What is a Variable Capital Company (VCC) and why is it interesting for International Corporate Funds?

What is a Variable Capital Company (VCC)? 

A Variable Capital Company (VCC) is a new corporate structure for investment funds launched by the Singapore Government in 2020. A VCC provides great flexibility and can be used in creative ways across different fund strategies, investor classes and asset classes.

A VCC has a variable capital structure, meaning that it provides flexibility in the issuance and redemption of its shares. It can also pay dividends out of capital, which gives fund managers flexibility to meet dividend payment obligations.

Members of a VCC have limited liability. A VCC is treated as a separate legal entity from its members and directors. It may be set up as a stand-alone entity or an umbrella entity with multiple sub-funds. In the latter case, the VCC will be treated as a single legal entity with its sub-funds operating as separate cells, each without legal personality.

Foreign corporate fund structures similar to a VCC can re-domicile or transfer their registration to Singapore provided that the requirements for re-domiciliation are satisfied.

 

Why do VCCs exist?

To facilitate the incorporation of new funds and to re-domicile existing overseas investment funds in Singapore.

 

Who are VCCs for?

Family Offices, Fund Managers and Asset Managers.

 

Why Singapore?

Singapore is planning to build structures to make it the dominant wealth management hub in Asia. There are more than 500 family offices in operations in Singapore, with another 700 applications currently under review by the Monetary Authority of Singapore (MAS).

 

What type of grant and tax incentives can VCCs get?

Foreign corporate funds structures and VCCs can apply to defray the costs of setting up a VCC or transfer their registration to Singapore. A VCC can be granted tax-exempt status if it meets various provisions of the VCC Act.

In terms of tax treatment, a VCC is treated as any other Singapore company – the VCC is regarded as a single legal entity and is eligible to apply for tax exemptions.

 

How much is the VCC Grant?

The VCC Grant will co-fund up to 70% of eligible expenses paid to Singapore-based service providers for the fund set up, with a total cap of S$150,000 per VCC, with a maximum of three VCCs per fund manager (i.e. S$450,000). The VCC grant is due to expire on the 15 of January 2023

 

Why is especially interesting for International corporate funds?

VCC facilitates ease of asset management for multiple cross-border families, and allows them to flexibly move from one region to another should a future crisis occur.

 

How can Monx help? 

Monx can support Funds (as well as Corporations and Entrepreneurs) in Singapore but also through our Global offices in Hong Kong, Australia, and Southeast Asia, providing corporate structuring and family governance.

We can help you with the incorporation of a new VCC vehicle and other tasks related operation and set-up of your VCC investment fund in Singapore. Monx can also act as your compliance provider and make sure that your funds stay compliant with Singapore’s corporate and tax regulations.

 

Contact us now to set up your VCC

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