Summary: Variable Capital Companies (VCCs) have emerged as a key structuring tool for wealth and asset management. The Dubai International Financial Centre (DIFC) recently introduced its VCC framework earlier this year, joining Singapore, which has had a similar regime in place since 2020. We analyse the two regimes on key parameters, highlighting key considerations for investors and managers alike.
In February 2026, the Dubai International Financial Centre (“DIFC”) enacted a novel framework introducing Variable Capital Companies (“VCC”) in the DIFC freezone through the Variable Capital Company Regulations 2026 (“DIFC VCC Regime”) after extensive public consultation, with the aim of making the DIFC VCC Regime more attractive than other regimes across the globe. Singapore, which aspires to be a global asset and wealth management hub, had already introduced VCCs through legislation in 2018. The regime became active in 2020, and estimates suggest there are over 1300 VCCs in Singapore as on April 1, 2026.
Thus, it is only pertinent to compare the DIFC VCC Regime with the Singapore VCC regime to identify key overlaps and/or differences. Accordingly, we have analysed the two regimes across certain broad parameters and set out the comparative overview in the table below.
| Criterion | DIFC | Singapore |
| Enabling legislation/regulation | DIFC VCC Regime: in force from February 9, 2026. | Singapore VCC Regime: Variable Capital Companies Act 2018 – commenced January 14, 2020. |
| VCC structure | A DIFC VCC is a private company that can exist either on a standalone basis or have an umbrella structure that may create segregated cells (“SC(s)”) or incorporated cells (“IC(s)”), but not both. | A Singapore VCC is a body corporate incorporated as a VCC under the Singapore VCC Regime, which permits umbrella VCCs with multiple sub-funds. Typically, a Singapore VCC is used as a corporate structure for investment funds. |
| Separate legal personality | SCs do not have a separate legal personality but are legally distinct cells within the same VCC. ICs, on the other hand, are a separate legal entity, with each IC deemed to be a separate private company incorporated under the Companies Law.[1] | A sub-fund is not a separate legal person from the umbrella VCC; the VCC sues and is sued in respect of the sub-fund. |
| Shares and assets | The share capital of a VCC or cell thereof is always equal to the Net Asset Value (“NAV”)[2] of the non-cellular assets of the VCC or the cellular assets of each cell, as applicable. A DIFC VCC can issue either a cellular or non-cellular share. Cellular shares will be linked to a particular cell and its assets,[3] whereas non-cellular shares will be issued in respect of the VCC’s non-cellular assets, which are not linked to any particular cell. The aggregate value of these assets is accounted for in the calculation of NAV (less the total liabilities) of the VCC and assets and liabilities are segregated by cell. | A Singapore VCC issues a “participating share” linked to a particular sub-fund. Shares at the overarching VCC level, i.e., not linked to any sub-fund, are issued only to the fund manager and are known as “management shares”. Their main purpose is to give the fund manager autonomy to be able to run the VCC. The value of share capital is taken for the calculation of NAV of the VCC, and assets and liabilities are segregated by sub-fund. |
| Management of the VCC | As a private company, the VCC’s governance will be as per rules applicable to a private company in the DIFC. However, there is an additional concept of a “controller” under the DIFC VCC Regime as someone in accordance with whose wishes the VCC is run (either by shareholding and resulting voting power or by powers conferred under articles of association). | The fund manager is responsible for the day-to-day operations of the VCC. The level of control of the fund manager depends on the mandate given (advisory or discretionary). |
| Regulation | In the DIFC, an authorised firm[4] needs express permission of the Dubai Financial Services Authority (i.e., DFSA) for providing financial services in or from the DIFC or establishing a fund. Apart from this, the VCC would not require authorisation for its operations. | In Singapore, a VCC is subject to the oversight of the Monetary Authority of Singapore’s (i.e., MAS) by virtue of being managed by a licensed fund manager. |
| Taxation | To avail exemption from corporate tax in the DIFC, an entity must be a Qualifying Free Zone Person[5] earning Qualifying Income.[6] If not exempt, a corporate tax of 9% for income above AED 375,000 will be levied. | A VCC managed by a licensed fund manager in Singapore, is eligible for tax exemption under Section 13 of the Income Tax Act of Singapore in respect of designated investments. |
| Powers of shareholders | In certain situations, a special resolution (requiring 75% majority) must be passed. These generally relate to issues surrounding the structuring of the VCC. | There is no concept of a special resolution. The VCC is run by the fund manager in consultation with its shareholders. |
| Confidentiality | The VCC, its SCs and ICs each have the responsibility of maintaining registers and records. This is required to be maintained at the VCC’s registered office. | There is seemingly higher degree of confidentiality, considering the register of members and its shareholding is not displayed in a public register. |
For further information, please contact:
Varun Kalsi, Partner, Cyril Amarchand Mangaldas
varun.kalsi@cyrilshroff.com
[1] DIFC Law No. 5 of 2018.
[2] NAV in relation to a VCC, or a cell thereof, means: (a) the aggregate value of the total assets of the VCC or, as the case may be, the non-cellular assets or cellular assets relevant to the determination; (b) less the total liabilities of the VCC, or the cell concerned, as determined in accordance with applicable accounting standards and regulations.
[3] The cellular assets of a cell comprise of: (a) the assets represented by the proceeds of cell share capital (i.e., proceeds of the issue of cell shares) and reserves, including (without limitation) retained earnings, capital reserves and share premium, attributable to a cell; and (b) all other assets attributable to a cell.
[4] Authorised Firm is a person who holds a licence from the DFSA or a Recognised Financial Services Regulator to carry on one (1) or more Financial Services, excluding a Representative Office. A Financial Services Regulator is a regulator of financial service activities established in a jurisdiction other than the DIFC.
[5] All of the following conditions must be met: (a) be a Free Zone person; (b) maintain adequate substance; (c) derive qualifying income; (d) not have made an election to be subject to the standard corporate tax regime; (e) comply with all transfer pricing rules and documentation requirements; (f) its non-qualifying revenue should not exceed the de minimis requirements; and (g) prepares audited IFRS financial statements.
Adequate substance requirements stipulate that the Qualifying Free Zone Person’s core income generating activities are to be undertaken in a Free Zone, they must maintain adequate assets & number of qualified employees and incur adequate amount of operating expenditures.
The de minimis requirements will be satisfied where non-qualifying revenue does not exceed 5% of total revenue or AED 5 million, whichever is lower.
[6] Qualifying Income includes: (a) income derived from transactions with other Free Zone persons, except for income derived from ‘excluded activities’; (b) income derived from transactions with non-Free Zone persons, but only in respect of ‘qualifying activities’ that are not ‘excluded activities’; (c) income derived from the ownership or exploitation of qualifying IP; and (d) any other income provided that the Qualifying Free Zone Person satisfies the de minimis requirements.
Excluded activities cover: (a) transactions with natural persons (subject to certain exceptions); (b) regulated banking, finance, leasing and insurance activities; and (c) ownership or exploitation of immovable property (except for transactions with Free Zone persons in relation to commercial property located in a Free Zone).
Qualifying activities include inter alia holding shares and other securities for investment purposes, fund management services and wealth and investment management services.
