Governance and Management of VCCs
- Calvin Chong
- Jul 16
- 3 min read
Introduction
On 26th June 2025, the Monetary Authority of Singapore (“MAS”) published a circular, providing insights on the governance and management in relation to Variable Capital Companies (“VCCs”). In 2024, MAS conducted a thematic analysis of VCCs and their managers through filed lodgements and submitted survey. The purpose of the survey was to provide MAS valuable insights into the operation of VCCs such as their investment priorities, scale of assets, governance frameworks and management strategies.
This post provides a practical overview of:
Profile of VCCs and Key Regulatory Requirements
MAS Observation and Expectations
How we can support your institution in navigating these changes
Overview
Profile of VCC
As a recap, VCCs are versatile corporate structures designed for both open-ended and closed-ended investment funds. VCCs allow efficient investments holding across various types of assets, from equities to fixed income instruments, in both public and private markets.
Since the launch of the VCC framework in January 2020, the number of VCCs has growth steadily over the years. As of 31 March 2025, there are around 1,200 VCCs managed by around 600 financial institutions. Here are some of the key regulatory requirements for the governance and management of VCCs:
A VCC can be used as one or more collective investment schemes (“CIS”) in the form of a body corporate
A VCC must appoint a manager that is regulated by MAS to manage its assets or operate the CIS
A VCC must appoint at least one director, who is either a director or a qualified representative of the manager of the VCC
A VCC must engage an eligible financial institution (“EFI”) for conducting AML/CFT requirements under MAS Notice VCC-N01.
A VCC manager must segregate the assets of the VCC from its own and maintain them through an independent custodian, if applicable
A VCC manager must ensure that individual involved in fund management activities for the VCC, such as contributing to portfolio decisions or engaging in marketing, is appointed and qualified as a representative of the manager
MAS Observations and Expectations
Based on the survey responses, MAS discovered that although most VCCs and their managers are compliant with these key regulatory requirements, there are also potential areas of improvements for certain VCCs and/or their managers and here is the summary of expectations from MAS.
Areas for Improvement | MAS Expectation on VCCs and/or VCC Managers |
Custody Arrangement | Assets under management (“AUM”) are subject to independent custody, except for private equity or venture capital investments which are exclusively offered to accredited/institutional investors. |
Appointment of VCC Manager and Director | Additional directors, who are not directors or representatives of VCC manager, and engages in regulated activities must be appointed as licensed representatives of the VCC manager. |
Substantive Fund Management Activity | VCC manager shall conduct periodic assessment and wind down VCCs that did not hold any assets and/or did not have any investors, especially if such VCCs have been incorporated more than a year. VCC managers should actively manage the VCCs, not merely transferring of existing investments or assets into the VCC without providing investment inputs. |
Anti-Money Laundering and Countering the Financing of Terrorism (“AML/CFT”) | VCCs shall maintain adequate framework and processes to comply with relevant AML/CFT obligations1 and remain as responsible party even there are sufficient directors’ oversight over the EFI. |
Summary
In brief, this paper outlines the recommendations from the MAS which includes reinforcing custody arrangements requirements, the need for to appoint external directors who are conducting regulated activities, winding down of dormant VCCs as well as fulfilling the VCC’s AML/CFT obligations. VCC managers retain the overall responsibility of its fund management duties and should ensure that their duties as managers are effectively discharged.
Based on the circular, we expect the MAS to continue conducting supervisory reviews. VCC managers are advised to review their management of VCCs against the observations set out in this circular, addressing any compliance gaps accordingly.
How We Can Help
As a compliance solutions advisor and funds specialist, we provide specialized solutions in accordance with MAS observations and recommendations to help your institution meet these regulatory requirements, from understanding of your organization and the customer base, to identifying and mitigating the operational and regulatory gap. Feel free to reach out to us for non-obligatory discussion.
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