final and v3 marketing funds in the us and singapore

Marketing Funds:Raising capital in the US and Singapore

Ed O’BreeHead of Funds and BrokingBovill Ltd

September 2016

Jennifer HoopesGeneral Counsel and Head of GlobalForeside

Ed O’BreeHead of Funds and BrokingBovill Ltd

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Singapore: the landscape

Insurance centre

Family Offices

Regional hub

Sovereign Wealth

Institutional capital

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Marketing Restrictions

· General prohibition

· Five most common exemptions:

- Registered prospectus (retail)

- Small offers exemption

- Private placement exemption

- S.304 (institutional investors)

- S.305 (accredited investors)

· Reverse solicitation

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Institutional investor exemption

· S.304 SFA

· Relatively narrow definition of institutional investor

· No need to register the fund with MAS

· Regulatory disclosures required on promotional material

But, definition changing imminently

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Institutional investors: consultation definition

· Singapore government

· Sovereign wealth funds

· Non-Singapore central governments

· Banks

· Finance companies

· Insurance companies

· Licenced trust companies

· Holders of capital markets services licences

· Pension funds and collective investment schemes

· Certain bond dealers

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The “305 exemption”

· Two categories of investors:

- Those investing S$200,000 as principal

- Accredited investors

· Fund must be recorded on the MAS list of restricted schemes

· Offering memorandum

· Two restrictions:

- No advertising permitted

- Not if prospectus is registered

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Accredited investors (s.305)

• with net personal assets of S$2m• with net financial assets of S$1m• with annual income of S$300k

• (other than LLP) where each Partners is an A.I.

• (or similar) with net assets of S$10m• where all shareholders are A.I.s

Individuals

Partnership

Corporations

• of a trust where trust property is S$10m• of a trust where all beneficiaries are A/Is• of a trust where all settlors are A.I.s

Trustees

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Registering restricted foreign schemes

· There are 5,000+ schemes on the MAS List of Restricted Schemes:

1: Fund Manager must be licenced / registered for fund management in its home country.

2: Information Memorandum, with disclosures, submitted to MAS

3: Electronic application submitted by the fund, its manager or agent.

4: Annual declaration is submitted by the Responsible Person or their agent. Initial registration fee: S$250.

· Annual fee: S$50

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Private Banks

• Slow moving• High charges

Singapore IFAs

• Access to HNWIs• Networks not so developed• Initial charges of up to 4%

Introducers

• Institutional capital• Niche operators• Up to 20% of AMC and performance fee

Third party distribution

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Promoting your own fund

· Like the UK, promoting in itself is not a regulated activity

· May need a licence or registration

· If setting up a Singapore entity:

- Base capital S$250,000

- 1 x SG director

- Proportionate compliance function

- Fees

· On balance, unlikely to be necessary

· Good for family office networks

Our integrity.Our guidance.Your success.

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Jennifer HoopesGeneral Counsel and Head of GlobalForeside

Accessing the U.S. Marketfor Non-U.S. Investment Managers

September 29, 2016

Portland, ME – Philadelphia, PA – Boston, MA – Columbus, OH


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Overview

• Accessing the U.S. Market• Products

• UCITS/SICAVs• U.S. Registered Funds

(mutual funds or ETFs)• Non-Registered Funds

• Distribution Options• Advantages and

Disadvantages• Regulatory Issues


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Products – UCITS/SICAVs

• Offerings to the NRA/NRC (non-resident alien/non-resident client) market.

• Generally offered through large U.S. broker-dealers (Pershing, Morgan Stanley, Merrill Lynch).

• Need connectivity through the NSCC (National Securities Clearing Corporation), a subsidiary of the DTCC.


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Products – Registered Funds

• Mutual Funds• Series Trust (established

structure and service providers)• Stand-Alone

• Exchange Traded Funds (ETF)• Series (reliance on existing

SEC Exemptive Relief)• Stand-Alone (need to obtain

SEC Exemptive Relief)


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Products – Registered Funds

• Register as Investment Adviser• Establish Board of Directors• Identify Service Providers:

• Transfer Agent• Custodian• Administrator• Principal Underwriter• Fund Counsel• Trustee Counsel• Audit Firm


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Products – Non-Registered Funds

• Offered pursuant to Regulation D to “Accredited Investors”

• Subject to the Investment Company Act of 1940 and relevant exemptions

• Registration as a Investment Adviser (exemptions and limited registrations possible)

• Offering documents best practice, not required


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Distribution Options – Regulatory Structure

• Generally, you must be registered as (or with) a U.S. broker-dealer or exempt from registration if you are marketing securities in the U.S.


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Distribution Options – Overview

• Issuer Exemption• Chaperoning (SEC Rule 15a-6)• Hire a third-party marketing firm• Build internal distribution function

– register sales people with U.S. broker-dealer

• Establish proprietary U.S. broker-dealer


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Distribution Options – Exemptions

• Issuer Exemption• Difficult to meet all

requirements of exemption• If transaction-based

compensation, cannot use this exemption

• 15a-6 Exemption: Chaperoning• Limited marketing to certain

types of institutional investors

Distribution Options – Third Party Firms

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Advantages• Established sales staff

and channels• Manager does not need to

register as a broker-dealer• Third party firm

responsible for compliance with U.S. regulations

Use of a Third-Party Marketing Firm

Disadvantages• Cost – generally % of

AUM• Internal sales staff cannot

get compensated• Relying on third party firm

to tell your story

Distribution Options – Internal Sales Force

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Advantages• Your sales force does the

selling• Sales force can get

compensated• Broker-dealer responsible

for compliance with U.S. regulations

Build an Internal Sales Force, registered with U.S. Broker-Dealer

Disadvantages• Sales people need to take

FINRA exams to be registered

• Cost – generally flat and/or per representative fee

• Manager cannot get any portion of compensation

Distribution Options – Proprietary Broker-Dealer

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Advantages• Your sales force does the

selling• Sales force can get

compensated• You control your own

destiny

Establish Proprietary Broker-Dealer

Disadvantages• Cost – registration and

operating costs• Required to have certain

principals, annual audit, compliance program

• Lengthy registration and approval process (9-12 months)


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Conclusion

Tremendous opportunities to access the U.S. market with registered and unregistered funds.

Compliance with the regulatory regime is critical to your success.


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Foreside Financial Group, LLCThree Canal Plaza

Portland, ME 04101

Jennifer Hoopes+1 (207) 553-7138

[email protected]

www.foreside.com

Contact Information

mailto:[email protected]

http://www.foreside.com/

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Questions?

final and v3 marketing funds in the us and singapore

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