What are Varable Capital Companies (VCC) ?
The Variable Capital Company (VCC) is a new corporate structure introduced for all types of investment funds in Singapore. It is governed under the Variable Capital Companies Act 2018 which took effect from 14 Jan 2020. It is a type of legal vehicle tailored made for collective investment schemes (CIS).
It can be formed as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding a portfolio of different assets.
The VCC will complement the existing suite of investment fund structures available in Singapore.
The VCC Act and subsidiary legislation is administered by ACRA. All VCCs must be managed by a Permissible Fund Manager 1 . The anti-money laundering (AML) and countering the financing of terrorism obligations of VCCs will come under the purview of the Monetary Authority of Singapore (MAS).
What are the key features of VCC ?
Some of the key features of VCC are:
- A VCC is a legal entity specifically for investment funds that can be used for traditional and alternative strategies, both on an open ended and closed ended basis.
- A VCC will have shareholders (also known as members).
- A VCC will have a board of directors for the governance of the VCC’s operations, same as a company structure.
- A VCC must be managed by a Permissible Fund Manager regulated by the MAS.
- A VCC can be set up as a single standalone fund or an umbrella fund with multiple sub-funds, each holding a portfolio of segregated assets and liabilities. For fund managers that structure their funds as umbrella VCCs, there may be cost efficiencies from using common service providers across the umbrella and its sub-funds.
- A VCC provides flexibility in the issuance and redemption of its shares without the need for members/shareholder approval.
- The capital of a VCC will always be equal to its net assets, thereby providing flexibility in the distribution and reduction of capital.
- A VCC can pay dividends out of capital which need not be out of profits, which gives fund managers flexibility to meet dividend payment obligations.
- A register of shareholders has to be maintained by a VCC and need not be made public but it must be disclosed to public authorities upon request for regulatory, supervisory and law enforcement purposes.
- A VCC can be used for both open-ended 2 and closed-end fund strategies 3 .
- Fund managers may incorporate new VCCs or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.
- A VCC is allowed to use either Singapore Financial Reporting Standards (SFRS) or other recognised international accounting standards such as IFRS and US GAAP in the preparation of its financial statements.
1. Generally, a VCC will have to be managed by a fund manager which is:
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A licensed fund management company (i.e. a holder of a capital markets services licence for fund management under S86 of the Securities and Futures Act (Cap. 289)),
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A registered fund management company (i.e. a corporation exempted from holding a capital markets services licence under para. 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations) or
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A person exempted under the S99(1)(a), (b), (c), or (d) of the Securities and Futures Act (Cap. 289) from the requirement to hold a capital markets services licence to carry on business in fund management (i.e. a bank licensed under the Banking Act (Cap. 19), a merchant bank approved under the Monetary Authority of Singapore Act (Cap. 186), a finance company licensed under the Finance Companies Act (Cap. 108), or
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A company or cooperative society licensed under the Insurance Act (Cap. 142)).
2. An open-ended fund allows redemption of investments by their investors at their discretion and are open to new subscriptions by new investors at any time.
3. A closed-ended fund does not permit investors to redeem their investments at their discretion, has a fixed number of shares and do not allow new subscriptions after the offering period is over.
Choosing a VCC name
The registration fee for the application of a VCC name via the VCC portal before you can incorporate your VCC which is exactly the same as the registration of the company. Application fee costs $15.
After the name application is approved, it will be reserved for 120 days. The VCC must be incorporated within this period else the applicant will have to submit a fresh name application.
Once the name application is approved, you can proceed to incorporate the VCC via the VCC portal.
Number of directors required for the board of directors
Every VCC must have at least 1 director who is ordinarily resident in Singapore (e.g. Singapore citizens, Singapore PR or EntrePass holders/Employment Pass) with a local residential address. It is not compulsory to appoint a Managing Director. Depending on the types of VCC, each type of VCC has a minimum number of directors:
Authorised vcc | restricted/exempted vcc |
|---|---|
At least 3 directors of which 1 is an independent director | At least 1 executive director and 1 director who is either a Qualified Representative (as defined under the VCC Act) or a director of its fund manager |
Appointment of Company Secretary
It is a must to appoint a secretary within 6 months from the date of incorporation. He must be:
- A natural person
- Ordinarily resident in Singapore
The sole director and the company secretary cannot be the same person.
