Can investment managers still utilize Singapore’s VCC Grant scheme as deadline approaches?

26 July 2022 - Singapore has now entered the last six months of the Variable Capital Company (VCC) grant scheme launched by the Monetary Authority of Singapore (MAS) under the Financial Sector Development Fund in the country.

Managed by a qualifying fund manager, VCCs need to meet certain criteria to qualify for the grant scheme, and need to obtain a notice of incorporation or transfer of registration from the Accounting and Corporate Regulatory Authority (“ACRA”).

If eligible, a VCC can reclaim up to 70% of its qualifying expenses incurred for the establishment of the VCC in Singapore (covering costs such as legal, tax, company secretarial, administration and regulatory compliance fees), capped at SGD 150,000 per company (with up to a maximum of three VCCs per fund manager being allowed).

As it stands, the current grant scheme is due to expire on the 15th of January 2023, and it is unclear whether this deadline will be extended.

WHY HAVE VCCS BEEN POPULAR?

As one of four major vehicles available in Singapore for funds, a VCC sits alongside the options of launching a Private Limited company (used as a Holding Company or for PE/RE funds), a Limited Partnership, or a Unit Trust.

VCCs have been an attractive choice for investors wishing to launch vehicles in Singapore because they offer flexibility. Unlike a Private Company, VCCs are not required to make a solvency declaration or draft underlying corporate resolutions for the issuance and redemption of shares, and offer other specific operational and tax benefits, which other legal entities only partly do.

Further adding to its appeal, under the current regime, funds domiciled overseas that have similar structures to the VCC can also be re-domiciled to Singapore via a filing with ACRA, provided the process complies with the requirements of the departing jurisdiction.

Over 500 VCCs have been established in Singapore so it is clear the uptake in the industry has been significant.

ARE THEY STILL AN OPTION AS DEADLINE LOOMS?

With the current January cut off approaching, there is still a window of opportunity to register a VCC in Singapore and qualify for the grant scheme.

Taking only a short period of 3-4 weeks to set these vehicles up, coupled with name registration being virtually instant, VCCs can be established fast (although timings may vary depending on the type of license the qualifying fund manager has applied for).

Nonetheless, with the deadline around half a year away, this means there is still a chance to set up a VCC or re-domicile existing overseas investment funds to Singapore as a VCC and profit from the grant scheme.

Any investment firms interested in doing so can find more information on the ACRA website, or contact Citco Governance Services for further guidance.

By Diederic Sterneberg, Regional Head of APAC, Citco Governance Services, Citco Singapore Pte. Ltd.