Establish fund platform for quick launch & support fund reporting in relevant jurisdictions.
We will introduce fund structures, including Singapore Variable Capital Companies (VCC), Cayman Islands Segregated Portfolio Companies (SPC) and Hong Kong Open-Ended Fund Companies (OFC) as follows:
- A VCC has a variable capital structure that provides flexibility in the issuance and redemption of its shares. It can also pay dividends out of capital, which gives fund managers flexibility to meet dividend payment obligations.
- A VCC can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities. For fund managers that structure their funds as umbrella VCCs, there may be cost efficiencies from using common service providers across the umbrella and its sub-funds.
- A VCC can be used for both open-ended and closed-end fund strategies.
- Fund managers may incorporate new VCCs or re-domicile their existing overseas investment funds with comparable structures by transferring their registration to Singapore as VCCs.
- VCCs must maintain a register of shareholders, which need not be made public. However, this register must be disclosed to public authorities upon request for regulatory, supervisory and law enforcement purposes.
Cayman Islands SPC
- The Segregated Portfolio Company (SPC) is a form of exempted company.
- The Companies Law, PART XIV, provides for any exempted company, a company by way of continuation and an exempted limited duration company to re-register as a segregated portfolio company.
- This company is required to include in its name either “Segregated Portfolio Company” or “SPC”.
- An SPC allows for the segregation of the assets and liabilities of individual portfolios – Known in some parts of the world as “cells” – from the general assets of the overall company as well as from other portfolios. Each portfolio, however, is not seen as a separate legal entity.
- In addition to the annual return required for an exempted company, the segregated portfolio company is required to file a return stating all movements on its portfolio during the year.
Hong Kong OFC
- An OFC must have at least two directors, who must be
- natural persons;
- aged 18 or above; and
- not an undischarged bankrupt unless with the leave of the court
- At least one of the directors must be an independent director
- OFC Code provides guidance on independent director, who must not be a director or employee of the custodian
- Directors must delegate investment management functions to the investment manager by an investment management agreement
- An OFC must have an investment manager who is responsible for managing the scheme property of the OFC
- The investment manager:
- must be registered or licensed for Type 9 (asset management) regulated activity; and
- must be and remain fit and proper, at and after the registration of the OFC
- An OFC must have a custodian, and all the scheme property of an OFC must be entrusted to a custodian of the OFC for safe keeping
- To be eligible as a custodian of an OFC, an entity must:
- meet same requirements as to the type of entities and capital requirements as those under the Code on Unit Trusts and Mutual Funds (UT Code); or
- for a custodian of a private OFC only, be a licensed corporation or registered institution licensed or registered for Type 1 regulated activity which meets eligibility criteria under 7.1(b)(ii) of the OFC Code
- Appointment of multiple custodians is permitted
Hedge fund managers often trade with a number of brokers. The fund’s prime broker (if they have designated one) provides a consolidation service—this means the executing brokers are instructed to settle all trades with the prime broker.
Our close relationships with a range of Prime Brokers and Custodians allows us to provide different types of clients the services traditionally reserved for major institutions only. In addition to this we will provide operational support via legal, administration, compliance and regulatory advice.