A segregated portfolio company (SPC) is a separate legal entity and is sometimes referred to as a protected cell company. It is generally more complex than the typical private company limited by shares. An SPC segregates the assets and liabilities of different classes and series of shares from one another and from the general assets of the SPC. A typical SPC structure would consist of the main SPC and multiple segregated portfolios under this main SPC. Each individual segregated portfolio may be dealing with a different form of activity.
The unique characteristic of an SPC is the ability to isolate the assets and liabilities of different segregated portfolios. For example, there may be the main parent SPC called Example SPC and Example SPC may have two segregated portfolios, namely Example Property Development Segregated Portfolio and Example China-India Segregated Portfolio. Example Property Development Segregated Portfolio may be dealing with property developments in a certain market and Example China-India Segregated Portfolio may be dealing with investments in the Chinese and Indian stock markets. They would raise funds by getting shareholders to subscribe to shares of the individual portfolios. Only the assets of a particular segregated portfolio can be used to meet liabilities to creditors of that specific portfolio. A creditor of Example Property Development Segregated Portfolio cannot claim against Example China-India Segregated Portfolio.
SPCs have several functions but they are most commonly used in collective investment schemes due to their flexible nature. Incorporating an SPC also eliminates the need to form multiple companies under a single holding company.
SPCs can be formed in jurisdictions like Guernsey, Delaware, Bermuda, the British Virgin Islands, the Cayman Islands, Anguilla, Ireland, Mauritius, Jersey, the Isle of Man, Malta, Bahrain, Gilbraltar and Samoa.
In Singapore, private equity funds have been using SPCs as vehicles for their mode of business. In Singapore, the Variable Capital Companies Act (2018) took effect on the 14th of January 2020. The Variable Capital Company is a new corporate structure for investment funds with similar flexibility as SPCs. This act, in conjunction with provisions in the Income Tax Act, encourages offshore funds to domicile in Singapore.
If you would like to learn more about the Variable Capital Companies Act (2018), you can visit this website: https://variablecapitalcompaniesact.com/
If you would like to incorporate a Variable Capital Company, you may contact us at [email protected]
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at Singapore Secretary Services
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