What is a VCC?

Written by Lim Wee Tek

The Variable Capital Company (“VCC”) is a corporate entity structure under which several collective investment schemes (whether open-end or closed-end) may be gathered under the umbrella of a single corporate entity and yet remain ring-fenced from each other.

It is similar to the open-ended investment company structure in the UK and protected cell company or segregated portfolio company structures in jurisdictions like Guernsey or the Cayman Islands. The corporate entity structure gives funds an alternative to unit trusts, limited partnerships, limited liability partnership and companies.

The VCC is regulated under its own legislation, the Variable Capital Companies Act 2018, which came into force on 14 January 2020.

Funds and sub-funds of VCCs may be authorised schemes or restricted schemes. Units in authorised schemes may be offered to the public, while units in restricted schemes may only be offered to institutional and accredited investors.

The Monetary Authority of Singapore (“MAS”) has also launched a VCC Grant Scheme. Under the scheme, MAS will co-fund up to 70% of eligible expenses paid to Singapore-based service providers. The grant is capped at SGD 150,000 for each application, with a maximum of three VCCs per fund manager. The scheme will run from 16 January 2020 to 15 January 2023.

Overview of the VCC structure

  • The VCC is a corporate entity in which shareholders may hold shares.
  • However, unlike a company which is used to carry on a business, the only purpose for which a VCC may be used is as one or more collective investment schemes (“CIS”) in the form of a body corporate.
  • Each share in a VCC is analogous to a unit of a CIS, and the members in a VCC therefore correspond to unitholders of a CIS.
  • Shares in a VCC entitle members to receive profits from the VCC’s property in accordance with the rights set out in the VCC’s constitution.
  • A VCC is not restricted to paying dividends only out of profits as is the case with companies.
  • If permitted, members may also redeem or sell their shares back to the VCC in order to exit their investment.
  • There are no capital maintenance requirements and hence whitewash approvals will not be required.
  • The redemptions will typically need to be carried out as a proportionate amount of the VCC’s net asset value.

What are the requirements of a VCC?

  • The capital of a VCC will always be equal to its net assets, thereby providing flexibility in the distribution and reduction of capital.
  • It will require a Singapore-based licensed or regulated fund manager
  • Existing Securities and Futures Act (SFA) requirements for investment funds will apply to VCCs.
  • It must have at least one Singapore resident director for non-authorised schemes and at least three directors for authorised schemes.
  • It must have its registered office in Singapore and must appoint a Singapore-based company secretary.
  • It must be subject to audit by a Singapore-based auditor and must present its financial statements as per IFRS, Singapore FRS, or US GAAP.

Benefits of a VCC

  • By allowing segmented investment portfolios through the sub-funds, assets and liabilities can be clearly separated and ring-fenced
  • Investors have the flexibility to enter and exit the fund as computation of their investment value is straightforward with the capital of the VCC being equal to the net assets
  • Cost efficiencies can be achieved by having a single administrator, fund manager, custodian, auditor, and compliance officer managing the main and sub funds as opposed to juggling multiple funds
  • The ability to tap on Singapore’s tax treaties as a legal entity for cross border investments
  • Distribution of dividends from the capital to meet dividend obligation as opposed to only being allowed to distribute from the profits for a traditional corporate vehicle


The flexibility of the VCC allows it to be used in both traditional fund structures as well as in creative and innovative ways. As more fund managers and investors make use of the VCC and see its many benefits, we see it becoming a mainstay and an established fund vehicle in time to come.



The information provided herein is for informational purposes only and should not be construed as professional or legal advice. While Credence Consulting Pte. Ltd. (Credence) believes that its sources are reliable, we make no representation or warranty as to the accuracy of the contents. You should contact your legal counsel to obtain advice with respect to any particular matter raised. The opinions expressed here or through our website are the opinions of the individual author only and are not legally binding, and may not reflect the opinions of Credence or any individual partner or director.

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