The Singapore government has, during the last two years, enacted a raft of legislative changes calculated to enhance Singapore's position as a leading financial and wealth management centre in Asia.
Changes include a new statutory duty of care imposed on trustees, replacing the common law rule against perpetuity with a statutory maximum perpetuity period of 100 years, abolishing the principle against excessive accumulation of income and provisions for payment of premiums out of, and valuation of, trust funds. Provisions concerning new default power to leave trust property in the care of nominees and custodians and expanded powers of trustees to insure have also been enacted.
Trust Companies Act
This Act will regulate companies doing trust businesses in Singapore, regardless of the location of the trust assets or the law of the trust. Licensing is now mandatory.
The principal focus of the new Act will be on safe, sound and fair-dealing intermediaries. The regulatory framework will place onus on the trust company's resident managers (at least two) and directors to ensure prudential soundness and professional market conduct, with appropriate internal controls and compliance structures.
These changes are complemented by a series of tax policy changes. They include exempting all foreign-sourced income for individuals from taxation and providing approved trustee companies a concessional tax rate for the provision of trustee and custodian services. Income from foreign trusts administered by an approved trustee company and income derived through an eligible investment holding company are also now exempt.
These changes enable financial institutions in Singapore to use trust concepts to provide a full range of banking products and services to sophisticated high-net-worth individuals from around the world.
Kim Seng Lo