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Singapore Variable Capital Company VCC: New Features & Benefits

November 5, 2018

The introduction of the VCC is a significant positive for the Singapore funds industry. Its aim is to retain Singapore as an attractive business destination and to keep investors wishing to domicile locally.

It is also an important update given the new Hong Kong Open-Ended Fund Company regulation.

Last year, MAS (the Monetary Authority of Singapore) drafted a consultation paper on the proposed framework for Singapore Variable Capital Company (referred to as VCC throughout the rest of the article) and following parliamentary approval, has finalised the features of the new corporate structure for investment funds that will hopefully be fully operational from quarter one in 2019.

VCCs can be used by both open-ended and closed-end investment funds, and for both traditional and alternative strategies e.g. hedge funds, private equity and venture capital funds.

Limitations to the Current Singapore Funding Structure

A VCC is a new corporate structure, originally proposed for investment funds as a result of the practical limitations posed to structures such as:

  • Singapore-based Unit Trusts.*
  • Singapore Companies.
  • Singapore Limited Partnerships.

As so many structures are being negatively affected; this is encouraging a stream of loss to the city-state as fund managers are relocating their Singapore-based fund structures externally in overseas jurisdictions such as BVI and the Cayman Islands.

*Unit trusts are characteristically only utilised for mutual funds aimed at investors in the retail industry. Limited partnership structures for this purpose have not really gained momentum; and funds constituted as companies are often costly and require time to manage and operate them.

VCC Benefits at a Glance

The VCC regime is intended to be an operationally efficient structure which aims to attract more funds to be set-up in Singapore. Attractive features of a Variable Capital Company include:

  • They allow the ability to redeem shares at a given fund’s Net Asset value.
  • They allow the payment of dividends from capital. See more under Variable Capital Structure.
  • They can be cost effective by setting-up an umbrella structure with a number of sub-funds. See more under Tax Treatment.
  • They allow a level of privacy due to the non-public Shareholder register. See more under Non-public Disclosure of Shareholder Register.
  • Unlike a fund constituted as a standard Singapore company, VCC shares can be charged and redeemed at their Net Asset Value. VCCs can issue and transfer shares without prior shareholders’ approval and can pay dividends using its share capital.
  • Assets and liabilities of each sub-fund must be clearly separated and defined.
  • The sub-funds can share a Board of Directors and have mutual service providers which can allow the company to make substantial operational efficiencies; thereby saving on costs.

Key characteristics of a VCC


The IRAS treats Singapore VCCs as a company and single entity for tax purposes; removing the requirement to file more than one tax returns for sub-funds.

The following tax exemptions are permitted to VCCs in Singapore:

  • S13R
  • S13X

Unlike normal Singapore companies, the Shareholder Registers in VCCs are not required to be made public; therefore offering an increased level of privacy to investors.


The current requirements for SMEs based in Singapore that apply under the Singapore Companies Act will not apply to VCCs, allowing more offshore funds the opportunity of relocation.

This means that all overseas corporate fund structures can re-domicile as VCCs in Singapore.

Singapore fund managers with offshore fund residences will now have the choice to control fund domiciliation and management activities in Singapore together in one place.


VCCs can choose to prepare financial statements using any of the following standards:

  • US GAAP.
  • IFRS.
  • ASC Standards.

VCCs under schemes for Retail investors, Authorised Schemes, must follow the Reporting Framework for Unit Trusts under “RAP 7”.

All sub-funds in a VCC are required to adopt the same accounting standards.

VCC Requirements

  • All VCCs are to be subject to audit by a Singapore-licensed auditor each fiscal year.
  • The VCCs audited financial statements must be made available to all shareholders custodians. (Authorised Schemes must also appoint an approved custodian).
  • A VCC must appoint a Permissible Fund Manager in order to manage its property.
  • Permissible Fund Managers can include Licensed or Registered Funds.**
  • Management Companies and other certain exempt fund managers under the SFA.

**Please note that single family offices currently exempted from licensing requirements cannot legitimately hold the title of Permissible Fund Manager.

  • At least 1 Director who is also a representative of the VCC’s fund manager for restricted or exempted schemes (such as private placements).
  • At least 3 Directors for a VCC which is an authorised scheme.
  • Corporate Directors are not permitted.

All VCCs must appoint a Singapore resident company secretary and have a registered office address in Singapore.

Eltoma have local specialists in Singapore that would be happy to answer any questions you have on Singapore VCC or other funding vehicles. Contact us for assistance or to set up a consultation.

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