Singapore Nears New Fund Structure As IFCs Battle For Business

Tom Burroughes

11 September 2018

The push towards a new corporate structure for investment funds in Singapore has moved a step closer, giving it a new tool to compete against rival hubs such as Hong Kong.

The Monetary Authority of Singapore has finalised the features of the new corporate structure for investment funds, called the Variable Capital Company. A VCC can be used by both open-ended and closed-end investment funds, and for both traditional and alternative strategies, MAS said in a statement.

“The new VCC framework will encourage the consolidation of fund domiciliation and fund management activities locally, creating a full-service fund ecosystem in Singapore. The growth of fund domiciliation activities will create opportunities for a wide range of service providers such as lawyers, accountants, fund administrators, and fund custodians,” Ng Yao Loong, assistant managing director , MAS, said.

The variable capital structure of a VCC allows it to issue and redeem shares without having to seek shareholders’ approval, enabling investors to enter into and exit from their investments in an investment fund when they wish to. It can also pay dividends using its capital.

VCCs can be built as a standalone structure, or as an umbrella structure with multiple sub-funds with different investment objectives, investors as well as assets and liabilities. They can be allowed to use international and Singaporean accounting standards, opening up their international appeal.