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Introduced on 15 January 2020 under the Variable Capital Companies Act, the Variable Capital Company (VCC) is a corporate entity specifically designed for investment funds in Singapore. A VCC is purpose-built to meet the day-to-day demands of fund management, including the ability to issue and redeem shares on demand and to adjust share capital without the cumbersome procedures under the Companies Act. A VCC may be a single fund or an umbrella fund comprising several sub-funds, each with separate assets, liabilities, investors, and fund service providers, similar to a Cayman Islands open-ended fund company. The VCC has been well received since its launch, and by March 2025, there were some 1,200 VCCs (with about 600 financial institutions managing them), and first-time launches and redomiciliations of existing offshore funds have been taking place. The Singapore VCC structure guide is an essential area of knowledge for investment management industry players in Asia, such as fund managers, legal advisors and compliance officers.
Before the introduction of the VCC, Singapore did not have a purpose-built corporate fund vehicle comparable to existing offshore fund structures used by global asset managers. Even though the majority of their funds’ assets were located in Asia, most Singapore-based fund managers set up their fund vehicles in the Cayman Islands, creating a disconnect between where investment management took place and where the funds were based. In response to this, the VCC was developed by MAS and ACRA in consultation with industry participants, and includes features that are important to fund managers, such as the provision for share capital to be freely variable, the concept of segregation of sub-funds under a single legal umbrella, the ability for a private register of members, and the qualification for Singapore’s tax exemption schemes. The outcome is a vehicle that makes VCC an attractive proposition from a commercial standpoint: a well-regulated, reputable jurisdiction and a fund structure suitable for modern-day institutional fund management.
A Variable Capital Company is a company incorporated in Singapore under the Variable Capital Companies Act, for the sole purpose of being an investment fund company. What sets it apart — and gave it its name — is that its share capital is variable; that is, shares can be issued and redeemed at any time, at any price, without the procedural steps required under the Companies Act for Singapore companies to vary share capital. This makes the VCC concept particularly suitable for fund structures in which investor subscriptions and redemptions occur regularly, and the NAV per share must be determined and applied precisely for each transaction. A VCC shall at all times be operated by a Permissible Fund Manager, which shall be a MAS-licensed entity, and cannot be a commercial enterprise outside the fund management context. Each VCC must also have at least one director who is a Singapore resident, and its constitution must comply with the requirements of the VCC Act as a fund vehicle.
The Singapore VCC structure guide is best explained by the specific characteristics that distinguish the VCC from other fund structures available in Singapore and from traditional corporate vehicles.
In contrast to the Companies Act entities, a VCC may issue, redeem, buy and cancel its own shares without any court approval or creditor protection procedures. This enables the fund to process investors’ subscriptions and redemptions efficiently, matching the NAV on the transaction date.
One VCC may function as an umbrella VCC, with several sub-funds each having distinct portfolios, investors, investment mandates, and fees. The assets and liabilities of each sub-fund are kept separate from those of the other sub-funds, so that losses or liabilities of one sub-fund are not treated as those of another.
The VCC does not have a public listing of its membership. Unlike a typical Singapore company, where the shareholders’ register is publicly accessible, VCC’s member register is kept private, offering an appealing structure for fund managers and investors seeking to maintain the confidentiality of ownership information.
VCCs will be exempt from taxation under the Singapore Income Tax Act (ITA) under Sections 13O and 13U for VCCs managed by MAS-licensed fund managers. As part of these schemes, qualifying investment income in Singapore is exempt from income tax, provided certain conditions are met regarding AUM, local spending, and local professional headcount.
Current investment funds are allowed to migrate their registration from offshore to Singapore and remain as a VCC without having to wind up the fund or transfer the assets. This is a common method adopted by foreign managers to restructure their funds to be based in Singapore.
The primary distinction between a VCC and a regular Singapore company lies in the treatment of share capital. Share capital is the amount of money fixed by the Companies Act and can only be altered by a resolution, court order, or creditor protection. This is because an open-ended investment fund allows investors to buy and sell its shares at will, with capital moving in and out of the fund regularly. But a VCC is completely immune to these restrictions, as the NAAV limits do not bind it; it can issue and redeem shares at any time at NAV, and the number of shares will dynamically reflect the value of the fund’s holdings. Apart from capital mechanics, a VCC has no other purpose other than to manage investments, must have its directors who have been appointed in compliance with fit and proper standards issued by MAS, is obliged to comply with AML/CFT requirements and must be managed by a MAS-licensed fund manager, and prepares fund-specific financial statements in accordance with international accounting standards — and that’s why it is a much more appropriate structure than any other entity to use as a Singapore fund structure for a broad spectrum of asset classes.
A VCC in Singapore offers flexibility in capital allocation, one of its most commercially useful features, especially compared to the traditional corporate structure.
A VCC has the authority to issue new shares to new investors and redeem shares from old investors at any price and any time, without any court or shareholder approval. This enables the fund to accept new purchase orders (subscriptions) and redemption requests at any time, as needed by the investment mandate.
Share capital is variable, so a VCC’s share price at any given time depends on the NAV of the VCC’s portfolio divided by the number of shares in issue. This means that the price at which investors on the other side of the transaction are offered is in accordance with the fair price, reflecting the value of the underlying assets at the time of investment or redemption.
In an umbrella VCC, each sub-fund has its own capital base and is independent of the other sub-funds. The obligations of the funds cannot be met by capital invested in other funds, and changes in the AUM of one fund do not affect the share capital or investor entitlements of other funds within the same umbrella fund.
The VCC’s share capital automatically increases (or decreases) with each subscription (or redemption) on a day-to-day basis, without the need for any formal corporate resolutions or regulatory filings; it is far less expensive and burdensome to maintain a variable capital base than a traditional corporate structure.
The Singapore VCC structure and compliance regime are engineered to provide a compelling package of tax efficiency and regulatory credibility – two qualities that are difficult to find in one single fund structure.
VCCs run by fund managers licensed by MAS can apply for the Section 13O tax exemption scheme, which exempts qualifying income (such as investment income, dividends, and interest) received by the VCC from income tax in Singapore. The scheme calls for at least S$20 million in assets under management (AUM) and mandates spending in the local market and support for employment levels.
