Variable Capital Company of Singapore

On October 1, 2018, the Singapore Parliament passed the Variable Capital Companies Act 2018 (the “VCC Act”). The Act came into force on January 14, 2020, when the Monetary Authority of Singapore announced the launch of the variable capital companies regulatory framework. The VCC Act provides for the incorporation and operational details of a new corporate vehicle that is suitable for investment funds. The legislation is designed to enhance Singapore's position as a full-service international fund management centre. This article explains the key features of the VCC, the legal framework relating to the incorporation and establishment of a VCC, and sets out the advantages of a VCC structure over fund structures that were previously possible in Singapore.


Singapore is recognised as a leading fund management hub in the world. Over the last 3 decades, the government proactively took important steps to develop the country’s fund management sector, and to aggressively promote and enhance Singapore's attractiveness in the global fund management industry. These included various tax-exemption schemes — such as the Qualifying Fund Scheme, the Resident Fund Scheme, etc. — that were introduced to provide incentives for fund management firms that locate in Singapore. These actions have yielded impressive results and Singapore is home to several well known global fund management firms.
NOTE: This article is about a specialized type of company structure called Variable Capital Company, designed for very specific uses as explained in this article. Refer to our guide for information on setting up a standard Private Limited Company in Singapore.

In line with the previous initiatives, Singapore launched the Variable Capital Companies Act to create a corporate structure specifically for investment funds. The VCC will complement and expand the existing forms of fund vehicle available in Singapore, such as the limited liability company, limited partnership, and the unit trust structure. Together, these corporate structures will provide a comprehensive range of formats that can be matched to suit the investors’ needs. The VCC structure will strengthen Singapore’s position as an international fund management centre, and provide new career opportunities for fund managers and fund servicing professionals such as fund administrators, lawyers, and accountants.

The article includes the following topics:

What Is a Variable Capital Company?

The VCC is a corporate structure in which the issuance and redemption of its shares can be performed with great flexibility and ease.The capital of a VCC will always be equal to its net assets, thus providing flexibility in the distribution and reduction of capital. Such a structure can also pay dividends out of capital thus providing fund managers flexibility in meeting dividend payment obligations. Furthermore, VCCs’ shareholder registers are not required to be made public – thus offering privacy to investors; this is not the case with regular companies.

A VCC may operate as a stand-alone or as an umbrella entity with multiple sub-funds that are gathered under a single corporate entity and yet remain separate. It’s a new alternative to unit trusts, limited partnerships, limited liability partnerships, and companies. It can be used for traditional and alternative fund strategies. It can be used for both open-ended and closed-ended funds.

The framework gives fund managers great operational flexibility and provides operational cost savings, thereby encouraging more funds to be domiciled in Singapore. Fund managers who run foreign investment funds with comparable structures are now able to redomicile such foreign investment funds by transferring their registration to Singapore as VCCs.

Key Features of the VCC

Legal Status

  • A VCC is treated as a company and as a separate legal entity. It can own property in its own name. A VCC is a legal person.
  • The VCC’s rights and obligations are separate from those of its shareholders and directors.
  • A sub-fund of an umbrella VCC is not a legal person separate from the VCC; however, the VCC may sue or be sued in respect of a sub-fund as if each sub-fund were a legal person, and the property of a sub-fund is treated in law as if the sub-fund were a separate legal person.
  • The only legitimate purpose for which the VCC vehicle may be used is one or more collective investment schemes (CIS).

Who Owns the VCC

  • The VCC is owned by shareholders.
  • The minimum is one shareholder; a maximum is not specified.
  • If shareholders want to exit their investment, they may sell their shares back to the VCC as prescribed in the constitution.

Liability of Shareholders

  • The liability of a shareholder to contribute to the liabilities of the VCC or a sub-fund of the VCC is limited to the amount, if any, unpaid on his or her share purchase. No liabilities extend to the shareholders beyond their invested capital in the VCC.

Type of Securities

  • The VCC issues shares; each share in a VCC corresponds to a unit of a CIS, and the members in a VCC are analogous to unitholders of a CIS.
  • The VCC shares give shareholders the right to receive profits from the VCC’s property in the manner they may decide in their constitution. This may include the right to participate in or receive payments from the property of the VCC (or a sub-fund of an umbrella VCC).

Minimum Capital Requirements

  • The law imposes no capital maintenance requirements for VCC. The VCC must issue at least one share.
  • Shares have no par value — the actual value of the paid-up capital of the VCC is at all times equal to the net asset value of the VCC. Thus, the share price of a VCC will fluctuate with the value of its assets and share price will be equal to total net asset value divided by total number of shares outstanding.


