VCC Act 2018 — Section 24 variable capital and share redemption — Costs and fees breakdown

The VCC Act 2018 gives a Variable Capital Company something an ordinary company cannot offer: shares issued and redeemed at net asset value without capital-maintenance friction. Section 24 is the engine of that flexibility. This 2026 guide breaks the mechanics, the fees and the compliance down.

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

What Section 24 of the VCC Act 2018 does

Section 24 of the Variable Capital Companies Act 2018 provides that the shares of a VCC have no par value and that the VCC’s capital is always equal to its net asset value. This lets a fund issue and redeem shares at NAV on demand, mirroring how open-ended investment funds actually operate — something the Companies Act 1967 capital-maintenance regime does not easily allow.

Who relies on this flexibility

Fund managers running open-ended strategies — hedge funds, private-equity feeders, and multi-strategy platforms — are the primary users. The NAV-linked capital model removes the need for solvency-tested capital reductions every time an investor subscribes or redeems. Managers weighing licensing should read the MAS Payment Services Act licensing — MPI and SPI — Costs and fees breakdown on payments and fund-manager regulation.

How share redemption works under the Act

Because capital equals NAV, a VCC can redeem shares out of capital without the elaborate capital-reduction procedure ordinary companies face. Redemptions are made at the prevailing NAV per share, subject to the fund’s constitution and any suspension provisions. This is complemented by the distribution rules elsewhere in the Act.

Costs and fees breakdown for a VCC using Section 24 flexibility

Indicative 2026 figures:

• ACRA VCC incorporation: S$8,000 (name application S$15)
• Fund manager and legal structuring: S$15,000–S$40,000 depending on strategy
• Annual corporate secretarial and registered office: S$3,000–S$6,000
• Annual audit (mandatory for every VCC): S$8,000–S$20,000
• Fund administration and NAV calculation: from S$18,000 a year

The ACRA incorporation fee for a VCC is materially higher than the S$300 for an ordinary company, reflecting the regime’s regulatory weight.

Legal note and disclaimer

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice. The VCC framework is administered by ACRA with fund-related oversight from the Monetary Authority of Singapore — see the MAS explainer at www.mas.gov.sg.

Step-by-step: standing up NAV-based capital

1) Appoint an MAS-regulated fund manager. 2) Draft the constitution to reflect no-par-value shares and NAV-linked capital under Section 24. 3) Incorporate the VCC with ACRA. 4) Appoint an auditor and fund administrator. 5) Establish NAV calculation and redemption procedures. For the incorporation mechanics that underpin the entity, see Singapore Annual Filing Calendar 2026: Every Deadline Your Private Limited Company Needs to Know; our VCC Act 2018 — Section 17 legal personality — Costs and fees breakdown covers the Section 17 legal-personality foundation this builds on.

Common mistakes and gotchas

Watch for: drafting a constitution that imports ordinary-company capital-maintenance language (defeating the purpose); under-budgeting for the mandatory annual audit; and neglecting robust NAV-calculation controls, which are central to fair redemptions. Confirm the current ACRA fee schedule at www.acra.gov.sg before filing.

How Section 24 differs from ordinary company capital

An ordinary Singapore company under the Companies Act 1967 must maintain its capital: reductions require either a solvency-statement procedure or a court order, and buy-backs are tightly constrained. Section 24 dispenses with all of this for a VCC by defining capital as always equal to NAV. The result is that subscriptions and redemptions simply move NAV up and down, with no separate capital-maintenance machinery to operate each time an investor comes or goes.

A worked example: daily dealing

An open-ended VCC deals daily at NAV. On a day when investors subscribe S$5 million and redeem S$3 million, the fund issues and cancels shares at that day’s NAV per share; capital rises by the net S$2 million automatically. No board resolution for a formal capital reduction is needed, because the Act treats the movement as an inherent feature of variable capital. This is the operational freedom that makes the VCC attractive versus an ordinary company wrapper.

Governance and administration obligations

Every VCC must have at least three directors (or two in some cases), one of whom is a director of its MAS-regulated fund manager, must appoint an approved auditor, and must maintain proper accounting records. NAV calculation should be independent and well-controlled, because redemptions and subscriptions all price off it. These obligations are the counterweight to the capital flexibility.

Related guides

Read next: MAS Payment Services Act licensing — MPI and SPI — Costs and fees breakdown; Singapore Annual Filing Calendar 2026: Every Deadline Your Private Limited Company Needs to Know; VCC Act 2018 — Section 17 legal personality — Costs and fees breakdown.

Authority resources

Confirm the current rules and fees directly with the relevant Singapore authorities: sso.agc.gov.sg, www.acra.gov.sg, www.mas.gov.sg.

FAQs

What does Section 24 of the VCC Act 2018 provide?
It provides that VCC shares have no par value and that the VCC’s capital always equals its net asset value, enabling NAV-based issue and redemption.

Can a VCC redeem shares out of capital?
Yes. Because capital equals NAV, a VCC can redeem shares out of capital without the capital-reduction procedure ordinary companies must follow.

How much does it cost to incorporate a VCC?
ACRA charges S$8,000 to incorporate a VCC, considerably more than the S$300 for an ordinary company.

Is an audit mandatory for a VCC?
Yes. Every VCC must appoint an auditor and have its accounts audited, regardless of size.

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.