Singapore May Alter VCC Regime To Encourage Single Family Offices - Report

Tom Burroughes

8 December 2020

Singapore policymakers may adjust how variable capital company (VCC) structures operate to encourage more take-up from single family offices, an important growth area in Asia, according to a media report.

The is thinking of relaxing the requirements for “permissible fund managers,” subject to certain limits, according to the Business Times (of Singapore). The publication quoted MAS as saying that it is looking at the idea of “widening the scope of permissible fund managers to allow SFOs to manage VCCs.”

This publication knows that, in talking to various independent wealth firms that the family offices segment - such as multi-family offices - is looking at making use of the VCC structure. The VCC system was introduced into Singapore at the start of this year. Lawmakers will be aware of how Singapore is perceived as potentially benefiting from wealth transfers from Hong Kong because of the political unrest - and subsequent new national security law imposed by mainland China – in that jurisdiction.

The VCC framework would, the report said, give single family offices benefits, including tax benefits and access to Singapore's double-tax treaty network.

The report noted that Tharman Shanmugaratnam, Senior Minister and Minister in Charge of MAS, recently told lawmakers that there are about 200 SFOs. Total AuM for SFOs could stand at around $20 billion.

The VCC is a new legal structure allowing investment funds to be domiciled in Singapore. Singapore already offers a variety of investment fund forms such as the Limited Partnership, Unit Trust, and the Real Estate Investment Trust. Companies, as corporations, are also used as investment vehicles of fund investments. The main aim of the VCC is to overcome challenges found in the current fund or Collective Investment Schemes. For example, compared with Singapore’s existing unit trusts, limited partnerships and companies, the VCC will allow for more flexibility in distributions and return on investment.

To see a commentary on VCCs, click here.