MAS Consults on Proposed Regulations for New Variable Capital Company Structure

No.

Area of concern

Key Aspects

1.

AML/CFT

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.

2.

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.

3.

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.

4.

Re-domiciliation

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.

5.

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.