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Singapore VCC (Variable Capital Company) Registration Service

VCC (Variable Capital Company Setup) Service Singapore

What is a VCC (Variable Capital Company)?

The Variable Capital Company (VCC) is a new corporate structure for investment funds constituted under the Variable Capital Companies Act which took effect on 14 Jan 2020. The VCC will complement the existing suite of investment fund structures available in Singapore.

The VCC Act and subsidiary legislation is administered by ACRA. All VCCs must be managed by a Permissible Fund Manager.

What legal structure funds used prior to VCC?

Prior to the availability of VCC, the primary legal structure fund managers used for holding investments was that of a private limited company. So if a fund wanted to invest in a specific target (Investment opportunity) and wanted to keep the investment amount segregated, then the fund will incorporate a separate private limited company for it.

Similarly, for a specific customer (LP- Also referred to as Limited Partner), a fund may create a separate private limited company to hold the assets.

As a result of this a fund may end up having multiple private limited companies under its ownership to manage different investment mandates. However, this was not the optimal structure because:

  • Corporate entities are meant for general businesses and not for fund purposes
  • Corporate entities have a generic version of M&AA (Memorandum and Article – or constitution), which allows any business to be done. Also the M&AA copy is publically available from ACRA
  • While additional shares can be issued, the reduction (or redemption) of share capital is not at all easy in a private limited company
  • The detail of the shareholders in a private limited company is a public record. Anybody can buy this data for a small fee.

Because of these reasons, a private limited company as an entity to manage fund business was not preferable.

What are the benefits of a VCC structure?

VCC has been created as a special structure for investment funds only (It can not be used for any general business). The legal entity of VCC provides the missing features that a corporate structure was lacking. More specifically :

  • A VCC has a variable capital structure that provides flexibility in the issuance as well as redemption of its shares. It can also pay dividends out of capital, which gives fund managers flexibility to meet dividend payment obligations.
  • A VCC can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities. The liabilities of one sub-fund can not touch the assets of another fund. For fund managers that structure their funds as umbrella VCCs, there may be cost efficiencies from using common service providers across the umbrella and its sub-funds.
  • A VCC can be used for both open-ended and closed-end fund strategies 2 .
  • Fund managers may incorporate new VCCs or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.
  • VCCs must maintain a register of shareholders, which need not be made public. However, this register must be disclosed to public authorities upon request for regulatory, supervisory and law enforcement purposes.
  • The Constitution of the VCC is not publicly available.
  • The details of the shareholders are not a public record.

Steps involved in Registering a VCC

Name Registration

The first step is to choose a suitable name for your VCC. Once you have a suitable name, conduct a search on Bizfile+ Search Directory to find out whether the name is available. Avoid selecting names which are:

  • Identical to an existing business;
  • Undesirable i.e. names which are vulgar, obscene or offensive; or
  • Prohibited by order of the Minister for Finance.

Directors

A director is the person in charge of managing the affairs of the VCC. He/she must take decisions objectively in the best interests of the VCC. Every VCC must have at least 1 director who is ordinarily resident in Singapore (e.g. Singapore citizens, Permanent residents or holders of EntrePass/ Employment Pass) with a local residential address. Every VCC must also have at least 1 director (who may be the same person that is ordinarily resident in Singapore) who is either a Qualified Representative (as defined under the VCC Act) or a director of its fund manager.

VCCs consisting of Authorised Schemes must have at least 3 directors including 1 independent director. Authorised Scheme refers to a collective investment scheme (CIS) as defined under section 2(1) of the Securities and Futures Act (SFA) that is constituted in Singapore and authorised by MAS under section 286(1) of the SFA.

Here are the basic requirements for a VCC director. He/she must be:

  • At least 18 years old;
  • Of full legal capacity;
  • A Singapore Citizen, Singapore Permanent Resident or EntrePass holder;
    • Not disqualified from acting as a Director (Eg. Undischarged Bankrupts)

Company Secretary

A VCC must appoint a secretary within 6 months from its date of incorporation. A company secretary must be:

  • A natural person; and
  • Ordinarily resident in Singapore.

The position of company secretary must not be left vacant for more than 6 months. The sole director of a VCC and the company secretary cannot be the same person.

Auditor

Every VCC must appoint an auditor within 3 months of its incorporation/registration. The audit exemptions under s205B and 205C Companies Act are not applicable to VCCs.

