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Organizational structure of a single family office
Seven Functions of Establishing a Single Family Office
Establish a typical architecture schedule for a single home office
Here is how we can help you and your family establish a single home office. If you wish to continue working with external consultants or using the services of a joint family office, we can also assist you.
Singapore regulatory regulations and institutions
In order to meet the numerous needs of a family office, a single family office ("SFO") may sometimes unintentionally engage in regulated activities such as fund management or financial consulting to achieve its goals.
The Monetary Authority of Singapore (MAS) has made significant progress in this regard. In order to enable SFOs to meet the requirements of households managing their own proprietary funds, MAS has explicitly stated its intention to exempt SFOs engaged in fund management and financial activities from regulatory and licensing requirements.
ask
What is the definition of Single Family Office (SFO) in Singapore's relevant laws and regulations? SFO Exemption License?
A
SFO usually refers to an entity that manages assets solely for or on behalf of a family and is wholly owned or controlled by members of the same family. In this regard, the term "family" can refer to the direct descendants of a single ancestor, as well as their spouses, former spouses, adopted children, and stepchildren.
According to the SFA and FAA, the categories of capital management and financial consulting services provided to relevant companies are exempt from licensing. According to the provisions of Schedule 5 (1) (B) of Schedule 2 of the Securities and Futures Ordinance, the Securities and Futures Ordinance may rely on exemptions provided by companies managing the funds of the relevant companies.
The following are examples of ownership structures that may fall within the scope of exemption under the Securities and Futures Ordinance:
Seeking exemption
The following information will assist MAS in evaluating exemption applications such as SFO:
The Securities and Futures Ordinance;
A chart describing the equity structure of the Securities and Futures Ordinance;
Explanation of the relationship between the Securities and Futures Ordinance and investment fund instruments and households/beneficiaries;
A brief description of households whose assets are regulated by the Securities and Futures Ordinance; and
Explanation of the nature of activities carried out under the Securities and Futures Ordinance.
MAS believes that the following arrangements are typical of SFO arrangements. The Securities and Futures Ordinance, which has (or plans to have) these arrangements, should include the following information when applying for exemption:
There is no common holding company, but the assets managed by securities and futures are directly held by a natural person in a family;
If the assets are held by a discretionary trust, the founder and beneficiary of the trust are members of the same family;
If a family trust is established for charitable purposes, the charitable trust is only funded by the settlor of a single family;
If the main employees and non family members of the SFO are shareholders of the SFO for the purpose of economic benefits and risk sharing, the initial assets and additional capital injection will only be provided by a single family.
MAS may take 2 to 4 months to review exemption requests, depending on the complexity of the arrangement, the quality of the submitted information, and the applicant's responsiveness.
Single Family Office Tax Law
Not all families are concerned about the cost of a single home office. Based on the fact that each wealthy family also has to pay a considerable amount of funds to manage their assets, needs, and desires, it is difficult to grasp the overall cost if the services of external consultants are fully utilized.
Therefore, some families intentionally establish a single home office to control and reduce asset management costs. The establishment of an exclusive family office allows them to view overall expenses and negotiate cost reductions (using institutional investments).
From our practical experience, it can be seen that the expenditure on operating a single family office will be lower than the total cost of decentralized payment, resulting in higher quality of service and better risk management.
Not only should we consider the annual expenses, but we also need to consider how to collect these expenses from the family and how to share them among various family members.
This is equally important as determining the operating costs of a family office, especially when family members do not reach a consensus on the scope of services provided by the family office, it will be more challenging. If family members are not informed about the cost of their home office and how to charge, in the long run, problems and contradictions will arise.
The eligibility for funding under the 13R and 13X tax incentive plans depends on the circumstances. When evaluating the eligibility of funds, MAS may need information about the family office, including:
The equity structure of the family office group;
Information on the relationship between family offices, investment fund vehicles, and beneficiaries;
Names of shareholders and directors of the family office;
Information on the activities to be carried out by the family office; and
The family office manages the family information of its assets.
13R and 13X funds that have been approved for tax incentives before December 31, 2024, will enjoy the benefits of the plan during the fund's term of use, provided that they meet the conditions for the entity's continued operation.
Home Office
Before and throughout the operation of the family office, various management requirements may arise. These may include opening bank accounts for family offices, preparing annual tax reports, and fulfilling other regulatory reporting obligations, such as the Common Reporting Standards (CRS) and the Foreign Account Tax Compliance Act (FATCA).