The Section 13U scheme (previously 13X) is aimed at larger funds and has a lower AUM threshold of S$50 million, but relaxes the conditions regarding the nature of investors and the types of funds invested. It is employed by institutional fund managers and family offices that have large amounts of capital to manage through a VCC.
VCCs are Singapore-registered entities and can avail of Singapore’s comprehensive network of over 90 double taxation agreements (DTAs). This DTA access can either reduce or eliminate withholding taxes on treaty-partner investment income, thereby enhancing net investment income for investors.
A VCC enjoys a degree of regulatory standing that many offshore fund vehicles lack, as it is managed by an MAS-licensed fund manager and incorporated under Singapore law. Institutional investors, sovereign wealth funds, and large family offices have come to appreciate this credibility when selecting fund structures for allocations.
For many family offices, high-net-worth individuals and institutional investors, investor privacy is a material consideration. The VCC’s privacy framework provides substantial privacy protections without compromising the fund’s integrity or compliance.
A VCC’s register of members is not open to the public, unlike a regular Singapore company. The register may be inspected only by the VCC itself, its directors, MAS, and ACRA, and the identities of investors cannot be disclosed to competitors, counterparties, or the general public.
Under the VCC Act, the names, addresses and shareholdings of investors in a VCC are confidential, meaning that they must not be disclosed to anyone without the investors’ permission. The confidentiality regime is similar to the privacy laws in well-established offshore fund jurisdictions such as the Cayman Islands and Luxembourg.
The VCC must implement full AML/CFT customer due diligence and beneficial ownership verification procedures, but the findings of these checks are not made public; they are retained by the VCC, not by the appointed financial institution. Regulatory compliance and investors’ privacy are thus harmoniously balanced within the framework of VCC.
MAS and ACRA have access to VCC membership information for regulatory and supervisory purposes and may require disclosure when investigating suspected wrongdoing or for a regulatory proceeding. This means that investors’ privacy is shielded from public view, and regulatory oversight remains intact.
Fund managers can benefit from a suite of structuring efficiencies available through the Variable Capital Company, including lower costs, simplified administration, and the operational flexibility to meet the needs of a variety of investor mandates under one umbrella.
One umbrella VCC can have several sub-funds with different investment strategies, asset classes, or geographic mandates. This enables the fund manager to provide investors with access to several funds in a single contract while keeping the portfolios and liabilities completely separate across the sub-funds.
Multiple service providers, such as the fund administrator, custodian, auditor, and legal counsel, can be shared among the sub-funds of an umbrella VCC, helping mitigate the overhead of maintaining multiple fund vehicles. Managers with several smaller strategies or those in an expansion phase can reap significant cost savings.
The VCC redomiciliation mechanism enables existing offshore funds to register in Singapore without needing to liquidate or transfer assets. It preserves the fund’s track record, fund relationships, and portfolio continuity, and benefits from Singapore’s tax and regulatory regimes. This is especially true for funds based in Cayman but managed from Singapore.
The sub-fund mechanism provides legally sound portfolio segregation within a single umbrella fund. It allows managers to set up complex investor arrangements — including co-investment vehicles, deal-by-deal structures and separately managed accounts — without having to incorporate multiple stand-alone funds, which would incur high costs.
The straightforward VCC is the simplest VCC structure, using a single fund firm with a single portfolio, investor base, and investment mandate. It is the simplest choice for fund managers entering the VCC market for the first time or those who do not seek to maintain multiple segregated portfolios.
A single-fund VCC is a self-contained fund, with a single set of constitution, a single Investor Register, a single Investment Mandate and a single set of financial statements. It has one board of directors and one Permissible Fund Manager, meaning it’s the simplest of the VCC options to administer.
Single-fund VCCs are ideal for managers who are launching a flagship, want to evaluate the VCC structure before launching an umbrella fund, or have a limited number of investors, such as a family office or a club deal. They are also commonly used for private equity co-investment vehicles and venture capital funds.
The VCC with a single fund has lower absolute ongoing operational costs than an umbrella VCC with multiple active sub-funds that share fixed administrative costs, but incur a higher cost per dollar of AUM.
Multiple fund strategies can be created from a single-fund VCC over time, as the manager’s business expands. This is what the VCC Act envisages, giving managers the option to start small and then build up their product offerings.
The two dominant VCC structures are the umbrella VCC, which is the more sophisticated and growing in popularity, and the other type of VCC. It also enables a single legal entity to host multiple sub-funds, each considered a functionally distinct portfolio within its general framework. This innovation has enabled VCCs in Singapore for institutional fund managers.
The assets and liabilities within an umbrella VCC are each legally separated. The creditors of one sub-fund cannot reach the assets of the other sub-fund, and a loss or insolvency of one sub-fund will not affect the investors or assets of another sub-fund within the same umbrella.
All sub-funds within an umbrella VCC are united by a single legal entity, which enables them to share the overhead costs of legal, audit, compliance and secretarial services. The umbrella structure is especially appealing to fund managers with multiple strategies because the cost per sub-fund declines as the number of sub-funds increases.
All the sub-funds can have different investment strategies, asset classes, geographic concentrations, or fee structures, provided they are all associated with the same umbrella VCC. All three – one umbrella, one house – could be governed from a common point of view for a Singapore equity fund, an SEA private credit fund, and a global VCF.
The sub-funds may differ in the types of investors they can admit, depending on their investment objectives, risk appetite, and eligibility criteria. Information about other sub-funds may not be made available to an investor in one sub-fund, and the terms and conditions of a sub-fund, such as minimum investment, redemption terms and even fees, can differ.
Among the most versatile Singapore fund structures is the VCC, as it can support both closed- and open-ended funds. An open-ended VCC option is suitable for liquid investment strategies such as equity, fixed income, and hedge funds. It enables investors to subscribe for and redeem shares at regular intervals, in accordance with the fund’s constitution and the frequency of NAV calculation. A closed-ended VCC, on the other hand, raises capital at the outset and then doesn’t allow further redemptions, which is suitable for strategies with no short-term liquidity, such as private equity, venture capital, or infrastructure investments. Closed-end VCCs share returns to investors either as distributions or as wind-up proceeds at the end of the fund’s term. Closed-ended VCCs are generally used in the VCFM regime, and the closed-ended structure is a condition of eligibility. Both are fully in line with the VCC Act and may be under a single umbrella, with sub-funds for varying liquidity terms.