Permissible Fund Manager

A VCC must appoint a Permissible Fund Manager to manage its property or operate the CIS that comprises the VCC. A Permissible Fund Manager refers to:

  • A licensed fund management company which holds a capital markets services license for fund management under the Securities and Futures Act (SFA);
  • A registered fund management company which is registered under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;
  • A financial institution exempted under sections 99(1)(a), (b), (c) or (d) of the SFA from the requirement to hold a capital markets services licence to carry on business in fund management, i.e. a bank licensed under the Banking Act (Cap. 19), a merchant bank approved under the MAS Act (Cap. 186), a finance company licensed under the Finance Companies Act (Cap. 108) or a company or co-operative society licensed under the Insurance Act (Cap. 142)

You will need to provide the Permissible Fund Manager’s Unique Entity Number (UEN), full name, address of the fund manager’s principal place of business and country of incorporation when submitting the application to incorporate a VCC. In addition, you will also need to provide a declaration by the Permissible Fund Manager in the prescribed form that it has consented to act as the fund manager of the VCC and fulfils one of the above criteria for a Permissible Fund Manager, as stipulated in section 46(2) of the VCC Act.

Registered Office Address

You must provide a registered office address when you incorporate a VCC. A registered office address refers to the place where all communications and notices to the VCC are addressed to, and the place where the VCC’s register and records are kept.

A registered office must be operational and accessible to the public during normal office hours, but need not be where the VCC conducts its activities (e.g. the registered office address may be in Raffles Place but the trading room could be located in Tuas).

Constitution

The Constitution is a legal document that:

  • Describes the key characteristics of the VCC;
  • Contains the rules and regulations for its governance;
  • Describes how its operations will be carried out; and
  • States the rights and responsibilities of the directors, shareholders and company secretary.

The applicant must attach a copy of the Constitution during incorporation / registration. The constitution document lodged with the Registrar will not be available to members of public but must be disclosed to public authorities upon request for supervisory and law enforcement purposes.

A model constitution is provided by the ACRA.

Application process

Step 1: Name Application

What information is required to complete this transaction?

1. Proposed VCC name;

2. Type of VCC;

3. Details of proposed director and VCC officers (include address, ID number, ID type and Nationality); and

4. In-Principle Approval Obtained from Other Authorities (if any).

  • The name application fee is $15. You can pay using credit/debit card (Visa, Mastercard or American Express), PayPal, Apple Pay and Google Pay.
  • Once the name application is approved, the name will be reserved for 120 days. The VCC must be incorporated within this period. Otherwise, the name approval will lapse, and the applicant will have to submit a fresh name application.

Step 2: Incorporating the VCC

  • What information is required to complete this transaction?

    1. Transaction number of the approved name application;

    2. Details of proposed director and VCC officers - including address, ID number, ID type, Nationality and contact information;

    3. Details of at least 1 director who is either a director or qualified representative of the fund manager of VCC;

    4. Details of Permissible Fund Manager – including UEN, address and country of incorporation;

    5. Details of subscribers – including ID number, name of subscriber and email address;

    6. Type of VCC;

    7. Registered office address and opening hours;

    8. Copy of Constitution; and

    9. Financial Year End (FYE) – This will determine when the VCC’s corporate filings and taxes are due. Common FYEs can include 31 March, 30 June, 30 September or 31 December.

  • An email notification seeking endorsement will be sent to the appointed officers. All proposed directors, company secretaries and subscribers must endorse / consent to their appointment online via www.vcc.bizfile.gov.sg within 60 days from the date of email notification before they can be appointed in the VCC. Applications lodged by registered filing agents do not require online endorsement.
  • The fee for incorporating a VCC is $8,000. You can pay using credit/debit card (Visa, Mastercard or American Express), PayPal, Apple Pay and Google Pay.
  • Once the VCC is successfully incorporated, a Unique Entity Number (UEN) will be issued. The UEN can be used to transact with ACRA or any other government agencies.

Processing Time for Incorporation of VCC

It may take between 14 to 60 days for the application for incorporation of VCC to be processed. This includes the time required for referral to another government agency for approval or review, if necessary.

VCC Registration Fees to be paid to ACRA

Name of Transaction

Statutory Filing Fees

Application for VCC Name $15
Application for Incorporation of VCC S$8,000
Application of Transfer of Registration $9,000 + S$400 (Sub-Fund registration fee) x No. of sub-funds
Registration of Sub-Fund $400

How Singapore Compliance can help

From the above it should be clear to you that you may need help to register a VCC in Singapore. Often times you may require small adjustments to the Constitution or additional legal documents prepared. So engage services of Singapore Compliance.

When you engage us we bring our expertise in this sector. Moreover, we provide all the below services. So when you engage us you don’t have to worry about other services related to Compliance and AML / CFT.

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