The Monetary Authority of Singapore (MAS) has introduced a new corporate structure to bolster the fund ecosystem in Singapore.
The regulator said it has finalised the features of the new corporate structure for investment funds, the Variable Capital Company (VCC), following public consultation in March 2017. According to MAS, the introduction of the VCC structure will position Singapore to become a ‘key fund domiciliation hub’, strengthening the country’s position as a full-service international fund management centre.
Mr Ng Yao Loong, Assistant Managing Director (Development and International), MAS, added, “The new VCC framework will encourage the consolidation of fund domiciliation and fund management activities locally, creating a full-service fund ecosystem in Singapore. 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.”
The new VCC legislative framework will provide greater flexibility, Achieve cost efficiencies, Cater to the needs of global investment funds and Enhance safeguards.
A VCC allows it to issue and redeem shares without having to seek shareholders’ approval, enabling investors to enter into and exit from their investments in an investment fund when they wish to.
It may also be established as a standalone structure, or as an umbrella structure with multiple sub-funds with different investment objectives, investors as well as assets and liabilities. This structure means sub-funds can share the same board of directors and common service providers and consolidate some administrative functions.
The new structure will be permitted to use Singapore and international accounting standards (such as the International Financial Reporting Standards and US Generally Accepted Accounting Principles) in preparing financial statements so that it can serve the needs of global investors.
However, fund managers with foreign-domiciled investment funds may take advantage of the statutory regime for inward re-domiciliation under the VCC framework to transfer the domicile of their foreign investment funds to Singapore according to MAS.
Lastly, he framework provides safeguards against the commingling of assets and liabilities between sub-funds, by requiring assets and liabilities of each sub-fund to be segregated.
The assets of one sub-fund may not be used to discharge the liabilities of another sub-fund, or of the umbrella fund, including in the event of insolvency. A VCC will be subject to anti-money laundering and countering the financing of terrorism requirements, and are also required to appoint a fund manager that is regulated by MAS.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
