The Variable Capital Company (VCC) is the latest and innovative fund management strategy which has brought Singapore to the forefront of global investment services. It has provided many opportunities for the VCC fund administrator to manage the fund and support the related activities. VCC is a legal framework provided for investment funds that need to be domiciled in Singapore. It intends to offer an alternative for the existing fund or collective investment schemes like partnerships, unit trust, cooperations, etc.
Some of the notable key features of VCC includes:
- VCC is set up as a single stand-alone fund or as a main VCC with multiple sub-funds.
- VCC can be used as a traditional or alternate fund strategy in closed/open-ended forms.
- In the tax aspect, it will still be considered a regular Singapore company.
What has made Variable Capital Company so powerful?
Several reasons have made VCC the most powerful and stable fund strategy. It has been recognized as a well-run investment center in all of southeast Asia. VCC has turned a few of the developing countries into the global investment spotlight. A most notable example is Singapore, which has become the global investment hub due to VCC’s inclusion. Besides making Singapore a global investment force, Variable Capital Company has created this Asian country stand in line with other leading tax heavens.
1. Benefits to investors due to VCC
The foremost reason VCC has become so powerful is because of the benefits investor gets due to VCC’s introduction. Let’s have a look at it.
- Once qualified for the enhanced tier fund scheme or the Singapore resident fund scheme, the investors can avail of tax-free income from eligible VCC funds
- A variable capital company is a legal entity which means which VCC can act for and on behalf of itself without appointing any trustee. It makes VCC offer much more freedom than the unit trust or similar entities.
- VCC can issue and redeem shares without taking approval from shareholders. That way, it provides flexibility to investors as they can exit their investments if they wish.
- VCC can also issue dividends using its capital if required. It gives an extra edge to VCC over other companies that offer dividends only on the profits.
2. Benefits to fund administrator or manager due to VCC
VCC is a structured approach that offers flexibility to investment possibilities for fund managers and the VCC fund administrator in Singapore. The following are the key benefits of VCC in this regard.
- In VCC, the sub-fund assets and liabilities can be separated from other sub-fund with the same VCC framework. That way, the VCC is used as an alternative to multiple companies.
- The sub-funds within VCC makes the funds manager legitimately competitive with other fund managers in the world.
- Moreover, the VCC sub-funds can share the board of directors and use the same service providers like VCC fund administrator, custodian, etc.
- In case VCC acquires another VCC, then the original one can use the customer due to diligence research already done by the acquired VCC.
3. Benefits to local fund service providers due to VCC
The previous fund service providers, who have put in their efforts for trust, private companies, or limited partnerships, also benefit from VCC’s introduction.
- Due to a new power-packed tool, the fund service providers can expect a significant rise in the business inflow.
- The fund service providers can re-domicile their offshore funds as VCC, and their clients will get the same benefits as they were getting before.
- VCC follows all the business ethics and values of the existing fund service providers that, too, in the same way, they were treated before VCC.
- VCC saves the time and money of fund service providers in administration and other preparations.
The bottom line
Undoubtedly, Variable Capital Company or VCC is power-packed global fund management that comes with many benefits to investors, VCC administrators & managers, and local fund service providers. Compared to the existing partnerships, unit trust, limited partnership companies, the VCC permits more flexibility, be it in the aspect of healthy ROIs or distributions. In order to get the customized solutions to meet the expected requirements, it would be way better to get administration facilities from a reliable Venture Capital Fund Administrator. If you have any queries or need any clarity, get in touch with the support team for 24/7 assistance.