Singapore VCC Structure – What we know one year on

14 January 2021

Now that the VCC has been available for nearly a year in Singapore, what has the funds industry learnt from the VCC’s launch and interest in the structure? ZEDRA’s Kelvin Sng, Head of Fund Services in Singapore, explores the topic.

The Singapore VCC structure launched in January 2020 to encourage foreign funds to re-domicile in Singapore as well as grow interest in incorporating new VCCs in the jurisdiction.

What is a Singapore VCC Structure?

To recap, Variable Capital Companies (VCCs) are corporate entity structures which can hold single or multiple investment schemes. They are aimed at fund managers, presenting them with a structure that provides operational flexibility and tax efficiency.

VCCs form one part of Singapore’s strategy to position the jurisdiction as a leading Asian hub from which wealth managers, investment managers and asset owners (corporate or private) can pool their investments. From a base in Singapore, managers can invest across the Asia Pacific region, or into the Middle East, Africa, Europe and the Americas. It also offers an alternative to recent tighter regulations in jurisdictions such as Cayman Islands and British Virgin Islands which were typically favoured as fund investment hubs.

Catering for the Needs of Fund Managers

Kelvin Sng, Head of Fund Services in Singapore, says he has seen an increase in take up of VCCs, with many wealth and investment managers interested in exploring the structure for their funds. 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 help fund managers by providing them with a structure that offers both tax and operational efficiency than has been available to them in the past. Flexibility in the issuance and redemption of shares and also on meeting dividend payment obligations are key elements.

Variable Capital Companies Grant Scheme

It is worth adding, that Singapore’s Financial Sector Development Fund simultaneously launched the ‘Variable Capital Companies Grant Scheme’ to encourage incorporation of new VCCs and re-domiciliation of foreign funds. The scheme, which will run for another two 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.

Kelvin adds, ‘Although fund managers might be apprehensive about using a relatively new structure at a time when many investors seek certainty, and prefer the familiarity of tried-and-tested fund structures, we can help highlight the benefits. It’s important for managers to find ways to bring peace of mind to their investors. I expect that fund administrators like us will increasingly be part of the conversation to help wealth and investment managers cement Singapore and the VCC as natural go-to choices for funds in Asia’.

There are numerous ways in which Singapore’s VCC structures can be used in conjunction with existing Singaporean incentive, immigration and business initiatives such as the Global Investor Program.

How ZEDRA can help?

Our team can help you with anything related to the Singapore VCC structure including the incorporation of the structure, serve as your registered agent and company secretary or assist with compliance and tax matters. You can find out more about the competitive benefits of VCCs or contact Kelvin Sng directly.

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