Variable Capital Companies (VCCs)

Variable Capital Companies (VCCs) | Bestar

Variable Capital Companies (VCCs)

Variable Capital Companies (VCCs) are a specialized investment fund structure launched in Singapore in 2020, not Hong Kong. They offer high flexibility for open/closed-ended funds, allowing capital to grow/shrink easily and enabling umbrella structures. While Singapore uses VCCs, Hong Kong’s equivalent is the Open-ended Fund Company (OFC), designed for similar flexibility. 

Key Differences: VCC (Singapore) vs. OFC (Hong Kong)

• Structure & Regulation: VCCs are regulated by the Monetary Authority of Singapore (MAS) and managed by the Accounting and Corporate Regulatory Authority (ACRA). Hong Kong's OFCs are under the Securities and Futures Commission (SFC). 

  
  

• Fund Type: VCCs cater to both traditional and alternative strategies (including private equity and hedge funds). 

  
  

• Key Advantage: VCCs allow sub-funds to share the same service providers (directors, auditors) under an umbrella structure, lowering costs. 

  
  

• Access: While VCCs are popular for global capital in Southeast Asia, Hong Kong's OFCs are designed specifically for access to mainland China markets. 

VCC Structure Benefits (Singapore)

• Variable Capital: Allows shares to be readily redeemable without needing to satisfy solvency tests required by traditional companies.

  
  

• Umbrella Structure: A single VCC can have multiple sub-funds, with segregated assets and liabilities between them.

  
  

• Corporate Entity: It is a legal entity rather than a trust, providing more familiar corporate governance. 

Hong Kong Alternatives

For managers looking to operate in Hong Kong, the equivalent structures are:

1. Open-ended Fund Company (OFC): A corporate structure for both private and public funds.

   
   

2. Limited Partnership Fund (LPF): A common structure for private equity. 

VCCs have become a preferred option for global fund managers setting up in Singapore, with over 1,400 established as of Q1 2025.

For financial advice, consult a professional.

Bestar Hong Kong: Setting Up OFCs

Establishing an investment vehicle in a premier financial hub requires more than just administrative filing; it demands a strategic partner who understands the nuances of the Hong Kong Open-ended Fund Company (OFC) regime.  

As a leading professional services firm, Bestar Hong Kong provides end-to-end solutions for fund managers looking to leverage the OFC’s variable share capital and flexible structure. This guide explores how Bestar simplifies the setup process while ensuring full compliance with the Securities and Futures Commission (SFC).

Why Choose the Hong Kong OFC Structure?

The OFC is a corporate-form fund vehicle designed specifically for investment funds. Unlike a standard private limited company, an OFC allows for the redemption of shares from paid-up capital, making it ideal for both public and private open-ended funds.  

Key Advantages:

• Variable Share Capital: Effortlessly issue and redeem shares based on investor demand without complex capital reduction procedures.  

  
  

• Umbrella Structure: Create multiple sub-funds under a single legal entity, each with segregated assets and liabilities (protected cell regime).  

  
  

• Tax Efficiency: Eligible OFCs can benefit from profits tax exemptions under the Unified Tax Exemption Regime.  

  
  

• Operational Flexibility: Managed by an SFC-licensed investment manager, offering a globally recognized governance model.  

How Bestar Hong Kong Facilitates Your OFC Setup

Navigating the dual oversight of the Securities and Futures Commission (SFC) and the Companies Registry (CR) can be daunting. Bestar provides a streamlined "one-stop" approach to get your fund operational.  

1. Structure Design & Advisory

Bestar’s experts help you determine if an OFC is the right fit compared to a Limited Partnership Fund (LPF). We advise on:

• Single vs. Umbrella OFC structures.

• Drafting the Instrument of Incorporation.

• Selecting the appropriate investment strategies and asset classes.

2. Licensing & Key Operator Coordination

An OFC must appoint key operators. Bestar ensures all regulatory boxes are checked:  

• Investment Manager: Ensuring the manager holds the necessary Type 9 (Asset Management) license.  

  
  

• Custodian: Coordinating the appointment of an SFC-approved custodian for the safekeeping of fund assets.  

  
  

• Directors: Assisting with the appointment of at least two individual directors (one of whom must be independent).  

3. Registration & Incorporation

Bestar manages the simultaneous filing process:

• SFC Registration: Preparing the application for the SFC’s "one-stop" registration.  

  
  

• Companies Registry: Handling the incorporation and obtaining the Business Registration Certificate.  

  
  

• Post-Incorporation: Setting up statutory registers and corporate records.  

4. Ongoing Compliance & Fund Administration

Setting up the fund is only the beginning. Bestar provides long-term support, including:

• Corporate Secretarial Services: Managing filings, board resolutions, and annual returns.  

  
  

• Accounting & Tax: Providing fund accounting and ensuring compliance with the Unified Tax Exemption criteria.

  
  

• Audit Support: Coordinating with auditors to meet annual reporting deadlines.  

The Bestar Difference: Expertise You Can Trust

With over 20 years of experience in the Asia-Pacific region, Bestar combines technical expertise with a client-centric approach. As a Trust or Company Service Provider (TCSP) licensee and member of the Hong Kong Institute of CPAs, we bring "bankable" credibility to your fund structure.  

Why Fund Managers Partner with Us:

• Deep Local Knowledge: Our team, led by seasoned professionals, understands the specific expectations of the SFC.  

  
  

• Efficiency: We minimize "red tape" by managing all communication with the Companies Registry and regulators.

  
  

• Global Reach: With offices in Hong Kong, Singapore, and Malaysia, we support cross-border fund strategies and regional expansion.  

Get Started with Your Hong Kong OFC

The Hong Kong fund landscape is evolving rapidly, with the government offering significant incentives (including grant schemes for setup costs) to attract global capital.  

Ready to launch your fund? Contact Bestar Hong Kong today for a consultation on setting up your Open-ended Fund Company.

• Phone: +852 +852 3565 1861

• Email: admin at bestar-asia.com  

• Website: www.bestar-hk.com

Frequently Asked Questions (FAQ)

What is the minimum capital requirement for an OFC?

There is no statutory minimum capital requirement for a private OFC, though the fund must have sufficient resources to meet its operational needs.  

How long does it take to register an OFC?

For private OFCs, the SFC typically processes registrations within one month of receiving a completed application.  

Can an OFC be used for private equity?

Yes, while often used for hedge funds, the OFC structure is flexible enough for private equity and other alternative investment strategies.  

Are you considering a specific asset class or looking to transition an existing offshore fund to Hong Kong?