Statute Details
- Title: Finance Companies (Exemption from sections 23(1) and 25(2)) Regulations 2017
- Act Code: FCA1967-RG2
- Type: Subsidiary Legislation (SL)
- Status: Current version (as at 27 Mar 2026)
- Revised Edition: 2025 Revised Edition (17 December 2025)
- Authorising Act: Finance Companies Act 1967
- Key Provisions: Regulation 2 (Definitions); Regulation 3 (General exemptions); Regulation 4 (Specific exemptions)
- Principal Exemptions: Exemptions from restrictions in sections 23(1) and 25(2) of the Finance Companies Act 1967 for specified business activities
What Is This Legislation About?
The Finance Companies (Exemption from sections 23(1) and 25(2)) Regulations 2017 is a piece of Singapore subsidiary legislation that creates targeted exemptions for certain licensed finance companies from specified statutory restrictions in the Finance Companies Act 1967. In plain language, it allows particular finance companies to carry on defined banking- and finance-adjacent activities—such as current account services for business customers, certain foreign exchange-related hedging and financing activities, and specified unsecured lending and payment services—without being constrained by the general prohibitions or limitations that would otherwise apply under the Act.
The Regulations do not provide a blanket deregulation. Instead, they are carefully bounded by (i) the identity of the exempt finance company (e.g., Hong Leong Finance Limited, Sing Investments & Finance Limited, and Singapura Finance Ltd), (ii) the specific business activities covered, and (iii) quantitative and qualitative conditions that limit risk—particularly in relation to foreign currency exposure and unsecured credit.
From a practitioner’s perspective, the Regulations operate as a compliance “permission framework”: they tell you when a finance company may do something that would otherwise fall within restricted categories, and what guardrails must be met to remain within the exemption.
What Are the Key Provisions?
Regulation 2: Definitions sets the interpretive foundation. It defines key terms used throughout the Regulations, including “approved exchange” (by reference to the Securities and Futures Act 2001), “business customer” (a customer who is a company or another gain-seeking person/body, excluding employees and office-holders acting in that capacity), and “cheque” (by reference to the Bills of Exchange Act 1949). It also defines “credit card” and “charge card” (by reference to the Banking Act 1970) and “foreign exchange trading” (a detailed definition capturing entering into or inducing contracts/arrangements to exchange currencies or settle differences based on currency indices at agreed rates).
These definitions matter because the exemptions are activity-specific. If a transaction does not fall within the defined meaning—particularly “business customer” or “foreign exchange trading”—the exemption may not apply.
Regulation 3: General exemptions is the core provision. It provides that, subject to paragraphs (2), (3) and (4), the following finance companies are “exempt finance company” for the purposes of the Regulations: Hong Leong Finance Limited, Sing Investments & Finance Limited, and Singapura Finance Ltd. The exemption is from:
(a) Sections 23(1)(a) and 25(2) in respect of the business of opening current accounts with facilities for (i) issuance of cheques by any business customer, (ii) payment of cheques drawn on the finance company by any business customer, and (iii) collection of cheques drawn by any business customer. This effectively permits these finance companies to offer current account cheque facilities to business customers without being blocked by the relevant statutory restriction.
(b) Section 23(1)(b) in respect of specified activities that are closely linked to risk management and trade/asset financing, including: entering into or facilitating contracts/arrangements enabling business customers to hedge, cover or change the amount of a liability or entitlement between foreign currencies and Singapore dollars; financing the purchase of assets in foreign currency; and financing foreign currency denominated invoices under factoring and accounts receivable financing.
(c) Section 23(1)(f) in respect of unsecured advances, unsecured loans or unsecured credit facilities granted to a person for a purpose relating to the person’s business.
(d) Section 25(2) in respect of (i) issuing corporate purchasing cards and (ii) providing electronic funds transfer services using interbank GIRO, FAST, or electronic funds transfer at point of sale network systems.
Regulation 3(2): Conditions for the foreign exchange hedging/related exemption (paragraph (1)(b)) are risk-limiting. The exemption is conditional on three requirements:
- Foreign currency exposure cap: the aggregate amount of foreign currency exposure must not exceed 10% of capital funds.
- No proprietary foreign exchange trading: the exempt finance company must not carry on foreign exchange trading for its own account.
- Unhedged exposure cap: the aggregate amount of foreign currency exposure not hedged must not exceed $500,000.
Practically, these conditions mean the exemption is designed for customer-facing hedging and financing, not for the finance company to take speculative FX positions. For compliance, a lawyer should expect the finance company to maintain internal systems to measure “foreign currency exposure” and to monitor hedging status and thresholds.
Regulation 3(3) and (4): Conditions and exclusions for unsecured lending (paragraph (1)(c)) are even more granular. The exemption for unsecured advances/loans/credit facilities is subject to:
- Overall unsecured lending limit: the aggregate and outstanding at any one time must not exceed 15% of capital funds.
