What’s Next for Singapore VCCs

      Singapore has introduced an alternative fund framework for Variable Capital Companies (VCCs), in order to encourage more funds to be domiciled in Singapore and enhance the jurisdiction’s value as an international fund management centre.

      The VCC concept was part of the trend of creating vehicles for passport funds, such as AIFMD in Europe, the Open-End Fund Company in Hong Kong and Corporate Collective Investment Vehicle in Australia. The VCC makes Singapore comparable to other main jurisdictions such as the Cayman Islands, Dublin and Luxembourg.

      Background on the VCC in Singapore

      The VCC was launched in Singapore on 14 January 2020 and of the 1,000 VCCs registered as of Q2 2023, the majority of them are small to medium AUM, with approximately half representing private family wealth and the remainder evenly divided between hedge funds and private equity.

      Features designed to improve the VCC

      To ensure the continuing success of the VCC structure, the Monetary Authority of Singapore (MAS) is planning more features designed to enhance the VCC and make it more responsive to the evolving requirements of fund managers and investors in today’s highly dynamic markets. VCC 2.0 could be introduced as soon as 2024 or 2025, and it incorporates features originally intended for the current version that were not included due to timing.

      One such feature which MAS is considering, based on feedback from the industry, is amending the existing legislation to allow fund managers who wish to convert their existing funds, currently structured as companies or unit trusts, to VCCs.

      Another feature that MAS is exploring is the feasibility of widening the scope of fund managers permitted to use the VCC structure, to potentially include specific classes and to allow licence exempt managers, such as Single-Family Offices (SFOs).

      Unlike other fund domiciles, the VCC structure is in an onshore, regulated environment with a pragmatic, business-friendly regulator, achieving the best of both worlds. Given recent disturbances in digital currencies and banks, fund managers may be inclined to explore more regulated environments such as Singapore.

      How Waystone Compliance Solutions can help

      Waystone’s team of experienced, compliance professionals, based in Singapore, can provide you with the following services:

      • incorporation of VCC
      • company secretarial services
      • provision of AML policy for VCC
      • VCC compliance support.

      Please reach out to our APAC Compliance Solutions team if you have any questions regarding VCC or if you would like to hear more about the range of services that we provide within the APAC region.

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