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Singapore Plans New Corporate Structure for Investment Funds

The Monetary Authority of Singapore (MAS) today commenced a public consultation on a new corporate structure for investment funds – the Singapore Variable Capital Company (S-VACC). The structure is said would offer asset managers greater flexibility and lower costs,

 

Lawrence Wong, Minister for National Development and Second Minister for Finance, said that the S-VACC structure would offer asset managers greater flexibility and lower costs, according to the releases.

 

Currently, there are three types of structures used by investment funds in Singapore, namely unit trusts, companies formed under the Companies Act and limited partnerships. The S-VACC seeks to complement these existing structures with one that is tailored for investment funds. With the S-VACC framework, MAS seeks to offer a flexible and efficient platform for fund managers to co-locate fund domiciliation with their substantive fund management activities in Singapore and further deepen the asset servicing ecosystem.

 

The proposed S-VACC framework is intended to cater to both open-ended and closed-end1 investment funds, and allow for segregation of assets and liabilities of sub-funds within an umbrella structure. This will allow asset managers to achieve cost efficiencies by consolidating administrative functions at the umbrella fund level. In addition, S-VACCs would be allowed to maintain their respective registers of shareholders, but would be required to disclose the registers to supervisory and law enforcement agencies where necessary.

 

The S-VACC is proposed to be limited to investment fund purposes only, and would be required to have a fund manager which is regulated by MAS. Shares of the S-VACC would generally be issued and redeemed at net asset value to ensure accountability and transparency for creditors.

 

MAS further proposes that the incorporation of S-VACCs be governed by a new Act, under which the Accounting and Corporate Regulatory Authority (ACRA) would act as the registrar of S-VACCs, while MAS would oversee the anti-money laundering obligations of S-VACCs.

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