The VCC’s structural flexibility has been beneficial to a variety of investment strategies. Knowing the most prevalent methods for using VCCs can help determine whether a VCC is suited to the fund manager’s mandate.
Open-ended VCCs are popular for long/short equity, global macro, multi-strategy and other liquid hedge fund strategies. Owing to the VCC’s ability to buy and sell shares at regular intervals (usually weekly or monthly), it naturally aligns with the liquidity requirements of hedge fund investors.
Closed-ended VCCs are used by private equity funds seeking control or minority stakes in unlisted companies. The structure and asset base are fixed and closed to private equity strategies, which usually have a 3-7 year investment time frame and low liquidity.
The VCFM regime has been tailored to venture capital investing, and closed-ended VCCs are the standard Singapore-domiciled vehicle of VCFM-licensed managers. VCC’s sub-funds enable VC managers to manage multiple vintage-year funds under a single umbrella.
VCCs — such as a single-fund VCC — often serve as an effective vehicle for enabling an FFO or multi-family office (MFO) licensed by MAS as an LFMC to design the investment portfolios of family clients in a tax-efficient, private, and institutionally credible manner. This is an attractive use case because the VCC is eligible for Section 13O and 13U tax schemes.
Not all entities are suitable for building and operating a VCC in Singapore. The eligibility conditions are intended to ensure that VCCs are overseen by qualified, regulated professionals within MAS’s regulatory framework.
A VCC shall at all times be managed by a Permissible Fund Manager (as defined in the VCC Act) who holds a Capital Markets Services (CMS) licence for fund management, or a financial institution that is exempt from holding a CMS licence under the Securities and Futures Act. This requirement helps ensure that MAS-regulated professionals supervise all VCCs.
The two types of LFMCs — accredited/institutional LFMCs and retail LFMCs — are both classified as Permissible Fund Managers. An A/I LFMC can manage one or more VCCs, and retail LFMCs can manage retail investors’ VCCs.
Permissible fund managers will also include fund managers who hold a CMS licence under the Venture Capital Fund Manager regime. All VCC sub-funds, however, under a VCFM shall have to adhere to the investment restrictions of the VCFM regime – that is, the sub-fund shall be closed-ended, and the investments in the sub-fund shall be limited to unlisted, early-stage businesses.
Single-family offices that are relying on the SFA Section 99 exemption and real estate fund managers that are relying on the immovable property exemption are not Permissible Fund Managers and, as such, are not eligible to run a VCC. These entities must obtain full CMS licensing before establishing a VCC structure.
The VCC regulatory requirements in Singapore comprise a dual regulatory regime comprising MAS and the Accounting and Corporate Regulatory Authority (ACRA), each with specific responsibilities for the governance and administration of VCCs.
MAS is responsible for the prudential supervision of VCC fund managers and the overall conduct and compliance standards of VCC structures. MAS provides guidance and advisory information on AML/CFT requirements and on governance and fund management standards for VCCs and their managers.
ACRA manages the registration of VCCs as legal entities and their corporate compliance. This includes maintaining the public register of VCCs, filing annual returns, overseeing the appointments of directors and auditors, and striking off and winding up VCCs.
MAS and ACRA coordinate in their supervisory activities on matters that involve both regulatory areas, e.g., the resolution of governance failures at a VCC and the redomiciliation of foreign funds to Singapore as VCCs. In this co-supervisorial approach, there is no regulatory disconnect between fund management and corporate administration aspects of the VCC.
MAS periodically reviews VCC structures and their fund managers via thematic reviews. In 2024, a significant review identified weaknesses in governance, sub-fund oversight, and AML/CFT controls, resulting in revised supervisory expectations. The managers of VCC should take the conclusions of these reviews as normative guidance on current best practice, as published by MAS.
Any manager who wants to use the VCC structure must obtain a suitable CMS licence from MAS. The VCC setup and compliance process in Singapore thus starts with the fund manager’s own licensing, not with the incorporation of the VCC itself.
The most basic CMS licence needed to run a VCC is the CMS licence endorsed for fund management (LFMC or VCFM). MAS cannot engage meaningfully with queries about the VCC structure until the licence is available (or the application is in the advanced stage).
The fund manager must have the required number of qualified representatives (QPs) resident in Singapore, meet the minimum capital requirements (S$250,000 for A/I LFMC and S$1,000,000 for retail LFMC) set by MAS, and have a CEO who is resident in Singapore and actively conducting operations.
All key personnel and directors of the fund manager must meet MAS’s fit-and-proper criteria, which include honesty and integrity, professional competence, financial soundness, and the absence of conflicts of interest. These criteria are ongoing and must be adhered to during the manager’s licensed life.
The fund manager has primary responsibility for AML/CFT compliance for all VCCs it manages. This involves adopting customer due diligence, transaction monitoring, and suspicious transaction reporting measures in line with MAS’s relevant notices and guidelines.
MAS will require VCCs and fund managers to have operational substance in Singapore, rather than just a paper presence. MAS’s 2024 thematic review of the VCC sector has led to improvements in governance standards.
In each VCC, there must be at least one member who is ordinarily resident in Singapore as a director. This director should be actively involved in the governance of the VCC by attending board meetings, monitoring the performance of the funds and ensuring that the VCC is run in accordance with the laws and the MAS supervisory expectations.
MAS does not expect the VCC’s board to be a rubber-stamp body for management decisions. Board minutes should be taken during board meetings, record the key decisions made at each meeting, and the board should actively monitor the fund’s compliance with its investment mandate and regulatory requirements.
The fund manager overseeing the VCC should have a genuine Singapore office staffed by qualified employees who actively manage the VCC’s investments and operations. Virtual offices, pass-throughs, or arrangements in which all substantive decision-making occurs outside Singapore are inconsistent with MAS expectations. They could compromise the fund manager’s licence and the VCC’s tax-incentive eligibility.
