Variable Capital Company: 101,000 Things to Know Before You Start

Variable capital company (VCC)

A variable capital company (VCC) is a new type of corporate entity that was introduced in Singapore in January 2020. VCCs are designed to be flexible and adaptable, and they can be used for a wide range of purposes, including:

• Investment holding: VCCs can be used to hold a variety of assets, including shares, bonds, and real estate.
• Fund management: VCCs can be used to manage funds, including private equity funds, venture capital funds, and hedge funds.
• Family office: VCCs can be used to manage the finances and assets of wealthy families.
• Special purpose vehicle: VCCs can be used for a variety of special purposes, such as securitization and project financing.

VCCs offer a number of advantages over other types of corporate entities, including:

• Flexibility: VCCs can be structured to meet the specific needs of the shareholders.
• Tax efficiency: VCCs are exempt from income tax and capital gains tax in Singapore.
• Confidentiality: VCCs are not required to file public accounts.
• Simplicity: VCCs are relatively easy to set up and administer.

Key features of VCCs

The key features of VCCs are as follows:

• Variable capital: VCCs have a variable capital structure, which means that the number of shares in issue can increase or decrease over time.
• No minimum capital: VCCs are not required to have a minimum capital.
• Single shareholder: VCCs can be incorporated with a single shareholder.
• Nominee directors: VCCs can appoint nominee directors.
• Exemption from income tax and capital gains tax: VCCs are exempt from income tax and capital gains tax in Singapore.

Benefits of VCCs

VCCs offer a number of benefits over other types of corporate entities, including:

• Flexibility: VCCs can be structured to meet the specific needs of the shareholders.
• Tax efficiency: VCCs are exempt from income tax and capital gains tax in Singapore.
• Confidentiality: VCCs are not required to file public accounts.
• Simplicity: VCCs are relatively easy to set up and administer.

Common mistakes to avoid when setting up a VCC

There are a number of common mistakes that should be avoided when setting up a VCC, including:

• Not understanding the specific needs of the shareholders: It is important to understand the specific needs of the shareholders before setting up a VCC. This will help to ensure that the VCC is structured in a way that meets the shareholders' needs.
• Not considering the tax implications: It is important to consider the tax implications of setting up a VCC. VCCs are exempt from income tax and capital gains tax in Singapore, but this may not be the case in other jurisdictions.
• Not seeking professional advice: It is advisable to seek professional advice from a lawyer or accountant before setting up a VCC. This will help to ensure that the VCC is set up correctly and that all of the legal and tax requirements are met.

Why VCCs matter

VCCs are a new and innovative type of corporate entity that offer a number of advantages over other types of corporate entities. VCCs are flexible, tax efficient, confidential, and simple to set up and administer. This makes them an attractive option for a wide range of businesses and investors.

Conclusion

VCCs are a valuable addition to the Singapore corporate landscape. They offer a number of advantages over other types of corporate entities, and they can be used for a wide range of purposes. VCCs are likely to become increasingly popular in the years to come.

Additional resources

• Variable Capital Companies (VCC) - A Guide for Practitioners
• Inland Revenue Authority of Singapore (IRAS) - Variable Capital Companies (VCCs)
• Singapore Accountancy Commission (SAC) - Variable Capital Companies (VCCs)

Tables

Table 1: Key features of VCCs

Table 2: Benefits of VCCs

Table 3: Common mistakes to avoid when setting up a VCC

Table 4: Why VCCs matter