In the last article, we have explored why the Variable Capital Company (“VCC”) is drawing so much attention in Singapore’s fund management industry, and highlighted the various tax planning opportunities that one may explore with this newly introduced corporate structure.
To recap, the VCC is a new innovative corporate structure tailored for investment funds and regulated under a separate legal framework through the Variable Capital Companies Act which took effect on 14 January 2020.
A VCC has been viewed as a corporate structure that offers more operational flexibility and complement the existing investment fund structures currently available in Singapore through unit trusts, limited partnerships, limited liability partnerships and companies.
In this article, we look in detail, some of the prominent features of a VCC from a corporate secretarial perspective, below:
- A VCC can be set up as a stand-alone or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities.
- A VCC must have a fund manager to manage its property or to operate the collective investment scheme(s) that comprise the VCC. A fund manager must be one of the followings:
- A licensed fund management company (i.e. a holder of a capital markets services licence for fund management);
- A registered fund management company; or
- Certain financial institutions exempted from holding a capital markets services licence under the Securities and Futures Act.
- VCCs are required to maintain a register of shareholders, which need not be made public, protecting the privacy of investors. However, this register must be disclosed to public authorities upon request for regulatory, supervisory and law enforcement purposes.
- The anti-money laundering and countering the financing of terrorism obligations of VCCs will continue to come under the purview of the Monetary Authority of Singapore.
- A VCC provides flexibility in the issuance and redemption of its shares. It can also pay dividends directly out of capital, which gives fund managers the flexibility to meet dividend payment obligations.
- The VCC structure can also be used for both open-ended and close-ended 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.
- Foreign investment funds may re-domicile into Singapore. The re-domiciliation process of a VCC is made relatively easy in Singapore. For fund managers, they may incorporate new VCCs or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.
How CCS Can Help You
We have a dedicated team of VCC experts and trusted professionals who can support and help you navigate every step of the way to achieve a successful outcome with your VCC launch as follows:
- Incorporate your VCC
- Serve as your registered office
- Any other related corporate and tax matters
Reach out to our Corporate Secretaries here at CCS for a further discussion.