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Singapore Variable Capital Company: Singapore’s new fund vehicle


On 23 March 2017, the Monetary Authority of Singapore (MAS) issued a public consultation paper on the proposed establishment of a new corporate legal vehicle in Singapore, the Singapore Variable Capital Company (S-VACC). S-VACC is a new corporate form which may only be used exclusively for collective investment schemes.

In coming up with the proposed new framework, the MAS took into account laws and practices of other leading fund jurisdictions such as Luxembourg, the Republic of Ireland and the United Kingdom where similar open-ended corporate-type fund vehicles have become commonplace for many years.

With the appropriate tax and regulatory backing, as well as widespread industry support, this proposed new framework should play a significant part in promoting and encouraging domiciliation of private and retail funds in Singapore. Singapore's extensive tax treaty network also provides for an interesting value proposition for local domicile of funds.

With the robust growth of the asset management and investment funds industry in Singapore over the years, the S-VACC could potentially be a timely introduction during this phase of the industry's evolution.


S-VACCs will be introduced and regulated through a new separate S-VACC legislation, which will be administered by the Accounting and Corporate Regulatory Authority (ACRA). The S-VACC will have to be registered with ACRA.

Notable Features

Some of the notable features of the S-VACC proposed in the public consultation paper include the following:

  • The S-VACC may be set up as an open-ended or closed-end fund.
  • The S-VACC can be established as an umbrella structure with multiple sub-funds. Each sub-fund will need to be registered with ACRA but will not have separate legal personality. The umbrella S-VACC will segregate the assets and liabilities between sub-funds, such that the assets of one sub-fund may not be used to satisfy the liabilities of another sub-fund. This segregation would apply even during insolvency.
  • Unlike normal companies, S-VACCs cannot be self-managed. An S-VACC must be managed by a fund manager which is duly regulated or licensed by the MAS.
  • The S-VACC must have its registered office in Singapore and a Singapore-based company secretary.
  • The S-VACC must also have at least one Singapore resident director and one director that is also a director of its fund manager.
  • S-VACCs which are authorised schemes (as described in the SFA) will be required to have at least three directors, of which at least one director has to be independent of: (i) business relationships with the S-VACC; (ii) the fund manager of the S-VACC (and its related entities); and (iii) all substantial shareholders of the S-VACC.
  • S-VACCs can issue debenture stock, bonds, or other securities, and list these instruments on a stock exchange.
  • Members of an S-VACC have limited liability, up to the amount unpaid on the shares respectively held by them.
  • S-VACCs will not be required to publicly disclose their register of members, although they must make their register available to supervisory and law enforcement agencies.
  • S-VACCs will also be allowed to freely redeem shares and pay dividends using its capital. The constitution of an S-VACC should state that the valuation and redemption of shares must be carried out at net asset value, with the exception of closed-end funds that are listed for quotation on a securities exchange.
  • The MAS is also considering proposals to allow foreign corporate funds to re-domicile themselves in Singapore as S-VACCs.

Looking Forward

The introduction of the S-VACC regime is expected to enhance Singapore's reputation as a fund domicile, as well as promote the vibrancy of the fund services sector, thereby contributing to Singapore's burgeoning reputation as a leading international fund management hub. It is anticipated that the S-VACC legislation will be passed by the third quarter of 2018.