In our first session, Daniel Yong and Stephen Banfield examined preferred fund domiciles that allow for inflow and outflow of capital, in addition to a balanced regulatory and tax regime as well as political stability and robust infrastructure. They discussed and answered questions on the various conventional fund structures commonly seen offered in Asia, whilst touching upon the new Singapore corporate fund vehicle, the Variable Capital Company (VCC), that are relevant for fund managers and investors to consider when it comes to structuring investment funds.
Presentation slide and relevant materials
- "Choosing the right fund and tax structures":https://marketing.withersworldwide.com/reaction/emsdocuments/Withersworldwide%20-%20Choosing%20the%20right%20fund%20and%20tax%20structures%20(July%202020....pdf
- "The Singapore Variable Capital Company":https://www.withersworldwide.com/en-gb/insight/the-singapore-variable-capital-company
- "Insights with… The Monetary Authority of Singapore":https://www.withersworldwide.com/en-gb/insight/insights-with-the-monetary-authority-of-Singapore
Frequently Asked Questions
Question: Given an overseas manager cannot use a VCC, should they first set up an onshore manager? Are there rules as to what level of activities can be delegated back? Answer: A manager will need to be licensed or registered with the MAS to establish a VCC so an overseas manager is currently not able to access the VCC structure. While sub-advisor type arrangements are permitted, an applicant for MAS licensing or registration must demonstrate that it will perform substantive fund management activity in Singapore.
Question: Can the VCC be distributed / marketed to EU investors? Answer: No impediment from a Singapore law perspective, subject to compliance with applicable AIFMD requirements.
Question: Any ideas as to when will the VCC be available to private wealth industry? Answer: Certain exempt managers are able to establish VCCs including private banks licensed in Singapore.
Question: In a master feeder structure, can the participating shares and management shares of the Master VCC Fund both be held at the offshore Feeder Fund? Answer: Yes, shareholders of the VCCs do not need to be resident in Singapore.
Question: Can regulated fund managers manage VCCs but on-delegate their investment functions to SFOs? Answer: SFOs will not be permitted to manage third party funds so regulated fund managers will not be able to 'on-delegate' investment function to exempt SFOs.
Question: Are sub-funds the same as cells? Or cells sit within the sub-fund? Answer: Yes, sub-funds and cells are used interchangeably in denoting internally segregated sub-funds or cells in an umbrella VCC structure.
Question: For a fund that invests in multi assets e.g. fixed income, equity (vanilla) and esoteric e.g. (PE), will it be better to set up two VCCs for vanilla items and esoteric (PE)? What are the risks, considerations and benefits of each approach? Answer: The umbrella VCC structure is flexible enough to house multi-strategies in separate sub-funds. Whether or not this is preferable to housing different strategies in separate VCCs may depend on other factors such as the possible need to appoint different service providers or operational variances.
Question: Given exempted managers such as single family offices and real estate managers are currently not being able to act as manager of a VCC and that there is currently some work being done for the MAS to allow them to eventually be managers of VCCs, grateful if you can share more details and a potential timeline? Answer: Yes, exempt SFOs and exempt real estate managers are not able to establish VCC presently. We are aware of continual policy reviews being conducted by the MAS of the VCC regime in general including the possible expansion of 'permissible managers' to include these exempt managers.
- Daniel Yong
- Stephen Banfield