Fund regulation – Cayman Islands v Singapore

With the current economic environment still heavily focused on regulation, PKF (Cayman) Ltd and PKF-CAP LLP in Singapore have prepared this summary comparison of the fund regulations in two of the major global jurisdictions. Funds are defined in the Cayman Islands regulations as mutual funds (funds) and the Singapore regulations as collective investment schemes (CIS). 


Cayman Islands 
 Cayman Islands Monetary
Authority (“CIMA”)
 Monetary Authority of
Singapore (“MAS”)


 Regulation  Mutual Funds Law (2009)
Revision, The Mutual Funds
(Amendment) Law, 2011 (
together, the “Law”)
 Securities and Futures Act (Cap. 289)
Part XIII Offers of Investments –

Division 2 Collective
Investment Schemes (“SFA”) –
The Code on Collective Investment
Schemes (the “Code”)
– Non Statutory, but its guidance
is highly recommended.


 Set up
 Mutual Fund Licence (“MFL”)
required (ie filing of the offering
and appointment
and due diligence of service


 No person shall make an offer of units
in a CIS if it has not been
under section 286 or recognised
under section 287 of the SFA

(ie completion of appropriate
due diligence.
of funds
Registered Mutual Fund
Administered Mutual Fund
– must have aCIMA-licensed
mutual fund administrator
providing its principal office.
Licensed Mutual Fund –
all funds except; administered
mutual funds,
funds that meet
the criteria set out in section 4(3)
of the Law or
exempt funds.
Authorised Schemes
(constituted in Singapore)
Also a
Singapore representative is required.

Recognised Schemes
(constituted outside Singapore),
the laws and
practices of the
jurisdictions under which the CIS is
constituted and
regulated affords to
investors in Singapore protection at least
equivalent to that provided to them by or
under the SFA.


Exemptions The equity interests are held
by not more than15 investors; or
It is a fund, not incorporated or
establishedin the Cayman
which makes an invitation to
the public to subscribe for its
interests by or through a person who
is the holder of a licence
the Securities Investment Business
Law and those interests are
listed on
a stock exchange or the fund is regulated
by an overseas
regulatory authority.  

The issue or transfer of equity interest for
no consideration

Small offers ($5m or less over a
12 month period)
Private placement (no more than 50
persons within a 12 month period)

Offers to institutional investors

Offers to accredited investors/
other relevant persons


Name of
the fund
 Certain restrictions on what may
constitute the name of a fund,
may refuse to grant a
MFL if a name is identical to that
of another
company, if it suggests a
false connection to another
person or
authority or falsely
suggests the fund has a
special status with the
 The name of the scheme should;

(i)     be appropriate,

(ii)    not be undesirable and

(iii)   not be misleading ( all per the Code).


Offering document (current and
updated) to be filed with CIMA

Prospectus or profile statement to be
lodged and registered by MAS.
The prospectus needs to be
registered every 12 months.

Other licences
 Mutual Fund Administrators
Licence required.
 The CIS manager must hold a capital
markets services licence for fund
and trustees must be
approved (Authorised Schemes).
 Annual audit required by a Cayman
Islands auditor, approved by CIMA.
fund annual return and audited
accounts to be filed with CIMA
six months of year end.

The accounting standards to be
used are those documented in the
document and consent
letter. The majority of funds utilise


 Participants in an Authorised 
Scheme should receive:
(i) the
semi-annual accounts and
semi-annual report  within two
months from the 
period end and
(ii) the audited annual accounts, 
and annual report
within three months
from the  financial year end. 
Specific requirements
to be i
ncluded in the reports are
described below.

Authorised schemes use Singapore FRS
(substantially equivalent to IFRS)

with further guidance prescribed in
Accounting Practice 7:

Reporting Framework for Unit Trusts”.


Whenever CIMA considers it
necessary, it can examine, by way
of scrutiny
of prescribed regular returns,
on-site inspections or auditors’ reports

or in such other manner as CIMA may
determine, the affairs or business
of any
regulated mutual fund or licensee for the
purpose of a general
review or for the
purpose of satisfying itself that the Law
and any
regulations made under the
Law or under the Proceeds of Crime
Law, 2008
are being complied with.

MAS may from time to time inspect
the books of an approved trustee.
trustee under inspection must give
access to and produce its books and
such information and facilities as may
be required to conduct the
or as MAS may otherwise require.

Fines Various fines for breaches of the Law present.Various fines and the possibility
of imprisonment for breaches of the
SFA present.


In addition we would like to draw the reader’s attention to some of the other requirements of the Code. The Code sets out best practices on management, operation and marketing of schemes that managers and approved trustees are expected to observe:

For Authorised Schemes – there are requirements on the name of the scheme, filing of reports, the function and responsibilities of investment managers, the structure of performance fees, requirements of the trustee on termination of the scheme, restrictions on trading activities, limitation on participants liability to their investment in the scheme and guidelines on dealing and valuation of the scheme’s units and valuation of the scheme’s assets.

