Financial Advisers (Amendment) Regulations 2005

No. S 362

Financial Advisers Act

(Chapter 110)

Financial Advisers (Amendment) Regulations 2005

In exercise of the powers conferred by sections 8, 9, 23, 27(5), 45, 48(1), 100 and 104 of the Financial Advisers Act, the Monetary Authority of Singapore hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Financial Advisers (Amendment) Regulations 2005 and shall come into operation on 1st July 2005.

Amendment of regulation 2

2. Regulation 2(1) of the Financial Advisers Regulations (Rg 2) (referred to in these Regulations as the principal Regulations) is amended —

(a)

by deleting the definition of “accredited investor” and substituting the following definition:

“ “accredited investor” means —

(a)

an individual —

(i)	whose net personal assets exceed $2 million in value (or its equivalent in a foreign currency); or
(ii)	whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency);

(b)

a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency), as determined by —

(i)	the most recent audited balance-sheet of the corporation; or
(ii)	where the corporation is not required to prepare audited accounts regularly, a balance-sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance-sheet, which is a date within the preceding 12 months;

(c)

the trustee of a trust of which all property and rights of any kind whatsoever held on trust for the beneficiaries of the trust exceed $10 million in value (or its equivalent in a foreign currency);

(d)

an entity (other than a corporation) with net assets exceeding $10 million in value (or its equivalent in a foreign currency);

(e)

a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005 (Act 5 of 2005)) in which each partner is an accredited investor; or

(f)

a corporation the sole business of which is to hold investments and the entire share capital of which is owned by one or more persons, each of whom is an accredited investor;”;

(b)

by inserting, immediately after the definition of “client’s money or property”, the following definitions:

“ “entity” includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust;

“expert investor” means a person whose business involves the acquisition and the disposal or holding of capital markets products, whether as principal or agent;”; and

(c)

by inserting, immediately after the definition of “guideline issued by the Authority”, the following definition:

“ “institutional investor” means —

(a)

a bank that is licensed under the Banking Act (Cap. 19);

(b)

a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap. 186);

(c)

a finance company that is licensed under the Finance Companies Act (Cap. 108);

(d)

a company or society registered under the Insurance Act (Cap. 142) as an insurer;

(e)

a company registered under the Trust Companies Act (Cap. 336);

(f)

the Government;

(g)

a statutory body established under any Act;

(h)

a pension fund or collective investment scheme;

(i)

the holder of a capital markets services licence for —

(i)	dealing in securities;
(ii)	fund management;
(iii)	providing custodial services for securities;
(iv)	securities financing; or
(v)	trading in futures contracts; or

(j)

a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;”.

Deletion and substitution of regulation 4

3. Regulation 4 of the principal Regulations is deleted and the following regulation substituted therefor:

“Forms

4.—(1) The forms to be used for the purposes of these Regulations are those set out at the Authority’s Internet website at http://www.mas.gov.sg (under “Legislation and Notices”, “Financial Advisers”), and any reference in these Regulations to a numbered form shall be construed as a reference to the current version of the form bearing the corresponding number which is displayed at that website.

(2) Any document required to be lodged with the Authority under any provision of the Act or these Regulations shall be lodged in the relevant form and in the manner specified in the website referred to in paragraph (1), or in such other manner as the Authority may specify from time to time.

(3) All forms used for the purposes of these Regulations shall be completed in the English language and in accordance with such directions as may be specified in the form or by the Authority.

(4) The Authority may refuse to accept any form if —

(a)	it is not completed or lodged in accordance with this regulation; or
(b)	it is not accompanied by the relevant fee referred to in regulation 6.

(5) Where strict compliance with any form is not possible, the Authority may allow for the necessary modifications to be made to that form, or for the requirements of that form to be complied with in such other manner as the Authority thinks fit.”.

Amendment of regulation 7

4. Regulation 7 of the principal Regulations is amended by deleting the words “as specified in the Form” and substituting the words “as may be specified in the Form or by the Authority from time to time”.

