Vollständiges Transkript von Fund Director Masterclass: Fiduciary Duties & Good Governance in 2025 | Ascentium Singapore

But in this case, this is really an exception. 00:05:02.281 --> 00:05:09.480 But having said that, you can expect that MAS will impose tightened scrutinies on the board. 00:05:09.480 --> 00:05:11.959 And this will be a case to start off with. 00:05:12.759 --> 00:05:18.759 To begin with, why does MAS resign all the managers on board? 00:05:18.761 --> 00:05:28.100 Well, in Eagle's case, and especially when it's listed, you would naturally expect policies to already be in place in order to be listed. 00:05:28.100 --> 00:05:38.819 And it appears that the manager on this entity, even as much as they have the policy in place, it does not seem that they have followed through what was included in policy. 00:05:39.620 --> 00:05:41.819 Or at least that's what the papers are saying. 00:05:41.821 --> 00:05:42.420 So. 00:05:42.420 --> 00:05:50.410 So from this perspective, that's the reason that MAS expect the managers to adhere to what they put in the documents. 00:05:51.209 --> 00:05:55.449 And that probably is the reason on why MAS decided to take action. 00:05:56.089 --> 00:06:05.930 So looking back, Yong, what were some of the key warning signs or governance gaps that we need to take note of that allow these failures to go Undetected until it's too late. 00:06:05.930 --> 00:06:27.930 Well, in terms of the policy that was already in place, other than following through the policy regularly, which then is able to allow the, audit committee or the checks and balance to identify gaps that could already start appearing, that will be one of the first signs that the committee or the board should be looking for. 00:06:27.930 --> 00:06:39.689 And that being one of the sign will help to indicate where are, the gaps that needs to be filled up, in order to complete the reporting or adhere to the policy that was put in place. 00:06:40.250 --> 00:06:52.879 So that should be one of the first signs that the company or the board should look into internally to fill up the gaps in order for them to be listed on top of what is in place. 00:06:52.880 --> 00:07:05.199 It is also important to have an, ongoing monitoring process where the boards and the senior management could identify what is needed to be filling up on the gaps. 00:07:06.079 --> 00:07:08.480 That should be one of the early signs that appear. 00:07:09.029 --> 00:07:28.389 So yon, I mean, if you were advising, Reid's board today, which we know you have a lot of experience in this area, what are, the practical steps or oversight mechanism, that you will recommend to help prevent another collapse like Eagle Hospitality Trust? 00:07:28.391 --> 00:07:40.879 I think it is important to set up a separate and independent committee to oversee what has been put in place and also to oversee what are the operational risks that could come with the fund. 00:07:40.880 --> 00:07:54.480 Naturally, to set up a committee that is totally independent, that will come with a cost consideration, and that is one important fundamental consideration when an entity decides to go listed. 00:07:54.480 --> 00:08:05.129 That will be one of the fundamental department that I think a REIT should set up to monitor its board as well as the processes on an ongoing basis. 00:08:05.130 --> 00:08:24.490 Of course, when it is not a listed entity, or that is any entity that collectively collects investment, which we usually term it as a fund, a simple checklist, but with an ongoing monitoring processes on that checklist is advisable to be put in place. 00:08:24.490 --> 00:08:33.340 Naturally, we will not expect an, unlisted entity to have a comprehensive or as comprehensive as a checklist of a listed entity would have. 00:08:33.341 --> 00:08:41.418 But it is the ongoing monitoring that is recommended on the checklist, even though it may be a simplified version of what it is. 00:08:41.419 --> 00:08:46.539 All right, so we move on to the second case, which is Sanwayye. 00:08:46.541 --> 00:08:51.899 So San Ye was a director and fund manager at OneAsia Investment Partners. 00:08:51.900 --> 00:08:57.450 So what happened was he manipulated trades between two funds under his control. 00:08:57.451 --> 00:09:03.929 He sold bonds from one fund to another at low prices, then sold them at higher market rates. 00:09:03.931 --> 00:09:07.049 So he benefited from causing losses to investors. 