The Role of Family Offices
A Family Office is essentially a fund management advisory company set up to oversee the administration, preservation, growth and transfer of high net worth families’ assets and investments. A Family Office is a legal entity which manages financial and personal matters for or on behalf of one or more families and is wholly-owned by family members.
Single-Family Offices (SFOs) are more common and are cited for exemption from licensing in the latest guidance (Feb 2017) from the Monetary Authority of Singapore (MAS). According to the MAS, the following arrangements are considered broadly typical of SFOs (link):
- Where there is no common holding company, but the assets managed by the SFO are held directly by natural persons of a single family;
- Where assets are held under a discretionary trust, the settlor of the trust and the beneficiaries are members of the same family;
- Where a family trust is set up for charitable purposes, the charitable trusts are funded exclusively by settlor(s) from a single family;
- Where non-family members such as key employees of the SFO are shareholders in the SFO for the purpose of alignment of economic interest and risk-sharing, the initial assets and additional injection of funds are funded exclusively by a single family.
Many of the functions of a Family Office are similar to those of a privately-held company. The wealth of experience AnC has gained in setting up and supporting companies are integral to the running of Family Offices.
Incorporation of onshore and offshore companies
Reporting and record keeping (including accounting and consolidated reporting)
Corporate secretarial services
Why Partner with AnC?
- Privacy and confidentiality
- Governance and management structure
- Interest alignment and protecting the family wealth
- Centralisation of other services
- Managing personal affairs of family members
Family Office Services:
- Incorporation of onshore and offshore companies
- Reporting and record keeping (including accounting and consolidated reporting)
- Corporate secretarial services
- Administrative services
Why Have Family Offices Grown Rapidly in Singapore?
Singapore is home not only to “Crazy Rich Asians” but also to highly affluent individuals and families from all over the world. According to the 2019 Wealth Report by London-based consultancy Knight Frank, the Asia Pacific already has more billionaires than Europe or North America. Singapore is a business-friendly state that has laws and incentives that encourage the setting up of Family Offices. The MAS has revealed that the number of Family Offices has seen a four-fold increase in Singapore over the last few years. Family Offices are shifting from being focused on wealth management to becoming a platform for other dispute resolution and succession planning as subsequent generations in family-owned companies move into emerging business sectors. Singapore is often used as a base to tap into the high growth opportunities in the region and beyond.
There are a few key factors why highly affluent families from Asia, Europe and further afield have been attracted to set up Family Offices in the Lion City.
- The lack of licensing requirements for SFOs. The MAS (link: https://www.mas.gov.sg/development/wealth-management) states that it does not intend to regulate or license SFOs. Class exemptions from licensing are provided under the Securities And Futures Act (SFA) and Financial Advisers Act (FAA) for fund management and financial advisory services. SFOs that do not fall under the class exemptions may apply for licensing exemption under section 99(1)(h) of the Securities And Futures Act (SFA) (link https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Securities-Futures-and-Fund-Management/Regulations-Guidance-and-Licensing/FAQs/SFA_FAQs-on-the-Licensing-and-Registration-of-Fund-Management-Companies_8-Oct-2018.pdf?la=en&hash=A1F2C054693BA437883EEE224C9D815B2AFF01BB.)
- The availability of fund-tax exemption schemes for SFOs that qualify. Many SFOs can avail themselves to attractive tax exemptions for funds dealing with both offshore and onshore vehicles. Families with international businesses can enjoy lower income taxation or even exemption under Singapore’s large number of Double Taxation Agreements. (link to list of DTAs https://www.iras.gov.sg/irashome/Quick-Links/International-Tax/List-of-DTAs–limited-treaties-and-EOI-arrangements/ )
- The rule of law. Singapore is renowned for its robust legal framework which is vital for Family Offices. The World Justice Project (link: https://worldjusticeproject.org/sites/default/files/documents/Singapore_0.pdf) ranks Singapore among the leading jurisdictions in the world. The Lion City is rated particularly highly in terms of the absence of corruption, order and security, civil justice and criminal justice.The Singapore International Commercial Court allows international dispute resolution without needing arbitration which can otherwise lead to protracted proceedings. Little wonder that the United Nations Convention on International Settlement Agreements Resulting from Mediation was named the “Singapore Convention on Mediation” (Link: https://www.mlaw.gov.sg/content/minlaw/en/news/press-releases/UN-convention-on-mediation-to-be-named-after-Singapore.html) and signed in the Lion City in 2019. The Convention gives businesses greater certainty that mediated settlement agreements can be relied upon to resolve cross-border commercial disputes.
- Political stability and quality of life. As a result of the Lion City‘s strong rule of law, the city state is well known as a beacon of stability in a world where political strive has been common. One additional benefit that is highlighted by various indices is that Singapore provides a high quality of life. For example, Mercer (link https://www.mercer.com.sg/newsroom/2019-quality-of-living-survey.html) ranks the Lion City tops in Asia in 2019.