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What is an LFMC?

What is an LFMC | Singapore Compliance

Singapore’s financial sector, which includes banks, financial advisors, fund management companies, and venture funds, has outperformed by constantly setting financial regulations and stringent management standards.

As per the regulatory framework, the FMCs can be bifurcated as registered fund management companies (RFMCs) and capital markets services licenses (CMSL). This is also referred at LFMC. The RFMCs are subject to fewer compliance requirements and supervision. On the other hand, CMSL is considered a full license and has strict prerequisites for being given to an applicant.

Crucial requirements for RFMCs

An FMC does not need to hold a CMSL for carrying out fund management activities. Therefore, earlier Exempt Fund Managers (EFMs) are now be called RFMCs. To be eligible as an RMFC, the assets under management (AUM) of the RMC should not be more than S$250 million, and it should not cater to more than 30 qualified investors. Of the 30 qualified investors, more than 15 funds with accredited investors as underlying investors should not be present. The FMC can start its business operations once the MAS authorizes its notification and includes the name of the RFMC in its online directory on the website of MAS.

The minimum competency requirements for an RFMC registration are as follows:

  • The FMC should have at least two directors;
  • The directors should have at least five years of relevant experience;
  • Of the directors, at least one of the executive directors recruited on a full-time basis for the routine company operations should be a resident of Singapore;
  • The Chief Executive Officer (CEO) of the RFMC should have a minimum of five years of relevant experience.
  • The FMC should have at least two relevant professionals, such as directors, CEO, and representatives;
  • The relevant professionals of the FMC should have a minimum of five years of appropriate experience;
  • At least two of the representatives of the FMC should be residing in Singapore.

The relaxation in compliance requirements set by MAS has resulted in fund management being one of the regulated activities in Singapore with numerous fund management companies (FMCs) in the country.

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