prospectus

Changes such as replacement, removal, or appointment of a manager, sub-manager, investment adviser, or trustee to the scheme, and the variation in the rights or obligations of participants as set out in the constituent document of the scheme and prospectus are allowed.

The manager in which the scheme’s NAV is sub-managed, the manager should ensure that it is under the Code. It should ensure that there are sufficient proceedings to monitor the conduct of its delegate and that the function delegated or outsourced is efficiently and properly performed. For the scheme’s NVA with more than 10% managed abroad, the manager together its related corporations should manage at least S$500 million of discretionary funds in Singapore. For schemes which 10% of its NAV and managed outside Singapore by another manager, the Authority will assess whether the sub-manager is reputable and supervised by an acceptable financial supervisory authority.

An appointed VCC Custodian is an independent person of the VCC and the manager, in which he or she has no interest in 20% or more of the shares. It should take reasonable care to ensure that the investment and borrowing guidelines have complied. With prior consent from the VVC, it may reuse the property.

Based on the Regulation 7A(1)(b) and or Regulation 7B(1)(b) of the SFR, a VCC custodian may delegate to third parties only if it has exercised all due skill, care, and diligence in the selection and the appointment of any third party.

Based on the Code of Collective Investment Schemes as adapted in SFA, the trustee should be independent of the manager, which means he or she has no interest in 20% or more of the shares.

The trustee conducts all transactions with or for a scheme, which involves sending of accounts and reports to participants, informing the Authority of any breach of section 289 (3) of the SFA.

Accordingly to the Code, the trustee of a property fund must be careful and diligent in carrying out its functions and duties, including safeguarding the rights and interests of participants. The trustee should be reasonable in ensuring that the property fund has legal and good marketable titles to the real estate assets and that the material contracts are legal, valid, binding, and enforceable by or on behalf of the property fund under its terms. Wherein material contracts which constitute 5% or more of the revenue of the property fund, or not entered into in the ordinary course of business of the property fund. The trustee must assure that the manager arranges adequate insurance coverage concerning the real estate assets of the property fund.

When the scheme has breached any guidelines set out in the Code, the manager or the VCC must take all necessary action to remedy the said breaching. The manager or the VCC is not allowed to engage in any transaction. It may increase the extent of the breach. In case the violation is caused by any of the following:
(1) appreciation or depreciation in the value of the scheme’s underlying investments
(2) the redemption of units, or payments made from the scheme
(3) change in the capital of a company
(4) reduction in the weight of a constituent in the benchmark being tracked by a scheme
(5) a downgrade in or cessation of a credit rating
the manager or the VCC may not need to report it if these breaches have rectified within three months to the Authority.

Take note that rectifying any violation of the Code can be extended, as long as the manager or the VCC could convince the trustee or the VCC Directors that the extension period will be an advantage to the interest of participants. Thus, the extension needs monthly reviews.

The manager or the VCC may suspend dealings in units only when it has realized that the suspension is beneficial to participants, and soon put to an end when the exceptional circumstances cease to exist, within 21 days. The manager or the VCC notifies both the Authority and participants of the suspension dealing in units, including the reasons.

The trustee notifies the Authority, and the manager or the VCC informs the participants regarding the resumption of dealing in units.

The prospectus, when performance fees are payable, contains disclosure such as the fact that the performance is payable and who will receive it. State, if possible, that in case the return of the scheme is negative, there are levies to be imposed on the performance fee.

Disclose also on the prospectus the maximum amount or percentage of the scheme’s NAV, and the performance fee might represent in an annual accounting period. Include also illustrations on the computation process, the achieved, and not attained equalization of performance fees.
It is necessary to state that the absence of equalization affects the amount of performance fees.

As stated in the Code of Collective Investment, the performance fee should calculate and pay after consideration of all other payments. The performance fee calculation must be fair to all participants, and its crystallization is only once a year. The calculation is based on the fulcrum fee (which should increase or decrease proportionately with the investment performance of the scheme). Or, it is computed based on a high watermark arrangement on which it should be reset to the NAV of the scheme only when the NAV of the scheme reaches a new historical high at the end of each performance period.

Take note also that the manager needs to consult the Authority in case of using other calculation methods.

