Statute Details
- Title: Finance Companies (Exemption from sections 23(1) and 25(2)) Regulations 2017
- Act Code: FCA1967-RG2
- Legislative Type: Subsidiary legislation (SL)
- Status: Current version (as at 27 Mar 2026)
- Revised Edition: 2025 Revised Edition (17 December 2025)
- Original Citation: SL 672/2017 (1 December 2017)
- Key Provisions: Regulation 2 (Definitions), Regulation 3 (General exemptions), Regulation 4 (Specific exemptions)
- Primary Exempted Provisions (Finance Companies Act 1967): Sections 23(1) and 25(2)
- Authorising Act: Finance Companies Act 1967 (as indicated by the legislative framework)
- Amendment History (high level): Amended by S 591/2020 (27 Jul 2020), S 165/2022 (8 Mar 2022), S 388/2022 (20 May 2022); consolidated in 2025 RevEd (17 Dec 2025)
What Is This Legislation About?
The Finance Companies (Exemption from sections 23(1) and 25(2)) Regulations 2017 is a targeted regulatory instrument that grants exemptions to certain finance companies from specific restrictions in the Finance Companies Act 1967. In practical terms, it allows approved finance companies to conduct selected banking-adjacent or financial-market activities—such as current account arrangements with cheque facilities, certain foreign exchange-related hedging and financing activities, and particular forms of unsecured lending and payment services—without being fully constrained by the default statutory limitations.
These exemptions are not blanket permissions. The Regulations are carefully drafted to carve out particular activities and to impose quantitative and qualitative conditions. Where the exempted activity could increase risk (for example, foreign currency exposure, unsecured credit concentration, or related-party lending), the Regulations require limits and exclude certain counterparties.
The scope is also company-specific. While Regulation 3 provides “general exemptions” for a group of finance companies, Regulation 4 provides “specific exemptions” for Hong Leong Finance Limited in relation to additional activities, including corporate financial advisory services, underwriting, and certain payment facilitation arrangements connected with NIUM Pte. Ltd. This structure reflects a regulatory approach: allow innovation and business expansion, but only within defined boundaries.
What Are the Key Provisions?
1) Definitions (Regulation 2)
The Regulations define key terms used throughout, including “approved exchange” (by reference to the Securities and Futures Act 2001), “business customer”, “cheque”, “credit card”/“charge card”, and “foreign exchange trading”. These definitions matter because the exemptions depend on whether the activity is performed for the relevant customer category and whether the finance company is engaging in “foreign exchange trading for its own account” (which is expressly restricted in the conditions).
Notably, “business customer” is defined broadly to include companies and other persons or bodies carrying on trade, commerce, or profession for gain, but excludes employees and office holders acting in those capacities. This is a critical gatekeeping concept: the cheque and hedging-related exemptions in Regulation 3 are tied to transactions with business customers, not retail individuals.
2) General exemptions for specified finance companies (Regulation 3(1))
Regulation 3(1) identifies three “exempt finance companies”: Hong Leong Finance Limited, Sing Investments & Finance Limited, and Singapura Finance Ltd. Subject to paragraphs (2)–(4), each is exempt from specified provisions of the Finance Companies Act 1967 in respect of particular business activities.
The exemptions are organised by reference to the Act’s sections and subsections:
- Section 23(1)(a) exemption (current accounts with cheque facilities): Exempt finance companies may open current accounts with facilities for (i) issuance of cheques by business customers, (ii) payment of cheques drawn on the finance company by business customers, and (iii) collection of cheques drawn by business customers.
- Section 23(1)(b) exemption (certain foreign currency hedging and financing): Exemptions cover activities enabling business customers to hedge/cover/change foreign currency liabilities or entitlements (including conversions 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.
- Section 23(1)(f) exemption (unsecured advances/loans/credit facilities): Exemptions apply to unsecured advances, unsecured loans, or unsecured credit facilities granted for purposes relating to the borrower’s business.
- Section 25(2) exemption (corporate purchasing cards and electronic funds transfer services): Exemptions apply to (i) issuing corporate purchasing cards and (ii) providing electronic funds transfer services using interbank GIRO, FAST, or electronic funds transfer at point of sale (EFTPOS) network systems.
3) Conditions attached to the general exemptions (Regulation 3(2)–(4))
The Regulations impose conditions that operate like compliance guardrails. If conditions are not met, the exemption may not apply, exposing the finance company to breach of the underlying statutory restrictions.
(a) Foreign exchange-related exemption conditions (Regulation 3(2))
For the Section 23(1)(b) exemption (Regulation 3(1)(b)), the finance company must satisfy three conditions:
- Foreign currency exposure cap: aggregate foreign currency exposure must not exceed 10% of capital funds.
- No proprietary foreign exchange trading: the finance company must not carry on foreign exchange trading for its own account.
- Unhedged exposure cap: aggregate foreign currency exposure not hedged must not exceed $500,000.
For practitioners, these conditions are often the most operationally significant. They require ongoing measurement of exposure, hedging status, and ensuring the business model does not drift into proprietary trading.
