COMMITTEE ON VARIABLE CAPITAL COMPANY
- June 2, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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COMMITTEE ON VARIABLE CAPITAL COMPANY
Subject : Economics
Context : Recently, the expert committee on Variable Capital Company (VCC) submits its report to the International Financial Services Centres Authority (IFSCA).
Concept :
- The Committee of Experts to examine the feasibility of the Variable Capital Company (VCC) was constituted by International Financial Services Centres Authority (IFSCA).
- It aims to examine the suitability of the Variable Capital Company as a vehicle for fund management in the International Financial Services Centre in India.
- It was set up to explore the potential for allowing another legal structure i.e. variable capital company (VCC) as an additional option through which asset managers could pool the investors’ funds.
- It examined the relevance and adaptability of the VCC for the IFSC in India or alternative structures to attract fund business in the IFSC.
The pooling of funds in India is undertaken through three types of entities, namely:
- Limited liability companies governed under the Companies Act, 2013;
- Limited liability partnerships under the Limited Liability Partnership Act; and
- Trusts governed under the Indian Trusts Act, 1882.
Variable Capital Company (VCC)
- It is a new corporate structure for investment funds.
- It has a variable capital structure that provides flexibility in the issuance and redemption of its shares.
- It can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities.
- It is basically an alternative form of corporate vehicle that dispenses with some of the key limitations of companies and LLPs.
- It can be used for both open-ended and closed ended alternative and traditional fund strategies.