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FACT SHEET: SECTION 13H (S13H)/FUND MANAGEMENT INCENTIVE (FMI) TAX INCENTIVES

FOR VENTURE CAPITAL/PRIVATE EQUITY FUNDS AND FUND MANAGEMENT COMPANIES

Startup SG Investor Administered by Enterprise Singapore (ESG), the Startup SG Investor pillar highlights the Angel Investors Tax Deduction (AITD) scheme for angel investors; and Section 13H (S13H)/Fund Management Incentive (FMI) for the fund or its associated fund management company (FMC) that are actively investing in startups and/or other Singapore companies. For more information, please visit https://ssg.startupsg.net/startupsg-investor/. S13H/FMI Tax Framework On 1 April 2015, S13H and FMI were introduced to: (i) encourage the inflow of local and foreign VC funds into Singapore, and (ii) catalyse more financing options with a focus to develop locally-based enterprises, especially startups to small- and medium- enterprise. The S13H and FMI are granted to the venture capital funds and FMC respectively, upon fulfilment of conditions mandating direct investments into local-based enterprises and developing the fund management expertise in Singapore. Summary of key features and conditions of S13H/FMI tax incentives for fund & FMC 1. Applicants could apply for both S13H and FMI or apply solely for S13H. Please note that a FMI

award is tied to a S13H-approved fund. It may be possible for a fund manager to hold multiple FMI awards for their management of multiple S13H-approved funds.

2. The benefits and administrative requirements of S13H/FMI are detailed below:

Section 13H (S13H) Fund Management Incentive (FMI)

Objective(s) To encourage the inflow and anchorage of local and foreign VC funds into Singapore, and to focus on local enterprise development and enhance the financing option of locally-based enterprises that include startups and small- and medium- enterprises (SMEs)

To develop fund management expertise in Singapore

Scheme exemption

a. Specified income from designated investments is tax-exempt for a period of up to 10 years in respect of: (i) Gains arising from the

divestment of approved portfolio holdings;

(ii) Dividend income from approved foreign portfolio companies; and

(iii) Interest income arising from approved foreign convertible loan stock.

The approved FMC managing the S13H-approved fund is subject to a concessionary tax rate of 5% for a period of up to 10 years in respect of: a) Management fees arrived from a

managing a S13H-approved fund b) Performance bonus received

from managing a S13H-approved fund

https://ssg.startupsg.net/startupsg-investor/

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S13H may be extended for a period of not exceeding 5 years, resulting in a maximum incentive period of 15 years, subject to case-by-case assessment at the end of the original tax incentive period.

FMI may be extended for a period of not exceeding 5 years, resulting in a maximum incentive period of 15 years, subject to case-by-case assessment at the end of the original tax incentive period.

Qualifying Conditions

a. An approved-S13H fund shall commit to invest a certain percentage of its subscribed capital1 in the following investment classifications2: (i) Singapore-based seed/early-

stage companies; and (ii) Singapore-based (excluding

seed/early-stage) companies; and/or

(iii) Overseas companies with economic spin-offs to Singapore

b. The approved S13H-approved fund

shall set and meet a projected milestone to deploy a certain percentage of monies by an agreed upon time period. For example, the fund shall deploy 70% of its fund by the 5th year of the tax incentive period.

Please refer to Annex A for the definitions of the different categorisation of companies. b. The abovementioned categorisation

of companies should be recognised separately at the point of first and follow-on investments. Any reclassification would be assessed by ESG on a case-by-case basis.

