Why should SFO use VCC?

What is VCC?

A Variable Capital Company (VCC) is a corporate structure in Singapore that is specifically designed for investment funds. It was introduced in January 2020 and is regulated by the Monetary Authority of Singapore (MAS). The VCC structure allows fund managers to set up investment funds as a single entity with multiple sub-funds, each with its own investment objectives, policies, and assets. The VCC also provides greater flexibility in terms of capital management, distributions, and redemptions, as well as offering tax benefits to investors. The VCC structure is designed to attract more fund managers and investors to Singapore and strengthen the country’s position as a hub for fund management in Asia.

Why use VCC as a fund vehicle?

The VCC offers several benefits to fund managers and investors, such as:

1. Flexibility: The VCC structure allows fund managers to set up a single entity with multiple sub-funds, each with its own investment objectives, policies, and assets. This provides greater flexibility in terms of capital management, distributions, and redemptions.
2. Cost-effectiveness: The VCC is a cost-effective solution for fund managers as they can enjoy economies of scale by managing multiple sub-funds under one entity.
3. Tax benefits: The VCC structure offers tax benefits to investors, including exemption from withholding tax on dividends paid by the VCC, and exemption from Singapore’s Goods and Services Tax (GST) on management fees charged by the fund manager.
4. International recognition: The VCC structure is internationally recognized, which makes it easier for fund managers to market their funds to investors worldwide.

The VCC structure provides a flexible and cost-effective way for fund managers to set up and manage investment funds in Singapore while offering tax benefits and international recognition to investors.

Who can set up VCC?

Any individual, company or group of individuals and/or companies can set up a Variable Capital Company (VCC) in Singapore. However, the VCC must have at least one director who is ordinarily resident in Singapore, and must appoint a fund manager who is licensed or registered with the Monetary Authority of Singapore (MAS).

The fund manager appointed by the VCC must be licensed or registered with the Monetary Authority of Singapore (MAS) under the Securities and Futures Act. The type of license required will depend on the specific activities to be carried out by the fund manager, such as portfolio management, dealing in securities, or providing investment advice. The licensing requirements are designed to ensure that fund managers meet certain standards of professional conduct and competence, and comply with regulatory requirements aimed at safeguarding the interests of investors.

The VCC must also have a registered office address in Singapore and comply with other regulatory requirements set out by the MAS. The VCC can be used to set up a wide range of investment funds, including private equity, venture capital, real estate, hedge funds, and mutual funds.

Can SFO setup VCC?

Under the current regulations, a Variable Capital Company (VCC) in Singapore can only engage a registered or licensed fund manager to manage its funds. This means that a single family office, which is typically exempt from licensing as a fund manager, cannot manage the funds of a VCC. However, the Monetary Authority of Singapore (MAS) is reviewing the possibility of allowing single family offices to manage the funds of a VCC in the future. In the meantime, families who wish to use a similar liability segregation or cell company structure can consider using Segregated Portfolio Companies (SPCs) established in other jurisdictions such as the Cayman Islands or the British Virgin Islands.

We can structure and set up VCC for you. Contact us for more information