Offshore Updates

Singapore Variable Capital Company – another fund management structure

Singapore is highly regarded as a sound legal and regulatory jurisdiction, anchored within a stable political and economic environment. 
 
The Singapore Variable Capital Companies (“VCC”) legislation has recently created a framework that aims to attract funds, asset management firms and investors to expand their activities in Singapore.
 
Its principal attraction is the ability to have legally segregated portfolios embedded in it. These entities have been around in other jurisdictions for a number of years, perhaps most notably in the Cayman Islands in the guise of the Segregated Portfolio Company. However, a VCC can be treated as a single unit, rather than a series of sub-funds. This means some economies of scale can be achieved through single investment and other service provider agreements. As effectively a Singapore company, it can have access to Singapore’s tax treaties.
 
But not every fund constitution fits every incentive and vice versa. There are numbers of typical structures which  might fit into the various tax exemption regulations.  The incentives are subject to entity type and location.
 
Singapore will be capable of meeting almost every need for structuring and managing a fund. While considering the pros and cons of each structure, it revolves around not only tax, but also location (time-zone, distance from service providers), constitution (i.e. ease of governance, liquidity) and regulation (freedom, reputation).