Here is a look at some the key benefits of a VCC in Singapore:
Competitive and Stable Economy
Singapore is a renown global financial center with political stability and a pro-business environment with excellent infrastructure, international connectivity and a highly-skilled labour force.
Cost Efficiencies
The umbrella structure creates economies of scale as sub-funds can share the same board of directors and common service providers and consolidate some administrative functions.
Easier to Meet the Needs of Different Investors
Apart from the Singapore Financial Reporting Standards, a VCC is permitted to prepare its financial statements using international accounting standards such as the International Financial Reporting Standards and the US Generally Accepted Accounting Principles. This allows for greater flexibility to serve the needs of global investors.
Flexibility
A VCC may freely redeem its shares (without the requirement for solvency tests and corporate resolutions) and pay dividends using its net assets/capital, thereby providing flexibility in the distribution and return of capital.
Investors also have the flexibility to enter and exit the fund as they wish, as the calculation of their investment value is straightforward – the capital of the VCC is equal to its net assets.
Reduced Tax Compliance Burden
An umbrella VCC will only need to file a single corporate income tax return regardless of the number of sub funds the umbrella VCC has.
Different Strategies under One Roof
Fund managers are able to adopt open-ended and closed-ended investment strategies for different sub-funds within a single VCC entity.
Easier to Meet the Conditions for Tax Exemption under Section 13R and 13X of the Income Tax Act
The tax incentive conditions and the economic commitments under both incentive schemes will be applied to the umbrella VCC rather than to the individual sub-funds.
The VCC was launched as a new corporate structure that aims to provide greater operational flexibility. This can really bring cost savings to both investors and fund managers in the long run. The introduction of the VCC goes to show Singapore’s drive to be an Asian hub for fund management and fund domiciliation.
