Wealth flows to Singapore continue unabated in recent times. We have received many enquiries from Families looking to set up family offices/offshore structures under multi-family offices in Singapore. This has arisen in part to the increase regulatory scrutiny of Single Family Offices by the Monetary Authority of Singapore (“MAS”) after the money laundering case in Singapore. This has resulted in longer application timelines and also longer private bank account opening timelines in Singapore. For families that do not wish to wait for such long timelines, one simple way is to hire a fund manager that runs a multi-family office setup to achieve economies of scale. Such fund managers usually would have obtained a tax incentive for their fund entities so saves the family time applying to the MAS for such tax incentives.
This article will highlight 3 reasons for such continued demand and set out 4 key legal issues families need to consider when setting up a multi-family office in Singapore.
Reasons for setting up a Multi-Family Office in Singapore
#1- Offshoring Assets
Many clients from countries with global tax (countries for example like China, Indonesia, New Zealand and Australia) are finding that offshore tax havens have fallen out of vogue. The reason for this is that opening bank accounts in global financial centers like New York, Hong Kong and Singapore for offshore island companies is getting increasingly more difficult given the increased regulatory scrutiny following the billion-dollar money laundering scandal in Singapore which we wrote about previously.
At the apex of their operating business structure, some businessmen may choose to set up an offshore structure in Singapore to hold their assets separate from their onshore assets (for example a PRC businessman would have one structure for his PRC business and one structure for his assets outside of the PRC). A proper offshore-onshore structure needs to have clear asset segregation and asset protection from creditors both offshore and onshore. Such a structure should also aim to protect against asset expropriation.
#2- US China Trade Tensions (the Offshore angle)
Due to US China tensions, whilst previously the PRC manufacturer would build his entire supply chain to supply US/EU companies with products entirely made in China, now many are shifting their manufacturing hubs to Vietnam and choose Singapore offshore structures to hold such manufacturing assets as Singapore is generally considered a neutral country.
Another side benefit that many businessmen have discovered is that if they completely offshore their offshore orientated part of their business, this opens up the possibility that their offshore business can be listed outside of China and this business would be effectively free from capital controls from the PRC.
#3- US China Trade Tensions (the Onshore angle)
In part due to such US China tensions, the reverse is true. We have seen many PRC businessmen with offshore business decide to do company restructuring and create a new offshore holding structure for the offshore oriented part of their business. Such apex holding structures are set up in Singapore and we have seen some of them using the MFO structure to hold such offshore operating companies and assets.
Key Issues encountered when setting up a Multi-Family Office in Singapore
Our clients generally come from all over the globe and choose to set up structures in Singapore due to its stable political environment, good rule of law and strong currency. In this section of the article, we will highlight 4 key legal issues that business families choosing to set up a multi-family office in Singapore need to consider.
#1- Proper Asset Segregation
In a traditional Asian family business, the founder of the business may (often mistakenly until the founder tries to undergo a divorce) that all the assets of the family business can be comingled with his own personal assets. As the group structure for a business increases in scale, often across the whole of the South East Asia, a business founder needs to seek clarity as to his holding structure for his operating business.
Thus, at the start of a planning exercise, it is always advisable for the business founder to seek clarity of ownership so that it is clear what is a personal asset of his and what belongs to the family business or family business holding structure.
#2- Legacy Planning
We came across a case whereby the business owner has a very profitable and good underlying business but his issue was that he has many family members constantly jostling for control over the underlying business. If he does not plan well, it is likely that after his demise the business will be sold or broken up and divided up amongst his descendants.
The case study of Yeo Hiap Seng is a case in point. In that case, the father assumed his family would be happy after his demise and placed all the shares that he owned in YHS in a company and gave shares in that company to his children. After the death of the founder, the children fought over the assets and finally the listed company and the family business was sold to the Ng family.
My view is that if you fail to plan, you plan to fail. The responsibility for such planning lies with the business owner. If such a business owner does not plan, we can safely assume like the Chinese saying “the wealth will not pass 3 generations”.
#3- Tax Planning
Cross border tax planning is often not discussed when foreign clients come to Singapore. Most bankers will just consider Singapore tax issues but fail to consider the tax implication of their clients in their home country.
A good structure for holding family business or holding family wealth needs to take into account cross border tax issues. So do remember to discuss such issues with your private wealth lawyer.
