The Variable Capital Company (VCC) is a new corporate form for investment funds established by the Variable Capital Companies Act, which went into force on January 14, 2020. The VCC will be a great addition to Singapore's existing investment fund arrangements.
With the Variable Capital Company (VCC), several collective investment schemes (whether open-end or closed-end) can be collected under a single corporate entity while being ring-fenced from one another. Unit trusts, limited partnerships, limited liability partnerships, and corporations are all alternatives to the new corporate entity form. The VCC’s umbrella structure allows sub-funds to share a board of directors and customary service providers, like the same fund manager, custodian, auditor, and administrative agent.
Certain administrative responsibilities, such as general meeting holding and prospectus preparation, can also be merged. Members may hold shares that are referred to a specific sub-fund held by the VCC if the VCC is set up as an umbrella fund with numerous sub-funds.
Advantages of a Variable Capital Company
- A VCC has a variable capital structure that allows for the issuing and redemption of its shares to be done in a variety of ways. Fund managers have more freedom to satisfy dividend payment requirements because it’s possible to pay dividends out of capital as well.
- A VCC is set either as one independent fund or as an umbrella fund with two or more sub-funds, each having its own portfolio of segregated assets and liabilities. There may be cost savings for fund managers that organise their funds as umbrella VCCs by employing common service providers across the umbrella and its sub-funds.
- Both open-ended and closed-end fund strategies can benefit from a VCC.
- By moving their registration to Singapore as VCCs, fund managers can create new VCCs or re-domicile their existing foreign investment funds with similar structures.
- VCCs are required to keep a shareholder registry, which does not have to be made public. This record, however, must be made available to public authorities upon request for regulatory, supervisory, and law enforcement reasons.
The purpose of VCC
- For both standard and non-traditional fund strategies (both open-ended and close-ended)
- To list funds for the purpose of information listing and trading
- As a mechanism for pooling and investing, it eliminates the need for multi-tiered fund structures.
- Help incorporate you VCC
- Putting together your legal paperwork
- Assist with compliance from the start.
- Assist as the Secretary of the Company
- Assist you as a Registered Filing Agent.
- Become your registered office.