Statute Details
- Title: Financial Holding Companies (Levy) Regulations 2023
- Legislation Type: Subsidiary legislation (SL)
- Act Authorising Powers: Financial Holding Companies Act 2013 (section 59(1))
- Singapore Legislation Number: SL 576/2023
- Citation: Financial Holding Companies (Levy) Regulations 2023
- Commencement: 22 August 2023
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions (from extract):
- Section 1: Citation and commencement
- Section 2: Definitions (including “relevant sum” and references to MAS notices)
- Section 3: Annual levy (rates and pro-rating rules)
- Related Legislation (as indicated): Banking Act 1970; Companies Act 1967; Financial Holding Companies Act 2013; Monetary Authority of Singapore Act 1970 (as referenced for insurer reporting direction)
What Is This Legislation About?
The Financial Holding Companies (Levy) Regulations 2023 (“FHC Levy Regulations”) set out how an annual levy is calculated and paid by “designated financial holding companies” in Singapore. In plain terms, the Regulations translate the policy in the Financial Holding Companies Act 2013 (“FHC Act”) into a practical charging mechanism: they define the financial measure used to determine the levy and prescribe the levy amount and timing adjustments.
The levy is intended to support the regulatory framework applicable to financial holding companies. The FHC Act establishes a regime for designating certain holding companies that sit above regulated financial institutions (such as banks and licensed insurers). Once a company is designated, it becomes subject to an annual levy. The FHC Levy Regulations therefore focus on the “how much” and “for which period” questions—rather than on designation criteria or supervisory powers.
Although the Regulations are relatively short, they are operationally important. They specify (i) what “relevant sum” means for different types of group structures, (ii) how to compute the levy based on thresholds of consolidated total assets, and (iii) how to pro-rate the levy for partial years—both for companies already designated when the Regulations commence and for companies designated after commencement.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides that the Regulations are the “Financial Holding Companies (Levy) Regulations 2023” and that they come into operation on 22 August 2023. This date matters because the Regulations include pro-rating rules tied to the period from 22 August 2023 to 31 December 2023, and separate rules for designation occurring on or after 22 August 2023.
Section 2 (Definitions) is the backbone of the charging mechanism. It defines several terms by reference to accounting concepts and MAS notices. The most consequential definition is “relevant sum”, which is used in Section 3 to determine the levy amount. “Relevant sum” is essentially a proxy for the size of the designated financial holding company’s group, measured by consolidated total assets drawn from audited consolidated financial statements.
Section 2 distinguishes the source of the consolidated total assets depending on (a) whether the designated financial holding company has a bank subsidiary incorporated in Singapore, (b) whether it has a licensed insurer subsidiary incorporated, formed or established in Singapore, or (c) other cases. It also distinguishes the relevant reporting period depending on whether the levy year is 2023 or a year other than 2023.
For annual levy payable for 2023, the definition provides three routes:
- Bank subsidiary route: if the designated financial holding company has a Singapore-incorporated bank subsidiary and, in 2022, provided audited consolidated financial statements to MAS in accordance with MAS Notice 609, the “relevant sum” is the consolidated total assets specified in those financial statements.
- Licensed insurer route: if the designated financial holding company has a licensed insurer subsidiary and, in 2022, provided audited consolidated financial statements to MAS in accordance with a direction issued under section 28(3) of the MAS Act 1970 (as in force immediately before 30 June 2022), the “relevant sum” is the consolidated total assets specified in those financial statements.
- Other route: otherwise, the “relevant sum” is the consolidated total assets specified in the latest consolidated financial statements provided to MAS under a notice issued under section 3(1) of the FHC Act (excluding the specific notices MAS Notice FHC-N609 and MAS Notice FHC-N129 for the relevant categories).
For annual levy payable for a year other than 2023, the definition similarly uses consolidated total assets, but the timing shifts to the year preceding the levy year and the relevant MAS notice changes:
- Bank subsidiary route: audited consolidated financial statements provided in the preceding year in accordance with MAS Notice FHC-N609.
- Licensed insurer route: audited consolidated financial statements provided in the preceding year in accordance with MAS Notice FHC-N129.
- Other route: consolidated total assets from the latest consolidated financial statements provided under section 3(1) notices, other than MAS Notice FHC-N609 and MAS Notice FHC-N129.
Section 3 (Annual levy) sets the actual levy rates and the pro-rating mechanics. Section 3(1) provides a two-tier schedule based on the “relevant sum” (i.e., consolidated total assets):
- If the relevant sum is less than $70 billion, the annual levy payable is $55,000.
