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Singapore VCC and Hong Kong OFC compared
Asia’s fund management sector has undergone a quiet transformation. As regulatory frameworks mature and capital flows deepen, fund managers and institutional investors have moved past the question of whether to domicile onshore in Asia to asking where, and increasingly, whether to use both.
Singapore’s Variable Capital Company (VCC) and Hong Kong’s Open-ended Fund Company (OFC) have emerged as the region’s two flagship onshore fund structures. Together, these frameworks have strengthened both jurisdictions’ positions as credible onshore domiciles, offering alternatives or complements to traditional offshore jurisdictions such as the Cayman Islands.
Knowing how each structure works, and when to use both, has become a core competency for Asia-focused fund managers.
The case for onshore Asia domiciliation
Historically, Asia-focused funds defaulted to the Cayman Islands Exempted Limited Partnership or Segregated Portfolio Company as their vehicle of choice, primarily for structural flexibility, tax neutrality and familiarity with institutional investors. The Cayman Islands remains the global default for cross-border fundraising, with CIMA reporting over 30,000 registered mutual and private funds as at Q1 2026, spanning approximately 13,008 open-ended mutual funds and 17,910 closed-ended private funds.
Yet the calculus is shifting. Regulatory substance requirements, evolving FATF transparency, Anti-Money Laundering and economic substance expectations, and growing investor preference for funds with genuine operational presence have made pure offshore structures increasingly scrutinised. Simultaneously, Singapore and Hong Kong have responded with onshore frameworks that closely replicate the commercial and tax advantages of offshore vehicles, while offering regulatory visibility and market proximity that offshore vehicles may not provide to the same extent.
The Singapore VCC and its appeal for ASEAN-focused managers
Launched in January 2020 under the Variable Capital Companies Act, the VCC was purpose-built to close a structural gap in Singapore’s fund ecosystem. As of 31 December 2024, 1,200 VCCs had been incorporated or re-domiciled in Singapore, representing 2,695 sub-funds. Singapore’s broader asset management industry recorded SGD 6.07 trillion in total AUM as at end-2024, reflecting a 12% year-on-year increase.
Legal architecture
A VCC is a corporate entity with a variable share capital structure, meaning its capital always equals its net asset value. It may be established as a standalone fund or as an umbrella vehicle housing multiple sub-funds, each with ring-fenced assets and liabilities under Section 29 of the VCC Act. Sub-funds can pursue entirely distinct strategies, private equity, venture capital, hedge fund or multi-asset, within a single legal entity, delivering meaningful operational and cost efficiencies through shared service providers and a consolidated governance framework.
Tax treatment
The VCC’s principal tax advantages are accessed through the Monetary Authority of Singapore’s (MAS) Section 13O and 13U incentive schemes under the Income Tax Act. Section 13O covers onshore funds with a minimum AUM of SGD 5 million at financial year end, whilst Section 13U generally targets larger fund structures with a minimum SGD 50 million in investments expected at the point of application.
Both schemes may exempt specified income from designated investments, including certain capital gains, dividends and interest income, from Singapore tax, subject to the relevant statutory conditions being satisfied. Following updates effective 1 January 2025, AUM thresholds are now measured against designated investments recognised in the fund’s financial statements, and local business spending requirements are tiered to fund size, beginning at SGD 200,000 annually.
Investor profile and market access
The VCC’s structure lends itself particularly well to Southeast Asian strategies, family offices and fund managers targeting a diversified regional investor base. The shareholder register is not publicly accessible, although it remains available to regulators and the relevant authorities. Singapore’s political stability, common law system and deep ecosystem of fund administrators, custodians and legal advisers further reduce operational friction. For a full overview of VCC fund structures and setup in Singapore, including licensing requirements and timelines, see Acclime’s dedicated VCC guide.
The Hong Kong OFC and its China access advantage
Established under the Securities and Futures Ordinance in 2018, the OFC was designed to bring a corporate fund structure to Hong Kong’s historically unit-trust-dominated landscape. As of April 2026, 723 OFCs were registered and active with the Securities and Futures Commission (SFC). The broader Hong Kong asset management market reached HKD 35 trillion as at end-2024, reflecting a 13% year-on-year increase.
Legal architecture
An OFC is incorporated with the Companies Registry and regulated by the SFC, which serves as its primary regulator. It must appoint at least two individual directors (no corporate directors are permitted), delegate investment management to an SFC-licensed Type 9 asset management entity and engage an independent custodian to hold scheme property. Similar to the VCC, OFCs may operate as standalone vehicles or umbrella structures with sub-fund ring-fencing under a protected-cell regime, meaning the liabilities of one sub-fund cannot be satisfied from the assets of another.
