These include fees paid to fund administrators, tax structuring, legal training of the fund, secretarial expenses such as starting a business, fees for local administrators, etc. For the purposes of an umbrella TRC, a Sub-Fund is not considered a separate legal entity from the CRC. However, the CVC may sue (or be sued) on behalf of a Sub-Fund. In this case, the Sub-Fund acts as a legal entity. The Government treats the assets of a Sub-Fund as if the Sub-Fund were its separate legal entity. VCC Context The VCC is a new business structure developed specifically for investment funds. It also offers insulation flexibility via a roof structure, just like a protected cell company or a separate holding company. Umbrella funds can host different strategies/investors in different compartments called sub-funds, with each of the underlying sub-funds affected, allowing for a legal separation of assets and liabilities. As it is a corporate fund structure with no regulatory definition of the investment strategies that can be integrated into it, VCC can be used for alternative fund strategies (open and closed). This new corporate structure provides funds with an alternative to the existing fund structures available in Singapore, such as limited partnerships, mutual funds and limited liability companies, and fills some of the gaps and limitations in the use of these structures. Foreign funds can now be transferred to Singapore by converting them into a corporate structure similar to venture capital firms.
The funds can then be transferred to Singapore as a VCC. Alternatively, the funds can be injected into a closed-end company in Singapore. The shareholders are the rightful owners of the VCC, just like in a normal limited liability company. You will receive a free company profile of the company after its successful creation. This includes a unique entity number (NU), which is assigned to your VCC. This UEN is the business unit identification number required for transactions with government agencies. The new VCC corporate structure for investment funds can be created as a separate entity (similar to a company) or as a holding company, where several collective investment undertakings can be combined under the umbrella of a single company. In this publication, we explain the main features of the CVC, the legal framework for the creation and incorporation of a CVC, and provide a comparison of the structure of the CVC with other fund structures in Singapore. If you intend to establish an umbrella structure, each of the Sub-Funds must be registered with AIDA via a special form, although the Sub-Fund is not considered a separate legal entity. Contact us now and our specialist will guide you through the process from start to finish, including business formation requirements, VCC structure, tax frameworks and strategies, audit, legal assistance and grant applications. A legally operating VCC must hire an appropriate fund manager who is resident and licensed by MAS in Singapore.
However, it is possible to find an exemption from the competent authorities. In addition, the CVC offers the flexibility of incorporation by re-domiciliation. Re-domiciliation is a feature of the constitution that allows a legal entity to be transferred to other compatible jurisdictions in the home countries and its characteristics to be retained from day one, thus maintaining the antecedents. In early 2020, Singapore introduced a new corporate structure, the Variable Capital Company (VCC), and by June, the number of registered VCCs had risen to over 300. This has now attracted interest from major asset managers and helped further cement Singapore`s reputation as a leading financial centre. The draft law on open-ended companies, which defines the legal framework for the creation, structure, operation, conversion and dissolution of a CVC, was presented as an emergency bill to the National Assembly on 4 April 2022. later passed as the Variable Companies Act («VCC Act») by the National Assembly on April 12, 2022 and published on April 15, 2022, which is now awaiting a proclamation. With 13R`s onshore fund tax incentive system and 13X`s expanded tax incentive, one and three employment passports (EPs) would be granted to senior executives/fund owners who are overseas residents and intend to relocate to Singapore. This passport allows foreigners to work legally, stay in Singapore and bring their immediate family members to join them. VCC is a new legal form/structure for all types of mutual funds in Singapore. It can be set up as a single stand-alone fund or as a fund of funds with two or more sub-funds, each with different assets. The new legal framework shares similarities with existing fund vehicles in Singapore in the form of a trust, limited partnership or standard private company, but the differences could be quite difficult to disentangle.
The open-ended company (VCC) is a new corporate structure in which several collective investment schemes (open or closed) can be grouped under the umbrella of a single company while remaining separate from each other. With the introduction of VCC in the wealth management market, Singapore strengthens its position as a leading fund site. The VCC has its own legal framework that allows it to be used for alternative and traditional investment funds in closed or open strategies. In this publication, we compare the VCC with different forms of companies in investment fund structures in other large fund domiciles. We found that many of last year`s early adopters have similar characteristics: early-stage asset managers, small investment groups, and seed funds. This is partly due to the generous financial incentive that plays an important role in the decision-making process for these actors: as part of the introduction of CVC, MAS introduced the CVC Grant Program (VCCGS) to encourage adoption and conversion to CVC. This grant covers 70% of eligible expenses (limited to $150,000 per CCV and up to three CCVs per fund manager) for work carried out in Singapore as part of the creation/re-domiciliation of the CVC. These include attorneys` fees, tax advisor fees, regulatory advisory fees for establishment, and consulting fees. A venture capital firm can operate as a stand-alone entity or as a portfolio entity with several sub-funds grouped under a single entity while remaining separate. It is a new alternative to mutual funds, limited partnerships, limited liability companies and corporations.