SINGAPORE: The Monetary Authority of Singapore (MAS) issued a consultation paper with proposals to simplify the authorisation process and regulatory framework for venture capital (VC) managers on Wednesday (Feb 15).
Currently, VC managers are subject to the same regulatory framework as other fund managers. However, MAS said at a briefing that differences between VC managers and fund managers make some rules less relevant.
Announcing the review of regulations for VC managers last year, Deputy Prime Minister and MAS chairman Tharman Shanmugaratnam had noted that VC funds and fund managers were typically smaller in size and headcount than traditional asset managers, and contribute to the economy in a different way by supporting entrepreneurship in Singapore and the region.
MAS capital markets assistant managing director Lee Boon Ngiap said the proposed simplified regime “recognises the lower risk they pose, given their business model and sophisticated investor base”.
Under the simplified authorisation process, MAS will no longer require VC managers to have directors and representatives with at least five years of relevant experience in fund management. Instead, the regulator said it would focus primarily on ensuring the VC managers are fit and proper.
MAS also proposed to simplify the regulatory framework so new and existing VC managers will no longer need to be subject to the same capital requirements and business conduct rules as other fund managers.
Mr Lee said the proposed changes “will allow new VC managers a faster time-to-market and reduce their ongoing compliance burden. We hope this will attract more VC managers to spur them to play a greater role in supporting entrepreneurship and innovation".
Still, the central bank said it is important that the VC industry remains sound, has good governance and adequate controls against financial crime, and upholds high standards of integrity.
MAS will continue to require VC managers to comply with anti-money laundering obligations and retain regulatory powers to deal with errant VC managers.
There are currently 30 VC fund managers in Singapore that provide capital and expertise to businesses that are in the start-up or early growth phases.
While the industry has been growing at a healthy rate, MAS said there is still room to further expand the size and scope of VC funding available for start-ups. The simplification of the authorisation process and regulatory framework for VC managers is also part of the regulator's support for the Committee on the Future Economy's (CFE) recommendations announced last week.
The public consultation will last until Mar 15 and MAS said it hopes to roll out the changes by July this year.