MAS Consults on Proposed Regulations for New Variable Capital Company Structure

May 06, 2019

On 30 April 2019, the Monetary Authority of Singapore (MAS) published two consultation papers (Consultation Papers) pertaining to the proposed new regulations for the Variable Capital Company (VCC) framework. The first Consultation Paper (AML/CFT Consultation Paper) deals explicitly with some of the standards and requirements expected of VCCs in relation to anti-money laundering and countering the financing of terrorism (AML/CFT), while the second Consultation Paper (VCC Framework Consultation Paper) deals more generally with the regulations governing the operational aspects of a VCC. The MAS is inviting interested parties to provide comments and feedback to these Consultation Papers by 30 May 2019.

Background of the VCC  

The VCC is a new corporate structure that is tailored for collective investment schemes (CIS). 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. The main legislation governing the VCC, the Variable Capital Companies Act (VCC Act) had been passed in Parliament on 1 October 2018, and the Consultation Papers are intended to cover the regulations setting out the operational framework for the implementation of the new regime.

Key Aspects of the Consultation Papers

The table below summarises the key aspects of the VCC regulations proposed by the MAS.


Area of concern

Key Aspects



VCCs are required to engage a MAS-regulated financial institution to conduct checks and perform measures to comply with AML/CFT requirements. They are also required to put in place internal policies and procedures, and appropriate compliance, audit, and training procedures.

A register of beneficial owners and nominee directors needs to be maintained and made available to law enforcement authorities.

A VCC which acquires another VCC can rely on the customer due diligence measures already performed by the acquired entity on its customers, provided that the VCC has no doubts or concerns about the veracity of the adequacy of the information acquired.



Registration of Sub-Funds


The MAS proposes that registration of a VCC’s sub-fund would require an applicant to provide the Accounting and Corporate Regulatory Authority (ACRA) with certain information, including (a) the unique entity number of the umbrella VCC; (b) the name of the sub-fund being registered, and (c) a declaration to ACRA that all the VCC Act requirements relating to the registration of the sub-fund have been complied with.



Fit and Proper Criteria of Directors

Directors of a VCC are required to comply with various “fit and proper” criteria, including:

  1. whether the applicant’s previous conduct and compliance history as a director of a VCC, financial institution, or overseas institution has been satisfactory;
  2. whether the applicant has had an application to be a director of a VCC or financial institution rejected by ACRA or the MAS;
  3. whether the applicant has been removed by or directed to be removed by ACRA or MAS as a director of a VCC or financial institution;
  4. whether the applicant has acted in a manner that adversely reflects on the commercial integrity or reputation of the applicant; and
  5. whether it would be contrary to the national or general public interest for the applicant to be a director of a VCC.




The MAS proposes that only foreign corporate entities with assets that exceed their liabilities (including contingent liabilities) and that are able to pay their debts within 12 months from the date of application by the foreign corporate entity can be re-domiciled in Singapore.



Authorisation and Recognition of a CIS constituted as a VCC or sub-fund in Singapore


For a CIS constituted as a VCC or a sub-fund to be authorized or recognized in Singapore, a custodian must take into custody or control all of the scheme’s property and hold this on behalf of the scheme’s participants, ensure that the property is properly accounted for and kept distinct from the custodian’s own property and the property of its other clients, and inform the MAS if it becomes aware that the VCC or the manager has contravened any requirement.

The constitution of a VCC must also contain provisions which set out that the VCC will (a) issue, redeem, or repurchase units in the scheme at a price equal to the proportion of the net asset value of the VCC represented by each unit, in accordance with the Code on Collective Investment Schemes; and (b) prepare reports and accounts relating to the scheme, among others.


Links to the Consultation Papers

Links to the AML/CFT Consultation Paper and the VCC Framework Consultation Paper can be found in the footnote below.[1]  

Request for Feedback by 24 May 2019

If you are interested in submitting feedback to the MAS regarding the Consultation Papers via Morgan Lewis, please email your comments to the lawyers listed below no later than 24 May 2019. We will collate and submit your comments to the MAS together with feedback received from other interested parties.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Morgan Lewis lawyers who are solicitors of Morgan Lewis Stamford LLC, a Singapore corporation affiliated with Morgan Lewis & Bockius LLP:


[1] AML/CFT Consultation Paper:
VCC Framework Consultation Paper: