Securities and Futures Act 2001 · 2020 Revised Edition · Part 1 · Preliminary
4. Interest in securities, securities‑based derivatives contracts or units in collective investment scheme
Feedback & supportLast amended by an amending law of 2024. 3 amendments in all.
Subject to this section, a person has an interest in securities, securities‑based derivatives contracts or units in a collective investment scheme, if the person has authority (whether formal or informal, or express or implied) to dispose of, or to exercise control over the disposal of, those securities, securities‑based derivatives contracts or units in a collective investment scheme, as the case may be.
securities
“securities” means —(a)shares, units in a business trust or any instrument conferring or representing a legal or beneficial ownership interest in a corporation, partnership or limited liability partnership;(b)debentures; or(c)any other product or class of products as may be prescribed,but does not include —(d)any unit of a collective investment scheme;(e)any bill of exchange;(f)any certificate of deposit issued by a bank or finance company, whether situated in Singapore or elsewhere; or(g)such other product or class of products as may be prescribed;
For the purposes of subsection (1), it is immaterial that the authority of a person to dispose of, or to exercise control over the disposal of, particular securities, securities‑based derivatives contracts or units in a collective investment scheme (as the case may be) is, or is capable of being made, subject to restraint or restriction.
Where any property held in trust consists of or includes securities, securities‑based derivatives contracts or units in a collective investment scheme, and a person knows, or has reasonable grounds for believing, that the person has an interest under the trust, the person is treated as having an interest in those securities, securities‑based derivatives contracts or units in a collective investment scheme, as the case may be.
property
“property” includes property, right and power of every description;
A person is treated as having an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme if a corporation has, or is by the provisions of this section treated as having, an interest in that security, securities‑based derivatives contract or unit in a collective investment scheme (as the case may be) and —
securities‑based derivatives contract
“securities‑based derivatives contract” means any derivatives contract of which the underlying thing or any of the underlying things is a security or a securities index, but does not include any derivatives contract that is, or that belongs to a class of derivatives contracts that is, prescribed by regulations made under section 341;
the corporation is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person; or
the person has a controlling interest in the corporation.
A person is treated as having an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme if —
collective investment scheme
“collective investment scheme” means —(a)an arrangement in respect of any property —(i)under which the participants do not have day‑to‑day control over the management of the property, whether or not the participants have the right to be consulted or to give directions in respect of such management;(ii)under which either or both of the following characteristics are present:(A)the property is managed as a whole by or on behalf of a manager;(B)the contributions of the participants, and the profits or income out of which payments are to be made to the participants, are pooled; and(iii)under which either or both of the following characteristics are present:(A)the effect of the arrangement is to enable the participants (whether by acquiring any right, interest, title or benefit in the property or any part of the property or otherwise) —(AA)to participate in or receive profits, income, or other payments or returns arising from the acquisition, holding, management, disposal, exercise, redemption or expiry of, any right, interest, title or benefit in the property or any part of the property; or(AB)to receive sums paid out of such profits, income, or other payments or returns;(B)the purpose, purported purpose or purported effect of the arrangement is to enable the participants (whether by acquiring any right, interest, title or benefit in the property or any part of the property or otherwise) —(BA)to participate in or receive profits, income, or other payments or returns arising from the acquisition, holding, management, disposal, exercise, redemption or expiry of, any right, interest, title or benefit in the property or any part of the property; or(BB)to receive sums paid out of such profits, income, or other payments or returns,whether or not —(BC)the arrangement provides for the participants to receive any benefit other than those set out in sub‑paragraph (BA) or (BB) in the event that the purpose, purported purpose or purported effect is not realised; or(BD)the purpose, purported purpose or purported effect is realised; or(b)an arrangement which is an arrangement, or is of a class or description of arrangements, specified by the Authority as a collective investment scheme by notice in the Gazette,but does not include —(c)an arrangement operated by a person otherwise than by way of business;(d)an arrangement under which each of the participants carries on a business other than investment business and enters into the arrangement solely incidental to that other business;(e)an arrangement under which each of the participants is a related corporation of the manager;(f)an arrangement made by or on behalf of an entity solely for the benefit of persons, each of whom is —(i)a bona fide director or equivalent person, a former director or equivalent person, a consultant, an adviser, an employee or a former employee of that entity or, where that entity is a corporation, a related corporation of that entity; or(ii)a spouse, widow or widower, or a child, adopted child or stepchild below 18 years of age, of such director or equivalent person, former director or equivalent person, employee or former employee;(g)an arrangement made by or on behalf of 2 or more entities solely for the benefit of persons, each of whom is —(i)a bona fide director or equivalent person, a former director or equivalent person, a consultant, an adviser, an employee or a former employee of any of those entities or, where any of those entities is a corporation, a related corporation of the entity which is a corporation; or(ii)a spouse, widow or