New regulation 14A

5. The principal Regulations are amended by inserting, immediately after regulation 14, the following regulation:

“Exempt financial advisers and representatives to be fit and proper persons

14A. For the purposes of section 23(9) of the Act —

(a)

a person who is exempted from holding a financial adviser’s licence under section 23 (1)(a), (b), (c), (d), (e) or (ea) of the Act shall ensure that —

(i)	it is a fit and proper person in relation to the provision of any financial advisory service for which it is exempted; and
(ii)	its representatives are fit and proper persons in relation to their acting as its representatives; and

(b)

a person who is exempted from holding a financial adviser’s licence under regulation 27(1)(d) shall ensure that —

(i)	he is a fit and proper person in relation to the provision of any financial advisory service for which he is exempted;
(ii)	his representatives are fit and proper persons in relation to their acting as his representatives; and
(iii)	where the person is an entity, its directors or equivalent persons are fit and proper persons for office.”.

Amendment of regulation 15

6. Regulation 15 of the principal Regulations is amended —

(a)	by inserting, immediately after the words “advising others” in paragraph (a)(i), the words “(other than in the manner specified in sub-paragraph (ii))”; and
(b)	by deleting the words “issuing or promulgating analyses or reports” in paragraph (a)(ii) and substituting the words “advising others by issuing or promulgating research analyses or research reports”.

New regulation 18A

7. The principal Regulations are amended by inserting, immediately after regulation 18, the following regulation:

“Non-application of section 27 of Act

18A. Section 27 of the Act shall not apply to a licensee, an exempt financial adviser, or any of its representatives, when making a recommendation with respect to any investment product —

(a)

to the public or to a section of the public;

(b)

which would not be regarded by a reasonable person within the public or a section of the public, as the case may be, as a recommendation that has taken into account his specific investment objectives, financial situation or particular needs; and

(c)

which is accompanied by a prominent written disclaimer stating that —

(i)	the recommendation is intended for general circulation;
(ii)	the recommendation does not take into account the specific investment objectives, financial situation or particular needs of any particular person; and
(iii)	advice should be sought from a financial adviser regarding the suitability of the investment product, taking into account the specific investment objectives, financial situation or particular needs of any person in receipt of the recommendation, before the person makes a commitment to purchase the investment product.”.

Deletion of regulations 23 and 24 and substitution of regulation 23

8. Regulations 23 and 24 of the principal Regulations are deleted and the following regulation substituted therefor:

“Preparation and lodgment of accounts

23. For the purposes of sections 45(1) and 48(1) of the Act, a licensed financial adviser shall prepare and lodge with the Authority —

(a)

statements in Forms 14, 15 and 16, where applicable; and

(b)

by personal delivery or by pre-paid post, a true and fair profit and loss account and a balance-sheet made up to the last day of its financial year in accordance with the provisions of the Companies Act (Cap. 50), where applicable, together with —

(i)	the auditor’s report in Form 17, which shall contain the documents necessary for the due completion of the Form; and
(ii)	copies of the statements referred to in paragraph (a).”.

Amendment of regulation 27

9. Regulation 27 of the principal Regulations is amended —

(a)

by deleting the word “or” at the end of paragraph (1)(c);

(b)

by deleting the words “giving advice, or in issuing or promulgating analyses or reports” in paragraph (1)(d) and substituting the words “giving advice in Singapore, either directly or through publications or writings or by issuing or promulgating research analyses or research reports”;

(c)

by deleting the full-stop at the end of sub-paragraph (d) of paragraph (1) and substituting the words “; or”, and by inserting immediately thereafter the following sub-paragraph:

“(e)	a person who provides all or any type of financial advisory service to an institutional investor.”;

(d)

by inserting, immediately after paragraph (3), the following paragraph:

“(3A) A person otherwise exempted under paragraph (1)(d) shall not be, or shall cease to be, so exempt if —

(a)	the person has not commenced business in accordance with paragraph (1)(d) within 6 months from the date of commencement of business as specified in the notice that the person has lodged with the Authority in accordance with regulation 37(2); or
(b)	the person has ceased to carry on business in accordance with paragraph (1)(d), and has not resumed business in the same regulated activity in accordance with that paragraph within a continuous period of 6 months from the date of cessation.”; and

(e)

by deleting the words “or (d)” in paragraphs (5), (6) (1st line) and (7) (1st line) and substituting in each case the words “, (d) or (e)”.

