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Singapore’s unique offering and grants make the global financial centre’s VCCs the ideal vehicle for new investment funds

18 November 2021

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With Asian markets offering huge potential, Singapore’s new Variable Capital Company structure continues to offer flexibility and efficiency as the assets management space reaches record global growth.

Fund managers looking to capitalise on Singapore’s business-friendly environment and make it a base for capturing Asia’s huge growth potential are keen to explore Singapore’s newest fund framework – the Variable Capital Companies (VCCs) scheme

Since the scheme launched in January 2020, some 300 VCCs have been set up and that rapid growth looks set to continue with countries opening up their borders as vaccination rates increase.

VCCs are legal entities designed to be used either as single fund structures or umbrella structures with multiple underlying sub-funds. They offer managers in Asia clear cost efficiencies and flexibility to host various assets and strategies under one roof.

The aim of the VCC framework, established by the Monetary Authority of Singapore, is to position Singapore as a leading fund domiciliation hub in addition to its position as a key financial centre for asset management in Asia. The VCC framework offers managers and investors an alternative to the

traditional fund structure found in the Channel Islands, the British Virgin Islands or the Cayman Islands.

VCCs offer a platform to capitalise on Asia’s huge growth potential

The Asian investment market is predicted to grow by US$6.1trn by 2025, according to the Business Times.

Singapore is now managing SG$3.4trn (US$2.5trn) assets under management (AUM) via managers in the island state. As the investment gateway to Asia, it holds 67% of total AUM invested in the whole Asia-Pacific area and is favoured both by investors looking for a jurisdiction with strong governance and fund managers looking to maximise opportunities in emerging markets.

Singapore is one of the world’s most attractive cities for foreign investment. It offers:

  • A stable political landscape and business-friendly outlook within the region and globally
  • A developed financial hub for asset managers
  • Well-established legal and tax advisory frameworks
  • Double tax treaties with more than 80 countries

How Singapore VCC structure offers flexibility and savings

Previously, investment funds in Singapore were structured either as corporate vehicles (private limited companies) or partnerships (limited partnerships) under its Companies Act. Although both structures are easy to set up, they present long-term inflexibilities or constraints to asset management businesses.

Recognising this, the Monetary Authority of Singapore launched the VCC framework to overcome such challenges for fund managers. Managers can launch sub-funds faster, enabling them to capitalise on new opportunities and growth areas without having to set up new funds.

Government grants support Singapore VCCs

Generous government grants are available for qualifying fund managers who incorporate VCCs or redomicile a foreign corporate entity to Singapore as a VCC. These are worth up to 70% of the legal expenses, tax services and administration and regulatory compliance services involved in the set-up, with conditions applied.

How Intertrust Group can help you set up a Singapore VCC

  • A VCC can only be established and operated by a licensed fund manager. We can offer advice, help you partner with fund managers on the ground and handle all administration to ensure statutory compliance.
  • Fund managers can operate as a registered fund management company (RFMC) or a licensed fund management company (LFMC) with a capital markets services (CMS) licence. Venture capital fund managers can also operate under the venture capital fund manager (VCFM) regime. Intertrust Group can assist, coordinating all set-up requirements with our trusted legal and tax partners.
  • To be considered for a government grant you must be a qualifying fund manager that has incorporated a VCC or successfully redomiciled a foreign corporate entity to Singapore as a VCC and have obtained a notice of incorporation or transfer of registration from Singapore’s Accounting and Corporate Regulatory Authority (ACRA).
  • With the right partner, this can be done within months. Intertrust Group can simplify the process, allowing set-up to be done with ease. Key forms on our website let fund managers see what information is required.