Insider Secrets About a Variable Capital Company (VCC) in Singapore

A Variable Capital Company VCC is seen as a significant and important step in the development of Singapore as a full service international fund management and Asian financial hub.

The Variable Capital Company VCC is one of the newest corporate structures for investment funds constituted under the Variable Capital Companies Act which was put into effect on 14 January 2020. The main purpose of VCCs is to further consolidate the status of Singapore as an attractive fund management hub by giving fund managers greater flexibility on the domiciliation of an extensive range of investment funds.

This flexibility of both operation and costs will enable Singapore’s fund management industry to climb up even higher. It will also encourage fund managers to use Singapore as a master fund platform because the framework of VCC Singapore provides them with a greater choice of investment fund vehicles.

Some important features of a VCC are,

• A VCC can be set up as a single standalone fund or an umbrella fund with multiple sub funds.
• The variable capital structure of VCC makes redemption and issuance of shares more flexible compared to other corporate structures.
• A VCC can be used for both open ended and closed end funds. Open ended funds usually don’t limit the number of shares which can be offered and are bought or sold on demand. The price per share is based on the value of the fund’s underlying securities. Closed end funds are launched through an initial public offering in order to raise money before they are traded.
• In a VCC structure, prospective foreign funds are able to be redomiciled by transferring the global corporate address to a Singapore address.

Why The VCC Is A Game Changer For Singapore

The Variable Capital Company VCC is considered as Singapore’s most innovative fund vehicle to date and is said to be a global game changer.

Raymond Chan of Piloto Asia says, “The structure of a VCC allows it to be used as an alternative to multiple individual companies and this provides protection from liabilities. It will also provide great flexibility to investment possibilities for fund managers in Singapore and will propel Singapore into the global spotlight.”

The Variable Capital Company VCC structure has multiple advantages,

• The VCC structure will bring attention to Singapore and establish it as a global investment hub.
• There will be greater efficiency in taxation and operations which will bring Singapore up to par with its tax exempt competitors like Dublin and Cayman Islands.
• VCCs don’t have the usual heavy capital requirements which provides a low barrier to entry making it an attractive pitch to investors.
• Because shares can be redeemed and issued without a shareholder’s approval, investors can exit their investments whenever they want.
• VCCs will allow new job and business opportunities both inside and outside of fund management service providers.
• VCCs are considered as a single entity for Singapore’s tax treaty network.

The structure of a VCC is similar to an LLC but there are some differences between them.

• VCCs are not subject to the restrictions under the Companies Act like LLCs. LLCs are only allowed to redeem its shares and distribute dividends from the distributable profits.
• VCCs provide more flexibility in the distribution of capital to its shareholders. Also shareholders are not subject to capital maintenance requirements which are applicable to LLCs.

A Variable Capital Company in Singapore help provide numerous opportunities for hedge funds and asset management firms.

If you are someone who wants to incorporate a VCC in Singapore, we recommend you to reach out to Piloto Asia. Our professionals will guide you through the entire process including the setup, licensing requirements, registration and incorporation. We will also provide you with the best corporate secretarial services, ongoing compliance services and any other additional services you might require.