The company secretary must not be left vacant for more than 6 months.
Appointment of Auditor
An auditor must be appointed within 3 months of its incorporation/registration. The audit exemptions under Section 205B and 205C of the Companies Act are not applicable to VCCs
Authorised VCC refers to a collective investment scheme (CIS) defined under Section 2(1) of the Securities and Futures Act (SFA) that is constituted in Singapore and authorised by MAS under Section 296(1) of the SFA.
Basic requirement for a VCC director
A VCC must meet at least the following criteria:
- At least 18 years of age
- Of full legal capacity
- A Singapore citizen, SPR or EntrePass holder
- A EP holder wishing to become a VCC director must first obtain a Letter of Consent (LOC) from the Ministry of Manpower (MOM).
- FIN holders are advised to seek consent from the relevant pass issuing authority such as MOM or ICA before registering or taking on the appointment
- Cannot be disqualified from acting as a director such as an undischarged bankrupt.
Processing Time for Incorporation of VCC
It takes between 14 to 60 days for the application of the incorporation of a VCC to be processed.
This includes time required for referral to another government agency for approval or review.
For more information on Referral Authorities, please click here. Below contains a table for the list of referral authorities who review selected business registration applications before they can be approved in BizFile.
referral authorities | SSIC Code applied | SSIC code description | other reasons for obtaining approval | Website of agencies |
|---|---|---|---|---|
Board of Architects (BOA) Singapore | 71111 | Architectural services | Proposed name and activities containing the word “architect” or any of its derivatives, or words, names or designations that will lead to the belief that the person is an architect unless the person is a registered architect. Please refer to the Architects Act for more information. | |
Council for Estate Agencies (CEA) | 68201 | Real estate agencies and valuation services | Proposed activities involving “Real Estate Agent” or "Real Estate Agency", and applications for change of name by entities already carrying on real estate agency activities. | |
Council for Estate Agencies (CEA) | 68209 | Real estate activities on a fee or contract basis nec. | Proposed activities involving “Real Estate Agent” or "Real Estate Agency", and applications for change of name by entities already carrying on real estate agency activities. | |
Enterprise Singapore (ESG) | 66124 | Commodity (excluding gold) and futures brokers and dealers | Business activities involving “spot commodity trading” and/or “rubber” may require licensing under the Commodity Trading Act (Cap. 48A) (“CTA”) and/or Rubber Industry Act (Cap. 280) (“RIA”). | |
MCCY - Charities Unit | - | - | Proposed names for registered charities containing "Foundation", "International", "Singapore" | |
MINDEF - Defence Industry & Systems Office (DISO) | - | - | Proposed names containing "Military" or "Defence" | |
Ministry of Education (MOE) - Private Schools Section | 85211 | Secondary Schools | Establishments functioning as a "school" / "learning centre" / "education centre" / "training centre", excluding those offering instruction of a "non-academic" nature (e.g. beauty care, dressmaking, cooking, sports, games, driving, recreation-related, etc.). Names containing "Academy", "College", "Institute", “Institution", "University"; and "National", "Singapore", will normally be disallowed. | |
MOE - Private Schools Section | 85212 | Junior Colleges and centralised Pre-U institutes | - | |
MOE - Private Schools Section | 85213 | International and foreign system schools - secondary | - | |
MOE - Private Schools Section | 85214 | Schools for the handicapped and educationally sub-normal - secondary | - | |
MOE - Private Schools Section | 85220 | Technical and vocational secondary and post-secondary non-tertiary education | - | |
MOE - Private Schools Section | 85301 | Polytechnics | - | |
MOE - Private Schools Section | 85302 | Universities | - | |
MOE - Private Schools Section | 85303 | Teachers' training institutes | - | |
MOE - Private Schools Section | 85304 | Commercial schools offering higher education programmes | - | |
MOE - Private Schools Section | 85494 | Academic tutoring services e.g. tuition centres, private tutoring services | - | |
Ministry of Foreign Affairs (MFA) - ASEAN National Secretariat, Singapore | - | - | Proposed names containing "Association of Southeast Asian Nations" or "ASEAN" | |
