Upon passing the Variable Capital Companies Act 2018 (VCC Act) into law in January 2020, the Monetary Authority of Singapore (MAS) has officially made the variable capital company (VCC) corporate structure available to the private funds industry. The VCC framework is a new legal vehicle that allows managers to enjoy operational flexibility and cost efficiency through funds domiciled in Singapore.
The VCC was conceived to enhance Singapore’s position as a leading asset management center by catering to the needs of global fund managers seeking to domicile fund structures in Singapore across all asset classes, including PE. The hope is that widespread use of VCC vehicles will naturally lead to new business opportunities for Singapore-based fund service providers, which are required to advise on and support their clients’ expansions and regional build-outs from Singapore.
This article outlines key features of the VCC vehicle and the factors that distinguish it from other Singapore-based corporate structures; distinct advantages and disadvantages of using VCCs; key considerations and issues with adopting the VCC; trends in the use of VCCs to date; and the potential future usage of VCCs among private fund managers.