The Definitive Guide: How to Open a Hedge Fund in Singapore – Your Gateway to Asian Wealth

The Definitive Guide: How to Open a Hedge Fund in Singapore – Your Gateway to Asian Wealth | Bestar

Opening a Hedge Fund in Singapore

The Definitive Guide: How to Open a Hedge Fund in Singapore – Your Gateway to Asian Wealth

Singapore has cemented its reputation as a leading global financial hub, offering a sophisticated and stable environment that is highly attractive for fund managers. If you're considering setting up a new investment vehicle, knowing how to open a hedge fund in Singapore is a crucial first step toward tapping into the rapidly growing wealth of Asia.

This comprehensive, SEO-optimized guide outlines the critical steps, regulatory requirements, and key considerations for launching your successful hedge fund in the Lion City.

Why Choose Singapore to Launch Your Hedge Fund?

Fund managers from across the globe are increasingly drawn to Singapore for several compelling reasons:

• Robust Regulatory Framework: The Monetary Authority of Singapore (MAS) provides a transparent and pro-business regulatory environment that maintains high standards of investor protection and market integrity.

  
  

• Strategic Location: Its position in Southeast Asia offers unparalleled access to a diverse pool of accredited and institutional investors and fast-growing capital markets across the Asia-Pacific region.

  
  

• Favorable Tax Regime: Singapore offers attractive tax incentives, such as the Section 13O (Singapore Resident Fund Scheme) and Section 13U (Enhanced-Tier Fund Tax Incentive Scheme), which provide tax exemptions on certain fund incomes, subject to meeting specific criteria.

  
  

• Talent Pool & Infrastructure: The city-state boasts world-class financial infrastructure, a deep pool of experienced financial and compliance professionals, and a stable political landscape.

  
  

Step-by-Step Guide to Opening Your Hedge Fund in Singapore

The journey to launching a hedge fund involves meticulous planning, regulatory compliance, and operational setup. Here are the essential steps:

1. Develop a Comprehensive Business Plan and Strategy

Before approaching regulators or investors, you need a detailed blueprint. Your plan should clearly define:

• Investment Strategy: Specify your asset class focus, risk management framework, and expected returns (e.g., long-short equity, fixed income arbitrage, quantitative strategies).

  
  

• Target Investors: Hedge funds in Singapore are typically restricted to Accredited Investors (AIs) and Institutional Investors (IIs).

  
  

• Fee Structure: Determine your management fees and performance fees (the traditional "2 and 20" model is still common, though variations exist).

  
  

• Financial Projections: Outline your capital-raising goals, operational budget, and hiring timeline.

  
  

2. Choose the Optimal Legal Structure

Selecting the right legal vehicle is fundamental. Common structures for investment funds in Singapore include:

• Private Limited Company: Often used for the Fund Management Company (FMC).

  
  

• Variable Capital Company (VCC): A flexible, corporate structure designed specifically for investment funds. It allows for umbrella funds with multiple sub-funds, offering greater operational efficiency and tax benefits, making it an increasingly popular choice for hedge funds.

  
  

• Limited Partnership (LP): Traditionally used, though the VCC is gaining ground.

3. Register the Fund Management Company (FMC)

To legally manage third-party assets in Singapore, you must incorporate a fund management entity (typically a Private Limited Company) with the Accounting and Corporate Regulatory Authority (ACRA). This entity will be the one applying for the necessary MAS license.

4. Obtain the Necessary MAS License/Registration

This is the most critical regulatory step. The Monetary Authority of Singapore (MAS) governs fund management activity under the Securities and Futures Act (SFA). The required license depends on your Assets Under Management (AUM) and investor base:

Regime	Maximum AUM	Maximum Investors	Base Capital Requirement	Investor Type
Registered Fund Management Company (RFMC)	S$250 Million	30 investors (up to 15 being funds)	S$250,000	Qualified Investors
Licensed Fund Management Company (LFMC)	Unlimited	Unlimited	S$250,000 (minimum)	Accredited & Institutional
Venture Capital Fund Manager (VCFM)	Specific to VC	Specific to VC	S$250,000 (minimum)	Accredited & Institutional

Key MAS Requirements:

• Fit and Proper Criteria: All directors, CEO, and substantial shareholders must meet MAS' "fit and proper" criteria.

  
  

• Competent Team: You must have at least two directors, with one being an Executive Director who is a Singapore resident, all with sufficient relevant experience.

  
  

• Compliance: Establish robust risk management, compliance, and internal control systems.

  
  

5. Build Your Operational Infrastructure and Team

A successful hedge fund requires more than just a stellar portfolio manager. You need a robust operational and compliance backbone:

• Core Team: Hire a team with expertise in portfolio management, trading, legal, risk management, and compliance.

  
  

• Service Providers: Appoint reputable third-party vendors, including:

  
  

  • Legal Counsel: For drafting Private Placement Memoranda (PPMs) and fund documents.

  • Fund Administrator: For NAV calculation, fund accounting, and registrar services.

  • Custodian: To safely hold fund assets (often an independent entity).

  • Auditor: To conduct annual audits.

    
    

• Technology: Set up advanced IT systems for trading, data analysis, cybersecurity, and regulatory reporting.

  
  

6. Finalize Legal Documentation and Fund Launch

With your structure and team in place, the final legal preparations include:

• Drafting the Private Placement Memorandum (PPM) or Offering Document.

