Variable Capital Companies (VCC)

A Variable Capital Company, or VCC, is a business that specialises in investments. Specifically, a VCC employs a fund manager to pool investor funds together to invest in various assets for higher returns.  

Variable Capital Companies are meant to reduce the costs of for investors. It can be formed as a single standalone fund or as an umbrella fund with two or more sub-funds, each holding different assets. VCCs are also exempt from income tax, which further entices investors to participate in the mutual fund. At the same time, VCCs are meant to optimise investor funds to achieve the best return on investment for the mutual fund as a whole. 

The 2 Main types of VCCs in Singapore are public VCCs and private VCCs.  

Conditions

The VCC capital must always be equal to its net assets. It must have a Singapore-based licensed or regulated fund manager (unless an exemption has been obtained from the relevant authorities). The VCC must have its office registered in Singapore and must appoint a Singapore-based company secretary 

Advantages

Reduced Tax Compliance Burden

An umbrella VCC will only need to file a single corporate income tax return regardless of the number of sub-funds the umbrella VCC has.

Confidentiality

Subject to adhering to specific regulatory requirements, the register of members of a VCC is not required to be open for inspection by the public. Financial statements are also not publicly available.

Flexibility

A VCC may freely redeem its shares (without the requirement for solvency tests and corporate resolutions) and pay dividends using its net assets/capital, thereby providing flexibility in the distribution and return of capital.

Easier to Meet the Conditions for Tax Exemption under Section 13O and 13U

The tax incentive conditions and the economic commitments under both incentive schemes will be applied to the umbrella VCC rather than to the individual sub-funds.  

Let us know if you are interested in setting up this investment structure instead of a PIC or family office, and we will be ready to advise. 

Let us know if you are interested in setting up this investment structure instead of a PIC or family office, and we will be ready to advise.

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