widower, or a child, adopted child or stepchild below 18 years of age, of such director or equivalent person, former director or equivalent person, employee or former employee;(h)a franchise;(i)an arrangement under which money received by an advocate and solicitor from his or her client, whether as a stakeholder or otherwise, acting in his or her professional capacity in the ordinary course of his or her practice, or under which money is received by a statutory body as a stakeholder in the carrying out of its statutory functions;(j)an arrangement made by any co‑operative society registered under the Co‑operative Societies Act 1979 in accordance with the objects thereof solely for the benefit of its members;(k)an arrangement made for the purposes of any chit fund permitted to operate under the Chit Funds Act 1971;(l)an arrangement arising out of a life policy within the meaning of the Insurance Act 1966;(m)a closed‑end fund constituted either as an entity, a sub‑fund or a trust;(n)an arrangement under which the whole amount of each participant’s contribution is a deposit as defined in section 4B of the Banking Act 1970;(o)an arrangement of which —(i)the predominant purpose is to enable the participants to share in the use or enjoyment of the property or to make its use or enjoyment available gratuitously to others; and(ii)the property does not consist of any of the following:(A)any currency of any country or territory;(B)any capital markets products;(C)any policy as defined in the First Schedule to the Insurance Act 1966;(D)any deposit as defined in section 4B of the Banking Act 1970;(E)any credit facilities as defined in section 2(1) of the Banking Act 1970;(p)an arrangement which is an arrangement, or is of a class or description of arrangements, specified by the Authority as not constituting a collective investment scheme by notice in the Gazette;
a corporation has, or is by the provisions of this section (apart from this subsection) treated as having, an interest in that security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be; and
the person, the associates of the person, or the person and the person’s associates are entitled to exercise or control the exercise of not less than 20% of the votes attached to the voting shares in the corporation.
For the purposes of subsection (5), a person is an associate of another person if the firstmentioned person is —
a subsidiary of that other person;
a person who is accustomed or is under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of that other person in relation to the security, securities‑based derivatives contract or unit in a collective investment scheme (as the case may be) referred to in subsection (5); or
a corporation that is, or a majority of the directors of which are, accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of that other person in relation to that security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be.
A person is treated as having an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme in any one or more of the following circumstances:
where the person has entered into a contract to purchase the security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be;
where the person has a right, otherwise than by reason of having an interest under a trust, to have the security, securities‑based derivatives contract or unit in a collective investment scheme (as the case may be), transferred to the person or to the person’s order, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not;
where the person has the right to acquire any of the following under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not:
the security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be;
an interest in the security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be;
where the person is entitled, otherwise than by reason of the person having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members, to exercise or control the exercise of a right attached to any of the following, as the case may be:
the security, not being a security of which the person is a registered holder;
the securities‑based derivatives contract, not being a contract to which the person is a party;
the unit in a collective investment scheme, not being a unit of which the person is a registered holder.
A person is treated as having an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme if that security, securities‑based derivatives contract or unit in a collective investment scheme (as the case may be) is held jointly by the person with another person.
For the purpose of determining whether a person has an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme, it is immaterial that the interest cannot be related to a particular security, securities‑based derivatives contract or unit in a collective investment scheme, as the case may be.
The following interests are to be disregarded:
an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme if the interest is that of a person who holds the security, securities‑based derivatives contract or unit in a collective investment scheme (as the case may be) as bare trustee;
an interest in a security, securities‑based derivatives contract or unit in a collective investment scheme if —
the interest is that of a person whose ordinary business includes the lending of money; and
the person holds the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money;
an interest of a person in a security, securities‑based derivatives contract or unit in a collective investment scheme if that interest is an interest held by the person by reason of the person holding a prescribed office;
an interest of a company in its own securities if that interest is purchased or otherwise acquired in accordance with sections 76B to 76G of the Companies Act 1967;
a prescribed interest in a security, securities‑based derivatives contract or unit in a collective investment scheme being an interest of such person, or of the persons included in such class of persons, as may be prescribed;
for the purposes of Part 7, an interest in a securities‑based derivatives contract the obligations under which are to be discharged by one party to the other at some future time by cash settlement only.
An interest in a security, securities‑based derivatives contract or unit in a collective investment scheme is not to be disregarded by reason only of —
its remoteness;
the manner in which it arose; or
the fact that the exercise of a right conferred by the interest is, or is capable of being made subject to restraint or restriction.