Chit Funds Act 1971

“agreement” means the document which contains the terms and conditions agreed to and adopted by the subscribers and the chit fund company;

“Authority” means the Monetary Authority of Singapore established under section 3 of the Monetary Authority of Singapore Act 1970;

“chit fund” means a scheme or an arrangement based wholly on the terms and conditions set out in section 24 or the regulations made under this Act or any scheme or arrangement that is deemed to be a chit fund under section 19 but does not include any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of section 20;

“chit fund amount” means the pool or the aggregate of the contributions payable on any specified day or in respect of any specified interval;

“chit fund business” means the business of carrying on chit funds;

“chit fund company” means a company which carries on chit fund business and holds a valid licence granted under section 7. All branches and offices in Singapore of the company are deemed to be one chit fund company for the purposes of this Act;

“contribution” means the sum of money payable periodically by each subscriber under the agreement;

“essential terms and conditions” means the terms and conditions specified in section 24;

“interest” means that amount of money which the subscriber agrees to forego in order to purchase the chit fund amount;

“prize” or “prize amount” means the difference between the chit fund amount and the interest;

“public company” means a company limited by shares incorporated in Singapore other than a private company;

“rebate” means the share of the interest payable to each subscriber;

“subscriber” includes any person who has agreed to participate in a chit fund or has signed the agreement in token thereof.

The Monetary Authority of Singapore is charged with the general administration of this Act and the exercise of the functions imposed upon it by this Act.

The Authority may authorise or appoint any person to assist the Authority in the exercise of its functions and duties under this Act, either generally or in any particular way.

Any person authorised or appointed by the Authority pursuant to subsection (2) is deemed to be a public servant within the meaning of the Penal Code 1871.

No chit fund business may be transacted in Singapore except by a public company which is in possession of a valid licence granted under this Act by the Authority with the approval of the Minister authorising it to conduct chit fund business in accordance with the provisions of this Act.

Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine of $1,000 for every day during which the offence continues after conviction.

No person or body of persons, whether incorporated or not, other than a chit fund company licensed under this Act may, without the Authority’s written consent —

For the purposes of subsection (1), the words “HWEI”, “KUTU” and “TONTINE” or any other word in any other language having the same meaning or being to the like intent are deemed to be derivatives of the word “chit”.

Nothing in this section prohibits an association of chit fund companies formed for the protection of common interests from using the word “chit” or the words “chit fund” or any of its or their derivatives in any language as a part of its name or description of its activities.

Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000 or to imprisonment for a term not exceeding one year or to both and, in the case of a continuing offence, to a further fine not exceeding $100 for every day during which the offence continues after conviction.

A public company which desires authority to carry on chit fund business in Singapore must apply in writing to the Authority for a licence under this section and must supply —

In considering any application by a public company for a licence, the Authority may require to be satisfied as to —

The Authority may, with the approval of the Minister, grant a licence, with or without conditions, or refuse to grant a licence.

The Authority may at any time vary or revoke any existing conditions of a licence or impose conditions or additional conditions thereto.

Where a licence is subject to conditions, the chit fund company must comply with those conditions.

Any chit fund company which fails to comply with any of the conditions of its licence shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and, in the case of a continuing offence, to a further fine of $1,000 for every day during which the offence continues after conviction.

Every chit fund company in Singapore must pay the annual licence fee that the Authority may by notification in the Gazette prescribe.

The Authority may prescribe different licence fees in respect of different classes or categories of chit fund companies and those fees apply uniformly to those classes or categories.

The manner of payment of the licence fee is as specified by the Authority.

Subject to the provisions of this Act, no chit fund company may be granted or may hold a licence unless its capital, issued and paid up in cash, and unimpaired by losses or otherwise, is not less than $200,000.

The Authority may require such percentage of the issued and paid‑up capital as may be prescribed in regulations made under this Act to be deposited in such manner as may be prescribed.

A chit fund company incorporated in Singapore must not reduce its paid‑up capital during the currency of its licence without the Authority’s approval.

