MAS scrutinises some VCC managers after review finds potential regulatory lapses

The Monetary Authority of Singapore (MAS) is looking more closely into certain variable capital companies (VCC) managers, after its review found potential lapses in regulatory compliance.

Following its thematic review of VCCs and their managers in 2024, the central bank said it is engaging with specific managers to determine whether supervisory interventions or regulatory actions may be warranted.

Despite the potential lapses, industry players noted that Singapore’s fund management industry remains robust, with a majority of VCCs and their managers complying with regulatory requirements.

VCCs are a corporate structure designed to house investment funds for a wide range of assets. In Singapore, they are managed by about 600 financial institutions, comprising MAS-regulated fund management companies and banks.

It has become a popular vehicle among some family offices. A VCC allows for segregated funds to be created, where assets can be pooled together for private investments or individual sub-funds can be managed on behalf of each of their clients.

MAS said the majority of these companies and their managers met key regulatory requirements: VCCs have to be used as collective investment schemes; and they will need to appoint a MAS-regulated manager, a director from the VCC manager, and an eligible financial institution.

A VCC manager must also segregate its assets and maintain them with an independent custodian, as well as ensure anyone who conducts fund management for the company is a representative of the manager.

VCCs also remain responsible for fulfilling their anti-money laundering obligations.

MAS found that there were some of them that did not report custody arrangements, despite investing in certain types of assets that require them – such as listed equities and fixed-income instruments.

Some had also appointed additional directors who are not directors or representatives of the VCC manager.

Meanwhile, the central bank noted that some of these companies did not have substantive fund management activity.

There were a few managers that were managing multiple VCCs that did not hold any assets or have any investors, despite having been incorporated for more than a year.

Some of these companies also held illiquid assets on behalf of a single investor or a few connected investors, where these assets were previously owned by the investors.

A routine survey

Joel Shen, corporate partner at international law firm Withers, said the review is likely a routine survey, being conducted around five years after VCCs were first introduced to Singapore.

“It is about time MAS does some housekeeping, especially now that there is such a large number of VCCs in the market,” he said.

According to the central bank, there were around 1,200 of these companies in Singapore as at Mar 31, 2025. Shen noted that this would mean the number of funds is a “multiple of that number”, since a VCC is essentially an umbrella of sub-funds, each with their own investment strategy and assets.

He was “quite encouraged by the findings that the vast majority of VCCs were compliant to regulations”.

“That speaks to Singapore’s good reputation and high standards of regulation and governance,” he said.

Urvi Guglani, who oversees growth and strategy at Silverdale Capital, said the review is a great step by MAS as it ensures that Singapore would not be caught infringing on the implementation of global corporate tax.

This raises the level and perception of the Republic as a wealth centre, making it more attractive to big and long-term funds.

“Singapore is very well-reputed and perceived as a no-nonsense jurisdiction that has zero tolerance for shady deals,” she said.

“Removing (the) ‘light-touch perception’ will remove tourist fund managers and non-serious VCCs, leaving the field for professionally managed firms like us who have invested heavily in creating robust infrastructure to run VCC funds,” she added.

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