Singapore MAS Investigating VCCs (Variable Capital Company) Managers for Failures in Compliance & Oversight Including Not Establishing Independent Custody for Assets and Using VCC for 1 Single Asset & for Only 1 Client, MAS Issues Reminder on VCC to be Used as Collective Investment Scheme & VCC Managers to Have a Substantial Role
1st July | Hong Kong
The Monetary Authority of Singapore (MAS) is investigating VCCs (Variable Capital Company) managers for failures in compliance & oversight including not establishing independent custody for assets and using VCC for 1 single asset & for only 1 client. Singapore MAS issued a reminder on VCC to be used as collective investment scheme, and VCC managers to have a substantial role. No. of VCCs (Variable Capital Company) in 2023 – 1,029. No. of VCCs sub-funds – 2,158 (Managed by 565 regulated fund management firms). No. of Re-domiciled VCCs – 18. Fund Service Providers – More than 300 legal advisors, tax advisors, fund administrators, corporate secretaries etc. VCC Fund Strategies – Private Equity / Venture Capital 41%, EAM / MFO 22%, Hedge Fund 18%, Traditional 15%, Real Estate 4%. Variable Capital Companies (VCC) – 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. The anti-money laundering and countering the financing of terrorism obligations of VCCs will come under the purview of the Monetary Authority of Singapore (MAS). More info below:
“ Singapore MAS Investigating VCCs (Variable Capital Company) Managers for Failures in Compliance & Oversight Including Not Establishing Independent Custody for Assets and Using VCC for 1 Single Asset & for Only 1 Client, MAS Issues Reminder on VCC to be Used as Collective Investment Scheme & VCC Managers to Have a Substantial Role “
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Singapore MAS – VCC (Variable Capital Company) in 2023
VCC (Variable Capital Company):
- No. of VCCs – 1,029
- No. of VCCs sub-funds – 2,158 (Managed by 565 regulated fund management firms)
- No. of Re-domiciled VCCs – 18
- Fund Service Providers – More than 300 legal advisors, tax advisors, fund administrators, corporate secretaries etc
VCC Fund Strategies:
- Private Equity / Venture Capital – 41%
- EAM / MFO – 22%
- Hedge Fund – 18%
- Traditional – 15%
- Real Estate – 4%
Variable Capital Companies (VCC) – 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. The anti-money laundering and countering the financing of terrorism obligations of VCCs will come under the purview of the Monetary Authority of Singapore (MAS).
Selected key features of VCC:
- A VCC has a variable capital structure that provides flexibility in the issuance and 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. 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.
- 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.
More details pertaining to the VCC framework can be found at www.mas.gov.sg.
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