Statute Details
- Title: Financial Holding Companies (Levy) Regulations 2023
- Act Code: FHCA2013-S576-2023
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Financial Holding Companies Act 2013
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Enacting Formula (power source): Section 59(1) of the Financial Holding Companies Act 2013
- Commencement: 22 August 2023
- Legislation Number: No. S 576
- Key Provisions (from extract): Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Annual levy)
- Related MAS instruments referenced in definitions: MAS Notice 609 (Banking Act 1970); MAS Notice FHC‑N129 and MAS Notice FHC‑N609 (Financial Holding Companies Act 2013)
What Is This Legislation About?
The Financial Holding Companies (Levy) Regulations 2023 (“FHC Levy Regulations”) set out how an annual levy is calculated and applied to “designated financial holding companies” in Singapore. In plain terms, the Regulations translate the policy framework in the Financial Holding Companies Act 2013 (“FHC Act”) into a practical charging mechanism: they define what financial figures are used and how much the levy should be, depending on the size of the relevant financial group.
The levy is payable “for the purposes of section 9(1)” of the FHC Act. Although the FHC Act establishes the concept of a levy and the designation of certain holding companies, the Regulations do the detailed work of (i) defining the “relevant sum” (the asset-based measure used to determine the levy) and (ii) prescribing the levy amounts and pro-rating rules for partial years (for example, where a company is designated part-way through 2023 or another year).
From a practitioner’s perspective, the Regulations are primarily a technical instrument. They matter because the levy amount depends on (a) whether the designated financial holding company has a Singapore bank subsidiary or a Singapore licensed insurer subsidiary, and (b) the audited consolidated financial statements provided to MAS under specific MAS notices. The Regulations therefore create a compliance and documentation pathway: the levy is only as accurate as the underlying reporting and the correct identification of the relevant consolidated asset figure.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and confirms that the Regulations come into operation on 22 August 2023. This commencement date is crucial because the Regulations contain special pro-rating rules for the year 2023 and for the “designation year” (the year in which a company becomes designated).
Section 2 (Definitions) is the heart of the charging mechanism. It defines several terms used in the levy calculation, including “consolidated financial statements”, “consolidated total assets”, and the MAS notices that govern how designated financial holding companies report to MAS. Most importantly, it defines “relevant sum” in relation to a designated financial holding company.
The definition of “relevant sum” is structured by reference to (i) the year for which the levy is payable (2023 versus other years) and (ii) the type of regulated subsidiary held by the designated financial holding company (a Singapore bank incorporated in Singapore, or a licensed insurer incorporated/formed/established in Singapore, or “any other case”).
For annual levy payable for 2023, the relevant sum is the value of consolidated total assets specified in audited consolidated financial statements provided to MAS under the applicable notice/direction. The definition distinguishes:
- Bank subsidiary case: where the designated financial holding company has a subsidiary that is a bank incorporated in Singapore, and the holding company provided audited consolidated financial statements in 2022 in accordance with MAS Notice 609, the relevant sum is the consolidated total assets value specified in those financial statements.
- Licensed insurer subsidiary case: where the holding company has a subsidiary that is a licensed insurer incorporated/formed/established in Singapore, and the holding company provided audited consolidated financial statements in 2022 in accordance with a direction issued under section 28(3) of the Monetary Authority of Singapore Act 1970 (as in force immediately before 30 June 2022), the relevant sum is the consolidated total assets value specified in those financial statements.
- Other cases: where neither of the above applies, the relevant sum is the consolidated total assets value specified in the latest consolidated financial statements provided to MAS under a notice issued under section 3(1) of the FHC Act (excluding MAS Notice FHC‑N609 and MAS Notice FHC‑N129).
For annual levy payable for a year other than 2023, the definition similarly uses consolidated total assets, but now the relevant financial statements are those provided in the year preceding the year for which the levy is payable, and the applicable MAS notices differ:
- Bank subsidiary case: audited consolidated financial statements provided in the preceding year in accordance with MAS Notice FHC‑N609.
- Licensed insurer subsidiary case: audited consolidated financial statements provided in the preceding year in accordance with MAS Notice FHC‑N129.
- Other cases: consolidated total assets from the latest consolidated financial statements provided under a notice under section 3(1) of the FHC Act, excluding MAS Notice FHC‑N609 and MAS Notice FHC‑N129.
