A large number of companies in Singapore are investment funds which focus on maximizing the returns for the investors. In countries where corruption and nepotism levels are high, investors are often targeted, facing penalties without a legally valid reason, so they often wish to relocate to Singapore, which has a business friendly government. To make it more convenient for investment funds to register in Singapore, the government has approved a new structure called the variable capital company (VCC). The procedure for registration of variable capital companies in Singapore and their advantages discussed.
Definition: What is VCC Company?
A VCC has a capital structure which is flexible, the number of shares issued and redeemed will vary based on the requirements of the investor. The share capital of the fund will be equal to the net asset value (NAV) of the fund. Investors can redeem shares, affecting the NAV of the fund.
While companies pay dividends from the profit they make, the VCC will pay dividends from the total capital. Foreign companies which originally set up as funds can consider being re-domiciled as a VCC to take advantage of the lower taxes which imposed on the VCC in Singapore.
Each VCC should have the suffix VCC for its name. Standalone funds, restricted funds and retail funds can have a VCC structure. Additional umbrella funds which have multiple sub-funds can also have a VCC structure. Each of these sub funds may specialize in a different category of assets. Most of the traditional funds open ended funds which allow investors to invest and exit whenever they wish.
Additionally there are traditional and alternative funds which open-ended or close-ended and these funds can also have a VCC structure. To reduce the taxes paid and get the benefit of other incentives offered by the Singapore government.
The Singapore government hopes that a large number of investment funds will get domiciled in Singapore due to the savings and flexibility which offered. The VCC is eligible for the tax treaties which Singapore has signed with other countries.
The fund is eligible for the tax exemption available for the enhanced tier fund and other incentives under the Singapore resident scheme. The investors and shareholders assured of privacy since their details will not published publicly. It is also easier to incorporate compared to other companies.
Like all other companies, the VCC should get approval for its name. In case of a non-authorized scheme, it should have at least one resident director in Singapore, and for authorized schemes it should have at least three Singapore resident directors. Unless the VCC has got exemption, it should also appoint a fund management company(FMC) authorized by the monetary authority of singapore (MAS).
One of the directors should be the registered director or representative of the FMC. The VCC should have a company secretary and auditor based in Singapore, and a registered office in Singapore. The company should have at least one shareholder who is local or foreign. The registration fee for a Variable Capital Companies is S$8000 and the sub fund registration fee is S$400. A certified copy of the constitution also required.