- If the relevant sum is $70 billion or more, the annual levy payable is $210,000.
Section 3(2) and Section 3(3) then address partial-year charging—a common issue when regulations commence mid-year or when designation occurs mid-year.
Section 3(2) (Designation before 22 August 2023) applies where a designated financial holding company is designated as such before 22 August 2023. For the levy payable for 2023, the amount is derived from a formula that pro-rates the annual levy based on the number of days from 22 August 2023 to 31 December 2023 (inclusive). The formula uses:
- A: number of days between 22 August 2023 and 31 December 2023 (inclusive); and
- B: the annual levy that would be payable for 2023 under Section 3(1), but for the pro-rating paragraph.
Section 3(3) (Designation on or after 22 August 2023) applies where a designated financial holding company is designated on or after 22 August 2023. It introduces a pro-rating rule for the designation year (the year in which designation occurs), again based on the number of days from the date of designation to 31 December of that year (inclusive). The formula differs depending on whether the designation year has 365 days or 366 days, reflecting leap year treatment.
Practically, these pro-rating rules ensure that the levy reflects the period during which the company is subject to the designated financial holding company status under the FHC Act and the Regulations.
How Is This Legislation Structured?
The Regulations are structured in a conventional format for subsidiary legislation:
- Section 1 contains the short title and commencement date.
- Section 2 provides definitions, with particular emphasis on the computation inputs for the levy (notably “relevant sum”) and references to MAS notices that govern the submission of audited consolidated financial statements.
- Section 3 contains the substantive charging provisions: the levy rates, and the pro-rating formulas for (i) companies designated before commencement and (ii) companies designated on or after commencement.
Notably, the extract indicates that the Regulations are concise and do not include additional administrative provisions (such as payment dates, enforcement mechanisms, or dispute processes). Those matters are typically handled in the authorising Act (the FHC Act) or in MAS’s operational notices and processes.
Who Does This Legislation Apply To?
The Regulations apply to designated financial holding companies—a status conferred under the Financial Holding Companies Act 2013. In other words, the levy is not imposed on all holding companies automatically; it is imposed on those that MAS has designated as falling within the FHC regime.
Within the designated population, the Regulations apply uniformly in terms of the levy framework, but the calculation inputs (the “relevant sum”) vary depending on the group’s regulated subsidiaries—specifically whether the group has a Singapore-incorporated bank subsidiary or a licensed insurer subsidiary, and which MAS notice governs the audited consolidated financial statements for the relevant period.
Why Is This Legislation Important?
For practitioners, the FHC Levy Regulations are important because they determine the quantum of an annual regulatory levy and the method for calculating it. The two-tier levy schedule ($55,000 vs $210,000) is straightforward, but the “relevant sum” definition is detailed and can materially affect which threshold applies.
In practice, the most common legal and compliance issues will likely arise in three areas:
- Correct identification of the relevant consolidated financial statements: the Regulations require using audited consolidated financial statements provided under specified MAS notices (MAS Notice 609, MAS Notice FHC-N609, MAS Notice FHC-N129) or other section 3(1) notices, depending on the group composition and the levy year.
- Threshold determination: whether consolidated total assets are below or at/above $70 billion will determine the levy amount. This can be sensitive to accounting consolidation and asset measurement in the audited statements.
- Pro-rating for partial periods: designation timing relative to 22 August 2023 affects the levy for 2023 and for the designation year. Errors in day counts or in applying the correct formula for 365 vs 366 days could lead to underpayment or overpayment.
From an enforcement perspective, the Regulations operate “for the purposes of section 9(1) of the Act,” meaning they are the statutory instrument that MAS relies on to compute the levy payable. Accordingly, legal counsel advising designated financial holding companies should treat the Regulations as a binding calculation rule, not merely guidance.
Related Legislation
- Financial Holding Companies Act 2013 (including section 59(1) authorising these Regulations and section 9(1) referenced for levy computation)
- Banking Act 1970 (MAS Notice 609 issued under sections 26 and 58, as referenced)
- Companies Act 1967 (definition of “consolidated total assets” referenced via section 209A)
- Monetary Authority of Singapore Act 1970 (direction under section 28(3) referenced for insurer-related reporting for the 2022 period)
Source Documents
This article provides an overview of the Financial Holding Companies (Levy) Regulations 2023 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.