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The Ins and Outs of Variable Capital Companies Grant Scheme

Variable Capital Companies grant scheme

The Variable Capital Companies grant scheme is a notable endeavour designed to strengthen Singapore’s standing as a prominent fund management centre.

Explore a comprehensive outline of the VCC grant scheme, highlighting its advantages and essential factors that fund managers and administrators must consider.

What is the Variable Capital Companies Grant Scheme?

The Variable Capital Companies grant scheme is an initiative by the Monetary Authority of Singapore (MAS) to promote the adoption of the Variable Capital Company (VCC) framework. The scheme supports fund managers in incorporating and operationalising VCCs by defraying part of the costs involved. This support aims to boost the city-state’s attractiveness as a domicile for investment funds.

Key Features of the VCC Grant Scheme

VCC Incorporation

One of the core components of the VCC grant scheme is financial support for the incorporation of VCCs. The scheme covers up to 70% of eligible expenses for VCC incorporation, capped at SGD 150,000 per VCC. This approach makes the process more accessible and less financially burdensome for fund managers.

Fund Administration Services

The scheme also subsidises the cost of engaging fund administration services, ensuring effective and professional management of VCC. These services are critical for maintaining compliance with regulatory requirements and for the smooth operation of the VCC. The grant helps to offset the cost of engaging reputable fund administrators, thereby encouraging high standards of governance and operational efficiency.

ACRA VCC Compliance

Compliance with the Accounting and Corporate Regulatory Authority (ACRA) regulations is mandatory for VCCs. The grant scheme provides support to cover the expenses related to meeting these compliance requirements. This compliance includes costs associated with regulatory filings, audits, and other compliance activities mandated by ACRA.

Benefits of the VCC Grant Scheme

Increased Efficiency and Flexibility

The VCC framework can offer greater efficiency and flexibility than traditional fund structures. VCCs allow for the creation of multiple sub-funds within a single legal entity, each with its investment objectives and segregated assets and liabilities. This structure reduces administrative burdens and costs, making it easier to manage multiple investment strategies under one umbrella.

Enhanced Investor Confidence

The VCC grant scheme helps enhance investor confidence in Singapore-domiciled funds by promoting high fund administration and compliance standards. Investors are more likely to invest in well-regulated and professionally managed funds, leading to increased capital inflows into VCCs.

VCC Tax Exemption

One of the significant advantages of incorporating a VCC is the potential for tax exemptions. Under the VCC framework, funds can benefit from various tax incentives, including exemptions on certain types of income. The VCC grant scheme further enhances these benefits by reducing the upfront costs associated with setting up a VCC, making it easier for fund managers to take advantage of the VCC tax exemption.

How to Apply for the VCC Grant Scheme

Eligibility Criteria

Applicants must be licensed or registered fund management companies in Singapore to qualify for the VCC grant scheme. Additionally, the VCC must be incorporated in Singapore and must not have previously received the grant. Detailed eligibility criteria are provided by MAS, and applicants must ensure they meet all requirements before applying.

Application Process

The application process for the VCC grant scheme involves several steps:

  1. Preparation: Gather all necessary documentation, including details of the VCC incorporation, fund administration services, and compliance activities.
  2. Submission: Apply through the MAS portal, ensuring all required information is provided.
  3. Review: MAS reviews the application and may request additional information or clarification.
  4. Approval: Once approved, the grant is disbursed according to the terms and conditions specified by MAS.

Key Considerations

When applying for the VCC Grant Scheme, it is essential to consider the following:

  • Documentation: Ensure all documentation is accurate and complete to avoid delays in the application process.
  • Compliance: Maintain ongoing compliance with ACRA and other regulatory requirements to remain eligible for the grant.
  • Engagement of Service Providers: Select reputable and experienced fund administration service providers to maximise the grant’s benefits.

Conclusion

The Variable Capital Companies grant scheme is necessary to foster the expansion and progress of Singapore’s fund management sector. This initiative offers financial aid for VCC incorporation, fund administration services, and compliance with ACRA regulations, thereby simplifying the establishment and operation of VCCs for fund managers. The scheme’s advantages, such as tax exemptions, improved efficiency, and heightened investor confidence, greatly enhance Singapore’s reputation as a prominent global fund management hub. Fund managers and administrators are encouraged to capitalise on this scheme to optimise their operations and accomplish their strategic goals.

Visit VCC Hub, and don’t let upfront costs hold you back from unlocking the full potential of the VCC framework.