Faster approvals and lower requirements for venture capital managers start today: MAS

SINGAPORE - New relaxed rules for managers of venture capital (VC) funds, meant to boost start-ups' access to capital, will take effect immediately, the Monetary Authority of Singapore (MAS) announced on Friday (Oct 20).

The move follows follows public consultation earlier this year on the proposed new rules, which simplify and shorten the authorisation process for VC managers.

They are now no longer required to have directors and representatives with at least five years of relevant experience in fund management.

They are also not subject to the capital requirements and business conduct rules that currently apply to other fund managers.

But MAS noted that in admitting and supervising VC managers, it will focus mainly on anti-money laundering safeguards under the Securities and Futures Act. "These safeguards remain important to uphold high standards of integrity in the industry," it said.

MAS will also retain regulatory powers to deal with errant VC managers.

The simplified rules also take into account the extent of contractual safeguards that are already present in typical contracts negotiated by VC managers' sophisticated investor client base, said MAS. Under the new rules, a VC manager has to manage funds that meet the following characteristics:

(a) invest in business ventures that are not listed on a securities exchange;

(b) invest at least 80 per cent of committed capital in securities that are directly issued by startups that are no more than ten years old;

(c) units of the funds are not available for new subscription after the close of fund-raising, and can only be redeemed at the end of the fund life; and (d) are offered only to accredited and/or institutional investors.

Said Mr Lee Boon Ngiap, MAS assistant managing director, capital markets: "The simplified VC manager regime recognises the lower risks posed by VC managers given their business model and sophisticated investor base. It will enhance the operating environment for VC managers to play a greater role in supporting start-up and growth stage businesses."