Tervinder Chal
Managing Director, Singapore, Ogier Global | Corporate and Fiduciary
Singapore
Tervinder Chal
Managing Director, Singapore, Ogier Global
Singapore
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Fund directors - Cayman Islands and Singapore
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Fund directors – Cayman Islands and Singapore
Funds’ directors’ play a critical role in the governance of funds that reinforces the risk management framework within the unique organism of owner-manager entity of investment funds. They are an important line of defence for investors, especially when investment funds and or the service provider eco-system are not directly regulated in some jurisdictions. The Weavering case in the Cayman Islands led to the issuance of statement of guidance for fund directors in 2014 that applies to all Regulated funds which covers the basic principles of governance and what a decent director should do in the governance of a fund.
As fund domiciliation in both Cayman Islands as well as now Singapore continues to grow, it is imperative for investors as well as operators (fund managers) to focus on governance of investment funds.
Cayman Islands
The statement of guidance issued by CIMA sets out only the best practices of minimum corporate governance expectations of fund directors and its application though restricted to Regulated Funds, but it does inspire good governance for all types of funds.
Below are the salient requirements and obligations of a fund director in the Cayman Islands when set up as a company.
| Regulated Mutual Fund (Mutual Funds Act) |
Private Fund (Private Funds Act) | |
|
Minimum |
At least two. | At least two. |
| Residency | Not required. | Not required. |
| Independence | Not statutorily required. | Not statutorily required. |
| Fitness and Probity check | As part of Directors Registration and Licencing Act requirements. | Not statutorily required. |
| Directorship services provided by | Both natural person or a corporate director. | |
| Declaration of interest in the fund | Required as part of conflict-of-interest management. | |
| Director's register of the fund | Not publicly retrievable for that particular fund. | |
| Director's qualification | Above 21 years and should not be insolvent or bankrupt and of contracting ability. | |
| Statement of directors | No statutory requirement for a statement of directors. | |
| AML/KYC responsibility | Investment funds must appoint natural persons in the required roles of Anti-Money Laundering Compliance Officer (AMLCO), Money Laundering Reporting Officer (MLRO), and Deputy Money Laundering Reporting Officer (DMLRO). A director can perform these roles too. | |
| Segregation of assets and liabilities between sub-funds | Ensuring segregation of assets and liabilities is the responsibility of the directors. | |
| Books and records | Maintenance of books and records are the responsibility of the directors. | |
| Filing obligations | As officers of the entity, it is their responsibility to ensure that the financial statements are audited and filed with CIMA timely. | |
| Breach of statutory duty | Subject to criminal penalties, and/or fines. CIMA could also impose administrative fines. | |
| Breach of fiduciary duty | Breach of fiduciary may lead to directors personally liable to the fund for damages. | |
| Limit on number of directorships | No statutory or regulatory limitation. | |
| Registration and Licensing | Yes, via Directors Registration and Licencing Act. | |
Singapore
Funds set up in Singapore as corporate form, like any corporation need a director. Funds which are set up as corporation (under Companies Act) or as a Variable Capital Company need to have at a minimum one director that is a natural person. Singapore does not allow for directorship function to be performed by a body corporate.
Below are the salient requirements and obligations of a fund director when set up as a Company or as a VCC.
| Private Fund set up as a company | Private Fund set up as a VCC | Public Fund set up as a VCC | |
| Minimum | At least one | At least one | At least three |
| Residency | Must be Singapore resident | Must be Singapore resident | At least one must be Singapore resident |
| Independence | Not statutorily required | Not statutorily required | At least one must be independent of the fund manager and the custodian |
| Executive function | Not prescribed | At least one director should be director of the fund management company managing the VCC. | |
| Fitness and probity check | Required as per the Companies Act. | Required as per the VCC Act. | Required as per the VCC act |
| Declaration of interest in the fund | Required as per the Companies Act. | Required as per the VCC Act. | Required as per the VCC act |
| Director's register of the fund | Publicly retrievable for that fund entity | ||
| Director's qualification | Above 21 years and should not be insolvent or bankrupt and of contracting ability. | ||
| Statement of directors | Attached to financial statements that are publicly retrievable. | Attached to financial statements that are not publicly retrievable. | |
| AML/KYC responsibility | AML/KYC is the responsibility of the directors, and the supervisory authority is ACRA. | AML/KYC is the responsibility of the directors and the fund manager, and the supervisory authority is the MAS. | |
| Segregation of assets and liabilities between sub-funds | Not applicable as fund set up under the Companies Act cannot be segregated. | Ensuring segregation of assets and liabilities is the responsibility of the directors. | |
| Books and records | Maintenance of books and records are the responsibility of the directors. | ||
| Filing obligations | As officers of the entity, it is their responsibility to ensure that the financial statements are audited and filed with ACRA. Income tax returns are prepared and filed with IRAS timely. | ||
| Breach of statutory duty | Are subject to criminal offences under various provisions of the respective laws (Companies and VCC Act). | ||
| Breach of fiduciary duty | Breach of fiduciary may lead to directors personally liable to the fund for damages. | ||
| Limit on number of directorships | No statutory or regulatory limitation. | ||
| Registration and licensing | No central database or formal registration to be a director in Singapore. | ||
As the investment fund domiciliation in Singapore continues to grow, the expectation of governance has become central and focal point. The distinction between Cayman Islands and Singapore governance models, is the mandatory expectation of an “executive director” (director or qualified representative of the fund manager) and directors’ registration requirement that is mandatory in Cayman Islands for all Regulated Mutual Funds but not yet Singapore. As the focus on operational risks intensifies by all the regulators, the governance of investment funds is now the focal point of attention in most progressive investment fund jurisdictions.
Governance Services
Ogier Global offers a team of experts that can provide the right governance framework for your corporate structures. Services include:
- Directorship
- Board Support Services
- Substance
You can find out more information about setting up a fund management business in singapore, and the different types of funds available, starting with this article: Setting up fund management business in Singapore.
Key contacts
Connie Chan 陈丽芬
Associate Director 副董事 | Corporate and Fiduciary
Singapore
Connie Chan 陈丽芬
Associate Director 副董事
Singapore
About Ogier
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
Disclaimer
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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