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MAS and ACRA Launch Variable Capital Companies Framework

The Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority have launched the Variable Capital Companies (VCC) framework.

The VCC is a new corporate structure that can be used for a wide range of investment funds and provides fund managers greater operational flexibility and cost savings. It will encourage more funds to be domiciled in Singapore and enhance Singapore’s value as an international fund management centre.

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 may also incorporate new VCCs or re-domicile their existing investment funds with comparable structures by transferring their registration to Singapore as VCCs. This can be done via ACRA’s online application form.

A group of 18 fund managers participated in a VCC Pilot Programme that was initiated by MAS and ACRA in September last year. All of these fund managers have today incorporated or re-domiciled a total of 20 investment funds as VCCs.  These investment funds comprise venture capital, private equity, hedge fund and Environmental, Social, and Governance (ESG) strategies, demonstrating the viability of the VCC framework across diverse use cases. The list of fund managers that participated in the VCC Pilot Programme is set out in the Annex.

To further encourage industry adoption of the VCC framework in Singapore, MAS 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% of eligible expenses paid to Singapore-based service providers. The grant is capped at SNG150,000 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 took affect in January 2020 for a period of up to three years.

Benny Chey, Assistant Managing Director (Development and International), MAS, said “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.”

“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,” Chey continued.

Andy Sim, Assistant Chief Executive (Legal Services & Compliance), ACRA, said “The fund managers’ response for VCC applications in the VCC Pilot Programme is heartening. The diverse spread of fund managers and the use of VCC across different fund strategies demonstrate the use of VCC as a viable investment fund structure.”