We are just over a year on from the launch of the Variable Capital Companies (VCC) framework by the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority on 15 January 2020. The launch has been warmly received in Singapore, not just in terms of asset management but also in private wealth and family offices.

The aim of the Singapore VCC initiative was to attract and encourage the domiciliation of funds in Singapore, leveraging the combination of geographic location, stable political environment and strong regulatory framework.

The VCC structure was created with the benefit of hindsight from other jurisdictions. It has been able to benefit from the latest innovations in investment vehicles seen in other jurisdictions like the Cayman Islands, BVI, and Hong Kong in order to create, what many believe to be, a superior investment option.
 

So, has it been successful? We think so – 250 VCCs were incorporated by March 2021 and continued Singapore’s recent growth in assets under management. On top of this, there are now over 900 registered and licensed asset managers.

VCCs came with a suite of tax and operational efficiencies that make them attractive, but the Singapore government has further incentivised their use under the VCC Grant Scheme. This has helped establish VCCs for the long-term, during a year that might otherwise have seen them struggle due to Covid-19. The grant scheme will continue to support VCC growth short term, setting them up as the vehicle of choice long-term.

That said, we have seen some delays with the introduction of VCCs, with the incorporation and bank account opening processes taking longer than ideally we’d like. It’s to be expected with the introduction of a new corporate vehicle, but no doubt everyone is keen to get it working more smoothly for the long-term success. This is especially important when you consider that VCCs were introduced to give Singapore a competitive advantage of jurisdictions with similar structures available.

Looking at VCCs a year on, even with them being new and the odd teething issue, it looks like they have been the game-changer as originally envisaged. Over the past year, we have also seen VCCs used in unique ways as many traditional funds, private equity, venture capital and multi-family offices have set up VCCs. For example, the launch of the world's first firm financing fund and unique opportunities created for investors with the launch of a digital private wealth platform. 

Looking to the future, VCCs look set to support Singapore's continued growth, cementing Singapore as a competitive asset management hub in the Asia-Pacific region. 

About the Author

Steffi Goh

Steffi is Business Development Manager at TrustQuay