Singapore VCC insights

VCC Act 2018: Suing, Set-Off and Winding Up a Sub-Fund Explained

By VCC Editorial Team · Published 10 October 2026

Short answer: Under the VCC Act 2018, a sub-fund is not a separate legal person, so the umbrella VCC sues and is sued on its behalf and may set off between sub-funds as if each were a person. A sub-fund can nonetheless be wound up on its own under section 33, using the IRDA winding-up rules with modifications.

This article is general information only and is not legal advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

Why does the VCC Act 2018 say a sub-fund is not a legal person?

A sub-fund looks like a separate fund. It has its own investment objective, portfolio, investor base and, usually, its own bank account. Legally, however, the umbrella VCC is the only entity. The VCC Act 2018 builds the structure on a single body corporate with internal compartments.

Section 32(1) states the consequence plainly: a sub-fund of an umbrella VCC is not a legal person separate from the VCC. Everything that follows in sections 32 and 33 is a set of rules that let the compartments behave, for specific purposes, as if they were separate persons.

This sits alongside the asset ring-fence in section 29, which stops one sub-fund’s assets being used for another sub-fund’s liabilities. If you want that side of the picture first, read our piece on section 29 sub-fund segregation. This article concentrates on what happens when a sub-fund is a party to a dispute, a set-off or an insolvency.

The VCC’s own legal personality also matters for directors. Our note on body corporate status, directors’ authority and sub-funds explains why the board acts for the VCC as a whole, even when it takes a decision for one sub-fund.

Who signs contracts and who is sued for a sub-fund?

Because a sub-fund cannot contract in its own name, the VCC signs on its behalf. The contract should still identify the sub-fund, for example “[VCC name] acting for and on behalf of [Sub-Fund name]”. That wording tells the counterparty which pool of assets stands behind the obligation, and it supports the ring-fence in section 29.

Section 32(1) then provides that the VCC may sue or be sued in respect of a sub-fund. A claimant therefore names the VCC as the party. A VCC that wants to recover a debt owed to Sub-Fund A sues in its own name, referring to Sub-Fund A in the pleadings.

Three practical drafting points follow:

• Name the sub-fund in the party description and in every schedule that lists assets, accounts or collateral.
• Use a separate bank account, custody account and brokerage account for each sub-fund so that title to assets is evident.
• Keep a contract register that records the sub-fund to which each agreement belongs.

For a checklist on this, see our guide to identifying assets, liabilities and counterparties in sub-fund contracts.

How does set-off work between sub-funds?

Set-off is the one area where the section 32 language runs in an unexpected direction. Section 32(1) says the VCC may exercise rights of set-off, if any, as between its sub-funds as if each sub-fund were a legal person. The words “if any” matter. The Act does not create a general right of set-off between sub-funds. It confirms that where such a right exists on ordinary principles, the lack of separate personality is not an obstacle.

Consider two sub-funds. Sub-Fund A owes the VCC’s service provider a fee, and the same service provider owes Sub-Fund B a refund. Whether the amounts may be netted depends on the contract and the general law. Section 32(1) removes the argument that set-off fails because both sub-funds are the same legal person. It does not override section 29, which prevents the assets of one sub-fund being used to discharge another sub-fund’s liability.

In practice, the safer course is to avoid cross-sub-fund netting unless the documents clearly provide for it and the board has recorded why it is fair to shareholders. Treat any netting that benefits one sub-fund at the expense of another as a section 29 question first.

What does section 32(2) mean for court orders?

Section 32(2) provides that the property of a sub-fund is subject to orders of a court as it would have been if the sub-fund were a separate legal person. A creditor with a judgment in respect of Sub-Fund A can therefore enforce against property of Sub-Fund A. It cannot reach the property of Sub-Fund B on the strength of that judgment.

A court-appointed receiver, a freezing order or a garnishee order can be framed by reference to a specific sub-fund’s assets. Counterparties and banks should identify the sub-fund in the account name so that orders attach to the right pool without freezing the whole umbrella.

How is a sub-fund wound up under section 33?

Section 33(1) says that, despite not being a legal person, a sub-fund may be wound up as if it were one. Section 33(2) applies Part 8 and Part 9 (as it applies to winding up) of the Insolvency, Restructuring and Dissolution Act 2018 (the “IRDA”) as they apply to a company limited by shares. That application is subject to section 5 of the VCC Act and to the modifications in the First Schedule.

The statutory text of section 33(2) and section 33(3) shows amendments by Act 28 of 2019 that took effect on 1 April 2026. If a winding up began before that date, check which version of the provision applied at the time.