Ministry of Law (MINLAW) - Legal Services Regulatory Authority (LSRA) | 69100 | Legal Activities | Proposed names containing Law-related words or acronyms such as “Law”, “Legal”, “Counsel”, “Chamber”, “Advocate”, “Solicitor”, “Law Corporation”, or “LLC”. | |
Monetary Authority of Singapore (MAS) | 64120 | Full Banks | ||
Monetary Authority of Singapore (MAS) | 64130 | Wholesale Banks | ||
Monetary Authority of Singapore (MAS) | 64140 | Offshore Banks | ||
Monetary Authority of Singapore (MAS) | 64150 | Merchant Banks | ||
Monetary Authority of Singapore (MAS) | 64992 | Representative offices of foreign banks | ||
Monetary Authority of Singapore (MAS) | - | - | Proposed names containing the words "Banks", "Banking", "Banque", "Banco", "Bancaire", "Finance Company" and "Finance", "Futures Exchange", "Clearing House", "Securities Exchange" or titles e.g. stock exchange, clearing corporation, clearing organisation, that give the impression that the applicant is a securities or futures exchange or clearing house | |
Professional Engineers Board (PEB) | - | - | Proposed names containing “Professional Engineering”, “Professional Engineers” and “PE”. Please refer to the Professional Engineers Act for more information. | |
Singapore Tourism Board (STB) | - | - | Regulatory authorities to seek prior approval before registering with ACRA | - |
Institute of Singapore Chartered Accountants (ISCA) | - | - | Names and activities containing "Accountancy", "Accounting", "Audit", or derivatives thereof are to obtain approval from ISCA | |
MOH | - | - | Names and activities containing “hospital”, “medical clinic/centre”, “dental clinic/centre”, “surgery”, “medical/clinical laboratory”, “healthcare establishment” or any other similar terms. Applicant to obtain approval from MOH. | |
Registry of Co-operative Societies | - | - | Names and activities containing "Co-op" or "Co-operative". Applicant to obtain prior approval from the Registrar of Co-operative Society. |
Registration of Sub-Fund(s) for an Umbrella VCC
A VCC can register one or more sub-funds under an umbrella VCC. To register a sub-fund, a VCC may apply through VCC portal.
Should the VCC decides to change from a non-umbrella VCC to an umbrella VCC, this information must be updated via the VCC Portal within 14 days. It will take up to 3 working days to process the application for the registration of the sub-fund if it is referred to another government agency for approval or review.
What are the types of VCC Filing Fees ?
The various types of VCC filing fees payable by a VCC are:
name of transaction | statutory filing fees |
|---|---|
Application of VCC Name | S$15 |
Application for incorporation of VCC | S$8,000 |
Application of Transfer of Registration | S$9,000 + $400 (Sub-Fund registration fee) x No. of sub-funds |
Registration of Sub-Fund | S$400 |
General Lodgement | S$0 |
1) Change of VCC/Sub-fund name | S$15 |
2) Change in VCC Type 3) Change in registered office address 4) Change in address where register of members and index is kept 5) Change in office hours 6) Change in user-described activity description 7) Alteration of Constitution under Section 20(5) of the VCC Act | S$0 |
8) Registration of Charge by VCC/Sub-Fund | S$60 |
VCC Information Products | |
i) Business Profile | S$5.50 |
ii) Certificate Confirming Incorporation of VCC | S$50 |
iii) Certificate Confirming Registration of Transfer | S$0 |
9) Annual Return | $1,600 |
10) Extension of Time (EOT) for submitting document evidencing that foreign corporate entity has been de-registered in its place of incorporation | S$200 |
11) Notice of Error for VCC / Sub-Fund such as
| S$60 S$200 |
12) Extension of time for Annual Return/Annual General Meeting | S$200 |
13) Application for relief from requirements for Financial Statements and Directors' Statement | S$200 |
14) Application for exemption from compliance with the Accounting Standards | S$200 |
15) Direction to VCC to change name under Section 21(6) of the VCC Act | S$200 |
VCC Grant Scheme
MAS has launched a VCC Grant Scheme (VCCGS) under the Financial Sector Development Fund (FSDF) to co-fund qualifying expenses paid to Singapore-based service providers for work done in Singapore in relation to the incorporation or registration of a VCC.
The scheme is valid till 15 January 2023.
Please click here for more information on the scheme issued by MAS.
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