Due-diligence moves to be mandatory for corporate finance advisers, says MAS

CORPORATE finance (CF) advisers, including issue managers of initial public offerings, will have to fall in with baseline standards of due diligence and conduct requirements from October this year.

The Monetary Authority of Singapore (MAS) said in a statement on Thursday (Feb 23) that this move to tighten procedural requirements is aimed at improving industry standards, and enabling investors to make more informed decisions.

Parties that undertake the regulated activity of advising on corporate finance will from then be subject to the more stringent requirements. These CF advisers include holders of the capital markets services licence, as well as banks, merchant banks and finance companies thus far exempt from holding that licence.

MAS listed the requirements as:

• Conducting background checks and interviews with relevant stakeholders;
• Conducting site visits of prospective issuers’ key assets;
• Assessing the knowledge, skills and experience of third-party service providers; and
• Ensuring that material issues are satisfactorily resolved or clearly disclosed.

CF advisers will also have to comply with enhanced requirements to mitigate conflicts of interests, such as where the adviser’s related corporations or controlling shareholders also provide services to the same customer, MAS added.

The introduction of the new requirements follows MAS’ issuing of a consultation paper on the move in December 2021. Discussions closed in February last year.

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Lim Tuang Lee, assistant managing director for Capital Markets at MAS, said: “Corporate finance advisers, through their work in advising prospective issuers, enable investors to make informed decisions by facilitating adequate and accurate disclosures.

“They play an important role in safeguarding investor interests and the integrity of our capital markets.”