Under the MAS Notice FAA-N06 (Prevention of Money Laundering and Countering the Financing of Terrorism – Financial Advisers), a financial adviser should adopt a risk-based approach in determining whether to perform enhanced customer due diligence (CDD) measures or the extent of enhanced CDD measures to be performed for the following conditions:-

(a)For domestic politically exposed persons, their family members and close associates.
(b)For international organization politically exposed persons, their family members and close associates.
(c)For politically exposed persons who have stepped down from their prominent public functions, taking into consideration the level of influence such persons may continue to exercise after stepping down from their prominent public functions, their family members and close associates.

Except in cases where their business relations or transactions with the financial adviser present a higher risk for money laundering or terrorism financing.

A financial adviser shall take all appropriate steps to ensure that its employees, officers and representatives (whether in Singapore or elsewhere) are regularly and appropriately trained on the following aspects:-

(a) Trained on AML/CFT laws and regulations, CDD measures, detecting and reporting of suspicious transactions.
(b) Trained on prevailing techniques, methods and trends in money laundering and terrorism financing.
(c) Trained on the financial adviser’s internal policies, procedures and controls on AML/CFT and the roles and responsibilities of employees, officers and representatives in combating money laundering and terrorism financing.

The Corporate Finance Committee (the Committee) was formed by the Financial Sector Review Group to make recommendations with the view of making Singapore a key financial center for international corporate fundraising activity.

The following are the terms of reference of the Corporate Finance Committee (the Committee):-

(a) To recommend an appropriate framework of rules, regulations and administrative guidelines governing corporate fund-raising that will Support steady and sustainable growth of corporations in Singapore.
(b) To recommend an appropriate framework of rules, regulations and administrative guidelines governing corporate fund-raising that will Foster innovation and entrepreneurship.
(c) To recommend an appropriate framework of rules, regulations and administrative guidelines governing corporate fund-raising that will Make Singapore an attractive center for international corporate fund-raising activity.
(d) To recommend ways to improve the efficiency of the fund-raising process, as well as standards of corporate disclosure.
(e) To recommend new or enhanced industry capabilities to better meet the financing needs of corporations, e.g. debt financing, covered warrants, new board for start-ups; and a framework of rules and regulations to promote these activities
(f) To recommend for Government’s consideration suitable respective roles for the Stock Exchange of Singapore (SES), the Monetary Authority of Singapore (MAS) and the Registry of Companies and Businesses (RCB), as well as other government agencies as appropriate.
(g) The review should include, but need not be limited to, relevant parts of the Securities Industry Act, SES Listing Manual and the Companies Act.

Singapore is a capital center for Asian Dollar Market, loan syndication, foreign currency trading, G7 equity and bond futures trading on the Singapore International Monetary Exchange (SIMEX). Fast-changing technology, sound market infrastructure, and the need for a well-regulated market provide new opportunities.

The Corporate Finance Committee was formed together with the Banking Disclosure Committee and the Stock Exchange of Singapore (SES) Review Committee. In May 1998 the Banking Disclosure Committee made recommendations on the standards and practices of Singapore banks with a view to attaining the standard of disclosure in developed countries. In July 1998 the SES Review Committee made recommendations on, among other things, membership and brokerage commissions, operations of SES member companies and the rules and regulations affecting these companies, and scope of activities that can be undertaken in the securities industry. The Committee agrees with and supports the recommendations of those committees, which would raise the standard of disclosure, encourage more international participation, and promote depth and breadth in our market.

A disclosure-based regime will reduce the cost of capital. Experience in disclosure-based regimes has shown that it has resulted in a higher standard of disclosure. A higher standard of disclosure and greater transparency coupled with stronger legal remedies and enforcement will give investors greater confidence in the integrity of the market, allowing companies to sell their securities at higher prices, thus reducing the cost of capital.

The disclosure-based regulatory regime was first introduced in the United States in 1933. The Securities and Exchange Commission (SEC) does not rule on the quality of a share issue but carries out a review of the prospectus lodged before declaring it effective (ex-ante review). The Securities Act 1933 and Securities Exchange Act 1934 provides for disclosure requirements and the SEC’s power to enforce disclosure.

There should be three tiers of rules. The first tier should comprise primary legislation in which would reside fundamental principles, including the general disclosure obligation, and the functions and powers of the securities regulator. The second tier would comprise secondary legislation. These are regulations promulgated by the Minister under powers derived from the securities legislation. The third tier would consist of non-statutory rules such as the SES Listing Manual.

Section 103 of the Securities Industry Act makes insider trading a criminal offence, which is liable under section 104 to a fine of up to $50,000 or imprisonment of up to seven years.

Section 103 of the Securities Industry Act makes insider trading a criminal offense, which is liable under section 104 to a fine of up to $50,000 or imprisonment of up to seven years.

Under the recommendations of the Corporate Finance Committee (the Committee), The period to present annual reports of listed issuers to shareholders should be shortened to five months from the end of the financial year.

Under the recommendations of the Corporate Finance Committee (the Committee), listed issuers should be encouraged to report their results on a quarterly basis. Subject to changes to the law to permit more timely preparation of financial statements, interim results should be released within 60 days of the period end.

