Singapore to ease rules to promote startup financing

Singapore to ease rules to promote startup financing

Commercial buildings stand in the central business district in Singapore. (Bloomberg photo)
Commercial buildings stand in the central business district in Singapore. (Bloomberg photo)

Singapore is proposing to ease regulations for venture capital managers including shortening their application process in a bid to promote financing for startup development.

Under a consultation paper published by the Monetary Authority of Singapore (MAS) on Wednesday, new and existing venture capital managers won’t be subject to the same capital requirements and business conduct rules that currently apply to fund managers in general. The MAS will focus primarily on fitness and propriety assessment, and retain regulatory powers to deal with errant venture capital managers, it said in a statement.

The latest proposal is part of efforts to support and implement recommendations from a top-level government-appointed committee that are aimed at sustaining Singapore’s growth at an average of 2% to 3% annually. The plan for venture capital managers follows initiatives seeking to make it easier to experiment with financial technology in the city-state and represents the latest step by the MAS towards a more agile, flexible regulatory role.

Under the latest proposals, open for public consultation until March 15, the central bank won’t demand that venture capital managers have directors and representatives with at least five years of relevant experience in fund management.

Base capital and risk-based capital requirements will be removed, the MAS said. It also won’t require venture capital managers to provide independent valuation, internal audits and audited financial statements.

Anti-money laundering

Other requirements, involving the annual submission of information on funds and the prevention of money laundering and financing of terrorism, will remain unchanged.

Singapore is home to 153 venture capital firms, according to data provider Preqin. The city-state saw record private equity and venture capital investments totaling $3.5 billion in 2016, rising from $2.2 billion in 2015, based on figures from Duff & Phelps, a corporate finance adviser.

The island-nation is taking steps to address a lack of technology initial public offerings on its stock exchange, with the Singapore government-appointed committee last week recommending that dual-class stock be allowed. This share-ownership structure has enabled minority shareholders to control some of the world’s largest technology companies including Facebook Inc. and Alphabet Inc.

Singapore isn’t the only country in Southeast Asia trying to lure startups. Last year, Indonesia announced plans to establish a dedicated section within its main stock exchange to host IPOs by startups, pursuing its vision of becoming a regional cradle of technology entrepreneurs.


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