As Singapore continues solidifying its position as a premier financial hub in Asia, the Variable Capital Company (VCC) framework further enhances its appeal as an attractive destination for fund managers and investors.
The VCC structure offers flexibility, efficiency, and transparency, making it a compelling choice for setting up investment funds. In this blog post, we’ll provide a comprehensive guide on how to set up a VCC in Singapore, covering key steps, requirements, and benefits.
Understanding the Variable Capital Company (VCC)
The Singapore variable capital company is a corporate structure specifically designed for investment funds in the city-state. Variable capital companies represent a flexible and efficient legal framework for forming and operating investment funds, including traditional and alternative asset classes.
The VCC structure allows the segregating of assets and liabilities between sub-funds, providing enhanced investor protection and risk management.
Related Read: What you need to know about the Variable Capital Company (VCC)
Key Features of a VCC
| Features | Details |
|---|---|
| Legal Entity | The VCC is a separate legal entity, providing limited liability protection to investors. |
| Flexibility | VCCs can be structured as open-end or closed-end funds, with the ability to create multiple sub-funds under a single umbrella entity. |
| Tax Efficiency | VCCs may enjoy tax exemptions on certain income, including dividends and capital gains under Singapore’s tax regime. |
| Ease of paying returns and distributions | Shares of a VCC are redeemable at the fund’s net asset value (NAV), and VCCs can pay dividends from the capital, which is not typically permissible in other forms of corporate vehicles. This allows a VCC to be flexible within its distributions and return of capital (and this is similar to Cayman SPCs). |
| Privacy factor | VCCs must maintain a register of members, which does not need to be made public but provided upon request to relevant authorities or service providers. This provides a level of “privacy” for the investors that traditionally only offshore tax havens can provide. |
| Enhanced Regulatory Oversight | VCCs are regulated by the ACRA, ensuring compliance with regulatory standards and investor protection measures. |
| Global Recognition | The VCC structure is recognised and accepted by international investors and regulatory authorities, facilitating cross-border investments and fund distribution |
How to Set Up a VCC in Singapore
The process of incorporating a VCC in Singapore is similar to that of incorporating a private limited company.
Here are the steps:
Step 1 – Register a VCC Name:
You must register a name for your VCC via the VCC Portal first and pay a fee. The name will be reserved for 120 days, of which the VCC must be incorporated within the period.
Step 2 – Decide on the VCC Type:
A VCC can be established as an umbrella fund VCC with two or more sub-funds, each with a holding portfolio of segregated assets and liabilities or non-umbrella VCC.
Step 3 – Choose Your VCC Officers:
You must appoint your VCC officers and provide their personal identification details, contact information such as their phone number and email address, and residential address when you apply.
Here are the types of appointed officers:
- Director: Every VCC must have at least 1 director who is either a Qualified Representative or a director of its fund manager
- VCCs with Authorised Schemes must have at least 3 directors inclusive of 1 independent director
- Directors who are employment pass (EP) holders must obtain a Letter of Consent (LOC) from MOM before taking up the role
- Managing Director: Although not compulsory, a VCC can decide to appoint a managing director who must also be its director
- Company Secretary: A VCC must appoint a company secretary within 6 months from its incorporation date. The sole director of a VCC cannot be the same person as the company secretary
- Auditor: A VCC must appoint an auditor within 3 months of its incorporation date. The audit exemptions under s205B and 205C of the Singapore Companies Act do not apply to VCCs
- Fund Manager: A VCC must appoint a Permissible Fund Manager to handle its property or operate the CIS that has the VCC. A Permissible Fund Manager can be a:
- Licensed fund management company with a capital markets services licence for fund management under the Securities and Futures Act (SFA)
- Registered fund management company registered under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations
- Financial institution exempted under sections 99(1)(a), (b), (c) or (d) of the SFA from the requirement to hold a capital markets services licence to operate a business in fund management
Related Read: Fund Structuring in Singapore: Is it Suitable For You?
Step 4 – Provide a Registered Office Address and Company Constitution:
When you incorporate a VCC, you must provide a registered office address that is operational and publicly accessible during regular office hours. You must also provide the Constitution during incorporation
Step 5 – Incorporate Your VCC:
You can incorporate a VCC in two ways:
- Engage the services of a registered filing agent or corporate service provider
- Appointing a subscriber to the constitution of a VCC to apply via the VCC Portal
Step 6 – Register Sub-fund(s) for Umbrella VCC:
If you have an Umbrella VCC, you can register sub-funds through the VCC Portal. You need these details:
- Proposed name of the sub-fund
- Date of establishment of the sub-fund
Foreigners Incorporating a VCC in Singapore
Foreigners who want to incorporate a VCC in Singapore must:
- Engage the services of a registered filing agent, such as InCorp, to submit the application on their behalf
- Employ a director who meets the requirements mentioned above
What Documents Are Required to Incorporate a VCC?
Here are the documents needed to incorporate a VCC:
| Registration Stage | Documents Needed |
|---|---|
| Name Application | Proposed VCC name |
| VCC type | |
| Details of proposed officers | |
| In-principle approval from other authorities, if any | |
| Incorporation of VCC | Transaction number of approved name application |
| Details of proposed officers and director | |
| Details of at least 1 director who is a director or a qualified representative of the VCC fund manager | |
| Details of the Permissible Fund Manager | |
| Details of subscribers | |
| VCC type | |
| Registered office address and opening hours | |
| Copy of Constitution | |
| Financial Year End (FYE) |
How Long Does it Take to Process a VCC Application?
It typically takes about 15 to 30 days to process the incorporation of a VCC, including the time needed for referral to another government agency.
How Much Does it Cost to Incorporate a VCC in Singapore?
The fees to incorporate a VCC in Singapore vary, but you can expect to pay basic fees for the name application, VCC incorporation application, and registration of sub-funds.
Engage InCorp to Help You Incorporate Your VCC
InCorp is a leading corporate service provider in Singapore experienced in assisting businesses with their VCC incorporation process. With a dedicated team of experts well-versed in the regulatory and operational intricacies of VCCs, we simplify the complex process of incorporation, ensuring that your VCC is established in compliance with Singapore’s laws and regulations.
In addition to incorporation services, InCorp offers a comprehensive suite of services tailored to the needs of VCCs, including regulatory compliance, tax advisory, and corporate secretarial services.
Engaging us accelerates the incorporation process and provides you with the peace of mind that all aspects of your VCC’s establishment are professionally managed. Contact us to find out more about how we can help today!
FAQs About VCC in Singapore
What is the difference between a company and VCC?
- The VCC functions as a corporate entity where shareholders have the opportunity to hold shares. However, unlike a conventional company, which typically engages in business activities across various sectors, a VCC serves a singular purpose: facilitating one or more collective investment schemes (CIS) in the form of a corporate body.
What are the benefits of a VCC?
- Some of its benefits include the flexibility in fund structure, enhanced investor protection, and tax efficiency.
Why should I engage the services of a corporate services provider to incorporate my VCC?
- You can benefit from the provider’s expertise and experience, mitigate risk, and have a smoother and hassle-free process.
Let InCorp assist on the incorporation of your VCC!
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