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Variable Capital Companies


Variable Capital Companies | Bestar
Variable Capital Companies | Bestar

A Variable Capital Company (VCC) is a new corporate structure for investment funds in Singapore. It was introduced in 2018 and came into effect in 2020. The VCC is designed to be a flexible and efficient structure for investment funds, and it offers a number of advantages over other fund structures available in Singapore.


Some of the key features of a VCC include:

  • Variable capital structure: The capital of a VCC is not fixed, and it can be increased or decreased as needed. This gives fund managers greater flexibility to manage the capital of their funds.

  • Segregated assets and liabilities: The assets and liabilities of each sub-fund of a VCC are segregated from the assets and liabilities of the other sub-funds. This provides investors with protection in the event that one sub-fund fails.

  • Global reach: VCCs can be used to raise capital from investors all over the world. This makes them a good option for fund managers who want to access a global investor base.

  • Tax efficiency: VCCs can be structured in a way that is tax-efficient for investors. This can help to reduce the overall cost of investing in a VCC.

The VCC is a relatively new structure, but it has already been gaining popularity in Singapore. The government has been actively promoting the VCC, and it is seen as a key part of Singapore's strategy to become a leading global fund domicile.


Here are some of the benefits of VCCs:

  • Greater flexibility: VCCs offer greater flexibility than other fund structures, such as limited partnerships and unit trusts. This is because the capital of a VCC is not fixed, and it can be increased or decreased as needed. This gives fund managers more control over the capital of their funds.

  • Improved operational efficiency: VCCs can be more efficient to operate than other fund structures. This is because they are subject to fewer regulations, and they can be managed by a single entity. This can help to reduce the costs of running a fund.

  • Tax efficiency: VCCs can be structured in a way that is tax-efficient for investors. This can help to reduce the overall cost of investing in a VCC.

If you are considering setting up an investment fund in Singapore, the VCC is a good option to consider. It offers a number of advantages over other fund structures, and it is seen as a key part of Singapore's strategy to become a leading global fund domicile.


About Variable Capital Companies (VCC)


A Variable Capital Company (VCC) is a new corporate structure for investment funds in Singapore. It was introduced in 2018 and came into effect in 2020. The VCC is designed to be a flexible and efficient structure for investment funds, and it offers a number of advantages over other fund structures available in Singapore.

Some of the key features of a VCC include:

  • Variable capital structure: The capital of a VCC is not fixed, and it can be increased or decreased as needed. This gives fund managers greater flexibility to manage the capital of their funds.

  • Segregated assets and liabilities: The assets and liabilities of each sub-fund of a VCC are segregated from the assets and liabilities of the other sub-funds. This provides investors with protection in the event that one sub-fund fails.

  • Global reach: VCCs can be used to raise capital from investors all over the world. This makes them a good option for fund managers who want to access a global investor base.

  • Tax efficiency: VCCs can be structured in a way that is tax-efficient for investors. This can help to reduce the overall cost of investing in a VCC.

The VCC is a relatively new structure, but it has already been gaining popularity in Singapore. The government has been actively promoting the VCC, and it is seen as a key part of Singapore's strategy to become a leading global fund domicile.


Here are some of the benefits of VCCs:

  • Greater flexibility: VCCs offer greater flexibility than other fund structures, such as limited partnerships and unit trusts. This is because the capital of a VCC is not fixed, and it can be increased or decreased as needed. This gives fund managers more control over the capital of their funds.

  • Improved operational efficiency: VCCs can be more efficient to operate than other fund structures. This is because they are subject to fewer regulations, and they can be managed by a single entity. This can help to reduce the costs of running a fund.

  • Tax efficiency: VCCs can be structured in a way that is tax-efficient for investors. This can help to reduce the overall cost of investing in a VCC.

If you are considering setting up an investment fund in Singapore, the VCC is a good option to consider. It offers a number of advantages over other fund structures, and it is seen as a key part of Singapore's strategy to become a leading global fund domicile.


Here are some of the key regulations that apply to VCCs:

  • Variable Capital Companies Act: This is the main piece of legislation that governs VCCs. It sets out the requirements for setting up and operating a VCC.

  • Securities and Futures Act: This act regulates the issuance and trading of securities in Singapore. It applies to VCCs that offer securities to the public.

  • Anti-Money Laundering and Countering the Financing of Terrorism Act: This act is designed to prevent money laundering and terrorist financing. It applies to VCCs that are required to be licensed or registered under the act.