Tax treatment
OFCs may qualify for profits tax exemption under Hong Kong’s Unified Fund Exemption (UFE) regime, which covers qualifying transactions on a broad range of specified assets. Public OFCs benefit from the same profits tax exemption that applies to other SFC-authorised funds. Private OFCs may also qualify under the regime where the relevant statutory conditions are met, including where the fund is centrally managed and controlled in Hong Kong. Stamp duty applies to share transfers at a rate of 0.2% (0.1% per side), though allotments, issues and redemptions of OFC shares are exempt. The Hong Kong government extended its OFC Grant Scheme in April 2024 for a further three years to 9 May 2027, covering 70% of eligible incorporation or re-domiciliation expenses, subject to caps of HKD 500,000 for private OFCs and HKD 1 million for public OFCs. For detail on ongoing obligations, see OFC annual reporting deadlines in Hong Kong.
Investor profile and market access
The OFC’s defining strategic advantage is proximity to mainland China. OFCs may benefit from Hong Kong’s Stock Connect and Bond Connect programmes, which support investment flows between mainland China and international markets. For China-focused equity or fixed income strategies, this gives Hong Kong a structural advantage over Singapore, subject to the fund’s mandate, eligible assets and operational arrangements.
For fund managers with a Greater Bay Area mandate, a Qualified Domestic Limited Partner (QDLP) strategy, or a target investor base that includes mainland Chinese institutions and family offices, the OFC can provide a strong structural fit. Hong Kong’s common law system and the familiarity of a corporate fund structure may also support engagement with European and US institutional investors.
Side-by-side benchmark
Dimension | Singapore VCC | Hong Kong OFC |
Regulator | MAS/ACRA | SFC/Companies Registry |
Legal form | Corporate (variable capital) | Corporate (variable capital) |
Structure options | Standalone or umbrella VCC with multiple sub-funds | Standalone or umbrella OFC with segregated sub-funds |
Minimum capital | None | None |
Tax exemption | Section 13O/13U (income tax) | Unified Fund Exemption (profits tax) |
Investor register | Confidential | Confidential |
Manager requirement | MAS-licensed fund manager | SFC-licensed Type 9 manager |
Re-domiciliation | Available for eligible foreign corporate funds | Available for eligible overseas corporate funds |
Government grant | Ended January 2025 (SGD 30k cap) | Extended to May 2027 (HKD 500k–1M cap) |
China market access | Indirect | Direct (Stock Connect/Bond Connect) |
Investor base strength | ASEAN, global investors, family offices | Greater China, institutional, global |
Primary strategy fit | PE, VC, hedge funds, multi-asset, family offices | Hedge funds, public market strategies, GBA mandates |
A dual-domicile perspective
Institutional managers are increasingly focused on how to deploy both within a coherent fund architecture.
A manager running a Southeast Asia private equity mandate with regional HNWI capital may establish a VCC in Singapore, using Section 13U incentives and MAS regulatory credibility. The same manager may later use a Hong Kong OFC for a China-facing strategy or to serve investors whose expectations are anchored in Hong Kong’s regulatory environment. The two vehicles serve distinct investor segments, different regulatory appetites and complementary capital pools.
For managers transitioning from Cayman or BVI structures, both jurisdictions offer formal re-domiciliation pathways, allowing funds to transfer their registration and retain their operational history without full restructuring. The choice often turns on the existing investor base, the strategy’s geographic weighting, licensing requirements, tax position and long-term growth plan.
Selecting a fund domicile is not a generic decision. Managers should consider the following when evaluating Singapore, Hong Kong or a combination of both:
Investor geography: Southeast Asian, global and family office capital may favour Singapore; Greater China strategies may favour Hong Kong.
Strategy type: Close-ended PE and VC structures benefit from the VCC’s sub-fund flexibility; liquid, public-market or QDLP strategies fit the OFC’s regulatory framework.
Governance and substance: Both jurisdictions require genuine operational presence and licensed managers. Cosmetic arrangements are unlikely to withstand investor or regulator scrutiny.
Distribution ambitions: Singapore VCCs benefit from the country’s network of over 90 tax treaties, supporting cross-border distribution and investor access across key markets; OFCs benefit from Mutual Recognition of Funds arrangements with mainland China.
Cost and timing: Both jurisdictions offer streamlined incorporation processes and government support, though cost structures vary by fund size, strategy complexity and whether re-domiciliation is required.
How Acclime can help
Acclime’s fund services teams in Singapore and Hong Kong provide integrated support across the full lifecycle of fund establishment and administration, from structure selection and licensing advisory to ongoing fund administration, compliance and governance. Whether you are launching a first fund, re-domiciling from an offshore jurisdiction, or building a multi-vehicle regional platform, our experts work alongside your legal and tax advisers to deliver a coordinated, jurisdiction-specific approach.
Planning an Asia-focused fund launch or re-domiciliation? Speak with Acclime’s fund services team to assess whether a Singapore VCC, Hong Kong OFC or a dual-jurisdiction structure best aligns with your mandate, investor base and operating model.
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