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Singapore Unveils New Variable Capital Companies Regime

Tom Burroughes Group Editor 16 January 2020

Singapore Unveils New Variable Capital Companies Regime

Under the structure, fund managers can constitute investment funds as VCCs across traditional and alternative strategies, and as open-ended or closed-end funds. The move is also a way for Singapore to compete against rival financial hubs, such as Hong Kong.

A raft of wealth and asset managers have taken part in a pilot programme to test out a new Singapore-based “variable capital companies” regime, launched yesterday in the Asian city-state.

The VCC is being created by the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority. The new corporate structure can be used for a wide range of investment funds and allows fund managers greater operational flexibility and cost savings, MAS and ACRA said in a statement. 

“It [the structure] will encourage more funds to be domiciled in Singapore and enhance our value as an international fund management centre,” they said. 

The move coincides with Singapore competing with other financial centres, such as Hong Kong, for a share of such business. Already, 18 organisations have piloted the scheme to test it out:  
Aggregate Asset Management; Arborvitae Capital; Assetfort Capital; Chartered Asset Management; CSOP Asset Management; DCG Capital; Gordian Capital Singapore; Heliconia Capital Management; Kamet Capital Partners; Meilun Asset Management; Mindful Wealth; Noviscient; Raffles Family Office; SOFOS Capital Management; Tembusu Partners; Ternary Fund Management;  UTI International (Singapore), and Yozma Singapore. 

Yesterday, all these fund managers incorporated or re-domiciled a total of 20 investment funds as VCCs.  

Under the structure, fund managers can constitute investment funds as VCCs across traditional and alternative strategies, and as open-ended or closed-end funds. Fund managers may also incorporate new VCCs or re-domicile their existing investment funds with comparable structures by transferring their registration to Singapore as VCCs, MAS and ACRA said.

MAS said it has also launched a Variable Capital Companies Grant Scheme. The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70 per cent of eligible expenses paid to Singapore-based service providers. The grant is capped at S$150,000 for each application, with a maximum of three VCCs per fund manager.

“The VCC marks a significant chapter in the development of Singapore as a full-service international fund management and domiciliation hub. The VCC framework provides fund managers with a greater choice of investment fund vehicles in Singapore that caters to the needs of global investment funds and investors,” Benny Chey, assistant managing director (Development and International), MAS, said. “Fund managers will also be able to extract cost savings from centralising their fund management and domiciliation activities in Singapore and structuring their funds more efficiently. The VCC framework also creates new opportunities for Singapore-based fund service providers such as legal and tax advisors, accountants, fund administrators and fund custodians, as we expect more fund managers to use the VCC to structure their investment funds.”

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