A chit fund company must not open a new place of business or change the location of an existing place of business in Singapore without submitting a written application in respect thereof to the Authority.

Upon receipt of an application under subsection (1), the Authority may —

A chit fund company incorporated in Singapore must not open a new branch, agency or office in any place outside Singapore.

Any chit fund company which contravenes subsection (1) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $500 and, in the case of a continuing offence, to a further fine of $100 for every day during which the offence continues after conviction.

The Authority may by notification in the Gazette specify the annual licence fees that chit fund companies in Singapore must pay for each of their branches.

The manner of payment must be as specified by the Authority.

No chit fund company incorporated in Singapore may be merged or consolidated with or be taken over by another company or companies or their subsidiaries or related companies as described in section 6 of the Companies Act 1967 (whether that company is or those companies are incorporated in Singapore or outside Singapore) nor may any such company or companies acquire an interest exceeding 20% of the voting share capital of a chit fund company without application to, and approval by, the Authority.

In considering the application, the Authority has power to call for any information that it requires.

The Authority may —

Any chit fund company whose application has been refused by the Authority may within one month of being notified of the refusal by the Authority appeal against its refusal to the Minister whose decision is final.

Every chit fund company in Singapore must, prior to the making of any amendment or alteration in its memorandum of association or articles of association, or other instrument under which it is incorporated, furnish to the Authority for its approval particulars in writing (verified by a statutory declaration made by a senior officer of the chit fund company) of the proposed amendment or alteration.

The Authority may thereupon —

If the Authority approves the proposed alteration with modification, the chit fund company must adopt the proposed alteration as so modified or not proceed with the proposed alteration, and if the Authority refuses to approve the proposed alteration, it may request the chit fund company to withdraw the proposed alteration and the chit fund company must comply with the Authority’s request.

Any chit fund company which fails to comply with the requirements of subsection (1) or with any request by the Authority made under subsection (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $300 for every day during which the default continues after conviction.

The Authority may by order revoke a licence issued under this Act —

The Authority must, before revoking any licence under subsection (1), give the chit fund company concerned notice in writing of its intention to do so, specifying a date, not less than 21 days after the date of the notice, upon which the revocation will take effect and calling upon the chit fund company to show cause to the Authority why the licence should not be revoked.

When the Authority has revoked a licence under subsection (1), it must forthwith inform the chit fund company by written notice of the revocation.

The chit fund company may, within 14 days of the receipt of the notice referred to in subsection (3), or an extended period of time that the Minister may allow, appeal in writing against the revocation to the Minister whose decision is final.

Where an order of revocation becomes effective under section 14 —

Subsection (1)(b) does not prejudice the enforcement by any person of any right or claim against the chit fund company or by the chit fund company of any right or claim against any person.

Every scheme or arrangement by whatever name called —

Regulations made under this Act may describe or define what schemes or arrangements are deemed only to partake of the nature of a chit fund for the purposes of this section.

Any person who promotes or conducts, or aids, assists, or takes any part in the promotion or conduct of any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of this Act shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both.

No right or claim under any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of this Act or the regulations made under this Act is, without affecting subsection (1), enforceable by action in any court.

Every agreement made under section 23 must contain all the following terms and conditions with the actual amounts, dates and other particulars necessary in each case:

The agreement mentioned in subsection (1) must also contain —

In respect of every chit fund, the agreement must be signed in original and duplicate by the chit fund company and each intending subscriber, either in person or by a duly authorised agent, and each signature must be attested by a witness present at the time of signing.

Where the provisions of this Act or the regulations made under this Act or the terms and conditions of the agreement require any matter to be decided by a meeting of the subscribers, the chit fund company must convene a meeting for the purpose within 7 days of its becoming aware of the event requiring a meeting and must serve written notice on each of the subscribers not less than 5 days before the date selected by the chit fund company for the meeting.

The notice must state the time, date and place at which the meeting is to be held, and the business to be transacted at the meeting.