  • The VCC is managed by its board of directors.
  • The fund must have at least one director. If the VCC comprises at least one authorised scheme (i.e., a scheme that has been authorised by the MAS so that units in the scheme may be offered to the public) then the minimum required is three directors, including one independent director.
  • A VCC must also have a fund manager to manage its property or operate the CIS or schemes that comprise the VCC. The fund manager must hold a Capital Markets Services Licence for fund management.

Benefits of the VCC

  • The new fund vehicle enables fund managers to create an umbrella structure and thus provides cost savings through economies of scale, as the sub-funds can have a common board of directors and service providers — such as the same fund manager, custodian, auditor, and administrative agent. Part of the administrative functions, such as holding of general meetings and preparation of prospectuses, can also be consolidated. Sub-funds can adopt different investment strategies. The assets and liabilities of sub-funds within an umbrella VCC are segregated, and each of them may be wound up as if it were a separate legal person without affecting the other sub-funds.
  • A VCC may be incorporated with only one member. Fund structures with only a single member but many underlying investors may be built.
  • The framework allows fund managers to take advantage of Singapore’s extensive double tax treaty network and tax incentives, as described below.
  • When the vehicle is set up as an umbrella fund with several sub-funds, members may hold shares that are referenced to a particular sub-fund held by the VCC.
  • Financial statements are not required to be made public.
  • The structure can be used for a number of investment strategies — namely traditional, hedge funds, private equity, and real estate funds.
  • It can be created as a pooling and investing vehicle and can thus help avoid multi-tiered fund structures.
  • The VCC can be used for wealth management purposes as well.
  • The VCC constitution may be altered by an ordinary resolution of the members. In addition, the constitution may expressly authorise directors to alter it without members’ consent in certain cases — where such alteration does not prejudice the interests of any member, and does not release the fund manager or any director from any responsibility to the members in any material sense.
  • A VCC is not obliged to hold an annual general meeting for a financial year if (i) the directors so decide and give to the members a written notice of such dispensation at least 60 days before the last date on which the annual general meeting must be held, or (ii) audited financial statements and the auditor’s report have been sent to all persons entitled to receive notice of general meetings within 5 months after the end of the financial year.

Advantages of VCCs Over Private Limited Companies

  • A VCC may change its share capital without seeking investors’ approval and can therefore give investors the right to freely invest, redeem or withdraw their capital from the VCC; such transactions can in fact be made every day.
  • The constitution and returns of a VCC will not be accessible to the public but must be submitted to the Registrar of VCCs.
  • The new structure’s register of members is not accessible to the public. Only the fund manager, a custodian, certain public authorities, or a person permitted by court order may have access to the register of members. A shareholder may only obtain information relating to himself or herself.
  • As mentioned above, the VCC can be established as an umbrella fund.

Additional Requirements for a VCC

  • The VCC capital must always be equal to its net assets.
  • It must have a Singapore-based licensed or regulated fund manager (unless an exemption has been obtained from the relevant authorities).
  • The VCC must have its office registered in Singapore and must appoint a Singapore-based company secretary.
  • The VCC must appoint a qualified custodian.
  • VCCs must follow the existing Securities and Futures Act (SFA) requirements for investment funds.
  • The VCC must be audited by a Singapore-based auditor on an annual basis and must present its financial statements in compliance with IFRS, Singapore FRS, or US GAAP accounting standards.

Tax Issues

A VCC is treated as a company and single entity for income tax purposes, whether it is set up as a stand-alone or as an umbrella vehicle with sub-funds. An umbrella VCC with its sub-funds is only required to submit a single corporate income tax return with the Inland Revenue Authority of Singapore. VCCs pay income tax at the corporate tax rate as a company, which is currently 17%. Singapore has a single-tier tax regime, and dividends paid out to shareholders are not taxable.

The Enhanced Tier Fund (“ETF”) Scheme and Singapore Resident Fund (“SRF”) Scheme under the Income Tax Act are extended to VCCs in a manner similar to how they are applied to Singapore companies. Under these incentives, the ‘‘specified income” (includes gains) derived by the fund from ‘‘designated investments’’ is exempt from tax. The list of designated investments covers a wide range of investments, including stocks, shares, securities, and derivatives. The only significant exclusion is for immovable property in Singapore whose gains are not exempt from taxation.

Under the ETF Scheme, the applicant’s fund, among other conditions, must have a minimum fund size of S$50 million at the time of application and an annual local business spend of at least S$200,000. Approval from the Monetary Authority of Singapore (MAS) is required for acquiring the ETF status.

