Out-Law News 1 min. read

MAS finalises new corporate structure for fund ecosystem in Singapore


The Monetary Authority of Singapore (MAS) has introduced a new corporate structure for investment funds.

The new corporate structure is designed to enhance the fund ecosystem in Singapore and is formally known as Singapore Variable Capital Company or S-VACC.

MAS said the introduction of the VCC structure would strengthen Singapore’s position as an international fund management centre.

“The growth of fund domiciliation activities will create opportunities for a wide range of service providers such as lawyers, accountants, fund administrators, and fund custodians,” MAS assistant managing director Ng Yao Loong said.

MAS said that the new framework allows a VCC to be used by both open-ended and closed-end investment funds for traditional and alternative strategies. The variable capital structure of a VCC allows it to issue and redeem shares without having to seek shareholders’ approval, enabling investors to enter and exit investment funds when they wish to. It can also pay dividends using its capital.  

A VCC may be established as a standalone structure, or as an umbrella structure with multiple sub-funds with different investment objectives, investors, assets and liabilities. The umbrella structure creates economies of scale as sub-funds can share the same board of directors and common service providers and consolidate some administrative functions.

A VCC will have permission to use Singapore and international accounting standards, such as the International Financial Reporting Standards and US Generally Accepted Accounting Principles, in preparing financial statements so that it can serve the needs of global investors. Fund managers with foreign-domiciled investment funds may take advantage of the statutory regime for inward re-domiciliation under the VCC framework to transfer the domicile of their foreign investment funds to Singapore.

The framework also provides safeguards against the co-mingling of assets and liabilities between sub-funds, by requiring assets and liabilities of each sub-fund to be segregated.

To prevent VCC from being abused for unlawful purposes, VCC will be subject to anti-money laundering and terrorist financing requirements, and also required to appoint a fund manager that is regulated by MAS.

MAS conducted a public consultation on the proposed regulatory framework for VCCs and the draft Bill from March to April 2017. According to MAS, the Variable Capital Companies Bill passed the first reading in parliament on September 10.

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