MAS Consults on Proposed Due Diligence Requirements for Corporate Finance Advisers

Corporate finance advisers (“CF advisers“) play a crucial role in the Singapore capital markets in advising entities intending to raise funds or entities which are involved in takeover and merger transactions.

On 15 December 2021, the Monetary Authority of Singapore (“MAS“) issued a consultation paper setting out proposed due diligence requirements for CF advisers that will be set out in a new MAS Notice. For the purposes of the Notice, CF advisers are defined as being either (a) holders of a capital markets services (“CMS“) licence, or (b) banks, merchant banks, and finance companies exempt from holding a CMS licence, that undertake the regulated activity of advising on corporate finance.

Examples of the new requirements include the duties to act with due care, skill, and diligence; manage conflicts of interests; and keep records of due diligence work performed.

In this Update, we cover key points of the proposed new Notice:

1. Requirements applying to all CF advisers under Part I of the Notice;
2. Additional requirements under Part II of the Notice applying to CF advisers who are acting as issue managers (“IMs“) for initial public offerings (“IPOs“). MAS also proposes applying Part II to CF advisers who advise on reverse takeovers (“RTOs“) and very substantial acquisitions (“VSAs“); and
3. Materiality considerations that apply to requirements in both Parts of the Notice.

The consultation closes on 15 February 2022.