Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Amendment No. 2) Regulations 2002

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Published in Subsidiary Legislation Supplement
on 05 Dec 2002

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No. S 614

Securities and Futures Act 2001

Act 42 of 2001

Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Amendment No. 2) Regulations 2002

In exercise of the powers conferred by sections 296(1) and 341 of the Securities and Futures Act 2001, the Monetary Authority of Singapore hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Amendment No. 2) Regulations 2002 and shall come into operation on 5th December 2002.

Amendment of First Schedule

2. The First Schedule to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2002 (G.N. No. S 241/2002) (referred to in these Regulations as the principal Regulations) is amended —

(a)

by deleting questions 17 to 20 and the paragraph immediately under question 20 in Part IV of Form 2 and substituting the following questions and paragraph:

“

17.	Within the past 10 years, has the manager had judgment given against it in any civil proceedings or incurred penalties imposed by a public authority, in Singapore or elsewhere, or are there any proceedings now pending that may lead to such a judgment or imposition of penalty?

Yes

18.	Within the past 10 years, has a receiver, a receiver and manager, a judicial manager or an equivalent person ever been appointed in relation to or in respect of any property of the manager in Singapore or elsewhere?

Yes

19.	Within the past 10 years, has the manager been refused the right or restricted in its right to carry on any activity for which a specific licence, registration or other authority is required by law in any place?

Yes

20.	Within the past 10 years, has the manager been censured, disciplined, suspended or refused membership or registration by a regulatory authority for any activity in Singapore or elsewhere?

Yes

Please attach annex(es), where appropriate, giving all relevant particulars if any answer to questions 17 to 20 is “Yes”.

”;

(b)

by deleting questions 6 to 9 in Part III of Form 3 and substituting the following questions:

“

6.	Within the past 10 years, has the applicant had judgment given against it in any civil proceedings or incurred penalties imposed by a public authority, in Singapore or elsewhere, or are there any proceedings now pending that may lead to such a judgment or imposition of penalty?

Yes

7.	Within the past 10 years, has a receiver, a receiver and manager, a judicial manager or an equivalent person ever been appointed in relation to or in respect of any property of the applicant in Singapore or elsewhere?

Yes

8.	Within the past 10 years, has the applicant been refused the right or restricted in its right to carry on any activity for which a specific licence, registration or other authority is required by law in any place?

Yes

9.	Within the past 10 years, has the applicant been censured, disciplined, suspended or refused membership or registration by a regulatory authority for any activity in Singapore or elsewhere?

Yes

”;

(c)

by inserting, immediately after question 3 in Part III of Form 5, the following question:

“

3A.	Indicate the structure of the scheme.

Unit Trust

Corporation

Other (specify) __________________

”; and

(d)

by deleting questions 8 to 11 in Part IV of Form 5 and substituting the following questions:

“

8.	Within the past 10 years, has the manager had judgment given against it in any civil proceedings or incurred penalties imposed by a public authority, in Singapore or elsewhere, or are there any proceedings now pending that may lead to such a judgment or imposition of penalty?

Yes

9.	Within the past 10 years, has a receiver, a receiver and manager, a judicial manager or an equivalent person ever been appointed in relation to or in respect of any property of the manager in Singapore or elsewhere?

Yes

10.	Within the past 10 years, has the manager been refused the right or restricted in its right to carry on any activity for which a specific licence, registration or other authority is required by law in any place?

Yes

11.	Within the past 10 years, has the manager been censured, disciplined, suspended or refused membership or registration by a regulatory authority for any activity in Singapore or elsewhere?