Another theme that has been on the ascendancy is that of economic substance. The EU has asked countries like Singapore and Malaysia to ensure that their companies have economic substance. Do check with your tax advisers how your holding structures (which usually in some cases merely shell companies) can show that they have economic substance.
#4- The Rise of Professional Managers
As family offices increase in scale and complexity and some family offices span multiple countries, professional managers are employed to manage the wealth of the family. Some of the larger families manage wealth under one division, whilst also setting up an internal venture capital fund which can fund the entrepreneurial ambitions of family members that wish to start new ventures. Some of the families also manage their operating business ventures under another division. It is this combination of wealth management, operational company management and new venture management that allows the family wealth to grow across generations.
For this to work properly, professional managers should be appointed to run the various divisions but with the input of the family members who can form part of an advisory board/ conference which meets yearly to discuss the family business ventures, wealth management and new ventures.
Another division of such family structures often seen is a philanthropic arm. In Singapore, some well known charitable groups include the Lee Foundation and the Shaw Foundation. These are usually setup as a company limited by guarantee and have charity status.
In conclusion, as business families globalize and their assets increase in size and scale of complexity, they will start hiring a mix of internal and external managers to manage such assets. A multi-family office structure can help bring a level of corporate governance to such private wealth management. Spending some time discussing key legal issues when setting up a MFO structure is key to avoid protracted multi-generational legal disputes later.
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We work with a Partner of a large well known Singapore law firm who in 2023 won an award from the global Society of Trust and Estate Practitioners (based in the United Kingdom) and is a qualified Trust and Estate Practitioner (TEP). If you need to engage a Singapore lawyer to advise you on your private wealth matters, please click here to schedule a complimentary meeting with our lawyers.
我们与新加坡一家知名的大型律师事务所合作。如果您需要聘请新加坡律师为您提供私人财富方面的建议，请点击此处安排与我们律师的免费会面。
http://www.SingaporeLegalPractice.com is a corporate law and commercial law educational website headquartered in Singapore which aims to demystify business law and 新加坡商业法 for SME Company Owners, Startup Founders and 新加坡新移民老板。The information provided on this website does not constitute legal advice. Please obtain specific legal advice from a lawyer before taking any legal action. Although we try our best to ensure the accuracy of the information on this website, you rely on it at your own risk. Click here to signup for our newsletter today to be kept updated on the latest legal developments in Singapore.
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新加坡多家族办公室的崛起
