Singapore has launched a new fund framework this year that will encourage more funds to be domiciled in in the Lion City and enhance the jurisdiction's value as an international fund management centre.
Namedthe Variable Capital Companies (VCC), the new corporate structure will provide fund managers greater operational flexibility and cost savings. Fund managers may also incorporate new VCCs or re-domicile their existing investment funds with comparable structures by transferring their registration to Singapore as VCCs. This can be done via ACRA's online application form.
"The launch of VCC will raise the game for Singapore's already robust fund management industry. It is expected to encourage fund managers to use Singapore as a master fund platform for US and European investors who have historically preferred jurisdictions such as Cayman Islands, Luxembourg or Ireland," Tejas Desai, partner at EY India told the Business Times.
Over time, investment by Singapore fund managers into various Asian markets, including India, may flow through VCC structures"
"Over time, investment by Singapore fund managers into various Asian markets, including India, may flow through VCC structures," Desai added.
The new structure is tailored for collective schemes and would be open to both open-end and closed-end funds, traditional and alternative funds - be it private equity, venture capital, hedge fund or any other fund with different strategies. The VCC can be a stand-alone entity or an umbrella entity with multiple sub-funds.
This week, an inaugural batch of 20 investment funds were incorporated or re-domiciled as VCCs by a group of 18 fund managers, as part of the pilot programme started by MAS and Acra last September.
Benny Chey, MAS assistant managing director (development and international), said the new VCC framework will create opportunities for Singapore-based fund service providers such as legal and tax advisers, accountants, fund administrators and fund custodians.
To further encourage industry adoption of the VCC framework in Singapore, MAS has also launched a Variable Capital Companies Grant Scheme. The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70% of eligible expenses paid to Singapore-based service providers. The grant is capped at S$150,000 for each application, with a maximum of three VCCs per fund manager.