The VCC, as a regulated entity under MAS’ AML/CFT notices, is required to designate an eligible financial institution to perform customer due diligence (CDD) and beneficial ownership (BO) checks on its investors. The VCC’s board is responsible for the overall maintenance and the appropriate, consistent, and periodic review of AML/CFT procedures.
The choice of the right VCC structure (whether single-fund or umbrella) depends on the fund manager’s strategy, expected product portfolio, investor type, and cost considerations. Managers can use a single-fund VCC for their first strategy launch, co-investment vehicles, and when simplicity and reduced initial setup costs are important for a single-family office fund. A more appropriate VCC for managers who are looking to run several strategies, expecting an increasing number of investors to participate in several sub-funds within a single relationship and/or benefit from a shared administrative cost base across the expanding fund platform. The structure will be open-ended or closed-ended depending on the liquidity of the investment strategy: If a liquid investment strategy is adopted, an open-ended structure will be implemented; if an illiquid private markets investment strategy is adopted, a closed-ended sub-fund will be implemented. The structural options should be considered in conjunction with legal counsel experienced with the VCC Act before drafting documents for incorporation.
Several constitutional and regulatory documents must be prepared when a VCC is incorporated. They outline the legal framework, governance of the VCC and its investment mandate.
The VCC’s constitution is the most basic constitutional document, comparable to a memorandum and articles of association of a typical company. It should identify the VCC’s name, its fund structure (single or umbrella), the types of shares the VCC can issue, the procedures for issuing or redeeming shares, and governance provisions, such as director appointments and board meetings.
The investment mandate, eligible investors, fee structure and redemption terms of each sub-fund in an umbrella VCC should be described in a sub-fund constitution or supplemental document. The sub-funds operate within an umbrella framework, the basis for which is these documents.
Offering documents (information memorandum or private placement memorandum) are not required to be filed for incorporation, but are necessary before marketing the VCC to investors. Such documents need to be a true representation of the investment approach, risks, fees, governance, and regulatory context relating to the VCC and the manager.
Before attracting investors, the VCC should have an agreement with an eligible financial institution to conduct AML/CFT checks on its behalf. Customer due diligence forms, AML/CFT policies, and procedures should be ready and in place before the VCC begins onboarding investors.
Since incorporation, VCC’s readiness to operate and compliance with regulations will depend on the appointment of qualified directors and experienced service providers.
All directors must meet the MAS’s “fit and proper” requirements, and at least one director must be ordinarily resident in Singapore. Directors shall be personally responsible for the VCC’s governance and compliance, and the appointment of Directors shall be publicly registered with ACRA. In the case of umbrella VCCs, the same board of directors usually governs all sub-funds.
The Permissible Fund Manager should be formally appointed by way of a fund management agreement that defines the scope of management responsibilities, the investment mandate of the fund, and the governance agreements between the VCC’s board and the Permissible Fund Manager, including the terms of the fees payable to the Permissible Fund Manager. This agreement is a mandatory document in the incorporation process and for MAS.
To hold the VCC’s assets on behalf of the VCC and its investors, a custodian is required. The custodian must be independent of the fund manager and comply with the requirements under the VCC Act and MAS guidelines. For open-ended VCCs, the custodian also participates in the calculation of the NAV and in the processes of share subscriptions and redemption.
Each VCC is required to have its financial statements audited annually by a public accountant registered in Singapore. The auditor should be independent of VCC and its Manager and acceptable to ACRA. The auditor’s appointments should be completed before the VCC’s first financial year-end.
VCCs are registered via the ACRA BizFile+ portal, which requires submitting specific documents and paying the registration fee.
Electronic filing of the application for incorporation of a VCC is made via ACRA’s BizFile+ portal. The application shall contain the name of the VCC as proposed, its registered office, particulars of its directors, the name of its Permissible Fund Manager and a copy of its constitution. At present, the registration fee for each VCC is S$3,000.00.
Before submitting the incorporation application, the proposed name of the VCC must be reserved via ACRA. ACRA will verify the proposed name with VCC and the company names to ensure it is unique and complies with ACRA’s name conventions. Duplicate or confusingly similar names will be disallowed.
After the umbrella VCC is incorporated, each sub-fund of the umbrella VCC should be registered separately with ACRA. The sub-fund registration application shall include the sub-fund’s name, investment mandate, and constitutional documents. The registration fee for each sub-fund is currently S$300.
The VCC shall inform MAS of the formation of the fund and its manager following successful incorporation, submit the required AML/CFT documentation to the appointed financial institution, and ensure that the necessary documentation for all appointments of service providers is in place. Not all investor onboarding steps may be taken until after the compliance steps are completed, following incorporation.
The VCC regulatory requirements and Singapore framework imposed on VCC managers and directors constitute an ongoing set of operational obligations that need to be planned for from the outset. The obligations set forth ensure that investors receive proper governance oversight and that MAS and ACRA have accurate and timely information on each VCC’s operations.
Each VCC will hold an annual general meeting (AGM) within 6 months of the end of the financial year. The directors shall provide financial statements (audited statements) and the auditor’s report to the members at the AGM. In the case of umbrella VCCs, an overall financial picture is presented for the portfolio, but sub-fund-specific financial information must be reported separately.
A VCC may waive the obligation to conduct a VCC physical AGM for a particular financial year where all of its members agree in writing to waive this obligation for that financial year. Small, private VCCs with a limited number of institutional investors frequently use this dispensation by submitting financial statements and resolutions for approval in writing rather than attending a formal meeting.
Each VCC is obliged to submit an annual return to ACRA within seven months of the end of its financial year. The annual return includes the VCC’s main particulars (such as its registered address, directors, and fund manager) and must be accompanied by the audited financial statements.
The VCC’s fund manager is required to comply with regulatory returns to MAS periodically, in addition to ACRA filings, as part of its licensing obligations. These returns include AUM, investor type and number, fund structure, and changes to key appointments, providing MAS with continuous information on how the fund manager is running the business across all VCCs.
It is the duty of the VCC to keep proper accounting records and to prepare and audit financial statements in compliance with the prescribed accounting standards. These requirements are intended to promote transparency and accountability towards investors.
