Singapore VCC insights

Capital Deployment Requirement 13O: How SFO Funds Meet the 10% or S$10 Million Test

By VCC Editorial Team · Published 25 October 2026

Photo: Jeremy Kwok on Unsplash

Short answer: Under MAS FDD Circular 05/2026, a 13O, 13OA or 13U single family office fund must hold the lower of 10% of its AUM in designated investments or S$10 million in three classes of Singapore-linked investment, tested at each basis period end. Listed Singapore equities, Singapore equity funds, blended finance and local operating companies count at twice their value.

Key facts at a glance

Amount: the lower of (i) 10% of the fund’s assets under management (AUM) in designated investments (DI) or (ii) S$10 million, under paragraph 4.5(b) and Annex 6B paragraph 1(d) of MAS FDD Circular 05/2026 (31 July 2026).
Three eligible options: DI listed on Approved Exchanges; DI distributed by MAS-licensed financial institutions in Singapore (excluding equities listed outside Approved Exchanges); and non-listed Singapore-incorporated operating companies with substantive presence in Singapore.
A 2x multiplier applies to equities listed on Approved Exchanges, funds with at least 30% of AUM in such equities, blended finance instruments distributed by licensed financial institutions in Singapore, and non-listed Singapore operating companies.
Timing for new awards: first tested at the end of the basis period for the first full year of assessment (YA) after the award starts; an award from 1 August 2026 with a 31 December year end is first tested on 31 December 2027.
Existing awards under the 18Apr22 and 5Jul23 conditions move to the revised requirement from the YA whose basis period ends on or after 1 August 2026; pre-18Apr22 awards have no requirement.
A 13U structure meets the test collectively, as a single fund entity.
Failing an economic condition costs the exemption for that basis period, not the award; it can be regained in a later period.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

The capital deployment requirement 13O and 13U family office funds must meet was rewritten by the Monetary Authority of Singapore (MAS) in FDD Circular 05/2026, issued on 31 July 2026. The specified investments were, in the circular’s words, “streamlined to 3 options”, and a 2x multiplier now rewards certain Singapore exposures. For an existing award with a 31 December year end, the first test under the revised rules may fall on 31 December 2026. This guide sets out the mechanics as the circular states them, works through funds of S$30 million and S$300 million, and lists the evidence a single family office (SFO) should hold. All sources were checked on 25 October 2026.

What is the capital deployment requirement for 13O SFO funds?

It is an annual economic condition requiring an SFO fund to hold a minimum amount of its portfolio in Singapore-linked investments. It applies to SFO funds under sections 13O, 13OA and 13U of the Income Tax Act 1947.

SFO funds are fund vehicles whose assets primarily originate from one family and that are managed by an SFO exempt from licensing under the Securities and Futures Act 2001. The capital deployment requirement (CDR) sits alongside the other economic conditions in Annex 6B: the investment professional condition, the minimum fund size of S$20 million in DI (S$50 million for 13U), and tiered local spending. Funds managed by licensed fund management companies (non-SFO funds) are not subject to it.

Unlike the fund size test, the CDR is measured against total AUM in DI, including assets the fund size test excludes. Our guide to minimum AUM for Singapore family offices covers the fund size thresholds.

How much must an SFO fund deploy, and how is it measured?

The fund must invest at least the lower of 10% of its AUM in DI or S$10 million in eligible investments. Both sides are measured at the basis period end.

Footnote 28 of the circular sets out the method for the percentage limb: capital deployed at the end of the basis period, divided by AUM in DI at the end of the basis period, must be at least 10%. Because the requirement is the lower of the two figures, the S$10 million limb takes over once AUM in DI exceeds S$100 million. A fund with S$80 million needs S$8 million; a fund with S$500 million needs S$10 million, not S$50 million.

AUM in DI means the value of the fund’s investments that qualify as designated investments under Annex 3; non-DI assets count on neither side. See our note on designated investments for 13O.

Which investments count towards the capital deployment requirement?

Only designated investments in three options count: DI listed on Approved Exchanges, DI distributed by MAS-licensed financial institutions in Singapore, and non-listed Singapore-incorporated operating companies with substantive presence in Singapore.

