On July 24, 2019, the Monetary Authority of Singapore (MAS) issued the Consultation Paper on the Proposed Framework for Variable Capital Companies Part 3 (the Consultation Paper), which covers the proposed subsidiary legislation relating to the insolvency and winding up of a variable capital company (VCC) and, where relevant, its underlying sub-funds (the VCC Insolvency Regulations).
The Consultation Paper is the third part of the consultation process this year in connection with VCCs following the earlier consultations on the subsidiary legislation relating to the operational framework for a VCC (including its sub-funds where relevant) in the consultation papers on the Proposed Framework for Variable Capital Companies Part 2 and the Proposed Notice on Prevention of Money Laundering and Countering the Financing of Terrorism for Variable Capital Companies, issued on April 30, 2019 collectively. Please click here to view our client briefing on these consultation papers issued on May 6, 2019.
The Variable Capital Companies Act 2018 (No. 44 of 2018) (VCC Act) essentially applies the existing insolvency and winding up regime for companies under the Companies Act, Chapter 50 of Singapore and the Bankruptcy Act, Chapter 20 of Singapore, with specific modifications for a VCC and its sub-funds. These specific modifications are now elaborated in the proposed VCC Insolvency Regulations. Please note however, that the existing insolvency and winding up regime for non-VCC companies will be replaced by a new Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) (IRDA), which has been passed by Parliament but has not yet come into effect. When the IRDA comes into effect, the MAS intends for the insolvency and winding up regime for a VCC and its sub-funds to be aligned with that of the insolvency and winding up regime for other corporate structures in Singapore under the IRDA.
This means that the VCC Act and the VCC Insolvency Regulations will subsequently be amended to adapt the relevant provisions under the IRDA and its subsidiary legislation that relate to the insolvency and winding up of a non-VCC company, with modifications for a VCC and its sub-funds, after the IRDA comes into force.
Invitation for Comments
Please refer to the Consultation Paper for full details on the proposed framework and VCC Insolvency Regulations. The deadline for comments and feedback to be submitted to the MAS is August 24, 2019.