The recent introduction of the Singapore Variable Capital Company (VCC) structure in January 2020 serves as an alternative to established fund structures such as the Cayman segregated portfolio companies or the BVI protected cell company. The VCC structure allows for several collective investment schemes (both open-end and closed-end funds) to be gathered under an overall umbrella structure while remaining ring-fenced from each other.



Singapore fund managers will be able to constitute investment funds as VCCs across both traditional and alternative strategies, and as open-ended or closed-end funds. Fund managers can either incorporate a new VCC, or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.

A VCC can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities. The assets of a sub-fund cannot therefore be used to discharge the liabilities of the VCC or another sub-fund of the VCC.

Holding multiple funds in a single VCC can improve cost efficiencies as they can share a board of directors, and have similar fund manager, auditor, custodian, and administrative officer across the different sub-funds.

Further, the VCC also provides greater flexibility in respect of the distribution and return of capital. Unlike corporations, the VCC is able to vary its share capital without having to seek shareholders’ approval, and the dividends are payable from its capital without being required to have profits or retained earnings.

Tax and Other Incentives

For income tax purposes, the VCC will be treated as a company and a single entity and will therefore be able to enjoy the same tax benefits as a company incorporated in Singapore. Distributions made by a VCC are exempt from tax in the hands of its shareholders.

As VCCs are to be used as an investment fund, they will be able to avail itself of the following tax incentives:

  • Exemption of income of venture company under section 13H of the Income Tax Act;
  • Exemption of income of company incorporated and resident in Singapore arising from funds managed by fund manager in Singapore under section 13R of the Income Tax Act; and
  • Exemption of income arising from funds managed by fund manager in Singapore under section 13X of the Income Tax Act.

To further encourage industry adoption of the VCC framework in Singapore, MAS has launched a VCC Grant scheme to defray the costs involved in incorporating or registering a VCC by co-funding up to 70% of the 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.



A VCC needs to be managed by a fund manager that is a holder of a Capital Markets Services (CMS) licence for fund management; a Registered Fund Management Company (RFMC); or exempted from holding a CMS licence under the Securities and Futures Act. Note that this excludes fund managers who are exempted under the real estate exemption or self-managed VCCs (e.g. those availing of the related corporation exemptions e.g. family offices).

VCC must also have at least one director who is ordinarily resident in Singapore, and at least one director (who may be the same person as before) who is either a director or a qualified representative of the fund manager of the VCC. All directors of a VCC must comply with the “fit and proper” criteria.

A VCC which is a “restricted scheme” must also appoint a custodian unless it is a closed-ended private-equity or venture capital fund, and participants have been informed of and acknowledged that there is no specified custodian for the scheme.

Corporate Compliance

A VCC is required to have its registered office in Singapore, and to appoint a Singapore-based company secretary. It is also required to maintain a register of members which need not be open for public inspection, similar to that of the constitution and returns of a VCC.

A VCC is also subject to the AML/CFT obligations and must appoint an eligible financial institution to assist with performing customer due diligence obligations. In particular, a VCC must maintain a register of beneficial owners and nominee directors

At Infinity Legal LLC, we can advise and provide guidance to investors who wish to set up a Variable Capital Company in Singapore. Together with our team of trusted specialists and experienced subject matter experts, we can assist investors in the incorporation of their VCC, licensing their fund management company, liaising with the Singapore regulatory authorities in obtaining the necessary approval, and drafting the necessary legal documentation for the launch of the VCC.

© Infinity Legal LLC 2020

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