00:09:07.051 --> 00:09:18.250 So mas prosecuted the case, securing Singapore's first criminal conviction for fraudulent OTC bond trading, with sun sentenced to six months in jail. 00:09:18.809 --> 00:09:29.580 So this Sun Weiya case demonstrated how self dealing can cause significant harms to the investors and call for regulatory interventions. 00:09:29.581 --> 00:09:38.299 So Yuan, can you share why conflict of interest are regarded as one of the most serious breach of fiduciary duties for fund directors. 00:09:38.301 --> 00:09:47.659 For all directors, the main duty is to discharge their fiduciary duty towards the stakeholder, that is the unitholder in this case. 00:09:48.379 --> 00:09:56.690 So for conflict of interest, it is expected that each director would have to have that declared on set before any major decision is made. 00:09:56.691 --> 00:10:12.610 And coming to what San has done, it has indicated an erosion of objectivity in the actions that he has performed and that will undermine all the trust that the unitholder place on the directors, which all directors are deemed to have. 00:10:12.610 --> 00:10:15.649 So this is a historic conviction. 00:10:15.650 --> 00:10:22.539 What, what message does this send to fund directors and also managers about their personal accountability? 00:10:22.541 --> 00:10:31.979 Well, all directors who act for and on behalf of the entity are indemnified against actual fraud, willful default and gross negligence. 00:10:31.980 --> 00:10:36.220 So in this particular case, San has committed actual fraud. 00:10:36.221 --> 00:10:48.480 He has fraudulently tried to buy law for his first fund

and sell it at a higher price after his second fund acquire it at a profit for personal liability. 00:10:48.480 --> 00:10:54.879 Unless it is an actual fraud, gross negligence and willful default that has been committed. 00:10:54.880 --> 00:11:00.440 Otherwise the directors are generally protected and indemnified against all other acts. 00:11:00.441 --> 00:11:16.649 Well, having said that, as much as that directors are indemnified against most of other acts that are not committed by them, each of the director does carry personal liability to the ex odd for and on behalf of the entity they are acting for. 00:11:16.650 --> 00:11:24.730 So from a governance perspective, what is a best practice to detect and prevent self dealing? 00:11:24.730 --> 00:11:30.730 Especially in the structure where trade and investment decision could be quite complex. 00:11:31.289 --> 00:11:53.450 We always recommend to have an independent party in the board so that the board or that the independent party in the board can counter check on whether if the declaration on the conflict of interest has been made accurately when such checks are performed, it lowers the risk of the person that is trying to benefit at the expense of the unitholder. 00:11:53.451 --> 00:12:04.720 And in Sun's case, it sends a strong message that while the directors are usually indemnified when acting in good faith, but once they cross into actual fraud, they will also lose that protection. 00:12:04.721 --> 00:12:12.960 And it is important to remind that all directors that they carry personal liability for all the acts that they act for and on behalf of that entity. 00:12:12.961 --> 00:12:18.639 Okay, we move on to the third case on the Three Arrows capital case. 00:12:18.640 --> 00:12:31.309 So three Arrows Capital was a Singapore based crypto hedge fund and they grew rapidly before collapsing in 2022, leaving over US$3 billion in unpaid debts. 00:12:31.950 --> 00:12:41.629 MAS later found that the founders misled regulators, exceeded license AUM limits and failed to implement proper risk management. 00:12:42.269 --> 00:12:50.830 The founders received nine year prohibition orders barring them from any future regulated financial activities in Singapore. 00:12:52.029 --> 00:12:58.690 So Three Arrows Capitals was wants a very high profile funds before its collapse. 00:12:59.250 --> 00:13:09.009 So what are the fiduciary lessons can traditional fund directors learn from its failure even though they may not be operating in that space? 00:13:09.010 --> 00:13:23.250 To first answer your question, crypto investment in how we view that is another type of investment which is the same as the traditional ones such as real estate and equities and bonds. 00:13:23.250 --> 00:13:41.250 On the lessons that we can learn from Three Arrows, it appears according to the public record that Three Arrows does have a very comprehensive plan on the types of investment to be made and also the timeline and when will the investment be realized. 