Singapore's Upcoming Game Changer in Fund Management - The Variable Capital Company

By Wong Koon Min, Partner & Head, Technical, Compliance and Financial Services, Moore Stephens LLP, Singapore

On 1 October 2018, the Parliament of Singapore passed into law a new type of corporate structure – the Variable Capital Company (“VCC”) – that will put Singapore in the same league as other global fund hubs like Cayman Islands, Dublin and Luxembourg.

The VCC is a bespoke corporate structure for investment funds in Singapore. It is aimed at attracting more fund managers to base their funds and run their fund management activities in Singapore. 

Key Features of a VCC 


At present, funds can be registered under existing structures available, namely, unit trusts, limited partnerships and investment companies, but these structures with restrictions are less ideal for funds. The new corporate entity structure will give fund managers operational flexibility in Singapore. The salient features of a VCC are as follows. 

  •  A VCC will be governed by the Variable Capital Companies Act (“VCC Act”) and is to be regulated by the Accounting and Corporate Regulatory Authority (for establishment and administrative purposes) and the Monetary Authority of Singapore (“MAS”) (for Anti-Money Laundering/Countering the Financing of Terrorism (“AML/CFT”) purposes).

  • A VCC can be used for both traditional funds or alternative funds and can be used for retail investors or for restricted class investors. It can be formed as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding different assets. The sub-funds can share a single board of directors with the same fund manager, custodian, auditor and administrative agent. Certain administrative functions can also be consolidated. A VCC must appoint a fund management company that is licensed or registered by MAS, or is an exempt financial institution in Singapore.

  • Shares can be issued and redeemed without shareholders’ approval, enabling investors to exit their investments when they wish to. Dividends can also be paid out of capital.

  • A VCC need not hold annual general meetings with its shareholders subject to caveats.

  • A VCC must prepare financial statements. Except for VCCs offered as a Collective Investment Scheme, which must be based on Recommended Accounting Practice 7 Reporting Framework for Unit Trusts, issued by the Institute of Singapore Chartered Accountants, financial statements may be prepared using US Generally Accepted Accounting Principles, International Financial Reporting Standards, or Singapore Financial Reporting Standards. 

  • A VCC will not be required to disclose its register of shareholders to the public, although it may be required to disclose such information to supervisory and enforcement agencies. The financial statements also need not be made public. This will provide shareholders with enhanced privacy and anonymity.

  • A VCC must be able to demonstrate sufficient mandatory substance in Singapore, via a Singapore registered office, a Singapore resident company secretary and auditor, and at least one resident director.

Tax Treatment


The Ministry of Finance has announced in its 2018 Budget Statement the following with respect to the tax treatment of a VCC: 

  •  A VCC will be treated as a company and a single entity for tax purposes. This means that only one set of income tax returns is required to be filed with the Inland Revenue Authority of Singapore.

  • The tax exemptions for the income of a company incorporated and resident in Singapore arising from funds managed by a fund manager in Singapore (section 13R of the Income Tax Act) and for the income arising from funds managed by a fund manager in Singapore (section 13X of the Income Tax Act) will be extended to VCCs.

  • The 10% concessionary tax rate under the Financial Sector Incentive – Fund Management scheme will be extended to approved fund managers managing incentivised VCCs.

  • The existing GST remission for funds will also be extended to incentivised VCCs.


Re-domiciliation of Foreign Funds to VCC


To facilitate fund domiciliation in Singapore, the law will provide a re-domiciliation mechanism for existing overseas investment funds constituted as corporate structures similar to VCCs. In addition, existing funds domiciled in Singapore as companies, limited partnerships or unit trusts can also restructure to take advantage of the VCC structure.



The establishment of the VCC in Singapore will certainly be welcome by the growing fund industry in Singapore. While the features of the VCC are, arguably, not too different from open-ended fund structures in some other jurisdictions, these features coupled with the country’s strong regulatory framework, economic reputation, and taxation infrastructure including its extensive network of double taxation agreements, will, in our view, almost certainly make the VCC an obvious candidate for global funds and family offices who are seeking a structuring venue when it becomes operational at the end of 2019. 

For more enquires, please reach out to your Moore Stephens LLP representative, or contact the author at the email address below.