The condition that the fund should have an annual business spend of at least S$200,000 is also applicable for the SRF Scheme. Under the SRF scheme, a resident fund enjoys access to Singapore’s large tax treaty network, which now stretches to more than 80 countries. Specific approval must  also be sought from the MAS to access the tax exemption under the SRF.

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The VCC Grant Scheme

In addition to the above-listed VCC benefits, the Monetary Authority of Singapore has launched a VCC Grant Scheme to help fund managers defray the costs of incorporating or registering a VCC. Under the scheme, the state will co-fund up to 70% of eligible expenses paid to Singapore-based service providers for the incorporation or registration of the VCC. The grant is capped at S$150,000 for each application, with a maximum of three VCCs per fund manager. Thus, each fund manager can defray upto S$450,000 of the costs of setting up a VCC.

The scheme started on January 16, 2020, and will operate until January 15, 2023.

How to Set up a Variable Capital Company

VCC incorporation, like registration of all other Singapore companies, is a straightforward and well-defined process.

1. Apply for a New VCC Name

To complete this task, you must file the relevant application with the proposed VCC name, details of proposed director and VCC officers — including address, ID number, ID type and nationality, and in-principle approval obtained from other authorities (if any). The application generally takes up to 14 days to process. You will receive the transaction number of the approved name application.

2. Apply for Your VCC Registration

When applying, you will need to submit the following information:

  • Transaction number of the approved name application;
  • Details of VCC officers, including address, ID number, ID type, nationality, and contact information;
  • Details of Permissible Fund Manager and subscribers;
  • Registered office address;
  • Working hours of your VCC;
  • Copy of your constitution;
  • Financial year end and period.

Note that:

  • You must pay a non-refundable fee of S$8,000 for incorporation of a VCC.
  • Only a subscriber to the constitution of the VCC or a Corporate Service Provider (CSP) may file the form.
  • Foreign Identification Number holders are advised to seek consent from the relevant pass-issuing authority (e.g. MOM or ICA) before registering or taking on an appointment (e.g. director, secretary) in an entity.
  • If any director or shareholder is a foreigner, you are obliged to engage a CSP to incorporate your VCC.
  • At least one director must be ordinarily resident in Singapore.
  • At least one director (who may be the same person as in the point above) must be either a director or a qualified representative of the fund manager of VCC.

3. Get Your Business Profile

You will receive a free Business Profile of the entity after it has been successfully incorporated.
This will include a Unique Entity Number (UEN) issued to your VCC. This UEN is the business entity's identification number, which is required for transacting with government agencies.

Sub-Funds Registration

If you intend to incorporate an umbrella structure, each of the sub-funds must be registered with the ACRA through a special form, although the sub-fund is not considered a separate legal entity.

You must submit the following information to complete this transaction:

  • UEN and name of an umbrella VCC;
  • Proposed name of sub-fund; and
  • Date of formation of sub-fund.

Note that:

  • The application may be referred to MAS and you may be asked to change the proposed name of your sub-fund;
  • The application may take up to 14 days to be processed;
  • You must pay a non-refundable filing fee of S$400 for registration of a sub-fund; and
  • Registration of a sub-fund is only applicable for an umbrella VCC; a non-umbrella VCC does not need to follow this step.

Foreign Funds Transfer to Singapore

The new law permits investment funds domiciled in other jurisdictions which comprise one or more Collective Investment Schemes to redomicile in Singapore as a VCC by applying to ACRA to transfer their registration. The procedure is similar to VCC incorporation. More registration information and the application form itself may be found here.
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The Variable Capital Company (VCC) is a brand new Singapore corporate structure for investment funds constituted in compliance with the Variable Capital Companies Act. This new vehicle strengthens Singapore’s profile as a good jurisdiction for global fund managers and investors. The structure combines the advantage of a single legal entity at the VCC level with segregation of assets and liabilities at the sub-fund level. The VCC is applicable to most types of investment funds used in the world currently and it provides very significant tax incentives, such as the Enhanced Tier Fund and Singapore Resident Fund Schemes. This structure is especially attractive to foreign fund managers, who can leverage the more than 80 tax treaties concluded by Singapore to reduce their tax burden. In addition, Singapore fund managers may apply for the VCC Grant Scheme, which is aimed at helping to defray upto S$150,000 of the costs of incorporating or registering a new VCC. can help you with incorporation of a new VCC vehicle and other tasks related to the setup and operation of your investment fund in Singapore. We can also act as your long-term compliance provider and ensure that your funds stay in compliance with Singapore’s corporate and tax regulations.

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