Singapore’s VCC Regime
Designed to meet the diverse needs of modern investors
Unlocking the Potential of Singapore’s Variable Capital Company
The Singapore Variable Capital Company (VCC) has emerged as a premier structure for international fund managers and family offices since its introduction in 2020. Designed to enhance Singapore’s status as a global financial hub, the VCC offers a blend of flexibility, efficiency, and regulatory advantages that cater specifically to the needs of investment professionals and high-net-worth families.
Why Should Investors Consider the VCC?
The VCC is designed to meet the diverse needs of modern investors. It allows for the creation of either a single fund or an umbrella structure with multiple sub-funds, and these can be open-ended or closed-ended.
With the flexibility to redeem shares and pay dividends from net assets or capital, it provides investors with unmatched adaptability.
The sub-funds are arranged to achieve legal separation, meaning independent ownership of assets and liabilities.
The VCC structure also ensures discretion, as the financial statements and shareholder registers are not disclosed to the public. Foreign funds can even re-domicile to Singapore under this structure, enhancing cross-border investment opportunities.
Key Advantages for Investors:
Flexible Fund Structuring
The VCC allows for the creation of multiple sub-funds under a single corporate umbrella, each with distinct investment objectives and strategies. This structure facilitates efficient management of diverse portfolios and reduces administrative costs by sharing common service providers across sub-funds.
Tax Efficiency
VCCs can benefit from Singapore’s tax exemption schemes, such as the Enhanced-Tier Fund Scheme and the Singapore Resident Fund Scheme. These incentives can lead to significant tax savings on income derived from designated investments. Additionally, Singapore’s extensive network of double taxation treaties enhances the VCC’s appeal for international investors.
Asset Segregation and Risk Mitigation
Each sub-fund within a VCC is legally segregated, ensuring that the assets and liabilities of one sub-fund do not affect others. This ring-fencing provides an added layer of protection for investors and is particularly beneficial for family offices managing multiple investment strategies.
Operational Flexibility
VCCs offer the ability to issue and redeem shares without shareholder approval, providing fund managers with the agility to respond swiftly to market changes and investor needs. This feature is advantageous for both open-ended and closed-ended fund structures.
Re-domiciliation of Existing Funds
The VCC framework permits the re-domiciliation of existing offshore funds to Singapore without the need for liquidation. This feature allows fund managers to take advantage of Singapore’s robust regulatory environment and tax benefits while maintaining continuity in their investment operations.
Privacy and Confidentiality
Unlike traditional corporate structures, VCCs are not required to disclose their shareholder registers publicly. This confidentiality is appealing to high-net-worth individuals and families seeking discretion in their investment activities.
Government Support and Incentives
Singapore offers various grants and incentives to support the establishment and operation of VCCs, reflecting the government’s commitment to fostering a vibrant fund management ecosystem. In summary, the Singapore VCC provides a versatile and efficient platform for international fund managers and family offices to structure their investment activities. Its combination of regulatory flexibility, tax advantages, and operational efficiencies makes it an attractive option for those looking to establish or expand their presence in the Asia-Pacific region.
3 VCC Examples
To give an idea how a VCC could benefit your institution you can review 3 sample presentations below. These are recent presentations made by 42 Wealth Management to address different client needs (edited for Privacy):
Australian Ultra High Net Worth Family Office
Looking to take advantage of the Double Taxation Agreement and overall legacy planning.
UK Fund Management Company
Looking to gain access to ASEAN (via the CIS agreement) and benefit from the Double Taxation Benefit
Indonesian Ultra High Net Worth family
Planning for the recent Singapore and Indonesian exchange of Information for their Singapore assets
Why VCC Makes Sense for Families
Conclusion
In today’s complex financial landscape, the VCC is a smart, future-proof option for investors and families seeking a flexible, efficient, and compliant structure for wealth management. Explore how the VCC can meet your investment needs with the expert guidance of 42 Wealth Management.”
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