Singapore’s efforts to develop a viable onshore alternativeto traditional offshore structures for fund management companies and theirinvestors have further enhanced its status as Asia's leading fund domicile.SingaporeSummit: Meet the largest APAC brokers you know (and those you still don't!).The Variable Capital CompanySingapore’s primary flexible corporate structure forinvestment funds is the variable capital company, or VCC. Introduced in January2020 and regulated by the Accounting and Corporate Regulatory Authority and theMonetaryAuthority of Singapore, it allows for both open-ended and closed-endedfunds with highly flexible share issuance/redemption and capital-baseddividends.The VCC supports both standalone and umbrella structures(segregated sub-funds), providing enhanced privacy and tax efficiency. ACRAdata shows there were 1,320 such entities registered as of February 2026.Attracting European and Global InvestorsBNPParibas Securities Services notes that the regime has reduced the barriersto entry—enabling managers to target a wider range of previously excludedindividual investors at a lower entry point—and is particularly attractive toEuropean investors seeking exposure to Asian markets, including India’s stockmarket, through a regulated onshore vehicle offering favourable tax treatment.While VCCs are gaining substantial regional interest, thebank suggests that further education about the structure and its advantageswill enhance its appeal, solidifying its position as a compelling alternativeto Cayman funds and enticing more allocations from North American andEuropean investors.Industry PerspectivesLucia Cheng, associate director of Vistra Fund Solutions,agrees that the VCC has been a significant catalyst in strengtheningSingapore’s position as Asia’s premier asset management hub.“MAS’s ongoing VCC grant schemes and strong public‑privateengagement have continued to encourage adoption,” she says. “Manymanagers see Singaporeas policy-consistent and innovation‑friendly, which is not always thecase in competing jurisdictions.”Vistra administers approximately 50 VCCs, the majority ofwhich are focused on private equity and venture capital strategies, although ithas also seen a growing number of multi-asset entities where fund managers areleveraging the flexibility and robustness of the structure.“Over the past two years, we have also observed increasedadoption by institutional asset managers, marking a shift from the early daysof the regime when most VCC structures were established by boutique andmid-sized private equity firms and family offices,” adds Cheng.Tax and Regulatory BenefitsThe VCC framework was specifically designed to address therigidities of older structures such as fixed capital companies, limitedpartnerships, and unit trusts. Funds qualifying under sections 13O or 13U ofthe Income Tax Act 1947 enjoy tax exemptions on specified income.“Looking at the numbers, we can conclude that the VCC hasbeen a meaningful catalyst in Singapore's positioning as Asia's leading funddomicile,” says Patrick Na, head of financial services for South Asia andAustralasia at TMF Group.He explains that while the VCC accommodates a wide spectrumof strategies (open-ended or closed-ended, traditional or alternative, retailor private), the most common types of alternative funds usingthis structure are hedge funds, funds of funds, private equity, venturecapital, and real estate funds.“VCCs have grown quickly, although they haven't displacedother structures entirely,” adds Na. “New limited partnership registrationseven outpace new VCCs in certain periods, which reflects the fact that limitedpartners remain the preferred vehicle for closed-ended private equity and realasset strategies. Unit trusts still serve institutional and retail investorswho are comfortable with the trust law framework.”Flexibility and Operational AdvantagesThe structure was specifically designed for investment fundsand offers a level of flexibility that traditional corporate structures do not.For example, VCCs allow funds to issue and redeem shares, pay dividends fromcapital, and operate multiple segregated sub-funds under a single umbrellaentity, explains Nithi Genesan, country head—Singapore at Waystone.“The structure can also be cost-effective, as thisflexibility allows for operational efficiencies and reduced administrativecomplexity,” she says. “Adoption has been strong, with more than 1,300 VCCsincorporated and managed by over 600 fund managers, demonstrating clearindustry uptake.”Genesan notes that most VCCs are used for private market andalternative strategies, particularly those targeting accredited andinstitutional investors.The umbrella VCC model has proven especially popular becauseit allows managers to launch multiple sub-funds with segregated assets andliabilities under a single legal entity. This structure helps reduceoperational costs while giving managers the flexibility to house differentstrategies within the same framework.“Singapore’s fund ecosystem still includes a mix ofstructures, including limited partnerships, unit trusts, and private limitedcompanies,” adds Genesan. “However, newly launched funds are increasinglyopting for the VCC structure.”Legal Domicile and Fund PlatformsThis is particularly the case where managers want Singaporeto serve as the legal domicile of the fund rather than simply the location ofthe management entity. The VCC’s flexibility and ability to operate multiplesub-funds under a single umbrella have made it an attractive option formanagers looking to establish and scale fund platforms in Singapore.Davin Dedhia, co-founder and CMO of Auptimate, also makesthe point that the ability to issue and redeem shares without needingshareholder approval or capital reduction procedures makes the VCC moreappealing than traditional vehicles such as private limited companies.“The most commonly created fund strategies we see areprivate equity, venture capital, multi-family offices, hedge funds, traditionallong-only funds, and real estate strategies,” he says. “Private equity andventure capital funds have gained most because closed-ended strategies benefitfrom the VCC’s ability to structure multiple investment vehicles or vintageswithin a single umbrella fund.”Whilst the VCC has become the default structure for mostfund managers, Dedhia refers to a large number of deals being done via specialpurpose vehicles using the private limited company structure given the costsinvolved in setting up and administering a VCC.“As a general rule of thumb, a VCC would make sense forassets under management or deal size above $10 million,” he adds. “For anythingsmaller, the costs of the VCC can be prohibitive, and a limited companystructure would be preferred.”Costs, Incorporation, and PrivacyCheng acknowledges that incorporation timelines and set-upcosts for VCCs are typically higher than those for a standalone Singaporecompany or limited partnership structure but suggests that the long-termflexibility of the VCC framework often offsets these initial costs.“This is particularly evident when the structure is designedwith future deployment and expansion in mind,” she adds. “Economies of scalecan also be achieved through the use of a single administrator across multiplesub-funds.”We are currently exporting the CEOs, but importing the financial products they create. GIFT City needs to adopt these global best practices:• Adopt the VCC Model: Replicate Singapore’s Variable Capital Company (VCC) structure, allowing funds to easily subscribe/redeem… https://t.co/pZ0IMOZ3jE— Pilot Investor (@pilotinvestor7) December 3, 2025In addition, the share registers of VCCs are not required tobe publicly disclosed, providing an additional layer of privacy for investorswho value discretion.Limitations and Regulatory RequirementsPerhaps the most significant limitation to the variablecapital company structure is that it must be managed by a Singapore-licensed fund manager, soexempt 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 findhard to justify,” says Na. “Stamp duty treatment can also be tricky in umbrellastructures, as transfers between sub-funds are treated as between separatelegal persons.” The tax incentive conditions were tightened in January 2025,with assets under management thresholds measured more conservatively and localspending requirements now tiered by fund size.The MAS emphasises that VCCs should involve genuine fundmanagement activity. The structure is not intended to be used simply as avehicle to warehouse assets without substantive fund management oversight.This article was written by Paul Golden at www.financemagnates.com.