On Monday, October 1, a bill in Singapore which launches a new corporate structure named the Variable Capital Company (VCC) was passed into Law.
The new structure encourages fund managers in Singapore to establish the origin of their investment funds in the country.
Indranee Rajah, the second minister for finance in Singapore, has acknowledged the fund management industry as an important component of Singapore’s Financial Sector, contributing 12.4% of the total financial sector’s nominal value-add in 2017.
Furthermore, the Variable Capital Company (VCC) will re-enforce the existing suite of structures which are already available to fund managers in Singapore. The most common investment for fund structures internationally are unit trusts, these would allow funds to hold assets and provide profits that go straight to an individual.
With this, the Variable Capital Company will potentially create over 1,000 jobs within two years. It will operate from an office in Singapore and employ SG-based corporate secretaries, engage its lawyers, fund administrators and so on to facilitate their operations, said Rajah.
In addition to this, the VCC has the option to create either a standalone or umbrella fund sourcing from multiple sub-funds. According to Rajah, these umbrella funds could form bigger scale economies, as the sub-funds could share a common board of directors and use the same service providers, such as the same fund manager, custodian, auditors, and administrative agent.
The Monetary Authority of Singapore (MAS) consulted the VCC framework and the bill, which has been reviewed for the past 18 months for any flaws and will also oversee the anti-money laundering and counter-financing of terrorism obligations of VCCs.
Singapore’s economy is already strong, which has earned the nickname “Asian Tiger”, and with this bill, it would help strengthen the country’s position as a full-service international fund management center.