The introduction of the Variable Capital Companies (VCC) grant scheme (VCCGS) has catalysed the adoption of VCCs in Singapore. The VCCGS was initially intended to end on 15 January 2023, but due to high demand, the Monetary Authority of Singapore (MAS) has now extended the VCCGS from 16 January 2023 until 15 January 2025 (both date inclusive), known as the Extended VCCGS. The Extended VCCGS seeks to build on the momentum and continue to broaden VCC adoption, and support more fund managers in setting up their first VCC.

Grant Amount

Under the Extended VCCGS, the Financial Sector Development Fund (FSDF) will co-fund 30% of qualifying expenses paid to Singapore-based service providers for qualifying work performed in Singapore in relation to the incorporation or registration of a VCC, up to a maximum grant cap of S$30,000 per application.

Previously, the funding available under the VCCGS provided for co-funding of up to 70% of eligible expenses paid to Singapore-based service providers, with a higher maximum grant cap of S$150,000 per application.

Qualifying Expenses

Qualifying expenses include legal, tax, administration and regulatory compliance services. Legal services include fees charged by law firms for legal work in relation to the incorporation or registration of a VCC, including but not limited to drafting of legal documents such as the VCC constitution, offering memorandum (or equivalent), subscription agreements and investment management agreements, and work done in relation to the authorisation or notification of the VCC’s prospectus with the MAS.¹

Grant Eligibility

The Extended VCCGS is available only to first-time Qualifying Fund Managers² that have incorporated a VCC or successfully re-domiciled a foreign corporate entity to Singapore as a VCC for the first time, and have obtained a Notice of Incorporation or Notice of Transfer of Registration from the Accounting and Corporate Regulatory Authority (ACRA) (as the case may be) which specifies a date between 16 January 2023 and 15 January 2025 (both dates inclusive).

Each applicant may only apply for the Extended VCCGS for qualifying work performed in relation to one VCC that has been incorporated or successfully re-domiciled. This is a change from the VCCGS which allowed for work done in relation to a maximum of three VCCs incorporated or successfully re-domiciled.

Minimum Operational Period

A VCC which has been awarded a grant under the Extended VCCGS is required to remain operational for at least one year from the Registration Date,³ which means that the VCC cannot be wound up within the first year from the Registration Date. In the event that the VCC is wound up within the first year from the Registration Date, the Qualifying Fund Manager is to inform MAS promptly and by no later than one week from the date of the application for the winding up or passing of resolution for a voluntary winding up. MAS reserves the right to claw back the grant awarded if the VCC is wound up within the first year from the Registration Date and/or if the recipient fails to inform MAS of the winding up of the VCC within one week from the date of the winding up.

Singapore is a global hub for fund management and international fund managers have embraced the VCC with many being established since its launch. The Monetary Authority of Singapore has demonstrated its intent to encourage the formation of VCCs with the Extended VCCGS and this could potentially see wider adoption among international investment managers, further strengthening Singapore’s global competitiveness in the fund management sector.

1. For the avoidance of doubt, work done in relation to the licensing of the Qualifying Fund Manager is not covered.
2. Refers to: (i) a licensed fund management company, i.e., a holder of a capital markets services license for fund management under section 86 of the Securities and Futures Act 2001 (“SFA”); (ii) a registered fund management company, i.e. a corporation which is exempted from holding a capital markets services licence under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations; or (iii) a financial institution exempted under sections 99(1)(a), (b), (c) or (d) of the SFA from the requirement to hold a capital markets services licence to carry on business in fund management, i.e., a bank licensed under the Banking Act 1970 ("BA"), a merchant bank licensed under the BA, a finance company licensed under the Finance Companies Act 1967 or a company or co-operative society licensed under the Insurance Act 1966.
3. Registration Date refers to the date of incorporation or registration as specified in the Notice of Incorporation or Notice of Transfer of Registration issued by ACRA (as the case may be)