The notice may either be served personally on each subscriber or sent to the subscriber by registered or certified post; and any notice sent to a subscriber by registered post is deemed to have been duly served if it was addressed to the registered address of that subscriber or to any other address notified by that subscriber in writing to the chit fund company.

The chit fund company must enter in a book to be kept for that purpose the minutes of the proceedings of every meeting of the subscribers.

The minutes must in every case contain the following particulars:

Every subscriber must receive a receipt issued by or on behalf of the chit fund company for each contribution paid by the subscriber.

Every subscriber must be issued with a passbook into which each payment made by the subscriber must be entered by the chit fund company.

If a subscriber purchasing the chit fund amount fails to produce the guarantors required under section 30 within 2 weeks of the auction, the chit fund company must either —

Where a subscriber is unable to produce the guarantors as required under section 30, the subscriber has the right to a refund of the actual amount of the earlier contributions paid by him or her to the chit fund company, without any deduction whatsoever.

The refund must be paid by the chit fund company within 3 weeks from the date of the auction.

In the event of a refund to a subscriber under subsection (2) by a chit fund company, the chit fund company is entitled to remove the name of that subscriber from the register of subscribers kept under section 37 and to substitute therefor the name of the new subscriber.

Where default in the payment of any contribution is made by any subscriber who has not purchased a chit fund amount, the chit fund company is entitled to remove the name of the defaulting subscriber from the register of subscribers kept under section 37 and to substitute in the register the name of a new subscriber.

The removal of the defaulting subscriber’s name from the register is not to be deemed to prejudice the right of the defaulting subscriber to a refund of the actual amount of any earlier contributions paid by him or her, at such time and with such deductions by way of penalty as may be prescribed by regulations made under this Act.

All the rights and liabilities that would under the agreement have accrued to or been incurred by the defaulting subscriber after the date of the substitution if he or she had not made default, are deemed to be transferred to the new subscriber.

No collateral undertaking, as to mutual rights and obligations entered into by the chit fund company and the new subscriber for the purposes of the substitution of the new subscriber, is deemed to affect in any respect the duties and liabilities of the new subscriber under the terms and conditions of the agreement.

In any case referred to in section 32, the chit fund company may, before substituting a new subscriber in place of the defaulting subscriber whose name is removed from the register under that section, convene a meeting of the remaining subscribers for the purpose of obtaining their consent to a reduction of the number of subscribers and of the chit fund amount by refraining from substituting a new subscriber in place of the defaulting subscriber.

If at the meeting so convened the subscribers by a majority representing not less than two-thirds of the chit fund amount consent to such reduction and to the necessary alteration of the agreement, the chit fund company must record that fact in the minute book kept under section 27.

Upon the recording of the alteration made for the purposes of a voluntary reduction under this section, every subscriber who was the purchaser of a chit fund amount sold at any auction prior to the date of the reduction, is liable to continue the payment of the contributions specified in the agreement until the aggregate amount so contributed by him or her becomes equal to the chit fund amount at the time of the sale at which he or she was declared the purchaser.

Where default in the payment of any contribution is made by a subscriber who has already purchased a chit fund amount, the subscriber and his or her guarantors are liable to make immediate payment to the chit fund company of the aggregate of all the contributions payable by him or her to the end of the chit fund period.

Upon receiving the contributions pursuant to subsection (1), the chit fund company must immediately deposit those contributions in any bank that is approved by the Authority.

Any money received under subsection (1) exceeding the amount required to cover the contribution of the defaulting subscriber must be returned forthwith by the chit fund company to the defaulting subscriber or his or her guarantors, as the case may be.

A chit fund company may charge interest on any money due under subsection (1) at the rate and by the method prescribed in the regulations made under this Act.

Any subscriber who has not purchased a chit fund amount may make over his or her rights in the chit fund by a transfer in writing to any person approved by the chit fund company.

Notice of every transfer made under subsection (1) must be given forthwith to the chit fund company in writing, signed by the transferor and the transferee.

On receipt of the notice of any transfer made under subsection (1), the chit fund company must make the appropriate entries in the register of subscribers kept under section 37.

