Understand VCC

On the 15th of January 2020, the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA) jointly launched the Variable Capital Companies (VCC) framework. Prior to its long-anticipated launch, there was quite a significant amount of excitement within the financial sector. Many professionals and industry leaders described this new investment vehicle as being a ‘gamechanger’. How so? And what does it mean for investments in Singapore moving forward?

If the capabilities and potential uses of the VCC vehicle are fully utilized, it would indeed fulfil its objective of promoting Singapore to becoming a stellar global wealth and fund management hub. At Raffles Family Office (RFO), we are proud and honored to be one of a handful of companies included in the VCC pilot programme – meaning firsthand immediate access to the framework.


Even though Singapore already has several attractive business schemes, the VCC fills an important void in the fund management space that was previously lacking. Its key features are the added flexibility and less stringent capital maintenance structure.

  • Legally, a VCC is a Singapore corporate entity.
  • It is only permitted to be used for Collective Investment Schemes (CIS)
  • Regulated under the Variable Capital Companies Act 2018 (No. 44 of 2018)
  • The new structure can consist of both open-end and closed-end funds, traditional and alternative funds.

The VCC can be set up as a stand-alone entity or as an umbrella entity with multiple sub-funds. This is not unlike what is currently available in traditional offshore domiciliation centres such as the Cayman Islands and British Virgin Islands.

Ultimately, all of those sub-funds under the same umbrella master fund will be taxed as a single entity regular Singapore company and would therefore give it access to tax treaties and Double Tax Agreements (DTAs) with other jurisdictions. In addition, tax incentives available for the Singapore Resident Fund (SRF) and the Enhanced-tier Fund (ETF) under the 13R and 13X schemes respectively will also be applied to VCCs, thereby adding further to its tax benefits.

Not only is the VCC aimed at newly created funds being domiciled locally in Singapore, it also attracts international investors with existing funds with a simple and straightforward re-domiciliation process. Foreign corporate entities will be required to transfer their registration to ACRA in order to apply for the VCC.

For investors that value anonymity and privacy, it is good to note that a VCC’s register of shareholders need not be made public. Such information regarding the shareholders may also not be purchased off ACRA.

Capital Structure & Maintenance

As previously mentioned, one of the main benefits of the a VCC from an investment fund point of view is that is not subject to stringent capital maintenance requirements of regular companies such as shareholder approvals. These are extremely enticing features which allows for investors ease of entry and exit while still being able to provide them with regular distribution payouts.

  • A VCC is permitted to freely redeem or purchase fully paid shares out of capital/profits.
  • A VCC’s shares must be issued, redeemed or repurchase at a price equal to the proportion of the VCC’s NAV represented by the share (after adjusting for fees and charges in accordance with the constitution).
  • A VCC is also permitted to freely pay distributions out of both capital and/or profits.

Umbrella/Sub Fund Structure, Segregation of Assets & Liabilities

Perhaps the most intriguing feature of the VCC framework is the umbrella-sub-fund structure that it will allow. Under this structure, fund managers will be able to enjoy greater flexibility and efficiency to segregate investors under different portfolios with a variety of different mandates. Fund managers will be able to manage the structure under a single legal entity, reducing overall costs and unnecessary delays. Previously, the sub-fund structure with different investments strategies was not possible and fund managers had to separately set up a brand-new fund for each strategy.

Structure of the VCC Umbrella Fund

In order to mitigate the risk of cross-fund contagion arising from the setup of multiple sub-funds under the same umbrella, the VCC includes several protective measures. These include preventing the assets of one sub-fund being used to settle the liabilities or claims against the VCC or any other sub-fund. In essence, any liability incurred in relation to any sub-fund must be discharged solely and wholly out of the assets of that particular sub-fund. Each sub-fund also has the ability to be wound-up singly and separately from the others. This ensures proper ring-fencing between each sub-fund’s assets and liabilities in the event of insolvency.


Compared to previous fund structures, the VCC finally adds the cherry on top, rounding off the full suite of fund management capabilities Singapore now has to offer. To further encourage industry adoption of the VCC framework in Singapore, MAS has also launched a Variable Capital Companies Grant Scheme. The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70% of eligible expenses paid to Singapore-based service providers. The grant is capped at S$150,000 for each application, must be submitted before 15 April 2020, and with a maximum of three VCCs per fund manager. With the enhanced flexibility, tax benefits and structural efficiency, the VCC propels Singapore to an international fund management and domiciliation hub.


This material is provided for informational purposes only, it does not constitute an offer to sell, or a solicitation or an offer to buy. The copying, saving or other reproduction, adaptation, modification, transfer, assignment, other utilisation or exploitation of the content or parts thereof without the prior written permission of the Raffles Assets Management (HK) Co. Ltd and Raffles Family Office Pte Ltd in Singapore is strictly prohibited.

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