Variable capital company will boost Singapore fund sector

ALTHOUGH investment funds have historically been established in "offshore" jurisdictions (principally the Cayman Islands and other tax-neutral jurisdictions), the last decade has seen a gradual but pronounced shift to "onshore" jurisdictions (typically tax-advantageous systems with a network of double taxation treaties where the fund manager is located).

This steady flow onshore has largely been driven by evolving global investor preferences, substance concerns from a tax perspective - including related political and public-relations issues in the European Union (EU) and elsewhere - and regulatory developments in both offshore and onshore jurisdictions.

There is also a growing appreciation for the convenience associated with having the entire fund structure (the investment fund, fund manager and holding companies plus the fund administrator, tax advisor, legal counsel and other service providers) domiciled in the same jurisdiction and time zone. Singapore, which is an onshore jurisdiction, has been a beneficiary of this onshoring trend.