Variable Capital Company (“VCC”) is a new corporate structure for investment funds constituted under the Variable Capital Companies Act enacted on 14 January 2020.
VARIABLE CAPITAL COMPANY (“VCC”)
Variable Capital Company is a new corporate structure for investment funds constituted under the Variable Capital Companies Act enacted on 14 January 2020. VCC can be formed as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding different assets. The VCC will complement the existing suite of investment fund structures available in Singapore.
The new VCC regime is on par with corporate form funds found in established global fund centres, including Luxembourg, Ireland and Mauritius, and allows for investment funds to issue shares and debt instruments. Having its own legal framework enables VCC to be used as
an alternative or traditional investment fund and also allows for both closed and open-ended strategies.
VCC has a variable capital structure which provides flexibility in the issuance and redemption of shares. It allows of dividends pay-out of capital, which allows fund managers flexibility to meet dividend payment obligations.
VCC can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities, thereby
allowing for cost efficiencies from using common service providers across the umbrella and its sub-funds.
VCC can be used for both open and close-ended fund strategies.
Fund managers may incorporate new VCCs or re-domicile existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.
VCC must maintain a register of shareholders, which need not be made public. However, this register must be
disclosed to public authorities upon request for regulatory, supervisory and law enforcement purposes.
The governance framework of Singapore VCC is on par with other fund centres. VCC only requires one local resident director. In addition, it does not mandate the need for the appointment of “independent” directors for
alternative funds marketed to non-retail investors.
However, the VCC legislation does require representation of at least one director or a qualified representative of the fund management company on the board of the VCC whereby the regulators encourage the “promoter” of the fund to have representation on the board of the fund.
VCCs are allowed to be constituted as umbrella funds with several sub-funds having different investment objectives, investors, and asset classes. Furthermore, the sub-funds may share the same board of directors and have the same fund manager, custodian, auditor and administrative agent onboard allowing for greater economies of scale and cost advantage.
- An umbrella fund consists of multiple sub-funds.
- All sub-funds can share the same directors and service providers.
- Each sub-fund acts as a separate legal entity.
- Each sub-fund should be wounded up separately to ensure ring-fencing of each fund’s assets and liabilities.
Our dedicated team brings together experienced subject matter experts and trusted specialists who can support you at every step of the way to achieve a successful outcome with the VCC launch. Our services rendered are as follows:
- Incorporation of VCC;
- Licence application;
- Advice of tax structure;
- Review of VCC documentation;
- Regulatory and compliance services;
- Advice on FATCA compliance; and
- Corporate secretarial services.
Chay Yiowmin PBM
Singapore (65) 9862 5292
China (86) 1888 884 2602