The financial statements of a VCC are to be prepared in accordance with the Singapore Financial Reporting Standards (International) — SFRS(I) — or International Financial Reporting Standards (IFRS), whichever applies to the VCC’s fund type and investors. For most institutional VCCs, IFRS is the applicable standard.
All VCC’s financial statements must be audited each year by a registered public accountant in Singapore. The audit report should be made available to members at the Annual General Meeting and filed with ACRA when the annual return is submitted. The auditor should be independent and have no conflict of interest with the VCC or its fund manager.
In addition to consolidated financial statements at the umbrella level, a separate financial statement is to be prepared for each sub-fund for umbrella VCCs. The managers should be transparent in the fund’s offering document about their ability to access all the financial statements of the other sub-funds, which investors have.
A VCC may select its financial year-end when it incorporates. The financial year-end will dictate the deadlines for the annual audit, AGM, and annual return filing. VCCs usually end with the year-end of their management company and parallel fund structures to ensure that reporting is consolidated at the fund level.
The VCCs have a legal obligation to maintain several registers and records that provide the basis for governance accountability, regulatory compliance, and investor rights. These records must be maintained to ensure they remain current and accessible to those authorised to inspect them.
The VCC should keep a current register of members that includes the names of all investors, their shareholdings, and the dates of any share transactions. The register is not open to the public but is available on request to MAS, ACRA and law enforcement authorities and is updated immediately after each subscription/redemption transaction.
The VCC should maintain a register of directors, including each director’s personal particulars, such as name, nationality, date of appointment, and contact address. ACRA must be informed of changes to the director register within the specified time limit.
If the shares are not subject to any restrictions on who can hold them, a register of substantial shareholders might be needed for VCCs. This register lists investors with voting interests or who control a significant percentage of the VCC’s voting shares, in accordance with the transparency principles for significant shareholders.
The VCC shall maintain all accounting records and supporting documents (such as bank statements, investment valuations, subscription and redemption notices, and audit workpapers) for a period of five years from the end of the applicable financial year. All these records shall be made available for inspection by the auditor, MAS and ACRA on request.
In addition to the annual reporting cycle, VCCs have a series of ongoing compliance and notification requirements throughout the fund’s lifetime that must be proactively managed.
The VCC needs to ensure that its appointed financial institution conducts ongoing customer due diligence and monitoring of existing investors, not just at the time of initial investor onboarding. Existing investor profiles should be reviewed periodically based on the investor’s risk rating, and suspicious transaction reports should be filed when appropriate.
Certain events must be reported to ACRA, including changes to directors, the VCC’s registered address, or the fund manager, and the creation or dissolution of sub-funds in an umbrella VCC. If the notifications are not submitted on time, they may incur late-filing fees.
As part of the fund manager’s ongoing regulatory obligations, material changes to the VCC or its manager, such as changes to AUM thresholds, investor eligibility requirements, or the scope of the fund manager’s CMS licence, must be reported to MAS. The fund manager is the key point of contact with MAS on all VCC-related regulatory issues.
MAS expects VCC managers to conduct regular internal compliance checks on the VCC to ensure it remains compliant with its investment mandate, AML/CFT requirements, governance policies, and constitutional documents. The findings from these reviews should be recorded and reported to the board.
One of the main reasons for using the VCC Singapore structure is Singapore’s tax incentive regime. Under the two main schemes (Sections 13O and 13U of the Income Tax Act), the investment income earned by qualifying VCCs managed by MAS-licensed fund managers is exempt from Singapore income tax. The smaller to mid-sized funds that meet the following criteria are targeted by Section 13O (formerly 13R): (i) have an AUM of at least S$20 million, (ii) have paid at least S$200,000 in local expenditure per year, and (iii) have at least two investment professionals who are resident in Singapore. Section 13U (previously known as 13X) is for larger funds with assets under management of at least S$50 million, annual local investments of at least S$500,000, and at least three investment professionals who are resident in Singapore. It can be used by more fund structures, such as those with non-accredited investors. Both schemes are implemented via MAS, are five-year awards, and are renewable if criteria are met. For VCCs investing in higher-yield vehicles or instruments subject to withholding taxes, the tax savings can be sizable and represent a significant economic benefit compared to investing through an offshore vehicle.
In addition to the main income tax exemption schemes, VCC managers and investors should be mindful of GST and withholding tax considerations for the VCC structure and its activities.
When a VCC pays management fees to a fund manager, the fees are typically subject to the Singapore standard GST rate, unless the fund manager is registered for GST and the fees constitute exempt financial services. Fund managers need specific GST advice as to the appropriate GST treatment of their fee arrangements.
Fund managers who are registered under the MAS are entitled to claim input tax credits for expenses incurred in their businesses, such as office expenses, professional fees, and compliance costs, where the expense is charged at the prevailing GST rate. The percentage recovered will vary based on the ratio of the financial services manager’s income that is not from exempt financial services.
A VCC may be liable to withholding tax in the foreign jurisdictions in which it has invested if investment income (such as dividends, interest and royalties) is received from those jurisdictions. This withholding tax can be mitigated or even avoided on income earned from treaty partner countries through Singapore’s DTA network, thereby boosting investors’ net returns.
Generally, distributions to investors made by a VCC will not be liable to Singapore withholding tax, as Singapore does not have a general dividend withholding tax on distributions made by companies to their investors. The tax treatment of distributions made in the investor’s own jurisdiction will, however, be subject to the tax laws and provisions of the relevant DTA applicable in that jurisdiction.
In a fund manager structure for a VCC, the fund manager will be the key player, with the primary role of managing the fund’s investment management, compliance, and governance oversight. The job of the fund manager is multifaceted and must be actively and proactively performed throughout the life of the VCC.
The fund manager is responsible for implementing the VCC’s investment mandate, which involves making investment decisions, executing trades, monitoring portfolio performance, and managing risk in line with the conditions set out in the fund’s constitutional documents and any conditions imposed by MAS on the fund. The function of this is to be done by the qualified investment professionals in Singapore.
The fund manager is the VCC’s key regulatory relationship and plays a key role in compliance with all applicable MAS notices, guidelines, and licence conditions. This covers AML/CFT compliance and regulatory reporting, event-driven notifications and compliance with the fund manager’s own CMS licence conditions.
