Singapore Launches Framework to Attract Investment Funds

The new corporate structure can be used for a wide range of investment funds and provides fund managers greater operational flexibility and cost savings.

Singapore is courting more funds to base themselves in the city-state with the launch of a new framework that caters to the needs of global investment funds and investors, and a grant scheme to encourage industry adoption of the framework.

Under the Variable Capital Companies (VCC) framework, announced by the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA) on Wednesday, fund managers will have greater flexibility in share issuance/redemption and the payment of dividends. Managers will also be able to incorporate multiple funds in a single VCC to save costs, the statement said.

The three-year VCC grant scheme will help defray costs of incorporating or registering a VCC by co-funding up to 70 percent of eligible expenses paid to Singapore-based service providers, capped at S$150,000 for each application, with a maximum of three VCCs per fund manager.

Marking the launch, a total of 20 investment funds, from a group of 18 fund managers that participated in a VCC pilot program by MAS and ACRA in September 2019, were incorporated or re-domiciled under the new framework on Wednesday.

Benny Chey, MAS assistant managing director, Development and International, called the launch of VCC a «significant chapter in the development of Singapore as a full-service international fund management and domiciliation hub» and said it would also create new opportunities for Singapore-based fund service providers as more fund managers to use the VCC to structure their investment funds.

Anshuman Asthana, regional head of Product Management, Securities Services, ASEAN and South Asia, Standard Chartered Bank, called the VCC structure a game-changer for the asset management industry and said the structure would also give Asia’s start-up ecosystem a boost.

With more private equity and hedge funds expected to domicile in Singapore, they can more easily continue their financing support for Fintech start-ups and help them grow in size. This will help solidify Singapore’s position as a technology and innovation hub for the region,» Asthana said.