00:13:41.250 --> 00:13:50.789 And it does appear that after what Three Arrows has planned in their documents, most of the objective has not been obtained or has not been followed through. 00:13:51.750 --> 00:13:59.350 In other words, Three Arrows has not been transparent to its investors on its plan on the usage of its investment. 00:14:00.070 --> 00:14:21.220 And we can't emphasize enough and advise the directors why it is necessary to follow through what was indicated in the fund documents because it actually guides and it actually tell the investor to how you are going to use the investment and nothing should be deviating from what was already written down in the funds document. 00:14:21.779 --> 00:14:31.539 And we always encouraged all the funds managers to be transparent about what they have provided for in the funds document and follow that through. 00:14:31.541 --> 00:14:35.059 So MAS imposed these severe penalties to the founders. 00:14:35.620 --> 00:14:41.210 How does this highlight the importance of transparency and also the accuracy of reporting? 00:14:41.211 --> 00:14:51.210 I think MAS is coming from the perspective for all entities, especially when they are listed to be transparent in all their communication to their investor. 00:14:51.211 --> 00:15:05.370 That could mean that any changes that has been made to the usage of the investment or the funds that has been collectively collected should always be informing the investor on what would be the use of the funds. 00:15:05.370 --> 00:15:14.019 So being transparent is that we encourage all the entities to update, to inform and update their shareholders regularly. 00:15:14.020 --> 00:15:36.190 And even when there is a small minor change that has been made to the investment objective and that is also important to maintain an open communication with the regulatories and that will help to maintain trust within the regulatory, the stakeholder and the entity, which is a fundamental basis of, for the entity to move on. 00:15:36.191 --> 00:15:58.190 So a responsible and experienced director should always be able to determine what are the relevant Material information to announce and to inform the public the various regulatory and from that we look into each of the director's experience to deal with the different scenarios that can occur within an entity. 00:15:58.191 --> 00:15:59.029 Thanks Yon. 00:15:59.030 --> 00:16:12.019 As fund manager increasingly explore new asset classes like crypto, how should fiduciary oversights and ML practices evolve to manage these emerging risks? 00:16:12.659 --> 00:16:17.220 Well, and with the new asset class such as crypto that are emerging these days. 00:16:17.221 --> 00:16:23.620 So we always encourage the investor to be knowledgeable about the asset class that you are going to invest in. 00:16:24.340 --> 00:16:33.309 We always encourage them to read up and also be aware of the market climate on the type of assets that you are going

to invest in. 00:16:33.311 --> 00:17:03.169 And from a director's perspective, it is important to understand the valuation methodology of that particular asset class And not only applying to crypto, but also to all the other traditional asset class or similarly part of the AML processes for a new asset class like crypto should be delegated to the experienced market providers to determine its value in order to provide an accurate market valuation on the asset that they invest in. 00:17:03.171 --> 00:17:08.210 In a nutshell, it is important to have directors that are familiar with the ecosystem. 00:17:08.211 --> 00:17:31.099 And in the example that you have quoted, which is the crypto asset, and in this space itself, it has already developed an ecosystem to be able to accurately identify device when it comes to the AML Perspective and also the value of each of the types of cryptocurrency that is available right now in the market. 00:17:31.980 --> 00:17:43.740 So that is important to get a relevant and experienced director to be appointed to the crypto board to provide their independence, judgment and view on each of the decision that's made. 00:17:43.740 --> 00:17:44.779 Thanks John. 00:17:44.780 --> 00:17:48.059 So looking across these three cases, right. 00:17:48.060 --> 00:17:54.200 So what are the common patterns of failure when fiduciary duties are breached? 00:17:54.201 --> 00:18:00.680 We see a lot of gaps in the lack of preparation and not being transparent to its investor. 