The Monetary Authority of Singapore (MAS) released a consultation paper (Insolvency and Winding-Up Consultation Paper) on 24 July pertaining to the proposed insolvency and winding-up regime (Insolvency Regime) for the Variable Capital Company (VCC) structure. This is the third in a series of consultation papers released since May 2019 pertaining to the VCC regulations, following the passage of the Variable Capital Companies Act on 1 October 2018.

The first two consultation papers dealt with anti-money laundering and countering the financing of terrorism and the operational aspects of a VCC (e.g., registration of sub-funds, “fit and proper” criteria of directors), where public consultations closed on 30 May 2019. The MAS is inviting interested parties to provide comments and feedback on the Insolvency and Winding-Up Consultation Paper by 24 August 2019.

Brief Background of the VCC

The VCC is a new corporate structure tailored for collective investment schemes. It can take the form of an umbrella structure, consisting of multiple sub-funds with different investment strategies and objectives, assets and liabilities, and investors. Introduced to encourage funds to incorporate and operate in Singapore, the VCC structure aims to enhance Singapore’s position as a full-service international fund management centre alongside global fund domicile centres such as the Cayman Islands and Luxembourg.

Summary of Key Regulations Proposed in the Consultation Paper

The table below summarises the key aspects of the proposed Insolvency Regime.

As a final observation, we would highlight that the proposed Insolvency Regime for a VCC and its sub-funds is subject to further changes once the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) comes into effect. The intent is for the regime to be aligned with that of the other corporate structures in Singapore under the IRDA with appropriate adaptations

As a final observation, we would highlight that the proposed Insolvency Regime for a VCC and its sub-funds is subject to further changes once the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) comes into effect. The intent is for the regime to be aligned with that of the other corporate structures in Singapore under the IRDA with appropriate adaptations.