The Monetary Authority of Singapore (MAS) on Friday announced a simplified regulatory regime for managers of venture capital funds (VC managers) with immediate effect to boost startups’ access to capital.
The new regulatory regime will simplify and shorten the authorisation process for VC managers, MAS said in a press statement. The new framework comes into place following public consultation on the proposal put forward by the regulatory body earlier this year.
Lee Boon Ngiap, Assistant Managing Director, Capital Markets, MAS, said, “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 startup and growth stage businesses.”
As part of the new framework, MAS will no longer require VC managers to have directors and representatives with at least five years of relevant experience in fund management. VC managers will also not be subjected to the capital requirements and business conduct rules that currently apply to other fund managers, the statement said.
MAS will also retain regulatory powers to deal with errant VC managers, it added.
The simplified regulatory regime takes into account the extent of contractual safeguards that are already present in typical contracts negotiated by VC managers’ sophisticated investor client base, MAS said.
As per the new regime, 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.