The Singapore Variable Capital Company – regulation memo

Singapore’s highly anticipated Variable Capital Companies Act, came into force on 15 January 2020. With this VCC structure, both traditional and alternative investment funds have access to a flexible and efficient fund structure option. The Monetary Authority of Singapore (MAS) aims to promote fund domiciliation in Singapore and position the city as an attractive investment hub for the Asia-Pacific region.

About the VCC

To boost the local asset management industry and promote fund domiciliation in Singapore, the MAS identified the need to create a company-type fund with a variable capital structure. It is the fourth fund type in Singapore and aims to address the limitations of the existing unit trust, companies and limited partnership structures.

Under the current regulations, funds in Singapore can be established in the form of unit trusts, companies (fixed capital) and as limited partnerships. The unit trust option is commonly used for retail and restricted funds who invest using a traditional asset strategy, and require the appointment of a trustee to act for and on behalf of each fund. Companies (fixed capital) and limited partnerships are non-unit trust type funds mainly used for funds holding alternative assets.

The Singapore variable capital company:

  • Covers both traditional and alternative fund strategies
  • Can be open-ended and closed-ended
  • Supports umbrella and sub-fund structures
  • Can be used for both retail and non-retail strategies
  • Is governed by the VCC Act
  • Has access to 80+ tax treaties

Overall the VCC provides greater flexibility and improved operational and tax efficiencies. Key benefits:

  • A VCC to be treated as a company and a single legal entity for tax purposes.
  • Singapore tax resident VCCs are eligible to access Singapore’s tax treaties. In the case of umbrella VCCs, the sub fund names as well as the umbrella fund name will be included in the Certificate of Residences.
  • VCCs can benefit from the tax incentive schemes for funds under sections 13R and 13X of the Income Tax Act (ITA).
  • 10% concessionary tax rate under the Financial Sector Incentive-Fund Manager (FSI-FM) scheme will be extended to approved fund managers managing an incentivised VCC.
  • A grant scheme launched by the MAS in January 2020 is available to subsidise certain expenses when incorporating or registering a VCC.


As of mid-October 2022, more than 400 VCCs or sub-funds have been incorporated or launched with  ACRA by both traditional and alternative asset managers, across a wide  range of fund  strategies (e.g. long-only, private equity, venture capital, hedge funds, impact investing).

Industry implications

The MAS and ACRA are working on enhancements to the VCC framework to better meet the needs of the industry. They are also considering enhancements to the limited partnership regime in Singapore, to strengthen the limited partnership as a fund vehicle. This will provide further structuring options for asset managers who wish to domicile investment funds in Singapore. 

The MAS is also focused on single family offices (SFOs). They granted exemptions to 26 SFOs in Q4 2020 such that SFOs are able to rely on the existing exemptions from licensing under the Securities and Futures (Licensing and Conduct of Business) Regulations to carry on business in fund management for or on behalf of any of its related corporation. With the exemptions given, more SFOs will have access to VCCs and enjoy benefits of tax and flexibility.

Securities Services’ view

The Singapore Variable Capital Company provides an alternative to the existing fund structures together with the region’s other company type funds such as Hong Kong’s Open-Ended Fund Company (OFC) launched in July 2018 and Australia’s anticipated Corporate Collective Investment Vehicle (CCIV).

With more than 400 funds set up since its launch, we can now expect to see an improved version 2 of the VCC that the MAS is working on with ACRA, in addition to a growth in SFOs. We will also be looking out for new regulations on the limited partnership.

The Asia-Pacific region is characterised by a web of varied local regulations and different schemes to enable fund managers to invest cross border. However, thanks to a direct local presence across the region, Securities Services and its team with extensive cross border experience is able to guide our clients on the various passport schemes and fund schemes including the ASEAN CIS, the Asia Region Funds Passport, various mutual recognition schemes, the OFC, CCIV and the VCC scheme.

Key dates

First public consultation closed

Tax framework for VCC announced

Further details on the tax framework for VCCs released

Second Consultation on VCC announced

The VCC Act 2018 and its subsidiary legislation came into force. The VCC (Miscellaneous Amendments) Act that amends the Income Tax Act, GST Act and Stamp Duties Act for tax treatment partially came into force. MAS and ACRA launched VCC pilot program and grant scheme

Subsidiary regulations went live