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What is Variable Capital Company | InCorp Global Pte. Ltd.

The variable capital company Singapore (u201cVCCu201d) is a new corporate structure which can be setup as a single standalone fund, or as an umbrella fund. <br><br>Learn more about Singapore Variable Capital Company at InCorp Global:<br>https://www.incorp.asia/infographics/what-is-variable-capital-company/

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What is Variable Capital Company | InCorp Global Pte. Ltd.

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  1. WHAT IS VARIABLE CAPITAL COMPANY Last updated Sep 2020 | 1 Twitter Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Connect with us for the latest business updates: LinkedIn Facebook

  2. Variable Capital Company (VCC) A VCC is a vehicle in Singapore to be used only for collective investment scheme(s). Foreign corporate entities may redomicile into. VCCs maybe used for open-ended and closed-ended funds and for retail and non-retail funds. Rights to participate in profits, redemption or repurchase of shares, and vote, are required to be set out in the VCC’s constitution. VCC can be a stand-alone entity or have an umbrella structure that houses separate sub-funds. Assets and liabilities of each sub-fund are segregated through a cellular structure. VCCs may freely redeem shares and pay dividends out of capital. VCCs are required to maintain a register of members, which does not need to be made public but provided upon request to certain persons such as public authorities. MEMBERS VCCs must have their accounts audited annually, and each sub-fund will be required to prepare separate financial statements in accordance with a single accounting standard across all sub-funds. VCCs shall be subject to anti-money laundering and countering the financing of terrorism requirements. VCC directors are required to be “fit and proper” persons. A VCC must have at least one (1) Singapore resident director and at least one (1) director (who may be the same person as the Singapore resident director) who is either a director or qualified representative of the VCC’s fund manager. Authorised schemes must have a minimum of three (3) directors, including one (1) independent director. A VCC must be managed by a permissible fund manager such as licensed or registered fund management company or certain entities exempted under the Securities and Futures Act. Last updated Sep 2020 | 2 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

  3. Use of VCC for types of funds in Singapore A VCC is a corporate investment structure that can have underlying cells that may be a mix of open-ended and closed-ended sub-funds. AUTHORISED SCHEME RESTRICTED SCHEME A authorised by the Monetary Authority of Singapore (MAS) to be offered in Singapore to retail investors. collective investment scheme A collective investment scheme notified to the MAS to be offered in Singapore to accredited investors and certain other persons under Section 305 of the Securities and Futures Act (SFA). FORM LOCATION Singapore Inward re-domiciliation of relevant foreign corporate entities to apply to be registered in Singapore as a VCC is permitted. INWARD RE-DOMICILIATION VCCs will be jointly regulated by the Accounting and Corporate Regulatory Authority (ACRA) and the MAS - ACRA will administer the VCC Act and its subsidiary legislation and MAS will regulate the anti-money laundering and countering of the financing of terrorism provisions. REGULATORY AUTHORITY A VCC must be managed by a permissible fund manager such as licensed or registered fund management company or certain entities exempted under the SFA. A fund manager can delegate its fund management and operational duties in accordance with the MAS Guidelines on Outsourcing. FUND MANAGER PERMITTED SECURITIES Shares, debentures A VCC must have at least one (1) Singapore resident director and at least one (1) director (who may be the same person as the Singapore resident director) who is either a director or qualified representative of the VCC’s fund manager. Authorised schemes must have a minimum of three (3) directors, including one (1) independent director. VCC directors must be “fit and proper” persons. A VCC must have at least one (1) Singapore resident director and at least one (1) director (who may be the same person as the Singapore resident director) who is either a director or qualified representative of the VCC’s fund manager. VCC directors must be “fit and proper” persons. DIRECTORS Last updated Sep 2020 | 3 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

