SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
Unit trust funds are more commonly used for open- end funds, hedge funds and private property income funds. A unit trust fund can be organised as an umbrella fund with sub-funds created under the umbrella structure. The umbrella structure itself is not a fund that inves - tors may invest into but is merely an overarching structure to house the sub-funds. Investors select and invest into the sub-funds and the investment assets are held by the sub-funds. The sub-funds are not sep - arate legal entities. Although the performances, assets and liabilities of each sub-fund may be contractually segregated from those of other sub-funds, there is no statutory or legal segregation. LP Fund The LP fund is not a separate legal entity. The LP fund is organised as a limited partnership pursuant to the Limited Partnerships Act 2008 and pursuant to an LP agreement where the legal ownership of the LP fund’s assets is vested in the general partner (GP), who holds such assets on behalf of the LP fund. The LP fund must be registered with the ACRA. Investors are known as LPs and own LP units. GP units are usually owned by the fund manager or a GP entity. There is no board of directors as in a normal company. As such, the day-to-day control, manage - ment and decision-making powers of the LP fund vest with the GP but are often delegated to the fund manager. The investment mandate and terms of such delegation are normally found in the investment man - agement agreement (IMA). LP funds are more commonly used for closed-end PE, VC, RE and other exotic assets funds. Company Fund The company fund is a separate legal entity. The com - pany fund is organised as a private limited company pursuant to the Companies Act 1967 (CA) and pursu - ant to its constitution, where the legal ownership of the company fund’s assets is vested in the company. The company fund must be registered with the ACRA. Investors are known as shareholders, who typically own preference shares or redeemable preference
shares. The ordinary shares are usually owned by the fund manager or a GP entity. There is a board of directors. As such, the day-to-day control, manage - ment and decision-making powers of the company fund vest with the board of directors but are often delegated to the fund manager. The investment man - date and terms of such delegation are normally found in the IMA. Company funds are seldom used and have certain disclosure and reporting requirements under the CA. Company funds are also subject to capital mainte - nance requirements. VCC Fund The VCC framework was introduced in Singapore on 15 January 2020 pursuant to the Variable Capital Companies Act 2018 (the “VCC Act”). The VCC Act stipulates that the VCC can only be used as a fund (ie, collective investment scheme) and must appoint a fund manager that holds a Capital Markets Servic - es (CMS) licence for fund management (or a financial institution which is licensed in Singapore that can manage VCC). The VCC fund is a separate legal entity and is organ - ised as a VCC pursuant to the VCC Act and pursuant to the constitution where the legal ownership of the VCC’s assets is vested in the VCC. The VCC fund must be registered with the ACRA. Investors are known as shareholders who own par - ticipating shares. The management shares are usually owned by the fund manager or a GP entity. There is a board of directors. As such, the day-to-day control, management and decision-making powers of the VCC fund vest with the board of directors but are often del - egated to the fund manager. The investment mandate and terms of such delegation are normally found in the IMA. VCC funds have certain disclosure and reporting requirements under the VCC Act, but capital mainte - nance requirements are not applicable and the register of shareholders is not available to the public. The VCC must also comply with the requirements for prevention of money laundering and countering the financing of terrorism prescribed by the VCC Act.
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