Setting Up an Asset Management Company

Setting Up an Asset Management Company | Bestar

Asset Management Company Setup Guide

Setting Up an Asset Management Company

Setting up an asset management company in Singapore, Hong Kong, or Malaysia involves navigating specific regulatory frameworks, capital requirements, and operational considerations unique to each jurisdiction. Here's a breakdown to guide you:

Singapore

Singapore is a leading financial hub with a robust regulatory environment governed by the Monetary Authority of Singapore (MAS).

Licensing and Regulatory Requirements:

Fund management companies in Singapore typically need to obtain a Capital Markets Services (CMS) License as a Licensed Fund Management Company (LFMC). There's also a category for Venture Capital Fund Manager (VCFM).

• LFMC (Accredited Investor (A/I) or Retail): For firms managing over S$250 million in AUM or serving a broader range of investors (retail investors require a retail LFMC license).

  • Requirements: Minimum of 2 directors with 5+ years relevant experience (at least 1 executive and Singapore-resident), and a CEO with 10+ years relevant experience. Dedicated and independent compliance function in Singapore.

  • Capital: Minimum base capital of S$250,000 for A/I LFMC, potentially higher for Retail LFMC (e.g., S$500,000 or higher depending on products and clientele).

  • Application Fee: S$1,000.

  • Processing Time: Up to 6 months.

• VCFM: Specific for venture capital fund managers.

  • Application Fee: S$1,000.

  • Processing Time: Up to 4 months.

General Requirements for all Fund Management Companies:

• Fit and Proper Criteria: The company, its shareholders, directors, and representatives must meet MAS's "fit and proper" criteria.

• AML/CFT Compliance: Robust Anti-Money Laundering and Countering the Financing of Terrorism frameworks.

• Internal Audit and Compliance: Strong internal audit and compliance functions.

• Independent Custody Arrangements: Adequate segregation of duties and independent custody for fund administration.

• Singapore-resident employees: Minimum number of full-time Singapore-based employees with relevant experience (e.g., 3 for LFMC, 2 for RFMC).

Setup Costs:

• Company Incorporation: Typically S$3,000 - S$4,000 (including government and agent fees).

• Government Fees for Incorporation: S$15 for name registration, S$300 for new company processing (total S$315).

• Annual Compliance Costs: Range from S$3,000 to S$5,000, covering accounting, audit fees, and tax obligations.

• Annual Return Filing Fee: S$60.

• Employment Pass (for foreign owners): S$105 for application, S$225 upon issuance.

• License Application Fees: As mentioned above (S$1,000 to S$4,000).

• Minimum Base Capital: S$250,000 for LFMC (A/I).

Hong Kong

Hong Kong is another prominent international financial center with a well-established regulatory framework supervised by the Securities and Futures Commission (SFC).

Licensing and Regulatory Requirements:

To conduct asset management activities in Hong Kong, a company needs to obtain a Type 9 License – Asset Management from the SFC.

• Type 9 License: Allows for discretionary portfolio management, including hedge fund management.

• Key Requirements:

  • Capital Requirement: Minimum HK$100,000.

  • Local Director: At least one local director is generally required.

  • Economic Substance: The company must demonstrate economic substance in Hong Kong.

  • AML/KYC: Robust Anti-Money Laundering and Know Your Customer policies and procedures.

  • Audit: Annual audits are required.

  • Fit and Proper: Shareholders, directors, and responsible officers must meet SFC's "fit and proper" criteria.

  • Compliance and Risk Management: Comprehensive internal control systems, risk management frameworks, and compliance policies.

Setup Costs:

• Company Incorporation: Around HK$5,800 to HK$7,800 for Hong Kong residents.

• Government Fees for Incorporation: HK$1,545 (electronic) or HK$1,720 (hard copy) for Certificate of Incorporation.

• Business Registration Certificate: HK$2,200.

• Company Secretary Services: Average HK$2,100 - HK$7,800 annually (digital services typically more cost-effective).

• Registered Office Address: Starts around HK$900 for a one-year term.

• Minimum Share Capital: Typically HK$1 (though higher initial capital is often opted for operational funding).

• Ongoing Compliance: Includes annual returns, accounting, and potentially audit fees.

Malaysia

Malaysia's capital market is regulated by the Securities Commission Malaysia (SC).

Licensing and Regulatory Requirements:

To operate as a fund management company in Malaysia, you generally need a Capital Markets Services License (CMSL) from the SC for fund management activities.

• Eligibility Criteria:

  • Incorporated in Malaysia: The entity must be incorporated in Malaysia.

  • Minimum Paid-up Capital: RM10 million for conventional fund management (or RM2 million for foreign companies with more than 50% foreign equity, managing funds sourced from within Malaysia with at least 30% local shareholding, or 100% foreign-owned for funds sourced and on behalf of clients outside Malaysia).