The VCC’s fiduciary responsibility for its governance rests with its board of directors. Still, the fund manager generally provides operational support and information to help the board carry out its duties effectively, such as preparing board papers, investment reports, compliance updates, and financial summaries.
The fund manager should interact with investors, update investors regularly on the portfolio and financial reports, process investors’ subscription and redemption requests, and answer investors’ questions. The quality and frequency of investor communications are important for retaining investors and expanding the fund’s AUM.
The successful functioning of VCC operations depends on a network of competent, independent service providers with clearly defined roles as outlined in the VCC Act and the applicable MAS guidelines. A key part of the VCC set-up process is the selection of service providers.
The custodian manages the VCC’s assets on behalf of the fund and its shareholders, protecting them and maintaining proper records. The custodian should be independent of the fund manager and be able to manage the assets in the VCC’s portfolio, including listed securities, private equity investments, and digital assets, depending on the VCC’s investment strategy.
An external auditor audits the VCC’s financial statements annually and reports an audit opinion in the annual report to investors at the AGM. The auditor shall be a registered Singapore public accountant and should be independent of the VCC, its fund manager and other service providers to the VCC.
Middle- and back-office services, such as net asset value calculation, maintenance of the shareholder register, processing of subscriptions and redemptions, and financial reporting, are offered by the fund administrator. The administrator’s job is crucial for processing investor transactions accurately and on time, as well as for preparing fund accounting records.
If a leveraged or derivatives-based strategy is being followed, a prime broker might be named to provide financing, securities lending, and execution services. The prime broker is not the VCC and is usually also a custodian for the assets financed or for which it takes security under its prime brokerage contract.
The legal and compliance advisers are an important part of setting up and maintaining a VCC. They are engaged throughout the life of the fund – from structuring and incorporation, monitoring compliance and, ultimately, wind-up.
Our legal team, with VCC expertise, prepares the constitutional documents, legal opinions, and regulatory guidance for VCC’s incorporation and for preparing its offering documents. They provide guidance on selecting the fund structure, the terms of the fund manager agreement and legal requirements for submitting the sub-fund to the fund manager and for investor onboarding.
Compliance advisers can be employed either directly by the VCC manager or within the fund manager’s compliance department to help develop and implement AML/CFT policies, regulatory reporting frameworks, and internal governance procedures. They also provide input on changes to MAS guidance and their impact on the VCC’s operations arising from regulatory developments.
Tax advisers specialising in Singapore fund structures provide advice on the possibility of qualifying for the Section 13O or 13U tax exemption, the GST treatment of management fee arrangements, the withholding tax implications of the fund’s investment portfolio, and the tax planning opportunities available to the fund through Singapore’s network of treaties.
Employment lawyers assist fund managers when creating or expanding their Singapore operations in relation to a new VCC, structuring employment contracts, immigration status of their investment professional team in Singapore, and the applicability of Singapore’s employment laws to the fund management team.
In accordance with the VCC Act and the ACRA regulations, VCCs must have a qualified corporate secretary to assist with corporate compliance and secretarial functions.
Each VCC must designate a corporate secretary within 6 months of its incorporation. The corporate secretary should have the qualifications or experience necessary under the VCC Act and should be a Singaporean resident. In the case of umbrella VCCs, one company secretary is usually appointed for all VCCs.
The corporate secretary keeps the VCC’s statutory registers, submits the VCC’s annual returns and other documents to ACRA, and notifies ACRA of any changes to the VCC’s principal particulars within the statutory time frames. Errors or delays in these filings could result in penalties imposed by ACRA.
The corporate secretary helps manage and record board meetings, draft board resolutions, and keep board minutes. This documentation is crucial for establishing that the VCC’s management and control are exercised in Singapore, an essential requirement for ensuring Singapore tax residency.
The VCC’s registered office, as required by the Singapore Companies Act, is usually the corporate secretary or the corporate secretary’s firm, and it must be a physical address, not a mailbox address. The function of the corporate secretary is extremely important because all official correspondence from the MAS, ACRA and other government bodies is channelled to the registered office, where timely handling of incoming regulatory correspondence is crucial.
Although there are considerable advantages to having a VCC in Singapore, fund managers need to carefully consider the costs of establishing and operating the VCC, as well as compliance costs. Costs can be significant – especially for smaller funds – and should be modelled with care as part of the fund’s financial projections before launch.
Costs for setting up a VCC comprise ACRA registration fees, legal fees for preparing the constitutional documents and offering materials, corporate secretarial fees, and advisory fees for guidance on MAS regulations. Generally, the total setup costs range from S$30,000 to S$80,000 for a first-time VCC with one sub-fund, depending on the structure’s complexity and the advisers involved.
Annual audit, fund administration, custody, legal, and compliance fees are important ongoing expenses for the VCC. These costs can have a significant negative impact on investors’ returns for smaller funds, which managers should factor into their minimum investment requirements and economic analysis of the VCC at a specific AUM level.
The fund manager’s ongoing costs of compliance with its own CMS licence obligations (such as regulatory reporting, AML/CFT programme maintenance, internal audit, and supervisory engagement with MAS) are also incorporated into the fund manager’s total cost structure and the management fees charged to the VCC.
Section 13O and 13U tax incentives include professional fees for tax advisers, in addition to the preparation of supporting documentation at the end of each incentive period. Such costs should be considered at the outset, as the resultant tax savings over the incentive period will generally far exceed the advisory costs.
One of the most frequent observations in MAS supervisory reviews of VCC structures is the weaknesses in governance. Proactive measures to address possible gaps in governance are crucial for regulatory compliance and securing investors’ interests.
One of the big governance issues is ensuring that the directors living in Singapore are truly independent of the fund manager and actively involved in their role as governors, not just ‘paper men’. This was identified as an area of concern during MAS’s 2024 thematic review and has been flagged for further review of VCC governance through director engagement.
An umbrella VCC may require a fund manager to decide how to allocate investment opportunities among sub-funds with overlapping mandates, for example, between a newly offered investment opportunity and two or more sub-funds seeking to invest in it. It’s important to manage these fairly and transparently by having documented policies covering conflicts of interest and board-approved allocation frameworks.
