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Why VCC will be favoured by Family Offices

Updated: May 26, 2020

Snippets from the Withers KhattarWong Family Office Conference 2020

Key talking points with Yenny Samad-Wong, CEO of L-Bridge Capital, on the Singapore VCC Regime

Q: Why do you think the VCC will be viewed favourably by Family Offices?

A: There are two main factors for that: One is the attractiveness of Singapore and the ecosystem it offers. Secondly, we look at the features of Singapore VCC regime which offers a robust corporate structure to investors. You see, when family members decide to form a family office, one of their purposes is to consolidate and streamline their investment framework to achieve greater efficiency in terms of cost, manpower and operation. In short, Families want to consolidate and not expand their collection of investment vehicles. Therefore, when you re-domicile into one jurisdiction, you do away with the need to keep up with the changes of legislative laws of many countries. This translates to lesser regulatory filings, lesser reporting, lesser compliance hurdles.

And we all know, Singapore has a lot more to offer in terms of:

- Political stability

- Strong rule of law

- Access to educated workforce

- Access to benefits of tax treaties and tax incentives schemes

- Robust financial and business hub and

- Gateway to Asean where all the exciting growth is happening

Q: What will this mean for families looking to adopt the VCC approach?

A: They will enjoy the much sought-after privacy because the shareholders registry is not made public. They can now have greater confidence to combine forces with other family members to form a family office and utilize a common framework for investment. And that ties-in to an attractive part of VCC: The investors within a family office gets to enjoy the economies of scale while retaining their own economic interest. There are legal segregation of assets, risk and liabilities. In fact, the VCC Act voids any terms that run contrary to that. They also dispense with the need to apply for tax incentive scheme for every single investor because the entire VCC is treated as one entity. Therefore, only the VCC entity needs to apply for the incentive. Lastly, we like the fact that VCC allows dividends to be paid out of capital and not just when they are in profit. Therefore, ensuring the investors or family the liquidity in times of need.

From left to right: Yenny Samad-Wong (CEO, L-bridge Capital), Stephen Banfield (Partner, WithersWorldwide), Elean Chin -  (Head, Insurance, Funds and Infrastructure Finance Division, Monetary Authority of Singapore) and Daniel Yong (Partner, WithersWorldwide)

If we go a step further and overlay the blueprint of the VCC with a family constitution and proper shareholder agreement, we get a structure that actually strengthens the protection of a family legacy.

Bottom line is, I think VCC just made Singapore a lot more attractive to investors now and that can only be good for us.


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