A property fund may acquire assets from or sell assets to interested parties, or invest in securities of or issued by interested parties under the following conditions:
(1) Adequate disclosures are made in the prospectus, which states the identity of the interested parties and their relationships with the property fund.
(2) For transactions entered into at the first launch or offer of the property fund, which agreed to buy those assets at the specified prices. In the case the transactions are conditional, the agreement must reflect the minimum amount of subscriptions.
(3) Two independent valuations of each of those real estate assets, with one of the valuers commissioned independently by the trustee, have been conducted.
(4) Each asset acquired from the interested parties at a price not more than the higher of the two assessed values or sold to interested parties at a price not less than the lower of the two assessed values.
(5) the trustee provides written confirmation that the transaction is on normal commercial terms and not prejudicial to the interests of participants where participants’ approval for the transaction is not required.

The manager can engage in a management agreement with the property fund at the time of listing of the property fund on an approved exchange. The management agreement contains a compensation provision for early termination of the management agreement, such as it is not more than five years. The provision of payment is related to commercial services provided in the performance by the manager of its duties. And the compensation has been determined on an objective basis. It has set out in the Code that the compensation provision should not be payable to the manager if the manager’s services have terminated due to fraud, insolvency, or negligence.

Also, the compensation amount payable to the manager does not exceed the sum of the fixed component of unearned management fees, which excludes variable and performance fees, over the remaining term of the provision.

In aligned with the proposed of MAS on the minimum entry requirements for individuals who intend to apply for a representative’s license to act on behalf of a REIT manager, the aspirants must meet the following:
(1) should be at least 21 years of age
(2) should meet the fit and proper criterion, which includes relevant experience in managing a portfolio of properties
(3) should have minimum academic qualifications of 4-O Levels
(4) should comply with the relevant examination requirements to be determined by MAS

Please also note that the requirements for the representative applicants are the same as representatives who conduct other types of regulated activities under the SFA.

It is part of the operational obligations of the manager in the management of the scheme not to retain soft dollars unless the soft dollars received can use to assist in the manager’s provision of investment advice or related services to the scheme. Another condition is that the transactions must well-executed and that the manager will not engage in unnecessary trade to achieve a sufficient volume of transactions to qualify for soft dollars.

In case a manager invested 30% or more of the scheme’s NAV in another scheme, he or she needs to disclose information such as the top 10 holdings at market value and as a percentage of the scheme’s NAV, turnover ratios for the period under review and a year ago. Disclose the expense ratios except for the following: (1) brokerage and other transaction costs (2) performance fee (3) foreign exchange gains or losses (4) front or back end loads arising from the purchase or sale of other schemes (5) tax deducted at source or arising out of income received.

Take note that place a footnote in the semi-annual and annual report indicating the exclusion of the expense ratio.

The property fund which invested in real estate as a joint owner, by direct investing as a tenant-in-common or by shares or interests acquisition, the joint agreement ( memorandum and articles of association or other constitutive documents) must enclose the following:
(1) specified minimum percentage of distributable profits, wherein the property fund is entitled to receive pro-rata share

(2) veto rights over key operational issues together with: (a) amendment of the joint venture agreement, memorandum, and articles of association or other constitutive documents, (b) cessation, (c) changes to the business, equity capital structure, and dividend distribution policy, (d) securities or securities-based derivatives contracts issues, (e) incurring of borrowings, (f) making security over the assets, (g) assets transfer or disposal, (h) asset enhancement approval and capital expenditure plans, and (i) interested party transactions entry

(3) mode for the resolution of disputes between the property fund and joint venture partners

The preparation of the half-yearly financial statements and the audited financial statements, for the semi-annual report and annual report should be based on the rules defined by the Institute of Singapore Chartered Accountants in the Statement of Recommended Accounting Practice 7: Reporting Framework for Investment Funds.

The semi-annual report or annual report must be prepared, audited and sent when they cover a period ending three months or less from the start of the initial launch period of a scheme. Or, the semi-annual report or annual report must be prepared and sent to participants at least a month before the termination or maturity date of the scheme. For instance, the annual report for a scheme for the financial year ended 31 December 20X4, so it must be submitted to participants as of 31 March 20X5.