Amendment of regulation 27A

10. Regulation 27A (1) of the principal Regulations is amended by deleting the words “giving advice, or issuing or promulgating analyses or reports” in the 5th line and substituting the words “advising others, either directly or through publications or writings or by issuing or promulgating research analyses or research reports”.

Amendment of regulation 28

11. Regulation 28 (1) of the principal Regulations is amended —

(a)

by deleting the words “giving advice, or issuing or promulgating analyses or reports” in the 4th and 5th lines and substituting the words “advising others, either directly or through publications or writings or by issuing or promulgating research analyses or research reports”; and

(b)

by deleting sub-paragraph (a) and substituting the following sub-paragraph:

“(a)	an expert investor; or”.

Amendment of regulation 29

12. Regulation 29 (1) of the principal Regulations is amended by deleting the words “giving advice, or issuing or promulgating analyses or reports” and substituting the words “advising others, either directly or through publications or writings or by issuing or promulgating research analyses or research reports”.

Deletion of regulation 30

13. Regulation 30 of the principal Regulations is deleted.

Amendment of regulation 31

14. Regulation 31 (9) of the principal Regulations is amended by deleting the words “or (2)” and substituting the words “, (2) or (3)”.

Deletion of regulation 32

15. Regulation 32 of the principal Regulations is deleted.

New regulation 32B

16. The principal Regulations are amended by inserting, immediately after regulation 32A, the following regulation:

“Exemption for advising institutional investor, related corporation, etc.

32B.—(1) A licensee, or a financial adviser which is exempt from holding a financial adviser’s licence under section 23 (1)(a), (b), (c), (d) or (e) of the Act (referred to in this regulation as exempt financial adviser), shall be exempt from sections 25 to 29, 32, 34 and 36 of the Act and regulations 37 and 38 when providing any financial advisory service in respect of any investment product to —

(a)	an institutional investor;
(b)	a related corporation of that licensee or exempt financial adviser, as the case may be;
(c)	a person that is connected to that licensee or exempt financial adviser, as the case may be; or
(d)	an approved headquarters company or approved Finance and Treasury Centre which carries on business involving the provision of all or any type of financial advisory service, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E (2)(a) or 43G(2)(a) of the Income Tax Act (Cap. 134), as the case may be.

(2) A financial adviser which is exempt from holding a financial adviser’s licence under section 23(1)(ea) of the Act shall be exempt from sections 25, 26 and 36 of the Act when providing financial advisory service in respect of any investment product to —

(a)	an institutional investor;
(b)	a related corporation of that financial adviser;
(c)	a person that is connected to that financial adviser; or
(d)	an approved headquarters company or approved Finance and Treasury Centre which carries on business involving the provision of all or any type of financial advisory service, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E (2)(a) or 43G(2)(a) of the Income Tax Act, as the case may be.

(3) A representative of a licensee or an exempt financial adviser referred to in paragraph (1) shall be exempt from sections 25, 26, 27, 29, 34 and 36 of the Act in respect of his carrying out of the activity referred to in that paragraph for the licensee or exempt financial adviser, as the case may be.

(4) A representative of a financial adviser referred to in paragraph (2) shall be exempt from sections 25, 26 and 36 of the Act in respect of his carrying out of the activity referred to in that paragraph for the financial adviser.”.

Deletion and substitution of regulations 33 and 34

17. Regulations 33 and 34 of the principal Regulations are deleted and the following regulations substituted therefor:

“Exemption from section 25 of Act for advising accredited investor or expert investor

33.—(1) Section 25 of the Act shall not apply to a licensee, an exempt financial adviser, or any of its representatives, when providing any financial advisory service in respect of —

(a)	any designated investment product (within the meaning of section 25(6) of the Act) to an accredited investor; or
(b)	any designated investment product (within the meaning of section 25(6) of the Act), that is a capital markets product, to an expert investor.

(2) Where a licensee, an exempt financial adviser, or any of its representatives, provides any financial advisory service in the circumstances specified in paragraph (1), the licensee, exempt financial adviser or representative, as the case may be, shall disclose the exemption under that paragraph to the accredited investor or expert investor, as the case may be, unless the accredited investor or expert investor is —

(a)	an institutional investor;
(b)	a related corporation of the licensee or exempt financial adviser, as the case may be;
(c)	a person who is connected to the licensee or exempt financial adviser, as the case may be; or
(d)	an approved headquarters company or approved Finance and Treasury Centre which carries on business involving the provision of all or any type of financial advisory service, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E (2)(a) or 43G(2)(a) of the Income Tax Act (Cap. 134), as the case may be.