If you are considering setting up a VCC, it is important to consult with a lawyer and an accountant to discuss the specific requirements and regulations that apply.


Some Key Features of a VCC


Sure, here are some key features of a VCC:

  • Variable capital structure: The capital of a VCC is not fixed, and it can be increased or decreased as needed. This gives fund managers greater flexibility to manage the capital of their funds.

  • Segregated assets and liabilities: The assets and liabilities of each sub-fund of a VCC are segregated from the assets and liabilities of the other sub-funds. This provides investors with protection in the event that one sub-fund fails.

  • Global reach: VCCs can be used to raise capital from investors all over the world. This makes them a good option for fund managers who want to access a global investor base.

  • Tax efficiency: VCCs can be structured in a way that is tax-efficient for investors. This can help to reduce the overall cost of investing in a VCC.

  • Single-fund VCCs and umbrella VCCs: There are two types of VCCs: single-fund VCCs and umbrella VCCs. Single-fund VCCs are only allowed to have one sub-fund, while umbrella VCCs can have multiple sub-funds.

  • Permissible Fund Manager: All VCCs must be managed by a Permissible Fund Manager. This is a fund manager that is licensed or registered under the Securities and Futures Act (SFA).

  • ACRA approval: VCCs must be approved by the Accounting and Corporate Regulatory Authority (ACRA) before they can be incorporated.

Model Constitution


The Singapore Academy of Law (SAL) has published a set of model constitutions for VCCs. These model constitutions are designed to provide a starting point for law firms and other professional advisers who are advising their clients on the VCC structure.


The model constitutions are available on the SAL website. They are divided into two categories:

  • Model Constitution for an Open-ended VCC: This model constitution is designed for VCCs that are open-ended, meaning that the capital of the VCC can be increased or decreased as needed.

  • Model Constitution for a Closed-ended VCC: This model constitution is designed for VCCs that are closed-ended, meaning that the capital of the VCC is fixed.

The model constitutions are not mandatory, but they can be a helpful resource for law firms and other professional advisers who are advising their clients on the VCC structure.


Here are some of the key features of the model constitutions:

  • They are comprehensive: The model constitutions cover all of the key aspects of the VCC structure, such as the capital of the VCC, the management of the VCC, and the rights of investors.

  • They are flexible: The model constitutions are designed to be flexible, so that they can be adapted to the specific needs of each VCC.

  • They are up-to-date: The model constitutions are regularly updated to reflect the latest changes to the law.

If you are considering setting up a VCC, it is a good idea to consult with a lawyer and an accountant to discuss the specific requirements and regulations that apply. They can also help you to decide whether the model constitutions are a good fit for your VCC.


Setting Up a VCC


Setting up a VCC in Singapore involves a number of steps, which include:

  1. Registering a VCC name: The first step is to register a VCC name with the Accounting and Corporate Regulatory Authority (ACRA). The name must be unique and cannot be the same as any other existing company name in Singapore.

  2. Determining the VCC type: There are two types of VCCs: single-fund VCCs and umbrella VCCs. Single-fund VCCs are only allowed to have one sub-fund, while umbrella VCCs can have multiple sub-funds.

  3. Appointing directors, company secretary and other key persons: The VCC must have at least one director and a company secretary. The directors must be natural persons who are resident in Singapore. The company secretary can be a natural person or a corporate entity.

  4. Providing a registered office address: The VCC must have a registered office address in Singapore. This address must be the physical location where the VCC's records are kept.

  5. Preparing the VCC constitution: The VCC constitution is the governing document of the VCC. It sets out the rules and procedures for the operation of the VCC.

  6. Incorporating the VCC: The VCC is incorporated by filing an application with ACRA. The application must include the VCC's name, type, registered office address, constitution, and details of the directors and company secretary.

  7. Registering sub-funds (for umbrella VCCs): If the VCC is an umbrella VCC, it must register each sub-fund with ACRA. The registration process is similar to the process for incorporating a VCC.

Once the VCC is set up, it can start raising capital and investing in assets. The VCC is subject to the same regulations as other companies in Singapore, but it has some additional advantages, such as its variable capital structure and its segregated assets and liabilities.


Here are some of the costs involved in setting up a VCC:

  • Name registration fee: $15

  • Incorporation fee: $8,000

  • Sub-fund registration fee: $2,000 per sub-fund

  • Legal fees: $5,000 - $10,000

  • Accounting fees: $2,000 - $5,000

The total cost of setting up a VCC will vary depending on the specific circumstances. However, the costs are generally comparable to the costs of setting up other types of investment funds in Singapore.


