Variable Capital Company Benefits in Singapore
The Variable Capital Company (VCC) is Singapore’s newest and legal means for an investment fund to be domiciled in the country. It was just launched last October 2018. The Accounting and Corporate Regulatory Authority (ACRA), together with the Monetary Authority of Singapore (MAS), officially inaugurated the Singapore Variable Capital Act (VCC Act) on 15th January 2020. In this article, we will be talking about Variable Capital Company benefits and advantages for every business sector.
For one, they aim to provide alternatives for both existing funds and collective investments scheme (CIS). It allows flexibility of distributions and returns on investments, thus turning Singapore to lead in providing governmental services. With that being said, it encourages foreign investments to be re-domiciled in Singapore.
A VCC can either be a stand-alone for a single fund or an umbrella with multiple sub-funds. It can also be a traditional or an alternative fund strategy that can open or closed in forms. However, it is still treated as a single Singapore company.
The re-domiciliation process of a VCC is made easy in Singapore. It can be through an established infrastructure or a low threshold investment. Since the country is a centre for investments, the VC will be able to have a registered fund manager. And if an investor still does not have one, he will not have a hard time finding one. It makes transitioning efficient and cost-saving.
Foreign funds can be shifted to a VCC if they have positive net assets and remain creditworthy for 12 months from the date of application. They must also comply with the Singapore company criteria and regulatory compliance.
Without further ado, here are Variable Capital Company Benefits for the following:
For Fund Managers
1. Due to its flexibility, Fund Managers can have more efficient taxation and operations. It will turn them to be as competitive among all others around the globe and Singapore to match its competitors.
2. It gives them alternatives to multiple separate companies because each VCC sub-funds has assets and liabilities that can be separated from the others under one umbrella.
3. It saves them time and cost as each sub-funds can share a Board of Directors and use the same service providers.
4. If a VCC acquires another VCC, the original can use the customer due to diligence research already done by the acquired one.
5. They help them provide an appealing package to any investors because of its structure combined with Singapore having access to 86 tax treaties
6. When it is used as an open-end fund, it provides a low barrier for entry and low threshold for the operation because the usual capital requirements do not burden it.
7. It can save them from paying taxes as it can be tax-free if it meets the following criteria:
- Enhanced Tier Fund (ETF) Scheme – The fund must have at least S$50 million at the time of application and S$200,000 annual local business spending.
- Singapore Resident Fund (SRF) Scheme – The fund must have at least a yearly business spending of S$200,000 but is not necessarily local.
8. They do not have to worry about sub-funds to affect each other because they are insulated from one another.
9. It does not require them to hold an Annual General Meeting (AGM) if the directors give 60 days’ notice, and the entitled personnel receives all of the necessary paperwork.
10. They can receive incentives from the Financial Sector Incentive Fund Management Scheme because of its 10% concessionary tax.
11. It allows them to delegate fund management to a registered third party within Singapore for as long as the overall responsibility is maintained.
12. It is easier for them to deal with directors and service providers from other places if the offshore fund can be re-domiciled in Singapore.
For Local Fund Service Providers
1. Because of VCC, local fund service providers can expect an increase in business inflows.
2. There will be no foreign competitor because all VCC will only have Singapore based fund managers.
3. If it has sub-funds, it can share the same Board of Directors, which makes its operation much more efficient.
4. It has sub-funds, it can be used for multiple companies and provide them with administration efficiencies.
5. They can re-domicile their offshore funds to enjoy the same benefits their clients have.
6. It is cost-efficient because if it acquires another VCC, the original can use the customer due to diligence research that was already done from the acquired one.
7. It saves time and money for preparing and holding an AGM should it choose not to do it.
8. VCC fund management can be delegated to a third party, allowing them to pass on administrative duties.
1. Their income can be tax-free if it qualifies from either ETF or SRF Scheme.
2. Since it is corporate and legal, it can act as behalf of itself without the need to appoint any trustee.
3. It enables them to issue and redeem shares without a shareholder’s approval. They can exit at any time.
4. It can issue dividends using its capital when required.
5. The registration of a variable capital company is not required to be public so that they can retain anonymity.
6. It provides them comfort that they can be hands-off since it doesn’t require holding an AGM and Singapore is known to have excellent corporate governance.
7. They do not have to worry about sub-funds to affect each other.
8. It is cost-efficient for them because if it has sub-funds, it can share the same Board of Directors.
9. They can use it as a master-feeder because it can have a single shareholder or hold a single asset.
1. It will build them a global reputation in terms of fund servicing as it helps to create a greater share of the overall chain of fund management.
2. It should expect an increase in investments once it attracts investors to move away from its competitors.
3. The increase in investments from offshore would help with its economic stability.
4. It will increase their employment rate.
3E Accounting Singapore’s Business Solutions Services
After knowing all the benefits, you might be considering assistance from locally stationed professionals. 3E Accounting Singapore would be the best choice. It is a multi-award winning company that offers extensive business solution services to the customers at an affordable rate.
It has established a reputation as a preferred one-stop provider in Singapore and puts clients as the centre of everything. Also, it has a variety of products and services to choose from and has a team of experts in place to help clients run their business seamlessly, effortlessly, and efficiently.
They have a flexible and well- designed a business solution service that caters to all shapes and sizes. And also their experts have tailored customizable services based on client’s needs. It is including investors wanting to establish a Variable Capital Company. You can rest assured that you will be able to enjoy and maximize the Variable Capital Company benefits.
Variable Capital Company benefits are one of the best reasons for foreigners to invest in Singapore. With its components and structure, you can enjoy all of the mentioned benefits that it can offer. The key to making it a success is to understand it deeply and how it works. It is then wise to seek professional help to make sure you will take the full advantage of variable capital company benefits and not make any mistakes and during the process. Just make sure to choose the best and known ones in Singapore like 3E Accounting.