00:18:00.681 --> 00:18:16.519 In all of these three cases, which are the fundamental basis for a director to discharge his duty, we would definitely recommend to have independent directors on board that can quickly close off this gap whenever they notice or they see signs on the red flags. 00:18:16.520 --> 00:18:23.230 At the same time we also see that these three entities, after that they have become established. 00:18:23.230 --> 00:18:27.710 The directors on board seems to be arrogant and complacent. 00:18:28.269 --> 00:18:37.630 One of the ways or, one of the signs that has pointed to that behavior is that they have repeatedly used the same providers over the years. 00:18:37.631 --> 00:18:49.680 It is recommended that you have a regular monitoring on these providers to ensure what they are providing to the entities are informed and also comprehensive. 00:18:49.681 --> 00:18:50.880 Thank you Yong. 00:18:50.881 --> 00:19:01.200 So how can fund directors build a, culture of compliance and integrity within their, organizations beyond simply checking those regulatory boxes? 00:19:02.079 --> 00:19:03.440 Well, you have to build it together. 00:19:03.441 --> 00:19:06.880 You have to have built it together with the directors and the management. 00:19:07.519 --> 00:19:27.059 I mean, other than checking the boxes on the checklist where then the policies and procedures are already in place, you need regular and open communication that checks off this checklist and also at the same time fill up the gaps on what the checklist is unable to cover. 00:19:27.940 --> 00:19:40.269 And we will strongly encourage the board to do a regular check in with the management team on, what is lacking and what can be done to improve and further better the situation. 00:19:40.270 --> 00:19:53.869 And as the director, we always encourage the management team together with the directors, to cultivate a culture where there is an open communication for them to talk about the red flags and what are the operation issues that they should take care of. 00:19:53.871 --> 00:19:58.269 So Yeo, we know you have been doing this for close to a decade. 00:19:58.270 --> 00:20:12.009 And if you were to advise new fund directors who are stepping into their roles today, what is the single most important fiduciary principle they should always, always keep front of mind? 00:20:12.010 --> 00:20:20.569 Well, as part of the fiduciary duty, it is very important for the new directors to be honest and hard working in discharging their duties. 00:20:20.570 --> 00:20:39.140 And when it comes to hard working, we defined it in our scope to review the processes regularly, be it in the form of checklists or be in the form of fund documents, to make sure the actions or the decisions that the entity made is in accordance to what has been written down. 00:20:39.859 --> 00:20:47.140 So we always encourage the new fund directors to take on this very active role rather than just having their name on the board. 00:20:47.141 --> 00:21:00.740 And on top of that, we always encourage the new fund directors to have open communication with the management team to check in regularly on the other providers on what is lacking and what should be improved. 00:21:00.740 --> 00:21:11.440 While we also encourage a, new director to stay vigilant and stay curious and be very objective in the decisions when they are making for and on behalf on the entity. 00:21:11.441 --> 00:21:19.839 That will be the fundamental that we are looking for or we encourage the new directors to have when they are newly appointed to any boards. 00:21:19.840 --> 00:21:20.598 Thank you, Yong. 00:21:20.599 --> 00:21:23.680 So for those watching us live, thank you so much for your questions. 00:21:24.240 --> 00:21:26.160 So we have a few questions that we can get to. 00:21:26.720 --> 00:21:30.000 So the first question is actually from Alan. 00:21:30.000 --> 00:21:30.319 Right. 00:21:30.320 --> 00:21:39.140 So Alan asks, so for the San Maya case, how can we be confident that the board has, strong enough controls to prevent conflicts like this? 00:21:39.859 --> 00:21:45.299 In San's case, the issue was that the declaration of conflict was never disclosed. 00:21:45.300 --> 00:21:59.599 But having said that when you have an independent body in the board, that the independent body or that the independent person, usually a director can look into why that transaction was made in that manner. 00:21:59.601 --> 00:22:09.599 Usually

