Variable Capital Company (VCC)

Local Entrepreneurs

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In January 2020, Singapore passed the Variable Capital Companies Act, which is meant to complement the existing suite of investment fund structures available here. The new structure allows investment funds the flexibility of distributions and returns on investments.

A Variable Capital Company can either be a stand-alone for a single fund or an umbrella with multiple sub-funds. However, it is still treated as a single Singapore company.

All Variable Capital Companies must be managed by a Permissible Fund Manager that is overseen by Accounting and Corporate Reulatory Authority (ACRA). The anti-money laundering and countering the financing of terrorism obligations of Variable Capital Companies will come under the purview of the Monetary Authority of Singapore (MAS).

Features of Variable Capital Companies (VCC)

Variable Capital Companies have a variable capital structure that provides flexibility in the issuance and redemption of its shares. It can also pay dividends out of capital, which gives fund managers flexibility to meet dividend payment obligations.
Variable Capital Companies 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. For fund managers that structure their funds as umbrella Variable Capital Companies, there may be cost efficiencies from using common service providers across the umbrella and its sub-funds.
Variable Capital Companies can be used for both open-ended and closed-end fund strategies. An open-ended fund allows investors to redeem their investments at their discretion, while a closed-end fund does not permit investors to do so. Closed-end funds also have a fixed number of shares and do not allow new subscriptions after the offering period is over, while open-ended funds are open to new subscriptions by new investors at any time.
Fund managers may incorporate new Variable Capital Companies or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as Variable Capital Companies.
Variable Capital Companies 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.

Benefits of Variable Capital Companies (VCC)

Due to its flexibility, Fund Managers can have more efficient taxation and operations. This has implications for competitiveness of Variable Capital Companies domiciled in Singapore vis-à-vis similar companies based overseas.
It saves time and cost as each sub-fund can share a Board of Directors and use the same service providers.
Any due diligence research already done by Variable Capital Companies that has been acquired by another Variable Capital Company can be used by the acquiring Variable Capital Company, thus making it more cost-efficient.
Sub-funds are treated separately so as not to affect each other or the parent fund.
The register of shareholders of a Variable Capital Company is not required to be public so that they can retain anonymity.
The financial statements/annual returns would not be made available to public.

Fund Administrator Singapore

To assist funds that are considering setting a Variable Capital Company, MetroCorp provides a whole suite of Fund Adminstration services that cater to various needs. We can provide advice and contacts with regard to accessing various grant schemes available to Variable Capital Companies.

Contact us today to find out how we can help you get started with your Variable Capital Company incorporation or our Fund Administration services.

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