  • Bumiputera Equity: For conventional fund management, at least 30% Bumiputera equity participation is generally required (for local companies).

  • Shareholders' Funds: At least RM10 million in shareholders' funds for conventional fund management.

• Key Personnel:

  • Licensed Director: Mandatory at least one licensed director with a minimum of 10 years of relevant experience in the licensed regulated activity, holding a Capital Markets Services Representative's License (CMSRL), and approved by the SC.

  • Chief Executive: Requires SC's prior approval, demonstrating capability and competence.

• Operational Framework:

  • Organizational Structure: Clear lines of responsibility and authority.

  • IT Systems and Infrastructure: Necessary IT systems, policies, and procedures for IT audit and security.

  • Internal Controls: Adequate internal control systems.

  • Risk Management: Policies and procedures, including a business continuity plan.

  • Conflict Management: Policies on conflict management, anti-corruption, and whistleblowing.

  • ADR Body Membership: CMSL holders are required to be members of an Alternative Dispute Resolution body approved by the SC.

Setup Costs:

• Company Incorporation: The Companies Commission of Malaysia (SSM) fees vary. For a company limited by shares, the application for incorporation is RM1,000. Annual return lodging is RM150 for private companies.

• Minimum Paid-up Capital: RM10 million (for conventional fund management), or RM2 million under specific foreign company conditions.

• Other Costs: Professional fees for legal and compliance assistance, office rental, IT infrastructure, and staffing will add significantly to the overall setup costs.

Important Considerations for All Jurisdictions:

• Business Plan: A detailed and robust business plan outlining your company's objectives, investment strategies, target market, and financial projections is crucial for all license applications.

• Compliance: Ongoing compliance with local regulations is paramount. This includes regular reporting, financial statement submissions, and adherence to "fit and proper" criteria for personnel.

• Tax Implications: Each jurisdiction has its own tax regime. Singapore offers attractive tax benefits (e.g., no capital gains tax, single-tier corporate tax system). Hong Kong has a low tax structure with no tax on offshore income. Malaysia also offers a low corporate tax rate with potential exemptions.

• Talent Pool: All three locations boast strong financial talent pools, but attracting and retaining skilled professionals will be an ongoing consideration.

Choosing the right jurisdiction depends on your specific business model, target investors, and long-term strategic goals. Each offers unique advantages in terms of regulatory environment, market access, and cost structure.

How Bestar can Help

Bestar is indispensable when setting up and operating an asset management company in Singapore, Hong Kong, or Malaysia. We offer specialized expertise that helps navigate complex regulatory landscapes, mitigate risks, and ensure the smooth establishment and ongoing operation of your firm. Here's a breakdown of how Bestar can help:

Bestar is crucial from the initial conceptualization through to ongoing operations. We ensure your firm is legally sound and compliant with all relevant laws and regulations.

• Initial Setup and Structuring:

  • Jurisdiction Selection Advice: While you've chosen Singapore, Hong Kong, and Malaysia, Bestar can provide in-depth comparative analysis specific to your exact business model, helping you refine which jurisdiction (or combination) is best for your specific asset classes, target investors, and operational preferences.

  • Corporate Structuring: Advising on the most appropriate legal structure for your asset management company (e.g., private limited company, limited liability partnership) considering tax implications, liability, and future growth.

  • Incorporation Services: Handling the full company incorporation process, including drafting constitutive documents (e.g., Memorandum & Articles of Association, Constitution).

  • Shareholder Agreements: Drafting and negotiating shareholder agreements to define ownership, rights, and responsibilities among founders and investors.

• Licensing and Regulatory Applications:

  • License Application Strategy: Guiding you through the specific licensing requirements for each jurisdiction (e.g., CMS License in Singapore, Type 9 License in Hong Kong, CMSL in Malaysia).

  • Application Document Preparation: Assisting in drafting, reviewing, and perfecting all necessary application documents for the relevant regulatory authority (MAS, SFC, SC), ensuring they meet the stringent "fit and proper" criteria and disclosure requirements.

  • Regulatory Correspondence: Acting as a liaison with the regulatory bodies during the application process, responding to queries, and addressing any concerns raised.

  • Policy and Procedure Drafting: Developing essential internal policies and procedures mandated by regulators, such as:

    • Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT) policies

    • Know Your Client (KYC) policies

    • Risk Management frameworks

    • Compliance manuals

    • Personal Data Protection Act (PDPA) / General Data Protection Regulation (GDPR) compliance

    • Business Continuity Plans (BCP)

• Fund Structuring and Documentation (if launching funds):

  • Fund Legal Structure Advice: Advising on the optimal legal structure for investment funds (e.g., unit trust, limited partnership, VCC in Singapore, OFC in Hong Kong).

  • Offering Documents: Drafting and reviewing Private Placement Memoranda (PPMs), Information Memoranda (IMs), or Prospectuses.

