SANNE is a Finalist in the 2020 Drawdown Private Equity Service Provider Awards
12 August 2020
On Wednesday, 15 January 2020 Singapore launched a new corporate structure for investment funds, the Variable Capital Companies (VCC) framework. For many years, the funds industry in Singapore has been frustrated by the lack of a flexible and effective product to structure open and closed-ended funds. With the much-awaited launch of VCC, Fund Managers can now run multiple sub funds below an umbrella VCC to benefit from economies of scale.
The scheme has been carefully designed to attract more funds to domicile themselves in Singapore. The new framework will also give Fund Managers greater flexibility in share issuance and dividend payment and allow them to set up multiple funds in a single VCC to reduce costs.
VCC Grant Scheme to accelerate industry adoption
To further encourage industry adoption of the VCC framework in Singapore, the Monetary Authority of Singapore (MAS) has also launched a VCC Grant Scheme. The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70% 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 grant scheme will be funded by the Financial Sector Development Fund (FSDF) and take effect from Wednesday, 15 January 2020 for a period of up to three years.
Key features of the VCC
> Flexibility in the issuance and redemption of shares as well as payment of dividends out of capital
> Structured as a single standalone fund or an umbrella fund with sub-funds
> VCC is treated as a single entity for tax purposes and is eligible for tax incentives
> Cost efficiencies from using common service providers across the umbrella and its sub-funds
> Can be used for both open-ended and closed-ended funds and both traditional and alternative strategies
> VCC must be managed by a MAS regulated fund manager
How can SANNE help – who should I speak to?
This is an exciting time for Singapore to showcase its strength, stability and attractiveness as a fund-structuring jurisdiction of choice. The VCC is a well-designed, user friendly, tax efficient fund structure that will provide asset managers an option to launch and operate a Singapore domiciled vehicle.
As a leading global fund and corporate administration provider, our team of highly skilled professionals look forward to working with managers to incorporate and provide ongoing support with this new vehicle.
For further information on our services, please contact David Fowler, Country Head - Singapore.