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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


Singapore’s highly anticipated Variable Capital Companies Act, came into force on 15 January 2020. With this new VCC structure, both traditional and alternative investment funds have access to a new, flexible and efficient fund structure option. The Monetary Authority of Singapore (MAS) aims to promote fund domiciliation in Singapore and position the city as an attractive investment hub for the Asia-Pacific region.

About VCC

To boost the local asset management industry and promote fund domiciliation in Singapore, the MAS identified the need to create a company-type fund with a variable capital structure. It is the fourth fund type in Singapore and aims to address the limitations of the existing unit trust, companies and limited partnership structures.

Under the current regulations, funds in Singapore can be established in the form of unit trusts, companies (fixed capital) and as limited partnerships. The unit trust option is commonly used for retail and restricted funds who invest using a traditional asset strategy, 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 holding alternative assets.

The Singapore Variable Capital Company:

  • Covers both traditional and alternative fund strategies
  • 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 the VCC Act
  • Has access to 80+ tax treaties

Overall the VCC provides greater flexibility and improved operational and tax efficiencies. Key benefits:

  • A VCC to be treated as a company and a single legal entity for tax purposes.
  • Singapore tax resident VCCs are eligible to access Singapore’s tax treaties. In the case of umbrella VCCs, the sub fund names as well as the umbrella fund name will be included in the Certificate of Residences.
  • VCCs can benefit from the tax incentive schemes for funds under sections 13R and 13X of the Income Tax Act (ITA).
  • 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.
  • A grant scheme launched by the MAS in January 2020 is available to subsidise certain expenses when incorporating or registering a VCC.

Eighteen fund managers participated in VCC pilot program initiated by the MAS and the Accounting and Corporate Regulatory Authority (ACRA).


The Singapore VCC structure is intended to attract global fund managers seeking to raise investor capital from the Asia-Pacific region by establishing funds in Singapore. According to the latest (2018) Singapore Asset Management Survey published by the MAS, Singapore’s total assets under management was SGD3.4 trillion, of which 75% was sourced from outside Singapore.

Industry implications

The VCC fund scheme is expected to encourage fund 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 corporate fund scheme is part of a wider plan to foster cross-border fund distribution from Singapore to the rest of the Asia-Pacific region. Its introduction is an important step towards the government’s aim to become a centre for regional asset managers as it provides a compelling offer for fund promoters; however, it is one of several fund structures now available in the Asia Pacific region.

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 government is considering joining the new Asia Region Funds Passport (ARFP) launched on 1 February 2019 with Australia, Japan, the Republic of Korea, New Zealand and Thailand.

The Singapore variable capital company provides 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) launched in July 2018 and Australia’s anticipated 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 is 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, the OFC, CCIV and the new VCC scheme.

Key dates

April 2017 – First public consultation closed

February 2018 - Tax framework for VCC announced

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

April 2019 – Second Consultation on VCC announced

January 2020 – The VCC Act 2018 and its subsidiary legislation came into force. The VCC (Miscellaneous Amendments) Act that amends the Income Tax Act, GST Act and Stamp Duties Act for tax treatment partially came into force. MAS and ACRA launched VCC pilot program and grant scheme

Subsidiary regulations went live in March 2020