On January 15, 2020, the Variable Capital Companies Act 2018 (“VCC Act”) and its subsidiary legislation came into force to introduce a new legal framework for variable capital companies (VCCs).
VCCs allow funds to be set up as a standalone, or as an umbrella entity with one or more sub-funds with different investment objectives, assets, debts and investors.
VCCs should bolster the City State’s position as a fund management hub, encouraging fund managers to domicile their investment funds in Singapore.
In order to drive adoption, the Monetary Authority of Singapore (MAS) has launched a Variable Capital Companies Grant Scheme that will help defray the costs involved in registering or incorporating a VCC by up to 70% of eligible expenses (paid to Singapore-based providers).
There is a maximum of three VCCs per fund manager and the grant is capped at S$150,000 for each application. The scheme is funded by the Financial Sector Development Fund (FSDF) and will take effect for up to three years.
Consultations for the introduction of the VCC started in 2016 with the Variable Capital Companies Act passed in October 2018. In September 2019 a group of 18 fund managers participated in a VCC Pilot Programme that was initiated by the MAS and ACRA. As of today, all fund managers have re-domiciled or incorporated 20 investment funds as VCCs comprising of venture capital, private equity, hedge fund and Environmental, Social, and Governance (ESG) strategies.