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On 15 January 2020, the Monetary Authority of Singapore (MAS) launched the much awaited ‘Variable Capital Company’ (VCC), a new corporate structure customized to cater to the specific requirements of investment funds.
The VCC structure is based on the “Segregated Portfolio Company” structure – a company, which remains a single legal entity and may create segregated portfolios such that the assets and liabilities of each portfolio are legally separate from the assets and liabilities of any other portfolio, currently adopted by jurisdictions such as the Cayman Islands. Much like the Segregated Portfolio Company, the VCC can be structured as a stand-alone fund or an umbrella fund with multiple sub-funds.
This article seeks to provide an overview of the VCC structure including regulatory requirements and incentives, and highlight why the VCC is becoming an increasingly popular vehicle for fund and wealth management.
The following are the key features of a VCC:
As the VCC was introduced for the purposes of fund and wealth management, it has been ultimately tailored towards the needs of the aforesaid industries. Some of the key advantages of the VCC include the following:
To encourage industry-wide adoption of the VCC framework from managers in Singapore and globally, the MAS has announced a generous grant to defray VCC related set up costs (the “Grants Scheme”).
Under the Grants Scheme, MAS will reimburse VCCs up to S$150,000 which can be utilized towards payments to eligible Singapore based service providers (legal and tax counsel, regulatory & compliance).
For the purposes of tax, the VCC is treated as a company and a single entity. As such, the VCC need only to file a single Income Tax return with the Inland Revenue Authority of Singapore (IRAS) .
The VCC will also be able to be afforded tax benefits such as:
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PDLegal LLC Advocates & Solicitors 1 Coleman Street #08-02 The Adelphi Singapore 179803
(65) 6220 0392
Mon - Fri : 9:00 am - 5:00 pm Sat : 8:30 am - 12:00 pm