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Singapore’s VCC Framework – What We Know…

by Agnes Chen, Managing Director, Global Financial Markets

A new, flexible corporate structure under which investment funds can be created in Singapore is expected to launch in the next couple of months.

Work on the new Variable Capital Company (VCC) framework, which it’s hoped will further develop the fund management environment already in place in Singapore, has been on-going since March 2017, when the Monetary Authority of Singapore (MAS) first issued its consultation paper on the subject. It’s hoped the framework will provide a flexible corporate structure for investment funds to be domiciled in Singapore, a local domicile for Asia-Pacific based fund managers working alongside their partners in regions like Luxembourg, Ireland, the U.K. and the U.S.

So how will VCC work in practice?

At this stage the finer details on the proposed VCC framework legislation are still to be confirmed. However, it’s expected that the new structures will be incorporated under the VCC Act and administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA). Funds set up under the VCC framework will need to be operated by managers regulated or registered by MAS, with MAS also providing guidance on anti-money laundering and counter terrorism oversight.

As with Luxembourg SICAVs, VCC fund managers will be able to setup individual funds or umbrella structures, under which multiple sub-funds can be created, each tailored to a unique investment objective and, indeed, investor base.

VCC structure

The funds themselves will have a flexible capital structure, meaning shares can be issued and redeemed according to investor activity. The manager also has the option to set up VCCs as both open- or closed-ended funds. Dividend payments will be made out of the fund’s capital, giving managers the flexibility to meet dividend payment obligations.

Under the VCC framework, it’s recommended that a fund’s capital should equal the value of its net assets, providing flexibility in the distribution and reduction of capital. The structure should have at least one member, to align with the minimum number of members required for companies under the Singapore Companies Act.

From a tax perspective, umbrella VCC structures need only file a single Corporate Income Tax (CIT) return, regardless of the number of sub-funds under the umbrella. Tax incentives under sections 13R and 13X of the Income Tax Act will be extended to VCCs when qualifying conditions are fulfilled: this will apply to umbrella structures too. This is, however, to be finalised based on the final details once it’s launched.

Who can set up a VCC fund?

To qualify for a VCC, fund managers will need to be Singapore-based, licensed or regulated in Singapore (unless exempted under Singapore regulations), with a registered office and company secretary based in the country. Singapore-based auditors and administrators will also need to be appointed.

From a governance perspective, non-authorised schemes will need at least one Singapore-based director, while authorised schemes will need three local directors. At least one director of the VCC must be a director of the fund manager, or be a qualified representative. In either scenario, the individual must pass a fit and proper persons test. Certain foreign fund structures could be re-domiciled as VCCs, although this would need to be done in line with MAS’ proposed assessment requirements. Again, how this works in practice will be solidified once the legislation is passed.

Should you consider VCC?

By introducing the VCC framework, Singapore hopes to position itself as one of the leading asset management centres in the world. The flexibilities around structure and governance of the VCCs, as well as the tax benefits associated at both fund and umbrella level, will – it’s hoped – prompt asset managers, and asset owners from across the fund management industry, to consider launching or even relocating their fund ranges to the region.

To learn more about setting up fund and investment structures in Singapore, contact our Asia-Pacific Managing Director, Agnes Chen at or visit our website ( to learn about our fund administrative and SPV services.

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