Option	Circular wording	Counts at 2x?	Points to note
Option 1	DI listed on Approved Exchanges (exchanges approved by MAS pursuant to section 9 of the Securities and Futures Act 2001)	Only equities listed on Approved Exchanges	Other listed DI, such as listed debt, count at face value
Option 2	DI distributed (e.g. sold, marketed) by MAS-licensed financial institutions in Singapore, excluding equities listed outside Approved Exchanges	Singapore-equity funds and blended finance instruments qualify for 2x (the 2x list is not tied to one option)	The Singapore entity must have distributed the product directly to the fund
Option 3	Non-listed Singapore-incorporated companies with operating business(es) and with substantive presence in Singapore	Yes	Property trading or holding companies excluded, other than property developers

The circular refers readers to the MAS Financial Institutions Directory for the list of Approved Exchanges. A fund investing substantially in Singapore-listed equities is defined in footnote 30 as an exchange-traded fund or non-listed equity fund with at least 30% of its total AUM invested in equities listed on Approved Exchanges.

MAS’s FAQs on the Schemes for Single Family Offices (last updated 14 September 2026) add that a global manager’s fund counts under Option 2 only if documents, such as a sales agreement, show its licensed Singapore entity directly distributed the fund to the awardee, and a limited partnership fund must itself be a DI.

How does the 2x multiplier work?

Four categories are “counted at twice their value (i.e. with a 2x multiplier applied) when computing if the CDR has been met”. The multiplier increases the numerator only; the fund’s AUM in DI is not grossed up.

The four categories are listed in the key facts above. The circular does not cap the share of the requirement that may be met through multiplied categories, so a fund may in principle satisfy the whole CDR with S$5 million of listed Singapore equities counted as S$10 million.

This is distinct from the 2x recognition of blended finance grants (contributions with no return of principal or income) under the local spending condition in footnote 24. An instrument held as an investment counts towards the CDR; a grant counts towards spending.

Can the family’s own operating business count towards the CDR?

Yes, if it qualifies as a DI and meets an option’s terms. MAS states that investments in the family’s operating businesses do not count towards the minimum AUM condition but “will count towards all other relevant conditions (e.g. the minimum annual business spending and the Capital Deployment Requirement), provided that the investments qualify as DIs”.

A family’s non-listed Singapore operating company can therefore fall under Option 3 and attract the 2x multiplier. MAS’s FAQs say that an operating company with substantive presence in Singapore “generally” has these characteristics: it is registered in Singapore, has at least 25% local shareholding interest, has a minimum of three employees in Singapore, and has an operating premise in Singapore. A company owned entirely by a foreign family may fail the local shareholding characteristic.

Two further limits apply. Singapore property trading or holding entities, other than developers, do not qualify under Option 3. And MAS permits family operating businesses in the fund structure only if the fund is not intended to facilitate the treasury operations of any operating business or group, and is not a 13U fund owned by a Singapore operating company or corporate group.

Indirect holdings count if the intermediate entities are purely investment holding structures or special purpose vehicles with no independent operations, and the fund’s records show the underlying company meets the definitions.

When is the capital deployment requirement 13O funds face first tested?

For new awards approved on or after 1 August 2026, the first test is at the end of the basis period for the first full YA after the award commences. Existing awards follow a transition table in Annex 6B.

A full YA’s basis period “generally refers to a complete 12-month period”. The circular’s example: an award starting on 1 August 2026, with a 31 December year end, must meet the CDR by 31 December 2027, the end of the basis period from 1 January 2027 to 31 December 2027. The short first period to 31 December 2026 is not tested.

Award type (13O/13OA)	CDR position	From when
New award approved on or after 1 August 2026	Revised CDR, Annex 6B paragraph 1(d)	End of basis period for first full YA, then every basis period
Existing award, 5Jul23 conditions	Revised CDR, Annex 6B paragraph 1(d)	YA whose basis period ends on or after 1 August 2026
Existing award, 18Apr22 conditions	Revised CDR, Annex 6B paragraph 1(d)	YA whose basis period ends on or after 1 August 2026
Existing award, pre-18Apr22 conditions	Not applicable	Not applicable

On our reading of the table, an existing 18Apr22 or 5Jul23 award with a 31 December year end is tested under the revised options on 31 December 2026 (YA 2027). The table applies “unless otherwise notified by MAS in writing”. For 13U awards, Annex 7B sets out the equivalent table; the circular’s main body confirms new 13U SFO awards carry the same CDR. Our 13O annual compliance calendar places the test date in the wider year-end timetable.

How does the CDR work at S$30 million and S$300 million?

At S$30 million the 10% limb applies and the fund needs S$3 million of counted capital; at S$300 million the S$10 million limb applies.

Assumptions: a 13O SFO fund, all assets DI, valued at the basis period end, no MAS variation.

