Variable Capital Companies: Singapore Introduces An Alternative Vehicle For Fund Management.
Legal News & Analysis - Asia Pacific - Singapore - Investment Funds - Regulatory & Compliance
30 January, 2020
The Variable Capital Company Act (“VCC Act”) is an extensive legislation administered by the Accounting and Corporate Regulatory Authority (“ACRA”) and came into operation on 14 January 2020. The VCC Act introduces the Variable Capital Company (“VCC”) as a form of corporate vehicle for collective investment schemes (“CIS”).
The VCC structure is highly versatile and can be implemented for a wide array of uses. It provides fund managers with greater flexibility in share issuance and the payment of dividends. Cost efficiencies may also arise as fund managers are able to incorporate multiple sub-funds into a single VCC entity under the scheme.
Before the VCC Act, offshore investment funds (even if they operate in Singapore) are predominantly incorporated and domiciled in jurisdictions that allows for greater flexibility in capital, shares and taxation, such as the Cayman Islands. Being a product of Singapore’s legislation, the VCC structure allows for these similar benefits of greater flexibility and cost efficiency while also cutting down on the traditional cross border administrative and compliance hurdles that may encumber offshore funds operating in Singapore.