Singapore VCC

 

 

OPIM is pleased to announce that, in cooperation with Pilgrim Partners Asia, a leading fund management platform in Singapore, it is now able to introduce the Singapore’s newly launched Variable Capital Companies (VCC) scheme. Launched on 15 January 2020, this new fund structure provides fund managers a new flexible solution to work within Singapore regulatory environment. The new legal entity, regulated by the Variable Capital Companies Act (VCC Act), can be structured as a stand-alone fund or umbrella fund with multiple sub-funds, and can be utilized for traditional and alternative fund strategies, either open-ended or closed-ended.


Pilgrim Partners Asia is licensed by the Monetary Authority of Singapore and holds a Capital Markets Services License to conduct fund management activities and provide asset management services to private and institutional investors that qualify as “accredited investors” under the Securities and Futures Act (Cap. 289) of Singapore.

 

Advantages of VCC

1. Flexibility

Thanks to the variable capital structure, VCC can issue and redeem shares without having to seek shareholders’ approval, enabling investors to exit their investments in the investment fund when they wish to, and pay dividends using its capital. VCC are not subject to restrictions on capital reduction (equivalent to fund redemptions) and on payment of dividends only out of profits, applied to Singapore companies in general.

 

2. Operational efficiency

As the multiple sub-funds are under the same umbrella fund, they can benefit from economies of scale and achieve cost efficiency. The sub-funds can share a board of directors and have common service providers, such as the same fund manager, custodian, auditor and administrative agent. Certain administrative functions, for instance the holding of general meetings and preparation of prospectuses, can also be consolidated. It is also convenient for fund managers managing various types of funds to set up different sub-funds to meet the needs of different investors.

 

 

3. Tax efficiency

VCC will be treated as a company and a single entity for tax purposes. In this case, only one set of income taxes is required to be filed with the Inland Revenue Authority of Singapore. In addition, the tax exemption under sections 13R and 13X of the Income Tax Act (Cap. 134) of Singapore will be extended to VCCs.

 

4. Foreign funds re-domiciliation

The investment fund established outside Singapore can become a VCC through a re-domiciliation mechanism. This mechanism enables existing foreign-domiciled funds with similar structures to VCC (with at least one or more pooled investment vehicles) to re-domicile in Singapore by submitting a simple application for transfer and notifying the foreign authorities of the de-registration. Fund managers can also choose to set up a new VCC in Singapore and transfer the assets and liabilities of the original fund to a VCC.

 

 

 

OP Investment Management Pilgrim Partners Asia Singapore Variable Capital Company

 

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