Variable Capital

The Variable Capital Company (VCC) is a new investment fund company structure established under the Variable Capital Companies Act, which came into effect on January 14, 2020. The VCC will complement Singapore's existing set of investment fund structures.

Application Requirements

Must have a licensed or regulated fund manager resident in Singapore
The registered office must be located in Singapore, and a company secretary resident in Singapore must be appointed
Unauthorised schemes must have at least one resident director in Singapore
Must be audited by a Singaporean auditor
Comply with the requirements for investment funds under the current Securities and Futures Act

Key Features of VCC

A VCC has a variable capital structure that allows it to issue and redeem its shares flexibly. It can also pay dividends out of capital, which gives fund managers flexibility in meeting dividend payment obligations.

A VCC can be set up as a standalone fund or an umbrella fund with two or more sub-funds, each holding a separate portfolio of assets and liabilities. For fund managers structuring funds as an umbrella VCC, using common service providers across the umbrella and its sub-funds may improve cost-effectiveness.

VCCs can be used for both open-ended and closed-ended fund strategies.

Fund managers can incorporate new VCCs or re-register their existing overseas investment funds with similar structures by transferring their registration to Singapore as a VCC.

A VCC must maintain a register of shareholders, which is not required to be made public. However, the register must be disclosed to public authorities upon request for regulatory, supervisory and enforcement purposes.

Combination of VCC and Multi-Family Office (MFO)

Under the umbrella VCC structure, the liabilities and assets of each sub-fund are segregated from one another
A VCC can be set up as a standalone entity or an umbrella VCC with sub-funds. In an umbrella VCC, its sub-funds will operate as separate units
Multiple family offices can be established under the VCC structure
Family offices under the VCC structure have the functions of 13O and 13U, as well as functions that traditional family offices do not have
Investing in a VCC sub-fund generally requires SGD 10 million, disclosure of source of wealth (KYC) is required, and there is no need to queue with the Monetary Authority of Singapore (MAS)
Appointed by the MFO to manage the sub-funds of their own investments and apply for an Employment Pass (EP)
Family members can apply for Dependent Passes, and children can study in Singapore
Multiple families share one MFO+VCC, invest in sub-funds separately, with mutual confidentiality and independence

Advantages of VCC and Multi-Family Office (MFO)

No high threshold of SGD 20 million
Significant reduction in the time required to open a private banking account for sub-funds
No need to queue with the Monetary Authority of Singapore (MAS) to apply for tax incentives, and still enjoy 13O/13U tax exemption (applied by licensed companies)
Multiple families share one licensed VCC fund structure
Flexible selection of reliable investment products

VCC Structure and Process

Timeline for Family Office and VCC Sub-Fund

Month 1

Client signs an investment consulting agreement with ATC (determine the investment structure; register and set up a company and open a corporate bank account; collect important information)

Client signs an investment management agreement (establish a VCC sub-fund; collect required information)

Within 3 to 6 months

Process EP (completed within 1 - 4 weeks) and open a private banking account for the sub-fund

Operation

After the private bank account is opened, the client's family office subscribes to its own sub-fund and starts operations

(Compared with the traditional family office project cycle of 9-12 months, the VCC structure can significantly reduce the time required)