An approved FMC shall commit to employ an additional one or two Singaporean/ Singapore Permanent Resident investment professionals3 to manage the approved-S13H fund. This headcount criterion is tagged to the FMI award. For instance, if the fund manager holds three FMI awards for holding each of its three S13H funds and each fund has a fund size of ≤ S$50mil, the fund manager will have to report a total additional headcount of at least three investment professionals. Depending on the fund size, the fund management company should employ at least one to two additional Singapore citizens / PR investment professionals for a minimum period of 24 months:

Fund size Additional headcount criteria

≤ S$50 million 1

> S$50 million 2

1 Subscribed capital may be defined as the fund size at the final close of the fund. This includes management fee and operating expenses incurred by the fund. 2 Please refer to Annex A for the general guidelines on each investment classification. There is a 5% limit (of the subscribed capital) for investments into public-listed companies. The returns from such investments will not be accorded tax relief under S13H and such investments will not be taken into consideration towards the fulfilment of investment requirements into Singapore-based companies. 3 Investment professionals are defined as persons who perform the functions of trading, portfolio management, research or dealing, and do not include individuals solely involved in activities such as client servicing, business development, marketing, human resource or risk management. For the avoidance of doubt, individuals whose roles are limited to middle-office or back-office functions would not be considered as ‘investment professionals’.

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c. Depending on the fund’s investment strategy, the investment conditions are negotiable and subject to ESG’s internal benchmarks, in line with the policy intent to catalyse financing option to locally-based enterprises that includes startups and SMEs.

Other eligibility conditions

The fund’s legal form is in the form of Companies; and incorporated and based in Singapore.

The FMC managing a S13H-approved fund is incorporated and based in Singapore.

Approval Requirement(s)

Necessary Monetary Authority of Singapore (MAS) approvals and licenses for the proposed activities.

Necessary MAS approvals and licenses for the proposed activities.

Annual reports to ESG

Required Required

3. ESG reserves the right to modify the terms and conditions at its sole discretion. How to apply for S13H/FMI 4. To apply, please note the application requirements below:

Deadline Before the first close of the fund. ESG reserves the right to turn down applications submitted after aforementioned events.

Supporting documents

Completed S13H/FMI application forms4 with original signatures;

Private placement memorandums of the fund;

MAS license for the FMC;

Details of management team; and

Corporate slides or profile of the fund/FMC

Contact person SSG_Investor_S13H@enterprisesg.gov.sg

Updated as of March 2019

4 Please refer to Annex B for the application forms.

mailto:SSG_Investor_S13H@enterprisesg.gov.sg

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ANNEX A: GENERAL GUIDELINES FOR INVESTMENT CLASSIFICATIONS Singapore based seed/early-stage companies

Incorporated in Singapore and is a tax resident in Singapore;

At least 3 strategic business operations in Singapore;

At least 1 founder based in Singapore;

Has not been incorporated for more than five years;

Has not generated significant commercial revenue; and

Has not received substantial prior equity investment Singapore-based companies

Incorporated in Singapore and is a tax resident in Singapore;

At least 3 strategic business operations in Singapore5; and

At least 1 member of management team based in Singapore Overseas companies with economic spin-offs a) Projects in overseas companies which have contractual agreements with Singapore companies in

any of the following form:

Technical collaboration;

Business collaboration;

Joint venture involving business collaboration (excluding a representative office);

Collaboration for launch/introduction of new and pioneering medical or medical technology products to Singapore; or

b) Overseas investment that have the following activities in Singapore:

Set up a regional operations and business headquarter;

Set up an operations centre (e.g. manufacturing plant);

Set up an R&D centre/ facility;

List on the Singapore stock exchange

5 (i) banking & financial, (ii) marketing and business planning, (iii) procurement, logistics, (iv) training & personnel management, (v) investment planning/ co-ordination, (vi) R&D and design, (vii) technical support, (viii) manufacturing, and (ix) other value-added (VA) activities.