For Recognised Schemes – in addition to the legal requirements set out in the SFA, a manager of a scheme (together with its related corporations) should be managing at least S$500 million of discretionary funds in Singapore. This requirement does not apply where any of the units in the scheme has been approved for listing for quotation on a securities exchange and will be traded on the securities exchange.

For Recognised and Authorised Schemes – which feed into an underlying scheme and there is the intention to use or invest in financial derivatives or their NAV is likely to have a high volatility due to its investment policies or portfolio management techniques, there needs to be a prominent statement in the scheme’s marketing material drawing attention to this.

The appendices to the Code – also contain additional requirements depending on the strategy of the CIS, (ie, money market funds, hedge funds (quarterly reports, semi-annual accounts and reports and annual audited accounts and reports, with certain exceptions to the items listed below), capital guarantee funds, index funds and property funds).

The following are the requirements which the semi-annual and annual reports should contain;

a) investments at market value and as a percentage of the scheme’s NAV as at the end of the period under review classified by:
 i) country;
ii) industry;
iii) asset class; and
iv) credit rating;
b)the top 10 holdings at market value and as a percentage of the scheme’s
NAV as at the end of the period under review and a year ago;
c)exposure to financial derivatives:
i)market value of financial derivative contracts and as a percentage of
the scheme’s NAV as at the end of the period under review;
 ii)net gains
or losses on financial derivative contracts realised during the period
under review; and
iii)net gains or losses on outstanding financial derivative contracts
marked to market as at the end of the period under review;
d)amount and percentage of the scheme’s NAV invested in other schemes as at the end of the period under review;
e)amount and percentage of borrowings to the scheme’s NAV at the end of the period under review;
f)amount of redemptions and subscriptions for the period under review;
g)amount of related-party transactions for the period under review;
h) the performance of the scheme and where applicable, the performance of
the benchmark, in a consistent format, covering the following periods of
time: 3-month, 6-month, 1-year, 3-year, 5-year, 10-year and since
inception of the scheme;
 i)expense ratios for the period under review and a year ago. A footnote
should state that the expense ratio does not include (where applicable)
brokerage and other transaction costs, performance fee, foreign exchange
gains or losses, front or back end loads arising from the purchase or
sale of other schemes and tax deducted at source or arising out of
income received;
j)turnover ratios for the period under review and a year ago;
k)any material information that will adversely impact the valuation of
the scheme such as contingent liabilities of open contracts;
1)where the manager invests 30 per cent or more of the scheme’s NAV
in another scheme, the following key information on the underlying
scheme should be disclosed:
i)top 10 holdings at market value and as a percentage of the scheme’s NAV
as at the end of the period under review and a year ago;
ii)expense ratios for the period under review and a year ago (see guidance above); and
iii)turnover ratios for the period under review and a year ago;
m)a statement describing the soft dollars received from each broker which
executed transactions for the scheme. If the broker also executed trades
for other schemes managed by the manager, a statement to that effect
may be included; and
n)where the scheme offers pre-determined payouts, an explanation on the
calculation of the actual payouts received by participants and any
significant deviation from the pre-determined payouts.

There has been significant growth in the asset management industry in Singapore which has lead to opportunities for collaboration for example with global PKF offices and this trend is expected to continue.

As can be seen the regulations for the two jurisdictions are similar, however, with different areas of focus (ie requirements being enacted into law as opposed to a non-statutory code). Also regulations are more focused on mutual fund administrators in Cayman as opposed to managers and trustees in Singapore. Both jurisdictions have responded to the global demands for more regulatory oversight with the Code being updated in October 2011 and The Mutual Funds (Amendment) Law, 2011 being passed in December 2011.


It is our view that both the Cayman Islands and Singapore will continue to monitor the evolving demands of the industry and adapt their regulatory frameworks to meet or exceed those demands.


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Rennie Khan
Rennie has fourteen years of accounting experience, including ten years in the Cayman Islands. Prior to joining PKF (Cayman) Ltd, he served with another major accounting firm in Trinidad and Tobago and the Cayman Islands. He gained his experience working on audits of investment funds, private banks, insurance captives and trust companies.

Rennie Khan
Technical Director
PKF (Cayman) Ltd
P.O. Box 1782
Grand Cayman
Cayman Islands KY1-1109

T: +1 (345) 945 5889      
E: [email protected]
Sajjad Akhtar

Sajjad was formerly a senior partner of Arthur Andersen, Singapore having worked in the firm for 27 years. He has extensive experience in assurance, business valuations, corporate restructuring, financial advisory and claims and disputes consulting including testifying in court as expert witness. 

Sajjad Akhtar
Managing Partner
146 Robinson Road,
Singapore 068909

T: +65 6500 9360      
E: [email protected]



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