Under the recommendations of the Corporate Finance Committee (the Committee), the securities regulator should have the power to prescribe accounting rules for companies that are listed or have made public offers of securities in Singapore and for public offering documents.

Under the recommendations of the Corporate Finance Committee (the Committee), listed issuers may sell placement shares at up to a discount of 10% from the current share price. The price should be based on the weighted average price for trades done on the day of the announcement, which provides a better representation of the price done on the day in question.

Under the recommendations of the Corporate Finance Committee (the Committee), a listed issuer may borrow shares from substantial shareholders for placement in anticipation of the placement shares being issued.

Under the recommendations of the Corporate Finance Committee (the Committee), the overall limit for warrants and convertibles can be raised to 100% of issued share capital.

The following products are not covered under the Financial Advisers Act (FAA):-

(a) The general insurance policies are not covered under the FAA.
(b) The deposit-taking products are not covered under the FAA.
(c) The loans and mortgages are not covered under the FAA.

The objective of the FAA is to regulate mainly products with an investment element. General insurance policies are not considered investment products as they are consumption-based. Deposit-taking products offered by banks are excluded as such products are at the low end of the risk spectrum and are generally well understood. Loans and mortgages do not have any investment element. Notwithstanding the above, MAS has the power under the FAA to regulate additional products where necessary so that the regulatory framework has the flexibility to cater to new product development.

The structured deposit had been prescribed as an investment product under the FAA with effect from 1 June 2005 and these are regulated under the FAA.

(a) Structured deposit is defined under the FAA to mean a deposit under which any interest or premium is payable, or is at risk, in accordance with a formula which is based on the performance of any financial instrument, securities, any units in a CIS, or specified securities-based derivatives contracts, as defined in the Second Schedule of the Securities and Futures Act (SFA).
(b) Structured deposit is defined under the FAA to mean a deposit under which any interest or premium is payable, or is at risk, in accordance with a formula which is based on the occurrence of any credit event in respect of a credit derivative to which the bank or the finance company, as the case may be, is a contracting party.
(c) Structured deposit is defined under the FAA to mean a dual currency investment.

Only licensed financial advisers and exempt financial advisers who are exempt under section 23(1) of the Financial Advisers Act (FAA) are allowed to conduct financial advisory services under the FAA. Individuals providing financial advisory service on behalf of licensed financial advisers and exempt financial advisers under section 23(1)(a) to (e) of the FAA are required to be appointed or provisional representatives in respect of that type of financial advisory service.

Banks, merchant banks, finance companies, insurance companies, insurance brokers registered under the Insurance Act, holders of a capital markets services license under the Securities and Futures Act (Cap 289) are exempt from holding a financial adviser’s license to act as a financial adviser in Singapore in respect of any financial advisory services. Nonetheless, exempt financial advisers and their appointed and provisional representatives are required to comply with the business conduct requirements stipulated in the Financial Advisers Act (FAA).

Following are the requirements for the admission criteria of the grant of a license under the Financial Advisers Act (FAA):-

(a) The applicants have adequate financial resources to perform the proposed activities.
(b) The applicants should satisfy MAS that they would discharge their duties efficiently, honestly and fairly.
(c) The applicants have the relevant competence and expertise.

A licensed financial adviser will be issued an electronic license (e-license), which is accessible via CoRe system within MASNET (under the “Corporate Lodgment” section). There is no need for a licensed financial adviser to renew its license.

A licensed financial adviser should notify the Monetary Authority of Singapore (MAS) within 14 days of its cessation by submitting Form 5.

The annual license fees payable by a licensed financial adviser is the sum of $2,000 and a variable fee of $5 per representative from the 101st representative onwards, based on the total number of unique individuals who are representatives under the Financial Advisers Act (FAA), as at 1 January of each calendar year.

The annual license fees payable by a licensed financial adviser is the sum of $2,000 and a variable fee of $5 per representative from the 101st representative onwards, based on the total number of unique individuals who are representatives under the Financial Advisers Act (FAA), as at 1 January of each calendar year.

A licensed financial adviser which is not a foreign company must maintain at all times the following net asset values:-

(a) A net asset value of not less than ¾ of the minimum paid-up capital.
(b) A net asset value of not less than ¼ of its relevant annual expenditure of the preceding financial year.

A licensed financial adviser which is a foreign company must maintain at all times the following type of net head office funds:-

(a) A net head office funds of not less than ¼ of its relevant annual expenditure of the preceding financial year.
(b) A net head office funds of not less than the minimum net head office funds.

The following requirements should be fulfilled by an applicant for a financial adviser (FA) license under the Financial Advisory Industry Review (FAIR) for the appointment of Chief Executive Officer (CEO):-

(a) A CEO must have min 10 years of relevant working experience of which at least 5 years must have been in a managerial capacity.
(b) A CEO must have acceptable academic or professional qualifications.
(c) A CEO must resident in Singapore.

The Monetary Authority of Singapore (MAS) may refuse an application for the grant of a financial adviser’s license if the applicant does not have in force a professional indemnity insurance policy, under which the limit of indemnity covered is not less than $500,000.