Section 3 (Annual levy) sets the actual levy amounts and the pro-rating formulas. The baseline rule is in Section 3(1), which applies “except as provided in paragraphs (2) and (3)”. For the purposes of section 9(1) of the FHC Act, the annual levy payable by a designated financial holding company for a year is:
- $55,000 where the relevant sum is less than $70 billion; and
- $210,000 where the relevant sum is $70 billion or more.
This is a threshold-based levy. The practitioner should note that the threshold is expressed in terms of the consolidated total assets figure as captured in the relevant audited consolidated financial statements. Therefore, the classification of the designated financial holding company’s regulated subsidiary (bank vs licensed insurer vs other) and the correct MAS notice under which the financial statements were provided can materially affect the “relevant sum” and, consequently, which levy band applies.
Section 3(2) (Pro-rating for 2023) addresses the fact that the Regulations commenced on 22 August 2023. If a designated financial holding company was designated as such before 22 August 2023, the annual levy payable for 2023 is pro-rated based on the number of days between 22 August 2023 and 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 this pro-rating paragraph.
Section 3(3) (Pro-rating for the designation year) applies where a designated financial holding company is designated on or after 22 August 2023. It pro-rates the levy for the year in which designation occurs (“designation year”) based on the number of days from the date of designation to 31 December of that year (inclusive). The Regulations account for whether the designation year has 365 days or 366 days, using two alternative formulas accordingly.
In practice, this means that the levy is not necessarily a full-year charge for newly designated companies. The pro-rating mechanism ensures that the levy corresponds to the period during which the company is designated under the FHC framework.
How Is This Legislation Structured?
The FHC Levy Regulations are concise and structured around three operative provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions, including the critical concept of “relevant sum” and the MAS notices that determine which audited consolidated financial statements are relevant.
- Section 3 prescribes the annual levy, including the threshold amounts and pro-rating rules for 2023 and for the designation year.
Although the extract does not show further parts or schedules, the Regulations rely heavily on cross-references to the FHC Act and to MAS notices issued under the Banking Act 1970 and the FHC Act. This means that the practical operation of the levy is partly “outside” the Regulations: it depends on the content of those MAS notices and the reporting process they establish.
Who Does This Legislation Apply To?
The Regulations apply to designated financial holding companies. The designation concept is governed by the Financial Holding Companies Act 2013. In other words, the levy is not imposed on all holding companies automatically; it applies to those that MAS has designated under the FHC Act.
Once a company is designated, the levy calculation depends on the company’s group structure and reporting history. Specifically, the Regulations look at whether the designated financial holding company has a bank subsidiary incorporated in Singapore, a licensed insurer subsidiary, or neither. The “relevant sum” is then derived from audited consolidated financial statements provided to MAS under the relevant MAS notice (MAS Notice 609, MAS Notice FHC‑N129, MAS Notice FHC‑N609, or other notices under section 3(1) of the FHC Act).
Why Is This Legislation Important?
For legal and compliance practitioners, the FHC Levy Regulations are important because they determine a predictable but threshold-based annual cost for designated financial holding companies. The levy amounts ($55,000 versus $210,000) are relatively straightforward, but the asset figure used to select the band is not. It is tied to audited consolidated financial statements and to the correct MAS notice framework.
From an enforcement and governance standpoint, the Regulations effectively require designated financial holding companies to maintain robust reporting processes. If the consolidated total assets figure is misstated, reported under the wrong notice, or based on the wrong audited consolidated financial statements, the levy band could be incorrectly applied. That creates downstream risks: underpayment, overpayment, and potential disputes about the “relevant sum” computation.
Finally, the pro-rating rules in Sections 3(2) and 3(3) are operationally significant for newly designated companies and for the transitional period around the Regulations’ commencement. Practitioners advising on designation timing, corporate restructuring, or changes in regulated subsidiaries should pay close attention to how the “designation year” is defined and how the number of days is calculated.
Related Legislation
- Financial Holding Companies Act 2013
- Banking Act 1970 (referenced for MAS Notice 609)
- Companies Act 1967 (referenced for “consolidated total assets” meaning in Section 209A)
- Monetary Authority of Singapore Act 1970 (referenced for a direction under section 28(3) as in force immediately before 30 June 2022)
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.