A major legislative milestone was reached for fund domiciliation in Singapore on 1 October 2018, with the Singapore Variable Capital Companies (VCC) bill voted and passed by parliament. The advantages of the VCC have been discussed and mooted since early 2017. The bill is currently being reviewed by a parliamentary committee and "will come into force in 2019." The VCC will be a new corporate entity type established under the Singapore Variable Companies Act (the ‘Act’). Fund managers will be able to avail themselves of VCC in addition to private limited companies, limited partnerships and unit trust structures for fund management purposes.
The regulatory framework underpinning VCC has been specially designed by legislators for investment funds and enhances Singapore's position as a leading financial centre.
VCC will complement Singapore's fund management capabilities by diversifying fund structure options available here, allowing both fund management and fund domiciliation to take place locally.
Fund establishment in Singapore via the use of VCCs will enjoy the following benefits:
Cost-efficiencies through economies of scale.
Access to a network of Avoidance of Double Taxation Agreements between Singapore and other jurisdictions.
In this article, we will explain key characteristics of VCC that have been announced and disclosed to the financial community by the Monetary Authority of Singapore (MAS).
Shares, Redemption and Valuation
Non-Public Register of Members
Governance of VCCs
Flexible Structure: Allows for Stand Alone and Umbrella Fund Structures
Audit and Accounting
Assets under management in Singapore have grown an average of 15 per cent annually during the 2013 to 2017 period and stood at S$3.3 trillion by the end of 2017. Singapore remains a strong fund management hub, with global talent and institutions tapping on Singapore's value proposition by locating and engaging themselves here. The introduction of VCCs to the Singapore fund management landscape will allow fund management and domiciliation to be co-located meaningfully in one jurisdiction within Asia and will be an important milestone for Singapore's funds industry.
 Note from Indranee Rajah S.C. Minister in the Prime Minister's Office, Second Minister for Finance and Education dated 2 October 2018. Retrieved from http://www.singaporelawwatch.sg/Portals/0/Indranee%20Rajah%20Note%20on%20Variable%20Capital%20Companies%20Bill.pdf on 10 October 2018.
 References in this memo to sections of the Act refers to sections of Bill No. 40/2018 of the Singapore Parliament 2018. Retrieved from https://www.parliament.gov.sg/docs/default-source/default-document-library/variable-capital-companies-bill-40-2018.pdf on 11 Oct 2018.
 Para 19 of Speech by Indranee Rajah S.C. Minister in the Prime Minister's Office, Second Minister for Finance and Education on 1 October 2018. "Variable Capital Companies Bill (2018)" – second reading speech in parliament. Retrieved from http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy-Statements/Speeches/2018/Variable-Capital-Companies-Bill-2018.aspx on 10 October 2018.
 Section 286 of the Securities and Futures Act will be amended by adding a new subsection (2A) on this point.
 Sue-Ann Tan (2018, September 10). Parliament: Proposal for a new corporate structure for fund managers. The Straits Times. Retrieved from www.straitstimes.com/politics on 10 October 2018
 Companies (Amendment) Act 2017 (No. 15 of 2017) Date of Commencement: 11 October 2017.
 See Annex 3 of Note from Indranee Rajah S.C. Minister in the Prime Minister's Office, Second Minister for Finance and Education dated 2 October 2018. Retrieved from http://www.singaporelawwatch.sg/Portals/0/Indranee%20Rajah%20Note%20on%20Variable%20Capital%20Companies%20Bill.pdf on 10 October 2018.
Eef Gerard Van Emmerik
Yap Teck Chai
Teck Chai is Managing Counsel at Legal Ink LLC and his practice covers a broad spectrum of financial and regulatory transactions. Teck Chai was focusing on banking and finance, corporate, and securities law before expanding his practice to cover payment services and financial regulation. Prior to his current role, he was a senior associate at an international law firm.
Ow Kim Kit
Kit is a Partner at Legal Ink and has over 20 years of legal experience in leading local and international law firms as well as at leading international banks. Kit was also Senior Legal Counsel at the Monetary Authority of Singapore where she was involved in calibrating and drafting Singapore’s banking laws and regulations and the development of wealth management, financial intermediaries, and trust industry in Singapore.