FAQs on the Notice on Business Conduct Requirements for Corporate Finance Advisers

Following the publication of a new Notice on Business Conduct Requirements for Corporate Finance Advisers (SFA 04-N21) which will come into force on October 1, 2023, the Monetary Authority of Singapore (MAS) has now published corresponding frequently asked questions (FAQs). To recall, the notice sets out far-reaching due diligence requirements of firms and individuals engaged in providing corporate finance advisory services which encompasses 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“. Such due diligence obligations include the following – among others:
– requirements to develop a so-called „due diligence plan“ to be observed by all staff members (regular employees and management) that needs to be reviewed and updated – if so needed. Additionally, material changes must 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 must also „verify material representations“, that is it must ensure that the fund or trust manager has the know-how necessary to perform its duties.
The notice also sets out other relevant obligations pertaining to the management of conflicts of interest and internal control and governance.
The now newly issued FAQs supplement this notice in that they clarify existing provisions and provide examples, e.g. for the steps to be taken by Corporate Finance Advisers to fulfill their conflicts of interest obligations. As the FAQs are entirely new and contain nearly 30 questions, we refrain from listing them individually at this point. Please refer to the enclosed document for a detailed description of ALL FAQs.