in all selling and buying of investment, we look into what are the three bids and ask prices on when the transaction is done. 00:22:09.601 --> 00:22:18.079 But in son's case, he being the director, nobody has actually had that oversight to monitor what he was doing. 00:22:18.080 --> 00:22:36.779 In the absence of an independent person and also in this son's case, in the absence of a declaration of conflict, this scope and role can also be delegated to an independent third party who can access whether if the transaction has been made fairly. 00:22:36.780 --> 00:22:44.859 Usually in such cases we see the providers obtaining three bids or ask prices to carry out the transaction. 00:22:45.500 --> 00:22:47.740 That can determine the fairness of this. 00:22:47.740 --> 00:22:48.779 Thank you Yong. 00:22:48.780 --> 00:22:50.779 So we have another audience question. 00:22:50.780 --> 00:22:52.380 This is a question from Jack. 00:22:53.269 --> 00:22:58.630 So he asked, in your opinion, what is the biggest challenge for fund directors? 00:22:58.631 --> 00:23:02.950 Is it governance compliance or emerging risks like crypto? 00:23:02.951 --> 00:23:09.990 I think it's difficult to identify any single element that is the most important in today's climate. 00:23:09.990 --> 00:23:19.589 But if I were to choose, I think compliance is becoming an increasing topic especially for an asset class like crypto. 00:23:20.349 --> 00:23:37.470 Because for crypto investment it has blurred the boundaries between international investment and also the ultimate beneficial owner where it is not as clearly identified as in the traditional asset class that we see. 00:23:37.471 --> 00:23:49.799 As a result, we encourage all directors to pay close attention to the regulatory framework and also ensure that the compliance requirement is, is adhered to in the particular asset class that they invest in. 00:23:50.759 --> 00:23:51.960 Thank you Yong. 00:23:51.961 --> 00:23:54.039 So we talked about the three cases today. 00:23:55.079 --> 00:24:01.960 So if you were fund board, what would be your first step to build investor trust? 00:24:01.961 --> 00:24:05.640 Well I will first do it through various approaches. 00:24:05.641 --> 00:24:20.640 So the first thing I will instill in the culture will be to having open communication between the stakeholder that includes sending emails and notices to all the changes that has been made on behalf of the entity. 00:24:20.641 --> 00:24:36.680 And at the same time I will also engage with the investor to allow Q and a session for them to ask questions or if they need regular updates on the entity or if they have any queries about what is the plan of the entity. 00:24:36.681 --> 00:24:37.359 Moving on. 00:24:37.361 --> 00:24:42.700 I will have these two cultures clearly instilled in the entity when I'm appointed to the fund. 00:24:42.701 --> 00:24:48.779 And I believe that openness forms the foundation for the investors trust in the long run. 00:24:48.780 --> 00:25:04.700 So today we explore why fiduciary duties are at the heart of fund governance and how breaches of these duties can lead to devastating consequences from investor losses to regulatory intervention. 00:25:05.670 --> 00:25:07.430 So these are what I've learned. 00:25:08.630 --> 00:25:19.269 Strong oversight and transparency are non negotiable and conflict of interest, if left unchecked, will erode trust and harm investors. 00:25:20.549 --> 00:25:30.069 Now, new asset classes such as crypto may bring new risk, but the fundamentals remain unchanged. 00:25:30.070 --> 00:25:36.289 And those are integrity, accountability and exercise good judgment. 00:25:36.290 --> 00:25:44.130 And sometimes you need to bring in independent third party such as independent director to help you to make that judgment. 00:25:44.930 --> 00:25:50.369 And last but not least, great directors don't wait for problems to happen. 00:25:51.089 --> 00:26:04.990 They are proactive, they ask tough questions, they spot early warning signs and ensure decisions are always made in the best interest of the fund and its stakeholders. 00:26:06.109 --> 00:26:14.990 So at the end of the day, being a fund director isn't about checking the compliance boxes, but it's about stewardship and trust. 00:26:15.630 --> 00:26:26.039 Because when the directors lead with integrity, it protects the investors and protects Singapore as being the world class financial hub. 00:26:26.040 --> 00:26:28.359 Thank you Ying and thank you for watching. 00:26:28.361 --> 00:26:30.519 Thank you for your questions as well. 00:26:30.520 --> 00:26:36.680 If you have any further questions, please contact Incorp Singapore and I'll see you at the next one.