(3) Any person who contravenes paragraph (2) shall be guilty of an offence.

Exemption from section 27 of Act in certain circumstances

34.—(1) Section 27 of the Act shall not apply to a licensee, an exempt financial adviser, or any of its representatives, when making a recommendation in respect of —

(a)	any investment product to an accredited investor;
(b)	any capital markets product to an expert investor; or
(c)	any Government securities.

(a)	an institutional investor;
(b)	a related corporation of the licensee or exempt financial adviser, as the case may be;
(c)	a person who is connected to the licensee or exempt financial adviser, as the case may be; or
(d)	an approved headquarters company or approved Finance and Treasury Centre which carries on business involving the provision of all or any type of financial advisory service, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E (2)(a) or 43G(2)(a) of the Income Tax Act (Cap. 134), as the case may be.

(3) Any person who contravenes paragraph (2) shall be guilty of an offence.”.

Amendment of regulation 35

18. The principal Regulations are amended —

(a)

by deleting sub-paragraph (i) of regulation 35 (a) and substituting the following sub-paragraph:

“(i)	an expert investor; or”; and

(b)

by renumbering regulation 35 as paragraph (1) of that regulation, and by inserting immediately thereafter the following paragraphs:

“(2) Where a licensee, an exempt financial adviser, or any of its representatives, provides any financial advisory service in the circumstances specified in paragraph (1), the licensee, exempt financial adviser or representative, as the case may be, shall disclose the exemption under that paragraph to the accredited investor or expert investor, as the case may be, unless the accredited investor or expert investor is —

(a)	an institutional investor;
(b)	a related corporation of the licensee or exempt financial adviser, as the case may be;
(c)	a person who is connected to the licensee or exempt financial adviser, as the case may be; or
(d)	an approved headquarters company or approved Finance and Treasury Centre which carries on business involving the provision of all or any type of financial advisory service, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E(2)(a) or 43G (2)(a) of the Income Tax Act (Cap. 134), as the case may be.

(3) Any person who contravenes paragraph (2) shall be guilty of an offence.”.

New regulation 36

19. The principal Regulations are amended by inserting, immediately after regulation 35, the following regulation:

“Exemption for advising overseas investors

36.—(1) Sections 25 to 29, 32, 34 and 36 of the Act shall not apply to a licensed financial adviser or an exempt financial adviser when providing any financial advisory service to any person outside Singapore who is —

(a)

an individual and —

(i)	not a citizen of Singapore;
(ii)	not a permanent resident of Singapore; and
(iii)	not wholly or partly dependent on a citizen or permanent resident of Singapore; or

(b)

in any other case, a person with no commercial or physical presence in Singapore.

(2) Sections 25 to 27, 29, 34 and 36 of the Act shall not apply to a representative of a licensed financial adviser or an exempt financial adviser when carrying out the activity referred to in paragraph (1) as a representative of the licensed financial adviser or exempt financial adviser, as the case may be.

(3) Where a licensee, an exempt financial adviser, or any of its representatives, provides any financial advisory service in the circumstances specified in paragraph (1) or (2), the licensee, exempt financial adviser or representative, as the case may be, shall disclose the exemption under that paragraph to the person outside Singapore referred to in paragraph (1).

(4) Any person who contravenes paragraph (3) shall be guilty of an offence.”.

Deletion of First Schedule

20. The First Schedule to the principal Regulations is deleted.

Transitional provision

21. Notwithstanding the provisions of these Regulations, a licensee may, during the period of 6 months commencing from 1st July 2005, lodge a document under the principal Regulations by personal delivery or by pre-paid post.

[G.N. Nos. S 76/2004; S 692/2004]

Made this 8th day of June 2005.

HENG SWEE KEAT

Managing Director,
Monetary Authority of Singapore.

[MCD/MCP 04/2003 PT 1; AG/LEG/SL/110/2002/1 Vol. 2]

Search within Legislation