A new company form designed for funds
The note dated 2 October 2018 follows Parliament’s passage of the VCC Bill on 1 October. A VCC is incorporated under the VCC Act rather than the Companies Act, with shareholders and a board owing fiduciary duties and acting in its best interests. It adds a fund-specific option instead of eliminating companies, LPs or unit trusts.
Why Singapore needed the structure
The note identifies a gap between fund domicile and management: many Singapore-managed funds were domiciled overseas because existing local vehicles had limitations. A flexible domestic vehicle was intended to complement Singapore’s fund-management expertise and allow more of the fund value chain to be based locally.
Standalone fund architecture: Annex 1
Annex 1 shows shareholders investing by holding VCC shares, a VCC board and assets within one legal entity, mandatory delegation of fund management to an MAS-regulated manager, and supporting providers handling administration, valuation, accounting and expenses. A custodian safeguards assets where required for certain investors, such as retail investors; the diagram does not make a custodian universally mandatory for every VCC.
Umbrella fund architecture: Annex 2
An umbrella VCC can contain two or more sub-funds with different assets and investor groups. Annex 2 shows a shared VCC board, manager, custodian and service-provider relationships, alongside separate sub-fund asset pools. Investors hold VCC shares relating to the respective sub-fund rather than converting each sub-fund into the ordinary separate company shown in a Companies Act structure.
Open-ended and closed-ended strategies
The vehicle supports both open-ended and closed-ended funds and traditional or alternative strategies. The note describes traditional funds as often open-ended with redemption choices, while private equity and venture-capital funds are typically closed-ended with a fixed number of shares and restricted redemption. Variable capital accommodates both types, rather than promising unrestricted exits in every fund.
Share issuance, redemption and capital-funded dividends
The note describes issuing and redeeming shares without shareholder approval and paying dividends from capital as well as profits. Compared with the ordinary company capital-reduction model, this supports fund subscriptions, redemptions and distributions. The general structural flexibility should still be read together with the fund’s actual open-ended or closed-ended design.
Accounting standards choices
The source permits Singapore standards or recognised international standards, expressly IFRS and US GAAP, so managers can meet investor needs and asset-jurisdiction requirements. It also urges accounting professionals to gain competence in the standards used by their VCC clients. This is a choice among recognised standards, not permission to dispense with financial statements.
Shared costs and segregated liabilities
Sub-funds can share directors and providers such as managers, custodians, auditors and administrators. At the same time, each sub-fund’s assets and liabilities must remain segregated: one cannot discharge another’s liabilities and each is wound up separately. Cost-sharing and liability ring-fencing therefore operate together, not as opposing alternatives.
Redomiciliation and retained corporate identity
Comparable foreign corporate funds can transfer registration into Singapore as VCCs without the small-company size requirements discussed for the earlier company route. A vehicle in another form may first restructure or instead form a new VCC and transfer assets and liabilities. Redomiciliation preserves corporate history and identity; creating a new entity and transferring assets is a different alternative.
ACRA, MAS and shareholder information
ACRA administers the VCC Act, while MAS oversees VCC anti-money-laundering and counter-terrorism-financing obligations. The shareholder register need not be public, but must be disclosed to public authorities on request for regulatory, supervisory and law-enforcement purposes. Non-public access is not an exemption from maintaining or disclosing the register to authorities.
Tax policy in Annex 3
The 2018 announced policy treats a VCC as one company and a single tax entity with one income-tax return. The note refers to extension of then-numbered sections 13R and 13X tax exemptions, a 10% Financial Sector Incentive–Fund Management rate for approved managers of incentivised VCCs, and GST remission for incentivised VCCs. It says further details would follow. Those section numbers and announced benefits are historical descriptions, not current approval assurances.
Implementation expectations and professional opportunities
The note anticipated commencement in 2019 on a notified date; that was its 2018 expectation, not the final launch date. It identifies opportunities for administrators, directors, custodians, accountants, lawyers and tax advisers to support new and redomiciled funds. The central professional task was to understand the new vehicle and explain it accurately, including its reporting and governance requirements.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