SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
VCC funds can be used for open-end and closed-end funds. VCC funds can be used for hedge, PE, VC, RE and exotic assets funds. The VCC fund is the most flexible among the Singapore fund structures. A VCC fund can be organised as an umbrella VCC fund with sub-funds created under the umbrella VCC. The umbrella structure itself is not a fund that investors can 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 but have their own unique sub-fund registration number issued by the ACRA. The performance, assets and liabilities of each sub- fund must be segregated from those of other sub- funds as required by the VCC Act. Hence, there is statutory and legal segregation, unlike in the case of sub-funds of an umbrella unit trust. In fact, the VCC Act stipulates that sub-funds must be segregated from each other and that the directors of the VCC must ensure that sub-funds are segregated from each other. 2.2 Regulatory Regime for Funds Overview of Regulatory Regime Alternative funds are not regulated in Singapore and are not subject to licensing nor approval, except for the notification that must be lodged with the MAS before the alternative funds can be offered to AIs and certain other persons pursuant to Section 305 of the SFA. Funds offered to retail investors must be authorised (for Singapore domiciled funds) or recog - nised (for non-Singapore domiciled funds). In addi - tion, a prospectus compliant with the SFA and Code on Collective Investment Scheme must be registered with the MAS before any units in the retail funds can be offered. The management of funds and the distribution of funds are regulated under the SFA and require a CMS licence. See 3.3 Regulatory Regime for Managers and 4.4 Rules Concerning Marketing of Alternative Funds . Alternative funds have no investment restrictions or limitations and can adopt any investment strategy,
thesis or approach, and can invest in any asset class or jurisdiction, so long as it is not against public policy nor investing in any asset class that is prohibited. They can raise any amount of capital and invest any amount of committed capital for any length of investment peri - od. However, these are subject to legal limitations, sanctions and any other specific legal or regulatory restrictions. Moreover, if the alternative fund is apply - ing for fund tax incentives, certain asset classes will not qualify. See 2.4 Tax Regime for Funds . Alternative funds can also invest directly or indirectly in the investment portfolio through special purpose vehicles. The critical requirement is that the invest - ment terms and conditions, and risks, are adequately disclosed in the fund private placement memorandum (PPM). Unit Trust Fund The unit trust fund is constituted when the trust deed is executed by the trustee and the fund manager, and no registration is required. The constitutive document for a unit trust fund is the trust deed, and the main contracts are the trust deed and subscription agree - ment. There is usually a PPM. The time taken to set up a unit trust fund can range from a few days to a few weeks, and this is largely dependent on the negotia - tion of the terms of the trust deed between the parties. There is no registration fee and the professional fees for setting up are considered reasonable. LP Fund, Company Fund and VCC Fund The LP fund, company fund and VCC fund are con - stituted when they are registered or incorporated by the ACRA. Prior to establishment or incorporation, reservation of names is required, and the registration or incorporation forms must be lodged with the ACRA, together with relevant supporting documents. The constitutive document for the LP fund is the LP agreement, and the main contracts are the LP agreement, investment management agreement and subscription agreement. The constitutive document for the company fund and VCC fund is the consti - tution, and the main contracts are the constitution, investment management agreement and subscription agreement. There is a PPM for LP funds, company funds and VCC funds.
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