Despite the clear regulatory requirements, MAS has observed AML/CFT execution deficiencies in several VCCs during its supervisory reviews, including the following areas: Adequacy of beneficial ownership verification, frequency of investor profile reviews, and Timeliness of filing suspicious transaction reports. Fund managers need to ensure that their AML/CFT programmes are not just documented but in fact operational.
Practical segregation of sub-fund assets can be hindered by operational failures, for instance, if assets are misallocated to the wrong sub-fund account or if service providers don’t keep separate records of sub-fund assets. Important protections are a sound set of operational practices and periodic reconciliation by the fund administrator.
Several VCC incorporation consultants in Singapore can guide fund managers through the structuring considerations for a VCC with an international investor base or a portfolio of foreign investments, both of which entail a host of regulatory, tax, and legal complications.
Before investing, fund managers need to consider whether foreign investors in the VCC are required to comply with the securities laws, foreign investment restrictions or other tax reporting requirements of their home jurisdictions (for instance, FATCA (US) or CRS (OECD)). These restrictions could impact the fund’s offering structure and who is eligible to invest.
Singapore’s DTA network is a great benefit. Still, fund managers are required to ensure that the VCC’s use of Singapore tax treaties does not amount to treaty shopping (in which a non-Singapore entity places income in Singapore solely to claim treaty benefits and has no economic activity there). Foreign tax authorities and the IRAS are vigilant about treaty-shopping arrangements and sceptical of treaty benefits claimed on a non-substance basis.
The fund manager will need to determine whether the VCC’s offering must be registered, whether it is regulated, or whether a local distributor of the VCC must be appointed in each target jurisdiction. Failure to secure the necessary regulatory approvals in foreign jurisdictions for marketing a fund to foreign investors may result in securities law violations in those jurisdictions.
The transition of an existing offshore fund to Singapore as a VCC will require careful planning for the regulatory, legal and operational aspects of the process, such as filing the relevant regulatory documents in the fund’s current jurisdiction, informing existing shareholders, renegotiating the agreements with service providers and transitioning the fund’s AML/CFT programme to meet Singapore requirements. It is highly advisable to seek a professional opinion from advisers with experience in cross-border fund redomiciliation.
Governance, transparency, liquidity, and reporting are important investor expectations and practical considerations for fund managers when structuring and managing VCCs. By managing these expectations proactively, investor disputes are mitigated, and trust in investors is preserved – a key ingredient in achieving long-term investor relations.
When an investor joins an umbrella VCC, he or she should be alerted that the financial statements of all other sub-funds are available to him or her, not just the statements of the portfolio to which he or she has invested. The disclosure dynamic in the VCC Act, which is one aspect of the Act, could be an issue for investors who desire full confidentiality of the disclosure and should be explicitly stated in the offering documents.
As for open-ended VCCs, investors usually have to wait for periodic liquidity as indicated in the fund’s offering documents. The fund managers need to ensure that the VCC’s investment portfolio has sufficient liquidity to meet expected redemption requests without having to liquidate assets at a loss. One of the major reasons for operational stress in funds is the misalignment between portfolio liquidity and investors’ redemption expectations.
Investors who have invested in a VCC based on its Section 13O or 13U tax-exempt status should be promptly notified if the fund becomes ineligible for the tax exemption, e.g., because it does not meet the AUM thresholds or spending requirements. Should tax incentive status change, fund managers should have language in their fund offering documents that discusses the implications of this change.
As institutions become more vocal about the importance of governance, VCC managers are now being asked to report regularly on governance activities, such as board activity, compliance programme performance, and significant regulatory changes affecting the fund. Proactive governance communication helps increase investor confidence and minimise the risk of redemption requests driven by governance concerns.
The VCC Singapore structure is particularly appealing given Singapore’s status as the leading fund management hub in Asia. The value of the VCC is not standalone — it is enhanced by the ability to attract talent, regulate adequately, provide adequate infrastructure and investor networks that Singapore has developed over decades as a financial centre.
Singapore’s financial infrastructure is well-established across all aspects of fund management, including prime brokerage, custody, fund administration, and legal and tax advisory. There is also less friction in establishing and operating a Singapore VCC, due to the availability of experienced and specialised service providers in Singapore.
Singapore has built up a large pool of investment professional talent, including investment managers, investment risk managers, investment compliance staff, and financial analysts across various classes of investments and diverse geographies. This talent pool is one of the key factors that can help fund managers establish a true Singapore operation, as part of the MAS licensing conditions and eligibility for tax exemption.
Fund managers and investors have a high level of legal certainty in Singapore thanks to the common-law legal system, an independent judiciary, and a transparent regulatory environment. Singapore is known the world over for its efficient, reliable processes for contract enforcement, investors’ protection and dispute resolution, which is an advantage over many competing jurisdictions in Asia.
With a strategic position at the hub of Southeast Asia and proximity to the fast-growing Asian economies of China and India, Singapore is an ideal location for fund managers focused on Asia. The other major plus of time zone alignment with key Asian markets for investment teams is the practical one of let’s get to work at the same time.
The Singapore fund structure explained framework facilitates meaningful access for offshore international investors who may be hesitant to invest in fund structures in other jurisdictions that lack Singapore’s regulatory credibility, or even in offshore fund vehicles.
Major institutional investors such as pension funds, sovereign wealth funds, insurance companies, and endowments have become more accepting of VCCs as a credible, well-regulated fund structure. The VCC’s AML/CFT regulatory system and Singapore’s AML/CFT takarazuka system are FATF-compliant and provide comfort to institutional investors regarding governance and compliance when assessing fund structures.
The large and growing volume of family office capital in Singapore (hundreds of billions of S$ managed by single- and multi-family offices in the city) is a rich source of potential investor capital for VCCs. Singapore-domiciled fund vehicles, which operate under the same regulatory and tax framework as Singapore-based family offices, are a popular investment avenue for many family offices in the city.
The wealth management industry in Singapore comprises private banks, independent asset managers, and financial advisers that provide fund managers with proven distribution channels for accredited investors. With their regulatory adherence and eligibility for the tax exemption schemes approved by the MAS, VCCs are aptly suited for distribution via these channels.