VCC Grant Scheme


The Variable Capital Companies Grant Scheme (VCCGS) is a government grant scheme that provides funding for the set-up of VCCs in Singapore. The scheme was launched by the Monetary Authority of Singapore (MAS) in 2020, and it is administered by the Singapore Exchange (SGX).


The VCCGS provides funding of up to 30% of the qualifying expenses incurred for the set-up of a VCC, up to a maximum of S$30,000 per application. The qualifying expenses include legal, accounting, tax, and regulatory compliance fees.


To be eligible for the VCCGS, the VCC must meet the following criteria:

  • It must be incorporated in Singapore.

  • It must be managed by a Permissible Fund Manager.

  • It must raise at least S$10 million in capital.

The VCCGS is a competitive scheme, and applications are reviewed on a case-by-case basis. The MAS will consider the following factors when assessing applications:

  • The quality of the VCC's business plan.

  • The experience of the VCC's management team.

  • The potential for the VCC to contribute to the development of Singapore's financial services sector.

The VCCGS is a valuable incentive for fund managers who are considering setting up a VCC in Singapore. The grant can help to reduce the cost of setting up a VCC, and it can also help to attract investors to the VCC.


The VCCGS is currently open for applications. The closing date for applications is 15 January 2025.


Here are some of the key benefits of the VCCGS:

  • It can help to reduce the cost of setting up a VCC.

  • It can help to attract investors to the VCC.

  • It can help to promote Singapore as a leading global fund domicile.

If you are considering setting up a VCC in Singapore, the VCCGS is a valuable incentive that you should consider.


VCC Filing Fees


Here are the VCC filing fees:

​Filing

​Fee

​Application for VCC Name

​S$15

​Application for Incorporation of VCC

​S$8,000

​Application of Transfer of Registration

​S$9,000 + S$400 (Sub-Fund registration fee) x No. of sub-funds

Registration of Sub-Fund

S$400

​General Lodgement

​S$0


Please note that these fees are subject to change. You can find the latest fees on the Accounting and Corporate Regulatory Authority (ACRA) website.


Here is a breakdown of the fees:

  • Application for VCC Name: This fee is payable when you apply for a VCC name with ACRA.

  • Application for Incorporation of VCC: This fee is payable when you incorporate a VCC with ACRA.

  • Application of Transfer of Registration: This fee is payable when you transfer the registration of a VCC from one entity to another.

  • Registration of Sub-Fund: This fee is payable when you register a sub-fund with ACRA.

  • General Lodgement: This fee is payable for all other lodgements with ACRA, such as changes to the VCC's constitution or directors.

If you are considering setting up a VCC, it is important to consult with a lawyer and an accountant to discuss the specific requirements and costs involved.


How Bestar can Help Variable Capital Companies


Bestar is a leading fund services provider in Singapore. They offer a wide range of services to fund managers, including:

  • Set-up and administration of VCCs: Bestar can help you to set up and administer your VCC, including registering the VCC with ACRA, drafting the VCC's constitution, and providing ongoing administration services.

  • Legal and regulatory compliance: Bestar can help you to ensure that your VCC complies with all applicable laws and regulations, including the Variable Capital Companies Act, the Securities and Futures Act, and the Anti-Money Laundering and Countering the Financing of Terrorism Act.

  • Tax planning and compliance: Bestar can help you to structure your VCC in a tax-efficient manner, and they can also help you to comply with all applicable tax laws and regulations.

  • Reporting and accounting: Bestar can help you to prepare financial reports for your VCC, and they can also help you to comply with all applicable accounting standards.

Bestar has a team of experienced professionals who are dedicated to providing high-quality services to fund managers. They have a deep understanding of the VCC regime in Singapore, and they are committed to helping fund managers to achieve their investment goals.


Here are some of the key ways that Bestar can help VCCs:

  • Provide comprehensive fund services: Bestar can provide a wide range of fund services to VCCs, including set-up and administration, legal and regulatory compliance, tax planning and compliance, reporting and accounting.

  • Help VCCs to comply with the law: Bestar has a deep understanding of the VCC regime in Singapore, and they can help VCCs to comply with all applicable laws and regulations.

  • Provide a high level of service: Bestar is committed to providing a high level of service to VCCs, and they have a team of experienced professionals who are dedicated to helping fund managers to achieve their investment goals.

If you are considering setting up a VCC in Singapore, Bestar is a valuable partner that you should consider.


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