The semi-annual report and annual report based on a scheme’s financial year contain such as investments at market value and the scheme percentage classified by country, industry, asset class, and credit rating. Include also the top 10 holdings at market value and as a percentage of the scheme’s Net Asset Value (NAV) as at the end of the period under review and a year ago. Stated also the exposure to financial derivatives, expense ratios, which included in a footnote explaining the reason for the exclusion of brokerage and other transaction costs, performance fee, foreign exchange gains or losses, front or back end loads (from purchase or sale of other schemes), and tax deducted.

Others are the amount and percentage of the scheme’s NAV invested in other schemes, amount and percentage of borrowings to the scheme’s NAV, amount of redemptions and subscriptions, amount of related-party transactions, the performance of the scheme, turnover ratios.

It was in the Code of Collective Investment Scheme that a property fund must comply with at least 75% of the deposited property to invest in income-producing real estate. It has restricted that a property fund not to undertake property development unless it intends to hold the developed property upon completion. It is also limited to property funds not to invest in vacant land and mortgages, except for mortgage-backed securities. The prohibition is to prevent a property fund from investing in real estate to be built on vacant land that has approved for development or other uncompleted property developments.

The manager may declare a certified distribution (excess of profits) to the participants of the property fund, which includes a description of the distribution policy and the measures and assumptions for deriving the amount available to be distributed from the deposited property of the property fund.

Take note that involving guaranting of guarantees, underwriting, direct lending of monies, and short selling are prohibited activities in the scheme.

Due to the constituent document of the scheme, liabilities of the participants are only limited to their investment. And advertisements of the scheme must include illustrations of income statistics and prepared under the Code of Best Practices in Advertising Collective Investment Schemes and Investment-Linked Life Insurance Policies jointly issued by Investment Management Association of Singapore and the Life Insurance Association and Guidance Notes on Recommended Disclosures to Support the Presentation of Income Statistics in Advertisements issued by the Investment Management Association of Singapore.

The termination or maturity of schemes, the trustee should send its termination date within two weeks to the Authority.

If the scheme has a fixed maturity date, the trustee must include the statement to the effect that all assets of the scheme have been realized and the resultant proceeds. Also, the statement must affirm that from the end of the financial year covered by the last set of annual accounts and annual report managed the scheme in accordance with the limitations imposed on the investment and borrowing powers set out in the constituent document of the scheme, laws, and regulations.

Property funds real estate assets full valuation is at least once a financial year by an authorized valuer. The manager has to decide if full or desktop valuation applies to real estate assets. For more than one valuation done by more than one valuer, the assessed value to be used is the average of the sum of the assessed value. An example formula with three valuations: AVE Assessed Value =(V1+V2+V3)/3

For the purchasing and acquiring real estate assets, the price must at least 110% of the assessed value, assessed not more than six months ago. And for the selling or disposal, it should not be less than 90%.

In choosing a person to conduct the valuation, ensure not to be a related corporation or has no connection with the manager or any other party whom the property fund is contracting.

The provisions for the disclosure of fees payable to the manager need to be clear, reasonable, informative, and meaningful. It further means that thorough discussions with the participants. Included in the disclosure are the following:
(1) Details of how the various types of fees that are payable to the manager out of the deposited property of the property fund co-exist
(2) Nature, type, extent, and quantum of the fees, wherein the rationale and purpose & how each type of fees computed and paid out

Please note that each type of fee must not overlap.

The annual report for the property fund investment for the financial year consists of many factors to disclose. In the report must disclose the following as per by the Code:
(1) all real estate transactions within the financial year, including the buyers and sellers identities, prices of purchase or sale, and valuations and methods used in the assessment of the assets
(2) particulars of all the real estate assets included assets locations, purchase prices, and up-to-date valuations, rentals received and occupancy rates, or the remaining terms of the property fund’s leasehold properties
(3) tenant profile such as total number of tenants, top 10 tenants & their percentage of total gross rental income attributable, trade sector mix of tenants, lease maturity profile, weighted average lease expiry of both the property fund’s portfolio and new leases
(4) other assets of a property fund details such as ten most significant holdings, distribution of investments in the dollar & percentage terms
(5) total operating expenses included the fees and charges paid to the manager and interested parties

Take note the mentioned above are the partial requirements to be disclosed. Other details are stated in the Code of CIS.