Statute Details
- Title: Variable Capital Companies (Maximum Amount Payable in Priority in Winding Up) Regulations 2020
- Full Title: Variable Capital Companies (Maximum Amount Payable in Priority in Winding Up) Regulations 2020
- Act Code: VCCA2018-S24-2020
- Type: Subsidiary Legislation (sl)
- Commencement Date: 14 January 2020
- Parts: N/A
- Key Sections: 2, 3
- Related Legislation: Companies Act, Employment Act, Variable Capital Companies Act 2018
What Is This Legislation About?
The Variable Capital Companies (Maximum Amount Payable in Priority in Winding Up) Regulations 2020 (the "Regulations") prescribe the maximum amounts that can be paid in priority to other debts in the winding up of a variable capital company (VCC) or its sub-fund. This legislation is made under the authority of the Variable Capital Companies Act 2018 (the "VCC Act") and applies the relevant provisions of the Companies Act to the winding up of VCCs and their sub-funds.
What Are the Key Provisions?
The key provisions of the Regulations are as follows:
Prescribed Amount for Winding Up of a Non-Umbrella VCC (Section 2(1)-(2)): In the winding up of a non-umbrella VCC, the maximum amount payable in priority to other debts for each employee is the lower of:
- 5 months' salary in respect of services rendered by the employee to the VCC; or
- An amount that is 5 times the amount mentioned in section 35(b) of the Employment Act.
If the two amounts are the same, the maximum amount payable is equal to either of those amounts.
Prescribed Amount for Winding Up of an Umbrella VCC (Section 2(3)-(5)): In the winding up of an umbrella VCC, the maximum amount payable in priority to other debts for each employee is the lower of:
- 5 months' salary in respect of services rendered by the employee to the VCC, after deducting the total amount of that salary that has been allocated to the sub-funds of the VCC under section 29(3) of the VCC Act; or
- An amount calculated using the formula: B - (C - D), where B is 5 times the amount mentioned in section 35(b) of the Employment Act, C is 5 months' salary in respect of services rendered by the employee to the VCC after deducting the amount allocated to sub-funds, and D is 5 months' salary in respect of services rendered by the employee to the VCC.
If the two amounts are the same, the maximum amount payable is equal to either of those amounts.
Prescribed Amount for Winding Up of a Sub-Fund (Section 3(1)-(3)): In the winding up of a sub-fund of an umbrella VCC, the maximum amount payable in priority to other debts for each employee is the lower of:
- The part of 5 months' salary in respect of services rendered by the employee to the umbrella VCC that has been allocated to the sub-fund under section 29(3) of the VCC Act; or
- An amount calculated using the formula: G - (H - I), where G is 5 times the amount mentioned in section 35(b) of the Employment Act, H is the part of 5 months' salary in respect of services rendered by the employee to the umbrella VCC that has been allocated to the sub-fund, and I is 5 months' salary in respect of services rendered by the employee to the umbrella VCC.
If the two amounts are the same, the maximum amount payable is equal to either of those amounts.
How Is This Legislation Structured?
The Regulations consist of three main sections:
- Citation and commencement (Section 1): This section provides the title of the Regulations and the date they came into operation.
- Prescribed amount where VCC is wound up (Section 2): This section sets out the maximum amounts payable in priority to other debts in the winding up of a non-umbrella VCC and an umbrella VCC.
- Prescribed amount where sub-fund is wound up (Section 3): This section sets out the maximum amounts payable in priority to other debts in the winding up of a sub-fund of an umbrella VCC.
Who Does This Legislation Apply To?
The Regulations apply to the winding up of variable capital companies (VCCs) and their sub-funds in Singapore. VCCs are a type of investment fund structure introduced in Singapore under the Variable Capital Companies Act 2018.
The Regulations specifically apply to the priority payment of certain debts, such as employee salaries, in the winding up of VCCs and their sub-funds. They prescribe the maximum amounts that can be paid in priority to other debts for each employee.
Why Is This Legislation Important?
The Regulations are important because they provide clarity and certainty on the maximum amounts that can be paid in priority to other debts in the winding up of VCCs and their sub-funds. This is particularly relevant for employees of VCCs, as it ensures they are entitled to receive a prescribed minimum amount of their unpaid salaries ahead of other creditors.
The Regulations also help to align the winding up process for VCCs with the existing provisions in the Companies Act, which apply to the winding up of other types of companies in Singapore. This promotes consistency and predictability in the treatment of employee claims during the winding up of investment funds structured as VCCs.
From a practical perspective, the Regulations provide guidance to liquidators, creditors, and other stakeholders involved in the winding up of VCCs and their sub-funds. By clearly defining the maximum priority amounts for employee claims, the Regulations help to facilitate the orderly and efficient winding up of these investment vehicles.
Related Legislation
- Companies Act (Chapter 50)
- Employment Act (Chapter 91)
- Variable Capital Companies Act 2018
Source Documents
This article provides an overview of the Variable Capital Companies (Maximum Amount Payable in Priority in Winding Up) Regulations 2020 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.