Benefits of Singapore Variable Capital Companies

04 August 2020

Earlier this year, Singapore launched Variable Capital Companies (‘VCCs’). VCCs can be used to hold single or multiple investment schemes. It is the jurisdiction’s newest corporate entity structure.

Using a VCC, each individual investment scheme can be structured under the overarching umbrella of the VCC. At the same time, the investment schemes remain separated from each other, mitigating risk and allowing for flexibility in choosing different investment strategies. A VCC can also be used as a stand-alone entity.

VCCs will help fund managers by providing them with a structure that offers both tax efficiency and more operational flexibility than has been available to them in the past.

Competitive benefits of VCCs:

  • Provide benefits for fulfilling conditions under fund tax incentive schemes
  • Gain operational efficiency
  • Financial statements do not have to be published
  • Lends itself to several investment strategies
  • VCCs allow for shares to be redeemed and dividends paid using net assets
  • No maximum number of shareholders

‘VCCs offer several tangible benefits for fund managers. Likewise, the introduction of VCCs will place Singapore on the map as a competitive jurisdiction for funds in Asia as an alternative to leading fund jurisdictions in Europe, Cayman and Mauritius.’ says Wendy Sim, Managing Director, ZEDRA Singapore. 

The benefits of the VCC are appealing enough to attract consideration from fund managers on their own, but to encourage incorporation of new VCCs and re-domiciliation of foreign funds, Singapore’s Financial Sector Development Fund also moved to launch the ‘Variable Capital Companies Grant Scheme.’

The scheme, which will run for three years, supports the cost of incorporating or registering a VCC in Singapore. The expenses incurred by fund managers who use Singapore-based service providers to set up or re-domicile a VCC are co-funded up to 70%. A maximum of S$150,000 is co-funded for each VCC application. The grant scheme can be applied to a maximum of three VCCs per fund manager.

‘We believe that Singapore has a future as a top jurisdiction for funds. Since the start of the year, we have seen strong interest in VCCs, which we think reflects the competitiveness and attractiveness of the vehicle compared to other jurisdictions. We expect the interest in VCCs to continue to grow over time, especially during the period in which the fund managers can apply for grants,’ adds Wendy.

For more information, please contact Wendy Sim, Managing Director, ZEDRA Singapore

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