Variable Capital Company Singapore is a new corporate structure that was introduced on 14th January 2020. It is a legal entity specifically designed for investment funds and provides an alternative to the traditional investment fund structures such as trusts and limited partnerships. The VCC is regulated by the Monetary Authority of Singapore (MAS) and is an attractive option for investment managers looking to set up a fund in Singapore.
One of the key benefits of the VCC is its flexibility in terms of share capital. Unlike traditional companies, the VCC can issue and redeem shares without the need for shareholder approval. This means that the VCC can easily adjust its share capital in response to changing market conditions or investment strategies. The VCC also offers investors the flexibility to buy and sell their shares without affecting the underlying assets of the fund.
Another key benefit of the VCC is its tax efficiency. VCCs are exempt from Singapore's dividend withholding tax and are also not subject to capital gains tax. This makes the VCC an attractive option for investors who are looking to maximize their returns.
The VCC is also subject to a lighter regulatory regime compared to other investment fund structures. For example, VCCs are not required to have a local custodian or a local fund manager. This makes the VCC an attractive option for investment managers who are looking to set up a fund in Singapore but do not want to incur the additional costs associated with local service providers.
To set up a VCC, investment managers must appoint a fund manager who is licensed or registered with the MAS. The VCC must also appoint a minimum of one director who is resident in Singapore. The VCC must also appoint an auditor who is registered with the Accounting and Corporate Regulatory Authority (ACRA).
The VCC can be structured as an umbrella fund with multiple sub-funds. Each sub-fund can have its own investment strategy and can be targeted at different types of investors. This allows investment managers to cater to a wide range of investor needs.
In terms of compliance, the VCC is subject to the same anti-money laundering and counter-terrorism financing requirements as other financial institutions in Singapore. The VCC is also required to maintain accurate records and to file its financial statements with ACRA.
Overall, the VCC is a flexible and tax-efficient investment fund structure that is well-suited to the needs of investment managers and investors in Singapore. With its lighter regulatory regime, the VCC is an attractive option for investment managers looking to set up a fund in Singapore without incurring significant costs. As such, it is expected that the VCC will play a key role in Singapore's fund management industry in the years to come.
