Singapore serves as the investment gateway to Asia with 67% of the total AUM invested in the Asia Pacific. In association with the Accounting and Corporate Regulatory Authority (ACRA), The Monetary Authority of Singapore (MAS) launched the much-needed Variable Capital Companies (VCC) framework on 15 January 2020. Here in this blog, you will get to know all about VCC, Venture Capital Fund Administrator, and the need.
Let’s read further without any delay and understand its significance in the world of investment and fund administration.
The need of Variable Capital Companies (VCC)
The conventional structure of investment funds i.e., a corporate vehicle (Private Limited Company) or a partnership (Limited Partnership) scheme are less complex and easy to administer. But also has numerous limitations for running an asset management business in the long run. In these structures, the subscription and redemption of shares are complicated as the decision is completely dependent on the majority shareholder’s approval and not to a single shareholder.
Whereas, In case of a partnership, it doesn’t have a separate legal entity from the partners. In case the partner gets corrupt, the partnership won’t be able to sue or be sued or own property in its own name.
The Variable Capital Company structure is formed to overcome such barriers promoting operational flexibility and best of the returns to both the parties, the investors as well as the fund managers.
What’s the VCC all about?
- The VCC structure can be used for open or closed-ended funds both giving the much-required flexibility. Flexibility in terms of issuance and redemption of shares to the partners.
- VCC also gives the flexibility to pay dividends out of capital
- The VCC fund administrators can set it up like an umbrella fund with various sub-fund schemes
- Underlying it with separate assets and liabilities or a standalone investment fund.
- VCCfund administrators can also help fund managers to transfer their registration of existing
- Investment funds from any other country to Singapore as VCCs.
- VCC fund administrator must create a register to be shared with the public authorities upon request for regulatory, supervisory and law enforcement purposes.
Top Benefits of Singapore VCC fund investments:
1. VCCs give the flexibility to the Investors to enter and exit the fund according to their will.
2. Lesser juggling between various mutual funds which means multiple fund administrators, managers and increased cost.
3. It enables you to tap on Singapore’s tax treaties as a legal entity for cross border investments
4. VCC gives the freedom to distribute dividends from the capital to meet dividend obligation which was unlikely in the conventional corporate vehicle.
Venture capital fund investors and fund managers both are directly benefited by the launch of VCC funds. To make its adoption easier, it is notified that “MAS will help defray the cost of setting up the fund through the Variable Capital Companies Grant. Up to 70% of the eligible expenses such as legal and tax advice, incorporation and registration fees, capped at a total of SGD 150,000 will be reimbursed by MAS”. Connect with the experts at ASCENT fund services to have a detailed discussion and understand how it could benefit you and your business.