  4. AUTHORISED SCHEME RESTRICTED SCHEME CUSTODIAN A VCC which is an authorised scheme must appoint a custodian that is an “approved trustee” under the SFA. A VCC that is a restricted scheme must maintain its assets with a “prescribed entity” which include an “approved trustee” and other prescribed entities. VCCs which are private equity or venture capital funds do not require a custodian to be appointed, subject to certain requirements. AUDIT Accounts of a VCC must be audited annually with the same accounting standards, under the VCC Act and/or the CIS Code, across all sub-funds but with separate financial statements for each sub-fund. AML/CFT REQUIREMENTS VCCs shall be subject to anti-money laundering and countering the financing of terrorism (AML/CFT) requirements. A VCC is required to outsource its AML/CFT requirements to its fund manager or a regulated financial institution. SEGREGATION OF ASSETS & LIABILITIES Any liabilities of a sub-fund must be discharged from the assets of that relevant sub-fund. Assets of any sub-fund must not be used to discharge liabilities of other sub-funds. TAX INCENTIVES Tax incentives pursuant to the “Enhanced Tier Fund Scheme” under Section 13X of the Income Tax Act (ITA) and the “Singapore Resident Fund Scheme” under Section 13R of the ITA for collective investments schemes in Singapore shall also be available to the VCC. If the VCC is an umbrella VCC, these tax incentives will be granted at the umbrella level. REGISTER VCCs are required to maintain a register of members, which does not need to be made public but provided upon request to certain persons. These include any public authority, the VCC’s manager, and an appointed custodian. Last updated Sep 2020 | 4 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

  5. VCC Income Tax Treatment All VCC’s are incorporated under the VCC Act, and are to be treated as companies under the Companies Act for the purpose of income tax. Tax Residence for VCCs ƒ Any VCC will be considered a resident of Singapore for tax purposes if it is controlled and managed in Singapore for the calendar year. ƒ Any sub-fund of the VCC will have the same tax residence as the umbrella fund. ƒ A VCC can apply for Certificate of Residence (COR) for the purpose of avoiding double taxation. The COR will be issued in the name of the umbrella VCC with the name of the sub-fund included in the COR. ƒ Dividends paid by a VCC with tax residence in Singapore Distributions by VCCs are exempt from tax for its shareholders. Last updated Sep 2020 | 5 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

  6. General Application of Tax Rules at VCC Umbrella and Sub-Fund Levels In general, VCCs are considered companies for tax purposes. ƒ A VCC will not be allowed deductions for expenses under certain sections of the ITA. ƒ A VCC will not be able to transfer or receive losses under the Group Relief System. The chargeable or exempt income of an umbrella VCC is the sum total of the chargeable or exempt income of its sub funds. The income of a sub-fund is determined as if it were a VCC and the tax rules are applied at the sub-fund level. Tax credits, if any, are also computed at the sub-fund level. ƒ Certain common tax rules are applied separately at the umbrella and sub-fund levels: • Unabsorbed capital allowances, losses and donations — sub-fund level. • Shareholding test — sub-fund level. • Partial tax exemption, start-up tax exemption and corporate tax rebate — VCC level. • Exemption of gains or profits from disposal of ordinary shares — sub-fund level. • Modification of provisions for VCCs redomiciled in Singapore — sub-fund level. • Tax credits — sub-fund level. PLANNING TO START A VARIABLE CAPITAL COMPANY (VCC) IN SINGAPORE? One of our strengths is our practical approach to finding ideal solutions to complex situations, and assisting our clients through the application of our technical know-how and our wealth of experience. CONTACT US Last updated Sep 2020 | 6 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

  7. IN.CORP GLOBAL PTE LTD 30 Cecil Street, #21-08 Prudential Tower, Singapore 049712 Phone: WhatsApp: E-mail: Website: +65 6812 1611 +65 8699 8821 info@incorp.asia incorp.asia OUR REGIONAL PRESENCE The information contained herein is intended for general information purposes only and shall not be regarded as professional advice. Readers are therefore advised that before acting on any matter arising from these notes, they should discuss their particular situation with the Firm. No liability can be accepted for any action taken as result of reading the notes without prior consultation with regard to all relevant factors. FOLLOW US ON: Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Sep 2020 | 7 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.

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