MAS Licensed Fund Management Company (LFMC) — Step-by-step walkthrough
Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.
A MAS Licensed Fund Management Company (LFMC) is a Singapore firm holding a Capital Markets Services licence for fund management, allowing it to manage assets for accredited, institutional or retail investors under the Monetary Authority of Singapore’s supervision. This walkthrough covers the LFMC categories, conditions and the 2026 set-up process.
What a MAS Licensed Fund Management Company is
A Licensed Fund Management Company holds a Capital Markets Services licence for the regulated activity of fund management under the Securities and Futures Act 2001. Singapore offers two main LFMC categories: the A/I LFMC, which may serve only accredited and institutional investors, and the Retail LFMC, which may additionally serve retail investors and faces higher capital and governance requirements.
The LFMC is the workhorse vehicle for hedge funds, private equity managers, venture funds and multi-family offices that take in external capital. It sits above the lighter Registered Fund Management Company regime, which caps the number of qualified investors and assets under management.
Who should choose the LFMC route
Choose an LFMC when you intend to manage external money beyond the Registered FMC limits, expect to scale assets under management, or want institutional and, for the retail category, public investors. Managers serving only a handful of accredited investors with modest assets may start as a Registered FMC and upgrade later, but many institutional allocators prefer to mandate licensed managers from the outset.
The retail LFMC is appropriate only where you genuinely intend to offer funds to the public, because the additional capital, board independence and track-record requirements are substantial.
For a closely related perspective, see our guide on VCC Act 2018 — Section 46 Permissible Fund Manager rules — Complete 2026 guide.
Eligibility and conditions
An A/I LFMC must maintain base capital of S$250,000, appoint at least two full-time directors, employ a minimum of two relevant professionals, and have a resident CEO with at least ten years of relevant experience. The Retail LFMC must hold base capital of S$1,000,000 and meet stricter independence and track-record tests. Section 86 of the Securities and Futures Act 2001 grants the licensing power and the conditions are set in the MAS fund management licensing guidelines.
All LFMCs must implement risk-based capital, professional indemnity insurance, independent custody and valuation arrangements, and a compliance and AML framework proportionate to the business.
Official guidance is published by the relevant Singapore authorities; see www.mas.gov.sg and www.iras.gov.sg for current requirements.
You may also find it useful to read Exempt Private Company (EPC) mechanics — Step-by-step walkthrough.
Cost and timeline
First-year costs for an A/I LFMC in 2026 typically run S$50,000 to S$130,000 in professional and set-up fees, plus the S$250,000 base capital you must hold. Retail LFMCs cost materially more given the S$1,000,000 capital floor and heavier governance. Ongoing annual compliance, audit and fund administration commonly add S$80,000 to S$200,000.
Allow four to six months from engagement to licence grant. The MAS review of a complete fund management application generally takes three to four months, with another one to two months to assemble the business plan, compliance manual and key-individual documentation beforehand.
Step-by-step process
First, decide the category, A/I or Retail, and confirm your investor base. Second, incorporate the Singapore company, appoint directors and a company secretary, and line up your CEO and relevant professionals. Third, design the operating model: custody, fund administration, valuation, dealing and risk controls.
Fourth, build the compliance and AML framework and the business plan with realistic financial projections. Fifth, submit through the MAS portal and respond to queries. Sixth, after grant, fund the base capital, bind PI insurance, finalise service-provider contracts and complete pre-launch operational readiness before accepting client money.
Common mistakes and gotchas
Underestimating the CEO experience expectation is common; MAS looks for genuine, relevant fund management leadership. Treating outsourced fund administration as a way to avoid building internal controls is another error, as the manager retains responsibility. A third is launching the first fund before operational readiness is complete.
A 2026 gotcha: independent valuation and custody arrangements are scrutinised closely, particularly for managers running illiquid private-market strategies. Get these contracts and controls right before submission.
LFMC versus Registered FMC
Choosing between an LFMC and a Registered Fund Management Company is the first decision. A Registered FMC may serve up to 30 qualified investors with assets under management capped at S$250 million, and is lighter to establish. An LFMC has no such investor or AUM cap, so managers expecting to scale, take retail money or satisfy institutional allocators that mandate licensed managers should choose the LFMC route.
Many boutiques begin as a Registered FMC to test the strategy, then upgrade to an A/I LFMC as assets grow. The upgrade is an application in its own right, so factor the transition cost and timeline into the plan if you expect to cross the registered-regime limits.
Operational readiness and service providers
An LFMC must demonstrate a credible operating model before launch. That means independent custody so client assets are segregated, an external fund administrator for valuation and investor reporting, an auditor, and prime-broking or dealing arrangements appropriate to the strategy. MAS expects the manager to retain oversight of outsourced functions rather than abdicate responsibility to providers.
For private-market strategies, independent valuation policies matter greatly because illiquid assets are harder to price objectively. Document the valuation methodology, the frequency, and the independent input, because this is an area MAS and investors scrutinise closely.
Capital, insurance and ongoing supervision
An A/I LFMC must hold base capital of S$250,000 and a Retail LFMC S$1,000,000, and both must meet risk-based capital requirements that scale with the business. Professional indemnity insurance is expected, sized to the assets and strategy. After grant, the firm files periodic returns, submits audited accounts, and notifies MAS of material changes to ownership, key individuals or strategy.
Capital must not be depleted to fund operating losses; that is a breach, not a cash-flow choice. Build a realistic runway so the base capital remains intact while the business reaches break-even, and monitor it monthly.
For more detail on a connected topic, see Private banking onboarding for newly licensed CMS holders — Complete 2026 guide.
FAQs
What is the difference between an A/I and Retail LFMC?
An A/I LFMC may serve only accredited and institutional investors and needs S$250,000 base capital. A Retail LFMC may also serve the public and needs S$1,000,000 base capital with stricter governance.
Can a Registered FMC upgrade to an LFMC?
Yes. Many managers start as a Registered FMC and apply to upgrade as assets and investor numbers grow beyond the registered regime’s limits.
How long must the CEO’s experience be?
MAS generally expects the CEO of an LFMC to have at least ten years of relevant experience in fund management or a closely related field.
What are the Registered FMC limits?
A Registered FMC may serve up to 30 qualified investors with assets under management capped at S$250 million. Beyond that, a licensed FMC is required.
Do I need independent custody?
Yes. An LFMC is expected to segregate client assets through independent custody and to use an external administrator for valuation and investor reporting.
Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.