What Are The Advantages OF Variable Capital Company Singapore?
The Variable Capital Company (VCC) Singapore is a new corporate form for investment funds that were established by the Variable Capital Companies Act, which went into force on January 14, 2020. The VCC will be a welcome addition to Singapore's existing investment fund arrangements.
A Permissible Fund Manager must oversee all VCCs. The Monetary
Authority of Singapore will be responsible for VCCs anti-money laundering and
counter-terrorist financing duties (MAS).
Alternatives to the new corporate organization structure include
unit trusts, limited partnerships, limited liability partnerships, and corporations.
Certain administrative duties, such as convening general meetings and preparing
prospectuses, can be merged as well.
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| Variable Capital Company Singapore |
Key features of Variable Capital company Singapore
The innovative suggested structure has piqued the interest of the Fund Administration
industry due to its unique
characteristics that would provide fund managers in Singapore with more
operational freedom. The following are some of the most important
characteristics of a VCC:
· The Variable Capital
Companies Act will control it. The Accounting and Corporate Regulatory
Authority will be in charge of the establishment and administrative aspects,
while the Monetary Authority of Singapore (MAS) would be in charge of the
anti-money laundering and counter-terrorist financing requirements.
· A VCC
can be a standalone fund or an umbrella corporation that houses numerous sub funds,
each with its investment objectives, investors, and assets and liabilities.
· The
VCC can have a single shareholder or hold a single asset; the existing Securities
and Futures Act (SFA) investment fund regulations will apply to VCCs; the
corporation cannot be self-managed.
· It
can be utilized as a stand-alone fund or as a holding company for various
sub-funds with varying investment objectives, investors, and assets and
liabilities.
What are the Benefits of a Variable Capital Company Singapore?
For the issuing and redemption of shares, no solvency tests or
corporate resolutions are required. Relief from such restrictions allows
capital to flow freely. Through simple subscription and redemption of shares,
shareholders have more freedom and flexibility to enter and exit a fund. The
effectiveness of investment money depends on such fluidity and adaptability.
· In a VCC, corporate
resolutions and solvency tests are not required for share problems and
redemption. Relief from these regulations aids in ensuring a smooth capital
flow. Shareholders also have additional freedom and flexibility when it comes
to joining or exiting a fund, thanks to convenient share subscription and
redemption. This trait of fluidity is critical in increasing the efficiency of
investment money.
· In a VCC, corporate
resolutions and solvency tests are not required for share problems and
redemption. Relief from these regulations aids in ensuring a smooth capital
flow. Shareholders also have additional freedom and flexibility when it comes
to joining or exiting a fund, thanks to convenient share subscription and
redemption. This trait of fluidity is critical in increasing the efficiency of
investment money.
· The capital of
the VCC will always be the same as its net assets. Because the VCC's shares are
only created when investments are made, this is the case. This allows for
greater flexibility in dividend distribution and capital reduction since
dividends may be paid out of capital, simplifying fund managers' capacity to
satisfy dividend payment commitments.
Important factors to consider for Singapore Variable Capital
Company
An umbrella structure's sub-funds do not have their legal status.
The VCC Act mandates that assets and liabilities of each sub-fund be separated
to avoid a potential contagion risk in which assets and liabilities of one
sub-fund are mixed up with or used to discharge liabilities of another
sub-fund. To maintain the segregation, each sub-fund must be wound up
independently, and the winding up of one Sub-fund does not result in the
winding up of the VCC. The VCC may sue or be sued in respect of a sub-fund
since the sub-funds lack legal personhood. A VCC's sub-fund can invest in
another VCC's sub-fund.
The segregation of each sub-assets fund's and liabilities is one
of Singapore VCC's main issues. The sub-funds of the umbrella framework do not
have their own legal body. As a result, this segregation is essential to handle
the risk of contagion, in which sub-fund assets and liabilities get entangled
with or used to discharge the liabilities of other sub funds. A sub-fund of a
VCC can invest in another VCC sub-fund.
The provisions of the Act dealing with the insolvency of VCC have
been taken from The Companies Act in their current form. However, this will shortly
be changed to include elements from the Insolvency Bill, as well as relevant
VCC-specific amendments.
In-short
The Variable
Capital Company Singapore is a brand-new corporate vehicle that overcomes the constraints of
traditional structures. With this acquisition, Singapore's position as a global
fund management hub will become more comprehensive and efficient, with
world-class management skills, a strong regulatory environment, and a favorable
tax system. With the establishment of the VCC, the industry will see a spike in
activity, providing enough opportunities for service providers such as
auditors, tax professionals, custodians, fund managers, and advocates to expand
their businesses. Singapore's newest fund management innovation demonstrates
the city-determination state's to keep ahead of the competition to maintain its
position as a pro-business asset and fund management center in the region.
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