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ANNEX B: S13H/FMI APPLICATION FORMS

Item Attachment

S13H application form

2018 May - S13H

application form.xlsx FMI application form

2018 May - FMI

application form.xlsx

Instructions

APPLICATION FOR INCENTIVE

FORM S13HSECTION 13H

Please indicate if the company is applying for other incentive listed below:

Instructions:

1If the space provided is insufficient, a separate sheet may be used. Where information is not yet available or not applicable, please indicate accordingly

2Should you encounter difficulties in completing the form, or if you need further information, please contact:

Tony Yeoh, Assistant Development Partner, Enterprise Singapore

DID: 6279 3186 Email: tony_yeoh@enterprisesg.gov.sg

3Upon completion of this application, you are required to submit:

• One signed hardcopy of this application and one softcopy of this form in original Microsoft Excel file format• Latest Private Placement Memos (PPM) of the fund• ACRA records for both the fund and fund management company• MAS license• Details of management team• Corporate slides or documents about the fund/fund management company

The full set of application documents should be submitted to ESG before the first close of the Fund. ESG reserves the right to reject applications submitted after the first close of the Fund.

4The application and softcopy should be submitted to:

Attn: Tony Yeoh, Startup and GIA Division

Enterprise Singapore

1 Fusionopolis Walk

#01-02 South Tower, Solaris

Singapore 138628

- ALL INFORMATION PROVIDED WILL BE HELD IN THE STRICTEST CONFIDENCE -

Fund Management Incentive for S13H Approved Funds

Global Investor Programme

Part I

PART I - CAPITAL STRUCTURE AND PROPOSED FUND

Please enter your inputs in the green cells only

1General Information on the Fund

Fund Name

UEN

Targeted Fund Size$0.00

Minimum Fund Size$0.00

Maximum Fund Size$0.00

Minimum Subscription Amount$0.00

Estimated Charter Life0

Estimated Date of First Close12/31/99

2Proposed share structure

Please supply information on a separate sheet if necessary

3Details and nature of offering

4General information on sponsors of Fund

Name of Sponsor Company /IndividualShareholdingCountryRegistered*/NationalityPR? (Y/N)Occupation

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

* Applies to sponsors that are companies

5Details of each sponsor

Please provide a brief background of each sponsor company or individual which includes:

(a)Details of proposed investment in said Fund and sponsorship of other

venture capital funds

(b)Ultimate shareholders(s) of each sponsor company

(c )Main activities of each sponsor

Please supply information on a separate sheet if necessary

Part II

PART II - DETAILS OF PROPOSED FUND

Please enter your inputs in the green cells only

1Objectives of Fund

Please supply information on a separate sheet if necessary

2Investment goals/ strategies and Operational Details

3Targeted industry focus

Industry%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Total0%

4Proposed geographical distribution of investments

Country%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Total0%

5Proposed distribution of investments by stage*

Stage%

Seed / Early Stage:0%

Post Seed (Series A/B)0%

Growth / Expansion0%

Pre-IPO/ Buyouts0%

Others0%

Total0%

*Refer to "Definitions" tab for more information on stage of investments

6Proportion of subscribed capital to be invested in:

Type of Investment*%

Singapore Seed/early stage investments 0%

Singapore-based investments0%

Overseas investments with economic spinoffs to Singapore0%

Others0%

Total0%

*Refer to "Definitions" tab for more information on categorisation of investments

7Proposed investment size per company

Minimum$0

Maximum$0

8Rate of return

Expected compounded rate of return per annum:

Part III

PART III - DETAILS OF PROPOSED FUND MANAGEMENT COMPANY

Please enter your inputs in the green cells only

1Performance of previous funds

Name of Previous FundsReceived S13H/PSI? (Y/N)LocationName of Fund / Date of CommencementFund SizeNo. of Professionals Employed

2Performance of previous investments

Investee CompanyName of FundBusiness ProfileInvestment AmountCompany StatusDate of Investment

3Fund management fees and other income

Management Fee: 0.0%

% of committed capital of proposed Fund.

Other Fees:

(if applicable)

4Details of fund managers

Please provide the CVs of the executives of the Fund Management company including name, age, qualification, work experience, current designation and responsiblities in separate attachements.

Part IV

PART IV - DECLARATION