Yes

”;

Amendment of Third Schedule

3. The Third Schedule to the principal Regulations is amended —

(a)

by deleting the word “securities” in paragraph 18(a) of Part VII and substituting the word “investments”;

(b)

by deleting paragraph 75 of Part XXI and substituting the following paragraph:

“

75.	If the Scheme is a specialised collective investment scheme as referred to in the Code on Collective Investment Schemes, state specific warnings or additional information as required in Appendices 1-5 as may be applicable.”; and

”; and

(c)

by deleting Appendix 4 and substituting the following appendices:

“Appendix 4 — Hedge Funds

The cover page of a hedge fund prospectus shall clearly state the following:

(a)

that unlike other types of collective investment schemes, the Code on Collective Investment Schemes does not prescribe investment guidelines for hedge funds;

(b)

that an investment in the hedge fund carries risks of a different nature from other types of collective investment schemes which invest in listed securities and do not engage in short selling; the hedge fund may not be suitable for persons who are averse to such risks;

(c)

that in the case where the hedge fund is —

(i)	not capital guaranteed or capital protected, investors may lose all or a large part of their investment in the hedge fund; or
(ii)	capital guaranteed or capital protected, investors are subject to the credit risk of the guarantor or default risk of the issuer of the securities providing the protection;

(d)

that an investment in the hedge fund is not intended to be a complete investment programme for any investor and prospective investors should carefully consider whether an investment in the hedge fund is suitable for them in the light of their own circumstances, financial resources and entire investment programme; and

(e)

the frequency of redemption and the period within which realisation proceeds will be paid to investors.

In addition, the prospectus of a hedge fund shall disclose the following:

(f)

the material differences between the hedge fund and other types of collective investment schemes;

(g)

details of the hedge fund’s risk management and monitoring procedures and internal controls, and a statement from the manager that, in its view, the procedures and controls are sufficient for the management of the hedge fund in accordance with its objectives stated in the prospectus;

(h)

a statement that the liability of investors is limited to their investment in the hedge fund;

(i)

in the case of a single hedge fund, the extent to which it may be leveraged;

(j)

in the case of a hedge fund-of-funds —

(i)	the strategies to be used to achieve diversification;
(ii)	the criteria to be used to select underlying funds; and
(iii)	the extent to which the underlying funds may be leveraged; and

(k)

in the case of a capital protected hedge fund or a capital guaranteed hedge fund, that the protection or guarantee is effective only at maturity of the hedge fund and if investors were to redeem their investment prematurely, there would be a risk of capital loss.

Appendix 5 — Futures and Options Funds

The first page of a futures and options fund prospectus should clearly state that —

(l)

an investment in the futures and options fund carries risks of a different nature from other types of collective investment schemes which do not engage in short selling; the futures and options fund may not be suitable for persons who are averse to such risks;

(m)

in the case where the scheme is —

(i)	not capital guaranteed, investors may lose all or a large part of their investment in the futures and options fund; or
(ii)	capital guaranteed, investors are subject to the credit risk of the guarantor; and

(n)

an investment in the futures and options fund is not intended to be a complete investment programme for any investor and prospective investors should carefully consider whether an investment in the futures and options fund is suitable for them in the light of their own circumstances, financial resources and entire investment programme.

(1) In addition, the prospectus of a futures and options fund shall disclose the following:

(a)

the type of financial futures contracts and/or financial options and/or gold, as may be applicable, that the futures and options fund will invest in; and

(b)

the strategies to be used to achieve proper diversification; in the case of a dedicated futures and options fund as referred to in the Code on Collective Investment Schemes, that it will only invest in futures contracts or options concerning a single underlying financial instrument or commodity, or a specific class of underlying financial instruments or commodities, and the risks arising from the lack of diversification.”.

Amendment of Fifth Schedule

4. Paragraph 3 of the Fifth Schedule to the principal Regulations is amended —

(a)

by deleting the words “and subject to sub-paragraph (2)” in sub-paragraph (1) and substituting the words “, and subject to sub-paragraph (1A) and the conditions specified in sub-paragraph (2)”;

(b)

by inserting, immediately after sub-paragraph (1), the following sub-paragraph:

“(1A) The Authority may recognise a restricted scheme under sub-paragraph (1) if and only if the Authority is satisfied that there is a manager for the scheme which satisfies the requirements in sub-paragraph (2).”; and

(c)

by deleting the words “sub-paragraph (2)” in sub-paragraph (8) and substituting the words “sub-paragraphs (1A) and (2)”.

[G.N. No. S 543/2002]

Made this 4th day of December 2002.

KOH YONG GUAN

Managing Director,
Monetary Authority of
Singapore.

[FSG CFD 016/99; AG/LEG/SL/289/2002/1 Vol. 1]