近来，财富源源不断流入新加坡。我们收到了许多家族的询问，他们希望在新加坡设立家族办公室/多家族办公室下的离岸结构。本文将突出说明这种持续需求的三个原因，并概述在新加坡建立多家族办公室时需要注意的四个关键问题。
设立多家族办公室在新加坡的原因
#1- 资产离岸化
许多来自全球税收国家（例如中国、印度尼西亚、新西兰和澳大利亚等国家）的客户发现，离岸避税天堂已经不再流行。造成这一情况的原因是，由于新加坡十亿美元洗钱丑闻后的监管加强，开设全球金融中心如纽约、香港和新加坡的银行账户以为离岸岛屿公司越来越困难。 在其经营业务结构的顶端，一些商人可能会选择在新加坡设立离岸结构，将其资产与其在岸资产（例如中国大陆商人可能会为其中国大陆业务设立一种结构，为其中国大陆以外的资产设立另一种结构）分开。一个适当的离岸-在岸结构需要清晰的资产隔离和资产保护，既在离岸又在岸。这样的结构还应该旨在防范资产征用。
#2- 美中贸易紧张局势（离岸角度）
由于美中紧张局势，虽然以前中国大陆的制造商会建立完整的供应链以向美国/欧盟公司提供完全在中国制造的产品，但现在许多人将其制造中心转移到越南，并选择新加坡离岸结构来持有这些制造资产，因为新加坡通常被认为是一个中立的国家。 许多商人发现的另一个好处是，如果他们完全将他们的离岸业务转移到离岸地区，这就开辟了他们的离岸业务可以在中国以外上市的可能性，这样的业务实际上免于中国的资本管制。
#3- 美中贸易紧张局势（在岸角度）
部分由于美中紧张局势，反之亦然。我们看到许多中国大陆商人决定对公司进行重组，并为他们的离岸业务部分设立新的离岸控股结构。这样的顶层控股结构在新加坡设立，我们看到其中一些使用多家族办公室结构来持有这些离岸经营公司和资产。
在新加坡设立多家族办公室时遇到的关键问题 我们的客户通常来自全球各地，并选择在新加坡建立结构，因为这里的政治环境稳定，法治健全，货币强势。在本文的这一部分，我们将突出介绍选择在新加坡设立多家族办公室的商业家族需要考虑的四个关键法律问题。
#1- 适当的资产隔离
在传统的亚洲家族企业中，企业创始人可能（往往是错误的，直到创始人试图进行离婚之前）认为家族企业的所有资产都可以与他自己的个人资产混合在一起。随着企业的集团结构在整个东南亚地区的规模不断扩大，企业创始人需要明确其经营业务的持有结构。因此，在规划开始时，建议企业创始人明确所有权，以便清楚了解哪些是他的个人资产，哪些属于家族企业或家族企业持有结构。
#2- 传承规划
我们遇到过一个案例，其中企业主拥有一个非常有利可图的基础业务，但他的问题是，他有许多家庭成员不断争夺对基础业务的控制权。如果他没有做好计划，那么在他去世后，很可能业务将被出售或分割，并分配给他的后代。 杨协成的案例就是一个例证。在这种情况下，父亲假设他去世后他的家人会感到高兴，并将他在杨协成的所有股份都放在了一家公司中，并将该公司的股份分给了他的子女。在创始人去世后，子女们争夺资产，最终上市公司和家族企业被卖给了吴家。 我认为如果你不计划，你就计划失败了。这样的规划责任在于企业所有者。如果这样的企业所有者不做规划，我们可以安全地假设就像中国的谚语“财富不会传递给3代人”。
#3- 税务规划
当外国客户来到新加坡时，跨境税收规划往往不被讨论。大多数银行家只会考虑新加坡的税务问题，但未能考虑客户在其本国的税务影响。 持有家族企业或家族财富的良好结构需要考虑跨境税务问题。因此，请务必与您的私人财富律师讨论此类问题。 另一个趋势是经济实质的上升。欧盟要求新加坡和马来西亚等国确保其公司具有经济实质。请咨询您的税务顾问，了解您的持有结构（在某些情况下通常仅为外壳公司）如何表明它们具有经济实质。
#4- 专业管理者的崛起
随着家族办公室规模和复杂性的增加，一些家族办公室跨越多个国家，雇佣专业管理者来管理家族的财富。一些较大的家庭在一个部门下管理财富，同时还建立了一个内部风险投资基金，该基金可以资助希望开始新创业的家庭成员的创业雄心。一些家庭还在另一个部门下管理他们的经营业务。正是这种财富管理、运营公司管理和新创业管理的结合，使得家族财富能够跨越几代人。 为了使这一切正常运作，应任命专业管理者来运行各个部门，但应由家庭成员参与咨询委员会/每年召开会议，讨论家族企业事业、财富管理和新创业。
此类家族结构的另一个部门通常是慈善机构。在新加坡，一些知名的慈善组织包括李氏基金会和邵氏基金会。这些通常是作为担保责任有限公司设立的，并具有慈善资格。
总而言之，随着商业家族全球化，其资产规模和复杂性不断增加，他们将开始雇佣一批内部和外部管理者来管理这些资产。多家族办公室结构可以帮助实现对私人财富管理的一定程度的公司治理。花些时间讨论设置多家族办公室结构时的关键法律问题对于避免日后长期的多代人法律纠纷至关重要。
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We work with a Partner of a large well known Singapore law firm who in 2023 won an award from the global Society of Trust and Estate Practitioners (based in the United Kingdom) and is a qualified Trust and Estate Practitioner (TEP). If you need to engage a Singapore lawyer to advise you on your private wealth matters, please click here to schedule a complimentary meeting with our lawyers.
我们与新加坡一家知名的大型律师事务所合作。如果您需要聘请新加坡律师为您提供私人财富方面的建议，请点击此处安排与我们律师的免费会面。
http://www.SingaporeLegalPractice.com is a corporate law and commercial law educational website headquartered in Singapore which aims to demystify business law and 新加坡商业法 for SME Company Owners, Startup Founders and 新加坡新移民老板。The information provided on this website does not constitute legal advice. Please obtain specific legal advice from a lawyer before taking any legal action. Although we try our best to ensure the accuracy of the information on this website, you rely on it at your own risk. Click here to signup for our newsletter today to be kept updated on the latest legal developments in Singapore.
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