Variable capital company framework

VCC key features and requirements

Firstly, VCC is incorporated under the VCC Act instead of the Companies Act (CA) though, still administered by the Accounting and Corporate Regulatory Authority (ACRA).

• The VCC can be set up as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding different assets which, creates economics of scales and cost efficiencies. 
• VCCs can be used as vehicles for both open-ended and closed-end funds, and for both traditional and alternative strategies
• VCCs can issue and redeem shares without the need for shareholder approval.
• VCCs can pay dividends out of capital, not only out of profits. 
• The VCC regime allows foreign corporate funds to be re-domiciled to Singapore as VCCs.

Accounting and Audit

There’s flexibility in choice of accounting standards - VCCs can use either Singapore or other recognised international accounting standards i.e. the International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP) for their financial statements.

Tax

Tax treatment which is an important factor in determining the venue for fund domiciliation and management, made legislative changes on Income Tax Act, Goods and Services Tax Act & Stamp Duties Act relating to VCC. 

Grant Scheme

To further encourage industry adoption of the VCC framework in Singapore, Monetary Authority of Singapore (MAS) and ACRA which launched the Variable Capital Companies framework on Jan 15, 2020 has also launched a Variable Capital Companies Grant Scheme. 

The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70% of eligible expenses paid to Singapore-based service providers, capped at S$150,000 for each application, with a maximum of three VCCs per fund manager.

Corporate Secretarial/Legal Highlights

• A VCC must at all times have a manager that complies with the below paragraph, to manage its property or operate the collective investment scheme or schemes that comprises the VCC.
• A VCC must be managed by a fund manager regulated/licensed by the Monetary Authority of Singapore or persons mentioned insection 99(1)(a), (b), (c) or (d) of the Securities and Futures Act.
• A VCC must have VCC as part of and at the end of its name.
• One of the directors of the VCC must be ordinarily resident in Singapore and also be a director or a qualified representative of VCC’s fund manager. Directors of the VCC should be “fit and proper persons”.

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