Expert Committee on Variable Capital Company submits its report to the IFSCA

The expert committee on Variable Capital Company, headed by Dr. K.P. Krishnan, has submitted its report on the feasibility of Variable Capital Companies in the International Financial Services Centres to the Chairperson of the International Financial Services Centres Authority (IFSCA), Shri. Injeti Srinivas.

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International Financial Services Centres Authority constituted a Committee of Experts to examine the feasibility of the Variable Capital Company (‘VCC’) in India to examine the suitability of the Variable Capital Company as a vehicle for fund management in the International Financial Services Centre in India.

The IFSCA set up this Committee to explore the potential for allowing another legal structure – popularly known as a variable capital company (VCC) – as an additional option through which asset managers could pool the investors’ funds.

The VCC structure dispenses with some of the key limitations of companies and LLPs and provides for higher regulatory standards than those applicable to trusts.

Fund management activities are an important pillar of the overall financial services ecosystem. In line with the mandate given to the Committee, it examined the relevance and adaptability of the VCC for the IFSC in India or alternative structures to attract fund business in the IFSC.

Conventionally, 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.