In Singapore, a “family office” refers to qualified high net-worth family (HNWF) or high net-worth individual (HNWI) investors, as defined by the Family Office Development Team (FODT), a state-run body under the auspices of the Singapore Economic Development Board (EDB) and the Monetary Authority of Singapore (MAS). As organizations, family offices could be considered special wealth management advisory firms.
In the past decade, Singapore has been actively courting HNWFs and HNWIs to invest in the country through family offices. This is because, apart from the numerous direct benefits their investments bring, the presence of HNWFs and HNWIs is particularly beneficial for the professional services and finance industries. HNWFs and HNWIs also tend to be highly influential within the startup ecosystem, as they are more flexible than traditional investment and venture capital firms.
Recent updates to requirements for setting up family office in Singapore are likely to attract even more HNWFs and HNWIs, particularly from China, Hong Kong, India, and Indonesia. This is seen to help Singapore directly benefit from the growing wealth and influence of these countries.
What Are the Benefits of Starting Family Offices?
HNW families and individuals that meet the FODT’s requirements for family offices enjoy a wide range of perks. Some of the benefits of being recognised as a family office include the following:
- Direct access to many of the world’s best financial advisors.
- A proven, structured approach to wealth and legacy management.
- More clarity for contentious issues such as succession and inheritance.
- Reduced external and internal risks to wealth stability.
- A structure for Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) approaches in investments.
- A stable framework for philanthropy.
- Opportunities for younger family members to continue growing wealth.
- Tax incentives for locating in Singapore
- Highly desirable environment for widening global professional contacts.
Given these benefits, growing HNW families and individuals from all over the world are now setting up a family office in Singapore. This influx of capital is now seen by the Singaporean government as strategically important for maintaining the country’s edge as a global innovation and investment hub.
How Do You Set Up a Family Office in Singapore?
Setting up a family office in Singapore is as easy as incorporating any other business. To begin, applicants must file an application on the Accounting and Corporate Regulatory Authority (ACRA) website. Refer to the ACRA How-to-Guides for current application requirements, including business registration, incorporation, and other legal compliance matters. Note that requirements may change without prior notice.
Family offices are also generally required to have a capital markets services licence for fund management, under s99(1)(h) of the Securities and Futures Act (“SFA”). Additionally, family offices are also required to engage domestic financial advisory and fund management services. However, there are exemptions for these requirements. Family offices may apply for licensing exemptions from the MAS.
What Are the Requirements for Family Offices?
There are several requirements for applicants seeking family office status. Some of the more notable requirements include the following.
- Family offices must hire at least two Singapore-licensed investment professionals. There is a one-year grace period for employing the second licensed professional.
- Family offices applying under Section 13O of the Income Tax Act 1947 for funds of less than SGD 50 million in assets under management (AUM) must meet a minimum capital requirement of SGD 10 million upon application, rising to SGD 20 million within two years.
- Family offices applying under Section 13U of the Income Tax Act 1947 for funds more than or equal to SGD 50 million in AUM must hire three Singapore-licensed investment professionals. At least one of the three hired investment professionals cannot be a family member.
- New family offices must spend a minimum amount within Singapore, with the required amount based on their AUM size.
- New family offices must invest at least 10% of the value of their AUM or SGD 10 million, whichever is lower, in local investments. This includes startups, listed equities on the Singapore stock exchange, and funds managed by Singapore-licensed fund managers, to name a few.
Specific requirements for family offices may change with little or no notice. For this reason, interested applicants may want to find the services of qualified experts in Singaporean corporate law.
How Do Family Offices Benefit Singapore?
Family offices are a key ingredient in Singapore’s innovation ecosystem. The ability of these types of businesses to quickly pivot to meet different opportunities makes them a prime source of funding for promising startups. They are also key factors in the development of Singapore’s domestic talents, particularly in legal services and finance.
Family offices also employ other Singapore-based professionals to facilitate the day-to-day operations of their businesses. Their presence in Singapore also encourages other HNWFs and HNWIs to move to the country, further increasing their benefits to the wider Singaporean community.
It’s also difficult to overstate the value of the experience brought by the heads of family offices, given that many of them are successful entrepreneurs themselves. Over the years, many heads of family offices have served as mentors and guides to present and future leaders of Singapore’s business community. Overall, family offices have been a net positive for the country, thus far.
Should You Start a Family Office in Singapore?
If you’re qualified, starting a family office in Singapore may open a world of opportunities for your family and help you secure your legacy. Given that the Singaporean government is heavily invested in improving the family offices ecosystem, it may very well be a safe bet that will continue to pay off for generations to come.