Marketing Funds:

Raising capital in the US and Singapore

Ed O’Bree

Head of Funds and Broking

Bovill Ltd

September 2016

Jennifer Hoopes

General Counsel and Head of Global

Foreside

Ed O’BreeHead of Funds and Broking

Bovill Ltd

3

Singapore: the landscape

Insurance centre

Family Offices

Regional hub

Sovereign Wealth

Institutional capital

4

Marketing Restrictions

General prohibition

Five most common exemptions:

- Registered prospectus (retail)

- Small offers exemption

- Private placement exemption

- S.304 (institutional investors)

- S.305 (accredited investors)

Reverse solicitation

5

Institutional investor exemption

S.304 SFA

Relatively narrow definition of institutional investor

No need to register the fund with MAS

Regulatory disclosures required on promotional material

But, definition changing imminently

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Institutional investors: consultation definition

Singapore government

Sovereign wealth funds

Non-Singapore central governments

Banks

Finance companies

Insurance companies

Licenced trust companies

Holders of capital markets services licences

Pension funds and collective investment schemes

Certain bond dealers

7

The “305 exemption”

Two categories of investors:

- Those investing S$200,000 as principal

- Accredited investors

Fund must be recorded on the MAS list of restricted schemes

Offering memorandum

Two restrictions:

- No advertising permitted

- Not if prospectus is registered

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Accredited investors (s.305)

• with net personal assets of S$2m

• with net financial assets of S$1m

• with annual income of S$300k

• (other than LLP) where each Partners is an A.I.

• (or similar) with net assets of S$10m

• where all shareholders are A.I.s

Individuals

Partnership

Corporations

• of a trust where trust property is S$10m

• of a trust where all beneficiaries are A/Is

• of a trust where all settlors are A.I.s

Trustees

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Registering restricted foreign schemes

There are 5,000+ schemes on the MAS List of Restricted

Schemes:

1: Fund Manager must be licenced / registered for fund

management in its home country.

2: Information Memorandum, with disclosures, submitted to

MAS

3: Electronic application submitted by the fund, its manager or

agent.

4: Annual declaration is submitted by the Responsible Person

or their agent. Initial registration fee: S$250.

Annual fee: S$50

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Private Banks

• Slow moving

• High charges

Singapore IFAs

• Access to HNWIs

• Networks not so developed

• Initial charges of up to 4%

Introducers

• Institutional capital

• Niche operators

• Up to 20% of AMC and

performance fee

Third party distribution

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Promoting your own fund

Like the UK, promoting in itself is not a regulated activity

May need a licence or registration

If setting up a Singapore entity:

- Base capital S$250,000

- 1 x SG director

- Proportionate compliance function

- Fees

On balance, unlikely to be necessary

Good for family office networks

Our integrity.

Our guidance.

Your success.

12

Jennifer Hoopes

General Counsel and Head of Global

Foreside

Accessing the U.S. Marketfor Non-U.S. Investment Managers

September 29, 2016

Portland, ME – Philadelphia, PA – Boston, MA – Columbus, OH

Our integrity.

Our guidance.

Your success.

14

Overview

• Accessing the U.S. Market

• Products

• UCITS/SICAVs

• U.S. Registered Funds

(mutual funds or ETFs)

• Non-Registered Funds

• Distribution Options

• Advantages and

Disadvantages

• Regulatory Issues

Our integrity.

Our guidance.

Your success.

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Products – UCITS/SICAVs

• Offerings to the NRA/NRC (non-

resident alien/non-resident client)

market.

• Generally offered through large

U.S. broker-dealers (Pershing,

Morgan Stanley, Merrill Lynch).

• Need connectivity through the

NSCC (National Securities

Clearing Corporation), a

subsidiary of the DTCC.

Our integrity.

Our guidance.

Your success.

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Products – Registered Funds

• Mutual Funds

• Series Trust (established

structure and service providers)

• Stand-Alone

• Exchange Traded Funds (ETF)

• Series (reliance on existing

SEC Exemptive Relief)

• Stand-Alone (need to obtain

SEC Exemptive Relief)

Our integrity.

Our guidance.

Your success.

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Products – Registered Funds

• Register as Investment Adviser

• Establish Board of Directors

• Identify Service Providers:

• Transfer Agent

• Custodian

• Administrator

• Principal Underwriter

• Fund Counsel

• Trustee Counsel

• Audit Firm

Our integrity.

Our guidance.

Your success.

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Products – Non-Registered Funds

• Offered pursuant to Regulation D

to “Accredited Investors”

• Subject to the Investment

Company Act of 1940 and relevant

exemptions

• Registration as a Investment

Adviser (exemptions and limited

registrations possible)

• Offering documents best practice,

not required

Our integrity.

Our guidance.

Your success.

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Distribution Options – Regulatory Structure

• Generally, you must be registered

as (or with) a U.S. broker-dealer or

exempt from registration if you are

marketing securities in the U.S.

Our integrity.

Our guidance.

Your success.

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Distribution Options – Overview

• Issuer Exemption

• Chaperoning (SEC Rule 15a-6)

• Hire a third-party marketing firm

• Build internal distribution function

– register sales people with U.S.

broker-dealer

• Establish proprietary U.S. broker-

dealer

Our integrity.

Our guidance.

Your success.

21

Distribution Options – Exemptions

• Issuer Exemption

• Difficult to meet all

requirements of exemption

• If transaction-based

compensation, cannot use this

exemption

• 15a-6 Exemption: Chaperoning

• Limited marketing to certain

types of institutional investors

Distribution Options – Third Party Firms

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Advantages

• Established sales staff

and channels

• Manager does not need to

register as a broker-dealer

• Third party firm

responsible for

compliance with U.S.

regulations

Use of a Third-Party Marketing Firm

Disadvantages

• Cost – generally % of

AUM

• Internal sales staff cannot

get compensated

• Relying on third party firm

to tell your story

Distribution Options – Internal Sales Force

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Advantages

• Your sales force does the

selling

• Sales force can get

compensated

• Broker-dealer responsible

for compliance with U.S.

regulations

Build an Internal Sales Force, registered with

U.S. Broker-Dealer

Disadvantages

• Sales people need to

take FINRA exams to be

registered

• Cost – generally flat

and/or per representative

fee

• Manager cannot get any

portion of compensation

Distribution Options – Proprietary Broker-Dealer

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Advantages

• Your sales force does the

selling

• Sales force can get

compensated

• You control your own

destiny

Establish Proprietary Broker-Dealer

Disadvantages

• Cost – registration and

operating costs

• Required to have certain

principals, annual audit,

compliance program

• Lengthy registration and

approval process (9-12

months)

Our integrity.

Our guidance.

Your success.

25

Conclusion

Tremendous opportunities to

access the U.S. market with

registered and unregistered funds.

Compliance with the regulatory

regime is critical to your success.

Our integrity.

Our guidance.

Your success.

Foreside Financial Group, LLC

Three Canal Plaza

Portland, ME 04101

Jennifer Hoopes

+1 (207) 553-7138

jhoopes@foreside.com

www.foreside.com

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Contact Information

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Questions?