Section 33(3) adds three points on liquidators and procedure:

• Section 129 applies, with modifications, to the appointment of a liquidator of a sub-fund and to a person acting as that liquidator.
• References in section 129 to the VCC are read as references to the umbrella VCC of which the sub-fund is a part.
• References to creditors are read as creditors of the sub-fund, and the members’ voluntary and creditors’ voluntary winding up labels are tied to a declaration lodged under section 163 of the IRDA as applied.

A members’ voluntary winding up requires a declaration made and lodged under section 163 of the IRDA as applied by section 33. Where that declaration route is not used, the winding up is treated as a creditors’ voluntary winding up for these purposes. Anyone planning a closure should take advice on which route fits the sub-fund’s solvency.

What happens to the umbrella VCC when one sub-fund is wound up?

The umbrella continues. Because section 29 confines a sub-fund’s liabilities to its own assets, the liquidation of Sub-Fund A deals with Sub-Fund A’s creditors and Sub-Fund A’s property. The other sub-funds keep operating, subject to the VCC’s ongoing duties such as having a manager at all times under section 46 of the VCC Act 2018.

Closing a sub-fund is still a project. Boards normally need to:

1. Confirm the sub-fund’s constitutional basis for closure and any investor notice periods.
2. Prepare a statement of the sub-fund’s assets, liabilities and contracts.
3. Decide, with advice, between a solvent and an insolvent route.
4. Appoint a liquidator if the winding up is under the IRDA as applied.
5. Inform the custodian, administrator, auditor and the Monetary Authority of Singapore, as required by the VCC’s circumstances.
6. Distribute net proceeds to the sub-fund’s investors and close the sub-fund’s accounts.

Our note on closing one sub-fund and keeping the umbrella expands on the sequence, and protecting an inactive sub-fund from dissolution deals with the opposite problem of sub-funds that sit dormant.

How do the three provisions compare?

Provision	Subject	Practical effect
Section 29	Segregated assets and liabilities	Assets of one sub-fund cannot meet another sub-fund’s liabilities
Section 32(1)	No separate legal personality	VCC sues and is sued; set-off between sub-funds where available
Section 32(2)	Court orders	Orders reach the property of the relevant sub-fund
Section 33	Winding up of a sub-fund	IRDA Parts 8 and 9 apply with modifications; liquidator appointed under section 129 as modified

What mistakes should directors avoid?

The most frequent problem is treating a sub-fund as if it were a company. Documents that refer to a sub-fund “Ltd”, resolutions “of the sub-fund” or bank accounts opened without the VCC’s name all create uncertainty about who the contracting party is.

A second problem is assuming a sub-fund can be closed by simply redeeming all investors. Redemption removes the investors, but liabilities, tax filings, custodian arrangements and records still need to be closed out. Section 33 provides a formal route for that.

A third is overlooking the manager. Section 46 requires a VCC to have a manager at all times. Our article on whether a VCC needs a fund manager explains the point, and the manager’s role continues for the remaining sub-funds after one is closed.

Where can you read the provisions and the regulator’s view?

Read sections 29, 32 and 33 on Singapore Statutes Online for the current wording. The Monetary Authority of Singapore publishes an explainer on the VCC regime. For corporate secretarial support on Singapore companies, see Raffles Corporate Services and Singapore Secretary Services.

Frequently asked questions

Can a sub-fund own property in its own name?

No. Because a sub-fund is not a separate legal person under section 32(1), assets are held by or for the VCC and attributed to the relevant sub-fund. Account and title records should make that attribution clear.

Can an investor in one sub-fund sue the VCC about another sub-fund?

An investor sues the VCC, as the only legal person. Any remedy is framed by reference to the sub-fund concerned, and section 29 keeps the other sub-funds’ assets out of reach for liabilities that do not belong to them.

Does winding up a sub-fund require winding up the VCC?

No. Section 33(1) allows the sub-fund to be wound up as if it were a legal person, while the umbrella VCC continues.

Which law governs a sub-fund winding up?

Section 33(2) applies Part 8 and Part 9 (as it applies to winding up) of the IRDA, subject to section 5 and the modifications in the First Schedule of the VCC Act 2018.

Who appoints the liquidator?

Section 33(3) applies section 129, with modifications, to the appointment of a liquidator of a sub-fund. The route taken depends on whether a declaration is lodged under section 163 of the IRDA as applied.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email hello@rafflescorporateservices.com. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

Last reviewed: 10 October 2026. The Editorial Team.