The Variable Capital Company (“VCC”) framework was officially launched by the Monetary Authority of Singapore (“MAS”) and the Accounting and Corporate Regulatory Authority (“ACRA”) on 15 January 2020.
What is a VCC?
A VCC serves as a corporate structure where multiple collective investment schemes can be consolidated within a single entity while maintaining distinct boundaries from one another. Regulated by the Variable Capital Companies Act 2018 (the “VCC Act”), which took effect on 14 January 2020.
The shareholder register, Constitution, and financial statements of a VCC are not obligated for public scrutiny.
An umbrella VCC and its sub-funds operate as one legal entity. Unlike funds using special-purpose vehicles, the VCC's board of directors, administrative, compliance, and other functions can be centralized at the umbrella level, enabling more significant economies of scale and cost efficiencies.
Within an umbrella VCC, assets belonging to one sub-fund cannot be utilized to settle obligations of another sub-fund. Each sub-fund retains the right to bring legal action or be subject to legal action in its own distinct capacity.
Shareholders of a VCC will only be liable for any unpaid amounts on their held shares, if such amounts exist.
VCCs have the authority to issue and redeem fully-paid shares without requiring approval from shareholders. No solvency assessments are necessary.
Unlike other corporate structures in Singapore that solely distribute dividends from profits, a VCC has the option to pay dividends from its capital.
the financial statements for each sub-fund can be prepared under different accounting frameworks (e.g. International Financial Reporting Standards, Singapore Financial reporting Standards and US Generally Accepted Accounting Principles).
Furthermore, qualifying fund managers who have established a VCC or relocated a foreign corporate entity to Singapore as a VCC may apply for the VCC grant.
The VCC grant provides 70% co-funding for eligible costs, with a cap of S$30,000 per application. These costs cover legal, tax, fund administration, or regulatory compliance services. The grant remains valid until January 15, 2025.
Unlike a company that engages in business activities, a VCC is solely designated for establishing one or multiple collective investment schemes in a corporate form.
A VCC must maintain a registered office presence in Singapore.
A VCC should have at least one director residing in Singapore and at least one additional director (who can be the same individual as the Singapore-residing director) serving as a qualified representative or a director of the VCC’s fund manager.
A VCC needs to appoint a Singaporean company secretary within six months from its incorporation date.
Appointment of an auditor in Singapore must be completed within three months after incorporation.
A VCC is required to appoint a qualified Singaporean fund manager. Failure to have a licensed, registered, or exempted fund manager for more than three months may lead to the VCC being wound up.
These must occur within six months from the financial year-end. The AGM requirement may be waived if written notice is provided to shareholders by the VCC's directors as per the VCC Act. However, shareholders holding at least 10% of the total voting rights in the VCC may demand an AGM by giving notice to the VCC.
VCCs must submit annual returns to ACRA within seven months after the VCC's financial year concludes.
Audited financial statements that fairly represent the financial performance of each financial year are mandatory for a VCC.
VCCs must adhere to MAS requirements regarding Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), and appoint an eligible financial institution regulated by MAS (such as the VCC's fund manager) to conduct necessary investor checks.
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