Item	Fund A: S$30 million AUM in DI	Fund B: S$300 million AUM in DI
10% of AUM in DI	S$3 million	S$30 million
Requirement (lower of 10% and S$10 million)	S$3 million	S$10 million
Route 1: 1x assets only	S$3 million in a bond fund sold by a Singapore bank (Option 2)	S$10 million in Option 1 or Option 2 assets at 1x
Route 2: 2x assets only	S$1.5 million in equities listed on an Approved Exchange, counted as S$3 million	S$5 million in equities listed on an Approved Exchange, counted as S$10 million
Route 3: mixed	S$1 million listed equities (S$2 million counted) plus S$1 million Option 2 fund (S$1 million counted) = S$3 million	S$4 million in a qualifying non-listed Singapore operating company (S$8 million counted) plus S$2 million Option 2 fund (S$2 million counted) = S$10 million
Local spending tier (separate condition)	S$200,000	S$500,000

Headroom matters for Fund A, whose requirement moves with its AUM: at S$36 million it needs S$3.6 million counted. Fund B’s requirement is fixed at S$10 million while AUM stays above S$100 million.

Family business holdings change the picture. Suppose Fund A’s S$30 million includes S$8 million of shares in the family’s operating company that qualify as DI. For the S$20 million minimum fund size, only S$22 million counts. For the CDR, the full S$30 million is the denominator because MAS says such investments count towards all other conditions. If the family company is a non-listed Singapore operating company meeting the Option 3 characteristics, the S$8 million could count as S$16 million, well above the S$3 million requirement.

What evidence should an SFO keep for the capital deployment requirement?

Keep a year-end computation and the documents behind each eligible holding. MAS can ask for supporting documents, and the circular reserves the right to revoke an award permanently for failure to provide them on request.

A workable year-end routine:

Fix the basis period end date and obtain valuations for every holding as at that date.
Classify each holding as DI or non-DI under Annex 3, and total AUM in DI.
Compute the requirement: the lower of 10% of AUM in DI and S$10 million.
Tag each eligible DI to Option 1, 2 or 3, and mark which items attract the 2x multiplier.
Compute counted capital, applying 2x only to the four multiplier categories, and compare it with the requirement.
File the support: custodian statements for listed holdings; distribution agreements naming the Singapore licensed entity for Option 2; fund documents showing the 30% threshold for 2x funds; and, for Option 3, the ACRA profile, shareholder register, headcount, premises evidence and any holding chain chart.
Have the computation reviewed and signed off before the annual declaration to MAS is prepared.

Our guide to the annual evidence file for 13O and 13U covers the wider file, and our note on listed securities portfolios covers custody and reporting for listed holdings. Cost estimates are available from the Raffles Corporate Services free tools.

What happens if a fund misses the CDR, and how does it apply to 13U structures?

Missing the CDR means losing the tax exemption for that basis period only.

Paragraph 2.4 of the circular states that funds unable to fulfil any of the economic conditions in a basis period “will not be able to avail themselves of the tax exemption for that basis period”, but can claim it again in a later period in which all economic conditions are met. The CDR is listed among the economic conditions in Annex 6B. The award therefore survives a single miss, but the fund cannot claim exemption on that year’s specified income, which for a portfolio with large realised gains can be costly. Permanent revocation is reserved for non-economic failures and serious offences.

For 13U, footnote 26 states that an SFO fund structure “will be regarded as having met the CDR for a YA if the approved entities within the structure collectively invest at least the lower of 10% of the structure’s total AUM in DI or S$10 million” in the specified investments at the end of the basis period. The Singapore-linked assets can sit in one vehicle, but any new vehicle added to the structure needs MAS approval first.

Frequently asked questions

Is the capital deployment requirement 10% or S$10 million?

Whichever is lower, so the requirement never exceeds S$10 million.

Do foreign-listed shares bought through a Singapore bank count under Option 2?

No. Option 2 expressly excludes equities listed outside Approved Exchanges, even when distributed by a Singapore licensed institution.

Does a Singapore property holding company count under Option 3?

No. MAS’s FAQs exclude entities trading or holding Singapore immovable property, other than those in the business of property development.

Can a 13U structure hold all its CDR assets in one entity?

Yes. Footnote 26 tests the approved entities collectively against the structure’s total AUM in DI.

Sources

Raffles Corporate Services helps family offices and fund managers with VCC incorporation, family office set-up and ongoing 13O and 13U compliance, including the year-end capital deployment computation and evidence file. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 25 October 2026. The Editorial Team, Variable Capital Companies Act.