The Monetary Authority of Singapore (MAS) has proposed a new corporate structure for Singapore: the Singapore Variable Capital Company (S-VACC). It is proposed as an alternative to incorporating a company for the constitution of collective investment schemes in Singapore and will be governed by its own legislation: the Singapore Variable Capital Companies Act.
The proposed key features of the proposed framework for S-VACCs are as follows:
- The S-VACC structure can only be used as a vehicle for collective investment schemes.
- Sub-funds with segregated assets and liabilities can be created by registration with the Accounting and Corporate Regulatory Authority (ACRA).
- Redemption of shares and capital reduction will be allowed, provided shares are issued and redeemed at their net asset value. The rights and limits of redemption must be set out in the constitution of the S-VACC.
- Annual General Meetings may be dispensed with at the discretion of directors, subject to certain safeguards.
- S-VACCs must appoint an accounting entity to audit their accounts on an annual basis but will not be required to have audit committees. Financial information of each sub-fund must be kept separate.
- A S-VACC will not be required to disclose its register of shareholders to the public, but must make the register available to supervisory and law enforcement agencies where necessary.
- Directors will be required to be fit and proper persons. S-VACCs consisting of authorised schemes must have at least three directors, of which at least one has to be independent of business relationships with the S-VACC, the fund manager of the S-VACC and all substantial shareholders of the S-VACC.
- At least one director must be a director of the S-VACC’s fund manager.
- A S-VACC’s assets must be managed by a licensed or registered fund management company or a financial institution exempted from the requirement to hold a capital markets services licence to carry on business in fund management.
- S-VACCs consisting of authorised or restricted schemes must have an approved custodian that is an approved trustee. The custodian must take custody of the scheme’s assets and act in the best interests of its shareholders.
- A S-VACC may issue debentures, including issuing debentures relating to specific sub-funds. Receivers or receivers and managers may therefore be appointed in respect of the property of the S-VACC as a whole, or in respect of the property of specific sub-funds.
- Requirements in relation to anti-money laundering / countering the financing of terrorism (AML/CFT) will be imposed on a S-VACC. The S-VACC will be required to outsource the performance of AML/CFT duties to its fund manager.
- Foreign structures that are equivalent to a S-VACC may re-domicile as a S-VACC in Singapore by registration with ACRA.