SINGAPORE – Singapore’s central bank announced on Wednesday (November 10) that in less than two years since the new corporate structure was introduced, more than 400 variable corporations (VCCs) have been set up or relocated in the city-state to consolidate the company’s position as a financial center.
The framework gives fund managers more flexibility in issuing stocks and dividend payments, and allows them to set up multiple funds in a single VCC to reduce costs.
VCCs can be used to build a corporate structure for a standalone fund or for an umbrella fund with multiple sub-funds. They can be used for both traditional and alternative mutual funds. Hong Kong also offers a similar structure.
Around 300 global and regional asset managers based in Singapore had founded or relocated more than 400 of these companies by mid-October, the Monetary Authority of Singapore (MAS) said in an asset management survey.
The new fund vehicle was launched in January 2020 with 20 VCCs. Singapore is also providing a grant to encourage more such funds to set up in the country.
MAS is exploring possible extensions to the framework, including facilitating the transformation of existing mutual fund structures and enabling a wider range of companies to set up and manage a VCC, the survey said.
Assets under management in Singapore rose 17 percent in 2020 to $ 4.7 trillion year over year, driven by net inflows and valuation gains, the central bank survey found.
The VCC structure has proven itself with a wide range of asset managers, including family offices, hedge funds and private equity. The appeal of Singapore has also increased in light of the political uncertainty in the rival Hong Kong hub.
ALSO READ: MAS is lifting dividend payment caps from local banks