Where the transfer of the rights of any subscriber under subsection (1) is proved to have been made to any person who was insolvent at the time of the transfer or to have been made with the intention of defeating the provisions of any written law in force in Singapore, the transfer is not to be deemed to operate as a discharge to that subscriber from his or her duties and liabilities under the terms and conditions of the agreement.

Despite anything in any other written law to the contrary, the stamp duty payable on any transfer under this section must be in accordance with the provisions of the Stamp Duties Act 1929.

The chit fund company is liable to each subscriber for any amount due to that subscriber in respect of the chit fund.

The chit fund company is not entitled to withdraw from the management of the chit fund without the written consent of all the subscribers.

Where the chit fund company is in liquidation or is being wound up, whether voluntarily or otherwise, any debt owing by the company to any subscriber under the terms and conditions of the agreement relating to the chit fund is, despite anything in any other written law to the contrary, to be a first charge upon any property acquired or held by it for the purposes of that chit fund, including property held by the Authority as security pursuant to the regulations made under this Act.

No chit fund company licensed under section 7 is entitled to bid or submit a tender or may bid or submit a tender either directly or indirectly at any sale of a chit fund amount held by auction or by tenders in connection with any chit fund formed or conducted by that company.

Any chit fund company licensed under section 7 may, in lieu of substituting a new subscriber in the place of each defaulting subscriber, take up the share of one or more defaulting subscribers, and in every such case the chit fund company is entitled to take, without an auction or other sale and without any interest, the successive chit fund amounts available after the last of the continuing eligible subscribers has purchased his or her prize amount.

A chit fund is deemed to terminate upon the occurrence of any of the following events:

Upon the termination of a chit fund otherwise than by the expiry of the chit fund period as specified in the agreement or by a voluntary reduction of a chit fund under section 33, every subscriber who has not purchased a chit fund amount is entitled —

Where any action is instituted by a subscriber for the enforcement of a claim under subsection (2)(a), the chit fund company may apply for an order of court under subsection (2)(b) in like manner as a subscriber and any sum of money that may be received under such an order by the subscriber instituting the action, is to be set off against the amount claimed in the action.

The sale of the chit fund amounts may, if the terms and conditions of the agreement provided therefor, be effected by way of sealed tenders as an alternative to an auction if, at a duly convened meeting of the subscribers held before the sale of the first chit fund amount, the subscribers by a majority representing three-quarters of the chit fund amount resolve to adopt the method of sealed tenders; and the method adopted for the sale of the first chit fund amount must be followed at each subsequent sale in connection with that chit fund.

However, in every case where the tenders of 2 or more subscribers are of the same value, the chit fund amount must be put up for sale by auction among those subscribers, and the initial bid at every such auction must be the amount set out in the tenders of those subscribers.

The total value of the chit fund to be conducted at any one time by a chit fund company must be as prescribed by regulations made under this Act.

For the purposes of this section, the “total value of the chit fund” means the aggregate of the chit fund amounts that are to be collected and put up for sale during the period of that chit fund.

A chit fund company must not lend to any person other than to a subscriber who has not purchased the chit fund amount.

A chit fund company may lend to a subscriber who has not purchased the chit fund amount but the amount so lent must not exceed 75% of the aggregate contributions already paid by that subscriber or any other percentage that may be specified in regulations made under this Act.

A chit fund company that lends to a subscriber under subsection (2) is not to be deemed to be a moneylender under the Moneylenders Act 2008 and that Act does not accordingly apply to any transaction under this section.

Every chit fund company must maintain a reserve fund.

At the end of each financial year, the net profit of each chit fund company is determined after allowing for taxation, and after making provision for bad or doubtful debts.

Such part of the net profits as is specified in this subsection must be transferred to the reserve fund at the end of each financial year, as follows:

Every chit fund company must furnish to the Authority, at such time and in such manner as the Authority may prescribe, all the information and data that the Authority may reasonably require for the proper discharge of its functions under the provisions of this Act.

