How to Start a Hedge Fund in Singapore
Updated on Sunday 09th July 2017
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The local government in Singapore imposed an investment legal framework providing numerous incentives, which attracts a large number of foreing investors. Businessmen interested in investing in Singapore through a hedge fund startup have several options in this sense, as they can set up an offshore or an onshore hegde fund.
Regulations for hedge funds in Singapore
Singapore is a large international financial centre, in which foreign investors can benefit from numerous investment regulations. The legistion for investments in this jurisdiction is given by the Monetary Authority of Singapore (MAS).
Investors who are interested in how to start as a hedge fund in Singapore will need to establish the fund through the regulations provided by the Singapore Code on Collective Investment Schemes, which defines a hedge fund as having the following characteristics:
• the fund will search for methods of obtaining the highest return on investment;
• the investments will be carried out in assets which are considered non-mainstream (this means that the fund will not invest in equities, bonds and cash).
Types of hedge funds in Singapore
The regulatory framework applicable in Singapore provides two types of hedge funds:
• onshore hedge funds;
• offshore hedge funds.
The onshore hedge funds are considered domestic legal entities and they can be incorporated as one of the following:
• open-ended unit trust funds;
• limited liability partnerships.
Businessmen who are considering starting a hedge fund in Singapore must know that in the case of a domestic hedge fund, the main applicable regulations are prescribed by the local authorities.
Incorporation requirements in Singapore
The procedure on how to start a fund in Singapore registered as a hedge fund will require a license, but only in the case in which the vehicle has more than 30 investors.
In the situation in which a license will be required, the investors may obtain one of the following licenses:
• Capital Market Services License;
• Financial Advisers License.
It is important to know that the license will also be required in the case of an offshore hedge fund, even though the vehicle runs under the legal requirements of a foreign jurisdiction.
Businessmen interested in receiving further advice on how to start an investment fund are invited to contact our team of affiliates in Singapore for more details on the hedge fund regulations.