(b) Unsecured lending exemption conditions (Regulation 3(3))
For the Section 23(1)(f) exemption (unsecured advances/loans/credit facilities), Regulation 3(3) imposes concentration limits:
- Overall cap: aggregate and outstanding at any one time must not exceed 15% of capital funds.
- Counterparty cap: for any person or body of persons (incorporated or not), aggregate and outstanding at any one time must not exceed 0.5% of capital funds.
These limits are designed to prevent excessive unsecured credit risk and to avoid over-concentration with a single borrower or related group.
(c) Excluded counterparties for unsecured lending (Regulation 3(4))
Even if the quantitative caps are met, the exemption does not apply to unsecured advances/loans/credit facilities granted to specified persons and entities. The excluded categories include:
- Directors (whether jointly or severally).
- Firms with director interests (where the finance company or its directors are partners, or where a director is a manager/agent).
- Individuals/firms where directors are guarantors.
- Companies with director control or majority ownership (with carve-outs for certain listed public companies and their subsidiaries).
- VCC structures (non-umbrella VCC and umbrella VCC sub-funds) where directors own more than 50% or control the board composition, subject to listing-related exceptions.
- Related corporations deemed related under section 6 of the Companies Act 1967 (excluding banks).
This exclusion regime is a classic conflict-of-interest and related-party risk control. It reduces the chance that the exemption becomes a vehicle for preferential or insufficiently arm’s-length lending.
4) Specific exemptions for Hong Leong Finance Limited (Regulation 4)
Regulation 4(1) provides additional exemptions that apply only to Hong Leong Finance Limited. It exempts the company from:
- 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.
- 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 the issue or sale of shares for VCCs listed (or intending to be listed) on an approved exchange;
- marketing “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 the relevant services and NIUM Pte. Ltd. in connection with those services.
Although the extract is truncated, the structure indicates that Regulation 4 is designed to permit Hong Leong Finance Limited to participate in capital markets and fintech-enabled distribution/payment flows, but only within defined boundaries and in connection with specified counterparties and service types.
How Is This Legislation Structured?
The Regulations are concise and organised into four main parts:
- Regulation 1 (Citation): sets out the short title.
- Regulation 2 (Definitions): defines terms by reference to other statutes and provides operational meanings used in the exemptions.
- Regulation 3 (General exemptions): grants exemptions to the three specified finance companies from selected provisions of the Finance Companies Act 1967, with conditions and exclusions.
- Regulation 4 (Specific exemptions): grants additional exemptions to Hong Leong Finance Limited for particular activities, including corporate advisory, underwriting, and NIUM-related marketing/payment facilitation.
From a drafting perspective, the Regulations rely heavily on cross-references to the Finance Companies Act 1967 and other financial sector statutes, which means practitioners must read them alongside the underlying Act provisions to understand the baseline restrictions being lifted.
Who Does This Legislation Apply To?
The Regulations apply to the finance companies expressly named in Regulation 3(1): Hong Leong Finance Limited, Sing Investments & Finance Limited, and Singapura Finance Ltd. For these entities, the exemptions apply only to the extent the company conducts the specified activities and complies with the conditions and exclusions in Regulations 3(2)–(4).
In addition, Regulation 4 applies specifically to Hong Leong Finance Limited and only for the activities listed in that provision. Other finance companies do not automatically benefit from Regulation 4, even if they conduct similar business; they would need their own exemptions or rely on different regulatory permissions.
Why Is This Legislation Important?
This legislation is important because it clarifies how finance companies can operate within Singapore’s financial regulatory framework. The Finance Companies Act 1967 generally restricts the activities finance companies may conduct. These Regulations provide a controlled pathway for certain activities that are commercially common—such as cheque-enabled current accounts for business customers, foreign currency hedging and related financing, and modern payment rails (GIRO/FAST/EFTPOS)—while still limiting risk exposure.
For legal practitioners, the key value lies in the compliance architecture. The exemptions are conditional and counterparty-specific. A finance company’s internal policies, risk limits, exposure monitoring, and related-party controls must be aligned with the Regulations’ quantitative thresholds (e.g., 10% capital funds foreign currency exposure; $500,000 unhedged exposure; 15%/0.5% unsecured lending caps) and with the categorical exclusions (directors, controlled companies, certain VCC structures, and related corporations).
From an enforcement and advisory standpoint, the Regulations also affect how contracts and product terms are drafted. For example, cheque facilities and hedging-related arrangements should be structured to ensure they are provided to “business customers” as defined, and foreign exchange-related offerings must be designed to avoid “foreign exchange trading for its own account.” Similarly, unsecured credit documentation should include governance and approvals that prevent lending to excluded persons/entities.
Related Legislation
- Finance Companies Act 1967 (sections 23(1) and 25(2), and section 6 for related corporations)
- Banking Act 1970 (definition 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 (definition of “related” corporations under section 6)
- Securities and Futures Act 2001 and other financial sector statutes referenced by definitions
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.