Singapore’s efforts to develop a viable onshore alternative to traditional offshore structures for fund management companies and their investors have further enhanced its status as Asia's leading fund domicile.

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The Variable Capital Company

Singapore’s primary flexible corporate structure for investment funds is the variable capital company, or VCC. Introduced in January 2020 and regulated by the Accounting and Corporate Regulatory Authority and the Monetary Authority of Singapore, it allows for both open-ended and closed-ended funds with highly flexible share issuance/redemption and capital-based dividends.

The VCC supports both standalone and umbrella structures (segregated sub-funds), providing enhanced privacy and tax efficiency. ACRA data shows there were 1,320 such entities registered as of February 2026.

Attracting European and Global Investors

BNP Paribas Securities Services notes that the regime has reduced the barriers to entry—enabling managers to target a wider range of previously excluded individual investors at a lower entry point—and is particularly attractive to European investors seeking exposure to Asian markets, including India’s stock market, through a regulated onshore vehicle offering favourable tax treatment.

While VCCs are gaining substantial regional interest, the bank suggests that further education about the structure and its advantages will enhance its appeal, solidifying its position as a compelling alternative to Cayman funds and enticing more allocations from North American and European investors.

Industry Perspectives

Lucia Cheng – Associate Director, Vistra Fund Solutions — Lucia Cheng, Associate Director, Vistra Fund Solutions

Lucia Cheng, associate director of Vistra Fund Solutions, agrees that the VCC has been a significant catalyst in strengthening Singapore’s position as Asia’s premier asset management hub .

“MAS’s ongoing VCC grant schemes and strong public‑private engagement have continued to encourage adoption,” she says. “Many managers see Singapore as policy-consistent and innovation‑friendly, which is not always the case in competing jurisdictions.”

Vistra administers approximately 50 VCCs, the majority of which are focused on private equity and venture capital strategies, although it has also seen a growing number of multi-asset entities where fund managers are leveraging the flexibility and robustness of the structure.

“Over the past two years, we have also observed increased adoption by institutional asset managers, marking a shift from the early days of the regime when most VCC structures were established by boutique and mid-sized private equity firms and family offices,” adds Cheng.

Tax and Regulatory Benefits

The VCC framework was specifically designed to address the rigidities of older structures such as fixed capital companies, limited partnerships, and unit trusts. Funds qualifying under sections 13O or 13U of the Income Tax Act 1947 enjoy tax exemptions on specified income.

“Looking at the numbers, we can conclude that the VCC has been a meaningful catalyst in Singapore's positioning as Asia's leading fund domicile,” says Patrick Na, head of financial services for South Asia and Australasia at TMF Group.

Patrick Na – Head of Financial Services, South Asia and Australasia, TMF Group — Patrick Na, Head of Financial Services, South Asia and Australasia, TMF Group

He explains that while the VCC accommodates a wide spectrum of strategies (open-ended or closed-ended, traditional or alternative, retail or private), the most common types of alternative funds using this structure are hedge funds, funds of funds, private equity, venture capital, and real estate funds.

“VCCs have grown quickly, although they haven't displaced other structures entirely,” adds Na.

“New limited partnership registrations even outpace new VCCs in certain periods, which reflects the fact that limited partners remain the preferred vehicle for closed-ended private equity and real asset strategies. Unit trusts still serve institutional and retail investors who are comfortable with the trust law framework.”

Flexibility and Operational Advantages

The structure was specifically designed for investment funds and offers a level of flexibility that traditional corporate structures do not. For example, VCCs allow funds to issue and redeem shares, pay dividends from capital, and operate multiple segregated sub-funds under a single umbrella entity, explains Nithi Genesan, country head—Singapore at Waystone.

“The structure can also be cost-effective, as this flexibility allows for operational efficiencies and reduced administrative complexity,” she says. “Adoption has been strong, with more than 1,300 VCCs incorporated and managed by over 600 fund managers, demonstrating clear industry uptake.”

Genesan notes that most VCCs are used for private market and alternative strategies, particularly those targeting accredited and institutional investors.

Nithi Genesan – Country Head – Singapore, Waystone — Nithi Genesan, Country Head, Singapore, Waystone

The umbrella VCC model has proven especially popular because it allows managers to launch multiple sub-funds with segregated assets and liabilities under a single legal entity. This structure helps reduce operational costs while giving managers the flexibility to house different strategies within the same framework.

“Singapore’s fund ecosystem still includes a mix of structures, including limited partnerships, unit trusts, and private limited companies,” adds Genesan. “However, newly launched funds are increasingly opting for the VCC structure.”

Legal Domicile and Fund Platforms

This is particularly the case where managers want Singapore to serve as the legal domicile of the fund rather than simply the location of the management entity. The VCC’s flexibility and ability to operate multiple sub-funds under a single umbrella have made it an attractive option for managers looking to establish and scale fund platforms in Singapore.

Davin Dedhia, co-founder and CMO of Auptimate, also makes the point that the ability to issue and redeem shares without needing shareholder approval or capital reduction procedures makes the VCC more appealing than traditional vehicles such as private limited companies.

Davin Dedhia – Co-founder and CMO, Auptimate — Davin Dedhia, Co-founder and CMO, Auptimate

“The most commonly created fund strategies we see are private equity, venture capital, multi-family offices, hedge funds, traditional long-only funds, and real estate strategies,” he says.

“Private equity and venture capital funds have gained most because closed-ended strategies benefit from the VCC’s ability to structure multiple investment vehicles or vintages within a single umbrella fund.”

Whilst the VCC has become the default structure for most fund managers, Dedhia refers to a large number of deals being done via special purpose vehicles using the private limited company structure given the costs involved in setting up and administering a VCC.

“As a general rule of thumb, a VCC would make sense for assets under management or deal size above $10 million,” he adds. “For anything smaller, the costs of the VCC can be prohibitive, and a limited company structure would be preferred.”

Costs, Incorporation, and Privacy

Cheng acknowledges that incorporation timelines and set-up costs for VCCs are typically higher than those for a standalone Singapore company or limited partnership structure but suggests that the long-term flexibility of the VCC framework often offsets these initial costs.

“This is particularly evident when the structure is designed with future deployment and expansion in mind,” she adds. “Economies of scale can also be achieved through the use of a single administrator across multiple sub-funds.”

In addition, the share registers of VCCs are not required to be publicly disclosed, providing an additional layer of privacy for investors who value discretion.

Limitations and Regulatory Requirements

Perhaps the most significant limitation to the variable capital company structure is that it must be managed by a Singapore-licensed fund manager, so exempt managers—including single family offices—cannot use it.

“The mandatory appointment of a fund administrator, custodian, and auditor adds operational costs that smaller managers may find hard to justify,” says Na. “Stamp duty treatment can also be tricky in umbrella structures, as transfers between sub-funds are treated as between separate legal persons.”

The tax incentive conditions were tightened in January 2025, with assets under management thresholds measured more conservatively and local spending requirements now tiered by fund size.

The MAS emphasises that VCCs should involve genuine fund management activity. The structure is not intended to be used simply as a vehicle to warehouse assets without substantive fund management oversight.