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The Singapore Variable Capital Company – regulation memo
The Singapore Variable Capital Company – regulation memo

The Singapore Variable Capital Company – regulation memo


The Monetary Authority of Singapore (MAS) announced its intention to launch a new investment company scheme, the Singapore Variable Capital Company. Previously known as “S-VACC”, it has been renamed VCC. It aims to promote fund domiciliation in Singapore and position the city as an attractive investment hub for the Asia-Pacific region. We expect it to be launched in 2019

About VCC

In 2016, the Monetary Authority of Singapore (MAS) announced its intention to launch an open-ended investment company scheme to position Singapore as an attractive investment hub for the Asia-Pacific region. The Singapore Variable Capital Company, or VCC as it has become known, is a company-type fund structure which is expected to be launched in 2019.

Under the current regulations, funds in Singapore can be established in the form of unit trusts, companies (fixed capital) and as limited partnerships. Unit trusts are commonly used for retail and restricted funds, and require the appointment of a trustee to act for and on behalf of each fund. Companies (fixed capital) and limited partnerships are non-unit trust type funds mainly used for funds for alternative assets.

The MAS has set an objective to boost the asset management industry and promote fund domiciliation in Singapore and identified the need to create a company type fund with a variable capital structure. It will be the fourth fund type in Singapore, and aims to provide flexible and comprehensive coverage to address the limitations of the existing schemes.

The Singapore Variable Capital Company:

  • Covers both traditional and alternative assets
  • Can be open-ended and closed-ended
  • Supports umbrella and sub-fund structures
  • Can be used for both retail and non-retail strategies
  • Is governed by VCC Act
  • Has access to 80+ tax treaties

In October 2018, the Monetary Authority of Singapore announced the further details about VCC tax framework following their initial announcement in February 2018. Key extracts are the following:

  • A VCC will be treated as a company and a single legal entity for tax purposes.
  • VCCs that are Singapore tax residents are eligible to access Singapore’s tax treaties. In case of umbrella VCCs, the sub fund names as well as the umbrella fund name will be included in the Certificate of Residences.
  • The tax incentive schemes for funds under sections 13R and 13X of the Income Tax Act (ITA) are extended to VCCs.
  • 10% concessionary tax rate under the Financial Sector Incentive-Fund Manager (FSI-FM) scheme will be extended to approved fund managers managing an incentivised VCC.


The Singapore VCC structure is intended for global asset managers who seek to establish funds in Singapore and raise investor capital from the Asia-Pacific region. According to the 2017 Singapore Asset Management Survey published by the MAS, Singapore’s total assets under management was USD 79.2 trillion, of which 78% was sourced from outside Singapore.

Industry implications

The VCC fund scheme is expected to encourage funds passporting with Singapore as a home country. This scheme will further promote Singapore as an attractive centre for both investment fund domiciliation and fund management activities.

BNP Paribas Securities Services’ view

This new Singaporean fund scheme is part of a wider plan to foster cross-border fund distribution from Singapore to the rest of the Asia-Pacific region. Whilst the introduction of the VCC is an important step towards the government’s aims to become a centre for regional asset managers, the fund promoters will analyse the costs and the benefits of VCCs and of other fund schemes to select the best scheme that suits their objectives.

Singapore is currently a member of the ASEAN Collective Investment Scheme (CIS) with Malaysia and Thailand. It is also in discussions with China on a future mutual recognition of funds scheme. And, the Singapore government is still considering joining the new Asia Region Funds Passport (ARFP) which is expected to be launched in early 2019 by the five current participants including Australia, Japan, Korea, New Zealand and Thailand.

The Singapore Variable Capital Company will provide an alternative to the existing fund structures together with the region’s other company type funds such as Hong Kong’s Open-Ended Fund Company (OFC) and Australia’s Corporate Collective Investment Vehicle (CCIV).

The Asia-Pacific region is characterised by a web of varied local regulations and different schemes to enable fund managers to invest cross border. However, thanks to a direct local presence across the region, BNP Paribas Securities Services and its team with extensive cross border experience are able to guide our clients on the various passport schemes and fund schemes including the ASEAN CIS, the Asia Region Fund Passport, the mutual recognition schemes, and the new VCC scheme.

Key dates

24 April 2017 - Public Consultation closed

19 February 2018 - Tax framework for VCC announced

31 October 2018 – Further details on the tax framework for VCCs released

Q2 2019 – Second Consultation on VCC

Q3/Q4 2019 – Subsidiary regulations to be announced

Q4 2019 – VCC goes live

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