Focusing on raising funds from international institutional investors, a Singapore-domiciled VCC managed by a fund manager licensed by MAS is a strong reputation-building signal and reflects a dedication to regulatory compliance, governance standards, and transparency associated with Singapore’s financial centre.
One of the enduring advantages of a VCC in Singapore is that it will operate in a supervisory environment provided by MAS and within an international community with an international reputation, which has become more crucial to investors in a world characterised by regulatory uncertainty in other Asian fund jurisdictions.
MAS is always included in the international hotspot list of financial regulators, is considered one of the best and most respected in the world, and has established strong ties with FATF, IOSCO, BIS, and financial regulatory bodies in all key financial centres worldwide. Being under MAS’s oversight is a strong affirmation of the fund managers’ governance and regulatory credibility.
The jurisdictional framework for investment funds in Singapore is known for its clear rules and well-documented guidelines, and for MAS’s constructive engagement, providing meaningful pre-application consultation and industry guidance. This predictability, compared with the regulatory uncertainty in other jurisdictions, helps reduce compliance risk for fund managers planning long-term fund operations in Singapore.
Singapore has an excellent compliance record with the FATF, and its AML/CFT framework is fully aligned with international AML/CFT standards, according to the VCC. This compliance record is gaining greater significance for investors, from individual to institutional, whose AML/CFT policies mandate investing only in funds managed in FATF-compliant jurisdictions.
MAS has succeeded in proactively defining and evolving the regulatory framework in Singapore, particularly regarding the development of the VCC and the eventual creation of the VCFM regime, as well as the continuous improvement of the tax incentive schemes in line with market developments. It is a proactive move that enhances fund managers’ confidence that Singapore’s regulatory landscape will remain conducive to their business development.
While the commercial and tax advantages are obvious, Singapore has a regulatory framework for funds that provides several structural benefits for fund managers and investors, which compound over time as the fund develops its track record, AUM, and investor relationships.
The fund managers that redomicile are existing offshore fund managers who do not need to undergo a fund windup and relaunch, thereby maintaining continuity for investors and their portfolios, as well as the fund’s track record and history. This continuity is commercially beneficial in marketing the fund to new investors who use track record length and consistency as factors in their investment decision.
The umbrella VCC structure gives a platform to a growing fund business. The manager’s product offerings increase as new strategies, asset classes, and geographic mandates are added, and more sub-funds can be created within the existing umbrella, saving capital for investment rather than administrative overheads, compared with a standalone fund vehicle.
The government’s long-term policy commitments of supporting the growth of the financial sector, attracting talent to Singapore, and ensuring the regulatory environment is optimal further underscore Singapore’s position as the “financial hub of the Asia-Pacific region. As Singapore’s asset management sector continues to expand and the capital inflows it attracts from across the region grow, fund managers that set up operations in Singapore and use VCC structures are well placed to reap the rewards.
The market acceptance and investor recognition of VCCs are likely to strengthen further as more institutional investors, including those from Asia and the Middle East, move toward fund vehicles – such as VCCs – incorporated in Singapore rather than traditional offshore structures. Fund managers who adopt the VCC structure are poised to cater to the evolving investor preference.
The guide has covered all aspects of the VCC framework, from its legal underpinnings and structural characteristics to tax and operational considerations, the ecosystem of service providers, and the commercial and regulatory advantages that are driving the use of Singapore VCCs as a preferred fund domicile for fund managers. These principles are the most crucial ones to take forward:
The VCC is specifically engineered to address the operational needs of investment fund managers, including the ability to have freely variable share capital, segregation of sub-funds, investor privacy, and Singapore’s tax exemption schemes. It is not like a commercial enterprise and cannot be applied in a context other than fund management.
Without a Permissible Fund Manager licensed by MAS, a VCC and its management cannot be regulated. The necessary CMS licence (either LFMC or VCFM) must be the first step in any plan to establish a VCC, and the licensing process should be considered from the fund’s launch.
However, the VCC’s regulatory and tax advantages depend on Singapore’s genuinely substantive governance, such as active involvement by the VCC’s directors, the VCC’s role in investment decisions, and the presence of meaningful compliance programmes. Buildings designed primarily for form rather than substance are at high risk of losing some or all of their MAS license and/or tax-incentive eligibility.
The Section 13O and 13U tax exemption schemes offer great ongoing tax advantages, though these benefits are subject to continued compliance with AUM thresholds, local spending commitments, and headcount of investment professionals. The VCC planning process is not a single shot, but an ongoing process that must be monitored and managed over the life of the fund.
The VCC framework introduces various legal, regulatory, tax, and operational complexities that are best handled with the guidance of advisers with the requisite experience, such as fund lawyers, MAS compliance professionals, tax advisers, and corporate secretaries. When qualified VCC incorporation consultants in Singapore are involved from the planning stage onwards, the chances of success increase in terms of structural outcomes and the avoidance of compliance issues after launch.
The implementation and operation of a successful VCC starts long before the documents are prepared and ACRA applications are submitted. The licensing of fund managers must be in place (or in the advanced application stage) before any VCC planning can begin, as the VCC cannot function without a Permissible Fund Manager. In addition to the licensing process, fund managers are faced with the question of how they need to set up the VCC structure (single fund or umbrella, open-ended or closed-ended), what type of clients they wish to cater for, and the fund’s investment mandate, as well as the services provider ecosystem required — all of which must be considered when carrying out the financial modelling and calculating the full range of operational costs, compliance and tax planning costs before determining fee structure and minimum investment thresholds. Sustainable long-term performance will depend on the ability to maintain credible governance, compliance, and investor communication beyond regulatory requirements once the VCC is up and running. To withstand regulatory scrutiny and maintain investor trust, active board engagement, strong AML/CFT programmes, disciplined sub-fund segregation, and transparent investor reporting should be the pillars of a VCC operation. For those who are ready to move on, working with experienced fund counsel, MAS compliance advisers, and VCC incorporation consultants in Singapore will ensure that the process of planning to launch a fund and running it is handled with the expertise that Singapore’s institutional fund management community expects.
