Notice SFA 04-N21 on Business Conduct Requirements for Corporate Finance Advisers

Following a consultation in December 2021 as regards the „Introduction of Due Diligence Requirements for Corporate Finance Advisers“ (please see EventID 13776 in this context for more information), the Monetary Authority of Singapore, MAS, has now published a response paper and a final Notice (SFA 04-N21) in this context.
To recall, in its consultation MAS sought feedback on due diligence requirements of firms and individuals engaged in providing corporate finance advisory services which would encompass all firms and individuals „acting in the capacity of an issue manager, sponsor or financial adviser (as the case may be) for initial public offers and reverse takeovers, including business combinations“. Although high level obligations are / were already defined in the Securities and Futures (Licensing and Conduct of Business) Regulations, MAS sought to specify these requirements in a corresponding new notice. The new notice would thereby set forth
– requirements to develop a so-called „due diligence plan“ to be observed by all staff members (regular employees and management) that would have to be reviewed and updated – if so needed. Additionally, material changes would have to be kept on record;
– requirements to exercise reasonable judgement when determining the level of and degree to which due diligence must be performed in a corporate finance transaction; and
– requirements to keep record of all relevant documentation in the advice and in the assessment of suitability of the advised firm. In case of providing advice to collective investment schemes, the advisory firm would also have to „verify material representations“ that is it must ensure that the fund or trust manager has the know-how necessary to perform its duties.
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The feedback paper now outlines the responses MAS has received to its consultation and its way forward on the issue. Specifically, MAS notes that it will not make any changes to the requirements with a few exemptions for clarification purposes. Therefore, the final notice as mentioned above is implemented with no material, substantive changes to the proposed notice.