  • Investment Management Agreements (IMAs): Drafting agreements between your firm and the investment funds or managed accounts.

  • Other Fund Documents: Preparing subscription agreements, side letters, administration agreements, prime brokerage agreements, and custody agreements.

• Ongoing Compliance and Corporate Governance:

  • Regulatory Updates: Keeping your firm abreast of changes in financial regulations and advising on necessary adjustments to policies and practices.

  • Compliance Training: Providing training to your staff on regulatory requirements and internal compliance policies.

  • Corporate Governance Advice: Assisting with board resolutions, corporate secretarial duties, and ensuring adherence to corporate governance best practices.

  • Contract Review: Reviewing and drafting all commercial contracts your firm enters into (e.g., vendor agreements, employment contracts).

Bestar ensures your financial operations are sound, compliant with accounting standards, and optimized for tax efficiency.

• Financial Planning and Capital Requirements:

  • Financial Projections: Assisting in developing realistic financial projections required for license applications and business planning.

  • Capital Adequacy: Advising on and ensuring your firm meets the minimum paid-up capital and ongoing capital adequacy requirements set by regulators.

• Accounting System Setup and Management:

  • Chart of Accounts: Setting up a robust chart of accounts tailored for an asset management company.

  • Accounting Software Selection: Recommending and assisting with the implementation of suitable accounting software.

  • Bookkeeping Services: Providing ongoing bookkeeping services to maintain accurate financial records.

• Tax Compliance and Planning:

  • Tax Registration: Registering your company for corporate tax, Goods and Services Tax (GST) in Singapore, or Value Added Tax (VAT) in Malaysia, if applicable.

  • Tax Advisory: Advising on tax efficient structures and strategies, particularly related to fund management activities (e.g., Section 13X/13R in Singapore for tax incentives).

  • Tax Filings: Preparing and filing corporate income tax returns and other relevant tax submissions.

  • GST/VAT Compliance: Managing and filing GST/VAT returns.

• Audit and Financial Reporting:

  • Annual Audits: Preparing financial statements for annual audits and liaising with external auditors.

  • Regulatory Reporting: Assisting with financial reporting requirements to the MAS, SFC, or SC.

  • Management Reporting: Providing regular financial reports to management for decision-making.

• Payroll Services: Managing payroll, including calculations of salaries, benefits, and statutory contributions (e.g., CPF in Singapore, MPF in Hong Kong, EPF/SOCSO in Malaysia).

Bestar specializes in the intricate details of regulatory compliance, going beyond professional advice to implement practical solutions.

• Pre-Licensing Assessment:

  • Gap Analysis: Conducting a thorough assessment of your proposed operations against regulatory requirements to identify any gaps.

  • Readiness Assessment: Helping you prepare for regulatory interviews and inspections during the licensing process.

• Compliance Framework Development:

  • Manuals and Procedures: Developing comprehensive compliance manuals, policies, and procedures tailored to your firm's specific activities and the chosen jurisdiction's regulations.

  • Code of Conduct: Establishing a robust code of conduct for employees.

  • Training Programs: Designing and delivering compliance training programs for all staff, from new hires to senior management, on topics such as insider trading, market abuse, data privacy, and gifts and entertainment.

• Ongoing Compliance Monitoring and Reporting:

  • Daily Compliance Oversight: Implementing systems for ongoing monitoring of transactions, communications, and activities to detect potential compliance breaches.

  • Regulatory Filings: Ensuring timely and accurate submission of all required regulatory reports (e.g., financial returns, incident reports, client asset reports).

  • Internal Reviews and Audits: Conducting periodic internal compliance reviews and audits to assess the effectiveness of existing controls.

  • Alert Management: Managing and resolving compliance alerts.

• AML/CFT and Sanctions Screening:

  • System Implementation: Advising on and assisting with the implementation of AML/CFT screening systems for clients and transactions.

  • Ongoing Monitoring: Performing ongoing sanctions screening and enhanced due diligence as required.

  • Suspicious Transaction Reporting (STR): Guiding on the identification and reporting of suspicious transactions.

• Regulatory Liaison:

  • Inquiry Response: Assisting in responding to regulatory inquiries, surveys, and investigations.

  • Inspections: Preparing your firm for and guiding you through regulatory on-site inspections.

• Risk Management Integration:

  • Risk Assessment: Conducting regular risk assessments to identify and mitigate operational, financial, and reputational risks.

  • Framework Implementation: Helping embed risk management practices into daily operations.

In summary:

Engaging Bestar from the outset is not merely an expense; it's an investment that significantly de-risks your setup process, accelerates licensing, ensures ongoing compliance, and allows your core team to focus on their primary objective: managing assets and growing the business. Our expertise helps you avoid costly mistakes, fines, and reputational damage that can arise from non-compliance in highly regulated financial sectors.

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