- Per-person (or per body) limit: unsecured facilities granted to any person or body of persons (incorporated or not) must not, in aggregate and outstanding at any one time, exceed 0.5% of capital funds.
Regulation 3(4) then provides a set of exclusions—the exemption does not apply to unsecured facilities granted to specified related or conflicted parties, including directors (whether jointly or severally), firms where the finance company or its directors have an interest as partners or where directors are managers/agents, individuals/firms where directors are guarantors, certain director-controlled companies, and specified types of VCCs (including non-umbrella and umbrella VCCs with director ownership/control thresholds). It also excludes unsecured facilities to a corporation (other than a bank) deemed related under section 6 of the Companies Act 1967.
These exclusions are typical of Singapore financial regulation: they prevent circumvention of conflict-of-interest and related-party risk controls by relying on an exemption.
Regulation 4: Specific exemptions narrows the scope further for Hong Leong Finance Limited. Subject to paragraphs (2) and (3), Hong Leong Finance Limited is exempt from:
(a) Section 23(1)(c) in respect of acquisition of foreign currency denominated stocks, shares, debts or convertible securities pledged by a customer as security for a loan, advance or credit facility. This permits the finance company, in a secured lending context, to take ownership of certain pledged instruments denominated in foreign currency.
(b) Section 25(2) in respect of specified business activities, including: providing corporate financial advisory services; underwriting the issue or sale of shares for companies listed (or intending to be listed) on an approved exchange; underwriting for VCCs listed (or intending to be listed) on an approved exchange; marketing “any relevant service” provided by NIUM Pte. Ltd. (either directly or under a co-branding arrangement using Hong Leong Finance Limited’s logo); and facilitating payments between users of relevant services and NIUM Pte. Ltd. in connection with those services.
Although the extract provided is truncated, the structure indicates that Regulation 4(b) is designed to allow Hong Leong Finance Limited to participate in certain capital markets and payments-related activities—particularly those involving NIUM Pte. Ltd.—without falling foul of the general restrictions in section 25(2).
How Is This Legislation Structured?
The Regulations are structured as a short, targeted instrument with four main components:
- Regulation 1 (Citation): provides the short title.
- Regulation 2 (Definitions): defines key terms used to delineate the scope of exemptions.
- Regulation 3 (General exemptions): grants exemptions to three specified finance companies for a set of activities, with conditions and exclusions.
- Regulation 4 (Specific exemptions): grants additional, company-specific exemptions to Hong Leong Finance Limited for particular activities (including advisory, underwriting, and NIUM-related services).
For practitioners, the “regulation-by-regulation” approach is important: compliance teams should map each intended product or service to the relevant paragraph and then test whether all conditions (caps, prohibitions, and excluded counterparties) are satisfied.
Who Does This Legislation Apply To?
The Regulations apply to the finance companies named as exempt finance companies in Regulation 3(1): Hong Leong Finance Limited, Sing Investments & Finance Limited, and Singapura Finance Ltd. The exemptions are not available to other finance companies unless a separate exemption is granted by law.
Regulation 4 applies specifically to Hong Leong Finance Limited, and only for the activities enumerated there. Accordingly, the legal effect is both entity-specific and activity-specific: even for an exempt finance company, the exemption is limited to the business lines described in the Regulations and subject to the stated conditions.
Why Is This Legislation Important?
These Regulations are significant because they enable regulated finance companies to offer practical commercial services—current accounts with cheque facilities, customer hedging support and trade-related FX financing, corporate purchasing cards, and certain electronic funds transfer capabilities—while still maintaining statutory risk boundaries. In effect, the Regulations reconcile business needs with prudential constraints.
From an enforcement and compliance standpoint, the conditions are the heart of the legal risk. For example, the prohibition on foreign exchange trading for the company’s own account and the caps on foreign currency exposure and unhedged exposure are likely to be focal points in supervisory reviews. Similarly, the quantitative limits on unsecured lending (overall and per counterparty) and the detailed exclusions for directors and related parties are designed to prevent excessive credit risk and conflicts of interest.
For legal practitioners advising on product launches, structuring of financing arrangements, or partnerships (such as NIUM-related services), the Regulations provide a clear checklist: identify the statutory restriction in sections 23(1) and/or 25(2), confirm the activity falls within the exempt categories, and then verify that all conditions and excluded counterparties are addressed in the transaction documentation and internal policies.
Related Legislation
- Finance Companies Act 1967 (sections 23(1) and 25(2), and section 6 for related-party deeming)
- Banking Act 1970 (definitions of “credit card” and “charge card”)
- Bills of Exchange Act 1949 (definition of “cheque”)
- Securities and Futures Act 2001 (definition of “approved exchange”)
- Companies Act 1967 (section 6, related corporation deeming)
- Exchange Act 1949 (contextual reference in definitions)
- Futures Act 2001 (contextual reference in definitions and regulatory framework)
Source Documents
This article provides an overview of the Finance Companies (Exemption from sections 23(1) and 25(2)) Regulations 2017 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.