Singapore put the final touches on a new corporate structure for investment funds. The move is a bid to bolster the city-state as a key fund hub.
Singapore's financial regulator, the Monetary Authority of Singapore on Monday said that it has finalized the features of the variable capital company, or VCC, after public consultations which started one and half years ago.
The move to bolster its standing in funds could help Singapore maintain its lead as a wealth management center against Hong Kong, its closest rival in the region.
«The new VCC framework will encourage the consolidation of fund domiciliation and fund management activities locally, creating a full-service fund ecosystem in Singapore,» Ng Yao Loong, assistant managing director at the MAS, said in a media statement. «The growth of fund domiciliation activities will create opportunities for a wide range of service providers such as lawyers, accountants, fund administrators, and fund custodians,» he added.
Flexibility and Cost Efficiencies
The new framework provides greater flexibility by allowing a VCC to issue and redeem shares without having to seek shareholders' approval, letting them enter or exit from investments in a fund when they wish to.
Secondly, a VCC can achieve economies of scale by being established as an umbrella structure (with multiple sub-funds), sharing the same board of directors and common service providers.
Re-domiciliation and Safeguards
To cater to the needs of global investment funds, MAS also said that a VCC can use Singapore and international accounting standards in preparing financial statements. Fund managers with foreign-domiciled funds may choose to transfer the domicile of their foreign investment funds to Singapore, or do an «inward re-domiciliation» under the new framework.
To prevent the misuse of VCC for illegal activities, it must be subject to anti-money laundering and anti-terrorism financing requirements. The VCC framework also requires that assets and liabilities of each sub-fund be segregated. Hence, assets of one sub-fund under an umbrella structure may not be used to offset the liabilities of another sub-fund, or those of the umbrella fund, even in the event of insolvency.
