Singapore has pioneered a specialized corporate structure to attract more investment funds to be set-up. With the introduction of the Variable Capital Companies (VCC) Bill (the “Bill”), fund managers will be able to experience greater flexibility to make Singapore into an international fund management hub. This new structure will also lead Singapore to be a center for fund domiciliation. The Bill for the VCC structure was passed on 1st October 2018 by parliament.

Variable Capital Companies (VCC) – What are they?

The VCC is a new type of corporate structure, which would be incorporated under the Authority & Corporate Regulatory Authority (“ACRA”), while the management of the AML/CFT aspects of the structure along with the licenses required for fund managers to operate under the VCC will be under the purview of the Monetary Authority of Singapore (“MAS”).

The VCC will effectively consist of

  • Shareholders
  • Governance board
  • The fund manager who will be regulated by the MAS
  • A custodian of assets

The VCC can be set-up as a stand-alone fund or as an umbrella fund, with two or more sub-funds.

The need for VCC?

Most of the funds which are managed from Singapore are domiciled overseas.

One of the main reasons for the above is the limitations of the existing fund structures available in the Singapore market when used as vehicles for investment funds.  For example, routine management activities – such as the return of capital to shareholders either by the method of capital reduction or redemption of shares – this involves various procedures under the Companies Act (“CA”), which includes the execution of solvency statements by all directors.

Due to the above, some investors choose to go with more flexible fund structures (e.g. UCITS), which are available overseas. Even though the funds are domiciled overseas, they tend to be managed from Singapore, as the requisite expertise and Asian Investor base access is located here.

The new VCC corporate structure is beneficial for both foreign and local investors intending to domicile their fund vehicles/structures in Singapore and allows for ease of management by fund managers in Singapore itself. The introduction of the VCC structure provides a new alternative for fund managers while addressing the limitations of a Singapore incorporated company.

Flexibility offered by VCC

  • VCC can be used for both open-ended as well as close-ended funds, for both traditional and alternative investment strategies.
  • VCC allows the issue or redemption of shares without the approval of the shareholders. This, in turn, will allow an investor to enter or exit from their fund, as and when they choose
  • VCC can help pay dividends from their capital. Companies with the VCC structure are not required to pay out dividends from their profits, which is the case for companies under the Companies Act. This, in turn, benefits the fund managers who can have the flexibility to meet dividend obligation, which is an important factor for the investor
  • Choice of accounting standards
    • VCC can use Singapore or any other accepted international standard for their accounting purposes, for example, International Financial Reporting Standards (“IFRS”) or Generally Accepted Accounting Principles (“GAAP”)
    • Fund managers can choose an accounting standard which best meets their
    • requirement

Fund Structure

VCC can be set up as a standalone fund as well as in the form of sub-funds i.e. umbrella structure.

The umbrella structure can help in achieving economies of scale and cost savings.

  • The Sub-funds can share the same board of directors and shareholders like fund managers, fund administrators and custodians
  • The most important point is that in an umbrella fund, the assets and liabilities of each sub-fund are segregated. This is done to safeguard the liabilities of one sub-fund affecting the other
  • When the funds are being wound up, the winding up of each sub-fund should be done separately.

Fund Re-Domiciliation

VCC allows overseas funds to be re-domiciled in Singapore

  • With the introduction of the VCC bill, foreign domiciled funds, which have structures similar to a VCC can be re-domiciled in Singapore. This would greatly expand the number of funds which can be transferred here.
  • Re-Domiciliation can be done by a simple registration process, which is similar to that for companies to be registered under the CA
  • This will benefit foreign investment funds to retain their corporate history and identity

Tax Treatment for VCC

Tax is an important factor when it comes to determining a venue to set up a fund. The Ministry of Finance (MOF) in its 2018 budget statement has announced that:

  • A VCC will be treated as a single entity, which means for the ease of compliance, only one set of income tax returns is required to be filled with the Inland Revenue Authority of Singapore(“IRAS”)
  • Tax exemption under sections 13X & 13R of the Income Tax Act (Cap.134) of Singapore, shall be extended to VCCs
  • The 10% concessionary tax rate  under the Financial Sector Incentive – Fund management scheme will be extended to approved fund managers managing incentivized VCCs
  • The existing GST remission for funds will be extended to incentivized VCCs

MAS along with the MOF and IRAS will release further information on tax for VCCs later this year.

Summary of advantages of VCC

  • Provide flexibility in terms of managing investment funds in Singapore
  • Will help fund manager to achieve cost efficiencies.
  • Help facilitate re-domiciliation of funds
  • Help reap the benefits of tax treaties and tax exemption schemes


The VCC Act will be implemented in 2019, the date would be notified by the notification published in the Gazette.


The Introduction of the VCC bill will take Singapore into a new era with respect to fund management, by providing a platform for the fund management industry to grow significantly via the impending introduction of new products and funds, through new setups or even re-domiciliation of existing structures. We anticipate the ecosystem to evolve rapidly to provide for this new structure and will be constantly providing updates on the matter.

If you have any question or queries related to VCC singapore, or have a specific interest on this topic and would like to know more, reach out to the Argus team at


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