  
  

• Preparing the Investment Management Agreement.

  
  

• Creating the Subscription Agreement for investors.

  
  

• Completing the incorporation and MAS licensing/registration process.

  
  

Critical Considerations for Foreign Managers

Foreign fund managers looking to open a hedge fund in Singapore must pay close attention to the following:

• Local Substance: MAS requires genuine "substance" in Singapore. This means having Singapore-resident executive directors, dedicated office space, and key decision-making functions carried out locally.

  
  

• Tax Incentives: To qualify for the most popular tax schemes (13O and 13U), your fund must be managed by a licensed or registered fund manager in Singapore, among other conditions.

  
  

• Anti-Money Laundering (AML) / Know-Your-Customer (KYC): Singapore has stringent AML/KYC regulations. Your fund must implement robust procedures from day one.

  
  

Next Steps: Start Your Hedge Fund Journey

Launching a hedge fund in Singapore is a complex but rewarding process. Given the highly regulated nature of the industry, engaging with experienced local legal and corporate service providers is highly recommended to streamline your application and ensure full compliance with MAS requirements.

Are you ready to establish your presence in Asia's financial powerhouse? Contact us today for a consultation on navigating the regulatory landscape and successfully launching your Singapore hedge fund.

Partnership for Success: How Bestar Singapore Powers Your Hedge Fund Launch

The Definitive Guide: How to Open a Hedge Fund in Singapore – Your Gateway to Asian Wealth

Launching a hedge fund in Singapore—the financial gateway to Asia—requires not just a visionary investment strategy but also flawless execution in compliance, corporate governance, and operational setup. This is where partnering with a trusted, full-service corporate services provider like Bestar Singapore becomes the critical factor for success.

Bestar Singapore's expertise is tailored to guide foreign and local fund managers through the complexities outlined in our Definitive Guide, ensuring a smooth, compliant, and efficient launch.

The Bestar Advantage: Seamless Setup and Compliance for Fund Managers

Bestar Singapore provides end-to-end solutions that cover the entire lifecycle of your fund management company (FMC) and the fund vehicle itself, letting you focus on generating Alpha.

1. MAS Licensing & Regulatory Navigation

Navigating the Monetary Authority of Singapore (MAS) requirements for fund managers is the most challenging step. Bestar simplifies this process by providing targeted expertise:

• MAS License Application Strategy: We advise on the optimal licensing path—whether it is the Registered Fund Management Company (RFMC) or the Licensed Fund Management Company (LFMC)—based on your target Assets Under Management (AUM) and investor base.

  
  

• Documentation & Submission: We assist in preparing and reviewing all necessary documents for your MAS application, including the crucial business plan, compliance manuals, and risk management frameworks, ensuring they meet the regulator's stringent "fit and proper" and substance requirements.

  
  

• Compliance Infrastructure Design: We help design and implement a robust internal compliance framework that adheres to the Securities and Futures Act (SFA), covering ongoing obligations, anti-money laundering (AML), and know-your-customer (KYC) procedures.

2. Fund & Company Incorporation

Speed and accuracy in setting up the legal entities are paramount. Bestar acts as your central coordination point for all corporate statutory matters:

• Fund Structure Advisory (VCC & Others): We provide expert advice on selecting the most tax-efficient and flexible fund structure, with a deep specialization in incorporating the popular Variable Capital Company (VCC) vehicle.

  
  

• Company & VCC Registration: We handle the full incorporation of your FMC and the fund entity (VCC, Private Limited Company, etc.) with the Accounting and Corporate Regulatory Authority (ACRA).

  
  

• Key Appointments: We can facilitate the mandatory appointment of a Singapore Resident Company Secretary and assist in sourcing qualified personnel to meet the Resident Director and other local substance requirements.

3. Ongoing Corporate and Financial Administration

Post-launch compliance and administration are continuous and non-negotiable. Bestar offers comprehensive support to maintain your good standing:

Service Area	Bestar's Value Proposition for Fund Managers
Corporate Secretarial	Ensure timely filing of all statutory returns with ACRA, maintain corporate registers (including the VCC's confidential shareholder register), and manage board meeting documentation.
Accounting & Bookkeeping	Provide accurate, timely fund accounting and corporate accounting for the FMC, adhering to international and Singapore Financial Reporting Standards (IFRS/SFRS).
Tax Advisory & Compliance	Navigate complex fund taxation, assist with the application for and maintenance of tax incentive schemes (e.g., 13O/13U), and handle annual corporate tax filing for the FMC.
Audit & Assurance	Connect you with experienced, independent auditors for the required annual audit of the fund and the FMC, with a focus on MAS regulatory compliance.
Payroll & HR Services	Manage payroll for your Singapore-based team and assist with employment pass (EP) applications for foreign specialists, crucial for demonstrating local substance.

Your Strategic Partner for a Successful Hedge Fund Launch

In the fast-paced world of fund management, any delay or compliance error can be costly. By leveraging Bestar Singapore’s established expertise and integrated corporate support services, you gain a strategic advantage.

We eliminate the administrative burden, manage regulatory risk, and ensure your operational foundation is as solid as your investment thesis.

Focus on your fund's returns. Let Bestar handle the rest.

Ready to accelerate your hedge fund launch in Singapore? Contact Bestar Singapore today for a confidential consultation on optimizing your fund structure and ensuring regulatory compliance from day one.