What are Single Family Offices (SFO) and Multi Family Offices (MFO) in Singapore?
Family offices come in two forms: multi-family offices (MFOs) overseeing assets of multiple families, and single-family offices (SFOs) managing the assets of a single family. MFOs operate under licensing and regulation as stipulated by the Securities and Futures Act (SFA). These regulations are established to ensure the welfare of the various families being served by the MFO.
A family office commonly functions as a legal vehicle that manages and administers the wealth and assets of high net worth individuals and families. If you imagine a wealth management company that has one individual or family as its only client, this description is remarkably accurate. Yuen Law can set up your family office domiciled in Singapore, and can work with any financial institution or partner of your choice.
Why set up a Family Office?
There are both financial and emotional reasons why it may make sense to set up family offices. A key motivation is discretion: family offices don’t have the same onerous reporting requirements as normal fund managers, and individual owners within a family office can remain unlisted.
Family offices afford an integrated suite of financial services, from investing and protecting wealth, to tax planning, estate and succession planning, and philanthropic activities. You may have strong views about how you and your family’s wealth are to be managed and distributed. You can set up strong parameters in place that reflects the values, governance, goals and dynamics of the family involved. Such parameters can relate both to the family’s continued cohesiveness and long term wealth preservation.
Yuen Law’s corporate lawyers provides guidance on regulatory issues, so your family office runs efficiently and effectively from the start.
Why Choose Singapore to Set Up your Family Office?
Singapore is a favorable choice for high net worth individuals due to its strong track record as a robust financial and wealth management hub, well-established rule of law, and stable political and economic environment. The comprehensive range of financial institutions in Singapore offers a convenient entry point to both global and regional financial markets. This access is coupled with an extensive array of wealth management services and private banking services.
Tax Incentive Scheme for Approved Companies Under Section 13O
At the end of 2022, MAS estimates that there are about 1,100 Single Family Offices managing 13O and 13R (Onshore Fund Tax Incentive) funds in Singapore. There are different tax rates on income and capital gains, determining whether gains are income or capital relies on multiple factors, including transaction frequency, holding period, and taxpayer’s intent. The Section 13O of the Income Tax Act extends a tax exemption to specific income stemming from designated investments, and provides certainty on the tax treatment of such gains.
Fund Structures for Family Offices
Variable Capital Company
If you’re a foreigner looking to set up a family office in Singapore, the Monetary Authority of Singapore (MAS) has made it much easier for you to. In January 2020, Singapore introduced a legal structure called the Variable Capital Company (VCC), designed to attract the assets of fund managers and family offices. This fund management vehicle is similar to legal structures in the UK, Luxembourg, and the United States.
There are a number of advantages for using the VCC framework to incorporate your family office. The VCC framework even allows for existing fund structures in other jurisdictions to be redomiciled into Singapore as VCCs. Should you be interested, there’s also a pathway towards permanent residency for you and your family.
Legal Solutions for Family Offices
We are highly experienced in regulatory and compliance matters. We provide comprehensive solutions to family offices in the following ways:
- Advising on the structure and set up of family office;
- Advisory on regulatory compliance;
- Registration of fund management companies (RFMC) or seek licensing exemptions from MAS;
- Incorporation of the fund vehicle and corporate secretarial services;
- Application of employment passes.
Yuen Law’s corporate practice group has garnered acclaim from prestigious organizations like Asialaw and IFLR1000. The firm has also provided valuable support to various clients in their family office setup.
Leading our esteemed Regulatory and Securities team is Senior Director, Kevin Chua. His extensive knowledge and experience ensure that our clients receive quality legal advice in private wealth and fund management matters.
Yuen Law LLC provides assistance on matters regarding family offices. Do contact us to make an appointment.
