VCC structure

The Variable Capital Company (VCC) is a corporate structure for investment funds established under the Variable Capital Companies Act which took effect on 14 Jan 2020.

Over 1,000 VCC structures have been established since the beginning of 2020, demonstrating their enormous appeal to fund and wealth managers in Singapore.

Key VCC features include:

• The capacity to serve both open-ended and closed-end fund strategies.
• Share issuance and redemptions flexibility, along with the option to pay dividends using capital. Redemptions out of capital do not require solvency declarations, unlike the Singapore Pte Ltd structures.
• The versatility to utilise the VCC as an independent fund or an umbrella fund with multiple sub-funds, each consisting of a distinct asset and liability portfolio. Using umbrella structures can create cost efficiencies and quickly deliver additional sub-funds to market.
• The capability to incorporate new VCCs directly or potentially re-domicile existing offshore funds as VCCs in Singapore.While historically many Singapore based fund managers targeting accredited and institutional investors have been using fund structures in offshore jurisdictions such as the Cayman islands, the VCC structure facilitates the establishment of a fund in the same jurisdiction as the manager, leading to efficiencies by having the same regulatory environment, service providers in the same jurisdiction and time zone and domiciliation in a well-respected, regulated and business friendly jurisdiction.

Many banks and managers have capitalized on the opportunities presented by the VCC. For example, DBS Private Bank launched a multi-family office (MFO) that utilizes the VCC structure this past June. Furthermore, there is likely to be possible amendments that could potentially allow Single Family Offices to use the VCC, under a concept referred to as VCC 2.0. This will cause the VCC to become even more favourable.

Portcullis has been delivering services for VCC structures since they were first introduced in January 2020, offering corporate secretarial and fund administration support from those involved in the pilot program at inception till now. Portcullis has provided services to a wide range of VCC’s from open and closed-ended funds to stand-alone, umbrella structures, multi-family offices and external asset manager VCCs. They cater to hedge funds, impact VC funds and fund of fund strategies. They have helped numerous clients with the re-domiciliation of their fund structures from places like Mauritius and the Cayman Islands, as well as with setting up new VCC’s with ACRA.

All of these services fall into the wide range that Portcullis offers to Singapore-based funds and fund management companies. Some of the other services they provide include assistance with AML, customer due diligence, FATCA/CRS compliance, GST remissions, fund accounting, custody, and registered office services.

For more information, feel free to get in touch with our teams / Mr. Allard de Jong ([email protected]) or Ms. Felicia Wee ([email protected]).