Every chit fund company that fails or neglects to furnish any information required by the Authority under subsection (1), and within the time specified by the Authority, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000 for every day during which the default continues after conviction.

The Authority may, from time to time, inspect or cause to be inspected, under conditions of secrecy, the books, accounts and transactions of any chit fund company.

The Minister may at any time direct the Authority to make an investigation, under conditions of secrecy, of the books, accounts and transactions of a chit fund company, if he or she has reason to believe that the chit fund company is carrying on its business in a manner detrimental to the interests of its subscribers and other creditors or has insufficient assets to cover its liabilities to the public, or is contravening the provisions of this Act or the regulations made under this Act.

The Authority may appoint any auditor, other than the auditor appointed by the chit fund company under section 205 of the Companies Act 1967, to exercise the powers of the Authority under subsections (1) and (2).

For the purpose of an inspection or investigation under this section, a chit fund company must give the Authority access to its books, accounts and documents and must give such information and facilities as may be required to conduct the investigation.

However, those books, accounts and documents mentioned in subsection (4) are not to be required to be produced at such times and at such places as would interfere with the proper conduct of the normal daily business of that chit fund company.

If any book, account or document or information is not supplied in accordance with subsection (4), the chit fund company concerned shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2,000 and, in the case of a continuing offence, to a further fine of $250 for every day during which the default continues after conviction.

If the Authority finds upon an inspection under section 49 that the affairs of a chit fund company are being conducted in a manner likely to be detrimental to the interests of the subscribers or prejudicial to the interests of the chit fund company, the Authority may by order require the chit fund company to take such corrective action as the Authority considers to be necessary or require the chit fund company to discontinue such practices or procedures.

No order may be issued under subsection (1) unless the chit fund company has been given a reasonable opportunity to present its views to the Authority.

The Authority may, upon representation being made to it, or on its own motion, modify or cancel any order issued under subsection (1) and, in so modifying or cancelling any order, may impose any conditions it thinks fit.

Without affecting the provisions of the Insolvency, Restructuring and Dissolution Act 2018 —

In the winding up of a chit fund company that has been carrying on chit fund business, every subscriber who has not purchased a chit fund amount is entitled to recover that subscriber’s contribution in the manner set out in section 40(2).

As soon as practicable after the making of an order for the winding up of a chit fund company, the liquidator of the company —

The notice must specify the latest date up to which any security may be redeemed, which date must not be less than 3 months from the date of the notice.

After the latest date for redeeming any security held by the chit fund company specified in the notice, the liquidator may proceed to realise any security held by the chit fund company forthwith, despite any agreement setting out any other period of redemption previously entered into between the chit fund company and the debtor.

Nothing in this Act affects the operation of the Companies Act 1967, and any company that is liable to be incorporated under that Act continues to be so liable as if this Act had not been passed, but in case of conflict between that Act and this Act, the provisions of this Act shall prevail, unless otherwise provided in this Act.

Nothing in this Act, unless it is expressly provided to the contrary, affects the operation of any written law relating to moneylending, finance companies, banking or insurance or the liability of any chit fund company under any such law.

Any person who, being a director, managing director or manager of a chit fund company —

In proceedings against a person under subsection (1), it is a defence to prove that the person had reasonable grounds to believe and did in fact believe that a competent and reliable person was charged with the duty of securing compliance with the provisions of those laws or with the duty of ensuring that those statements were accurate and that that person was in a position to discharge that duty.

A person shall not be sentenced to imprisonment for any offence under subsection (1) unless, in the opinion of the court, the person committed the offence wilfully.

The Authority may, with the approval of the Minister, make all such regulations for, or in respect of, every purpose which it considers necessary for carrying out the provisions of this Act and for the prescribing of any matter which is authorised or required under this Act to be so prescribed.

In particular and without limiting the powers conferred by subsection (1), the Authority may, with the approval of the Minister, by such regulations —

Every chit fund company which contravenes the regulations made pursuant to subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2,000.