A strong foundation for Special Purpose Vehicles (SPVs) is critical for protecting investments and maximising returns. This article breaks down the key differences between sector-specific SPV structures, considerations in setting up SPVs, and how Singapore's advantageous tax regime rewards strategically structured SPVs from the funds space.
The importance of setting up/managing SPVs
SPVs are separate legal entities created for specific purposes, and their structure and operation varies depending on the sector.
For instance, in the real estate and shipping sectors, SPVs typically adopt simpler legal and commercial structures since their primary purpose is to hold single assets – individual properties in real estate or specific vessels in shipping. In contrast, fund SPVs feature more complex structures designed to accommodate multiple investors while strategically navigating regulatory frameworks and optimising tax efficiency across jurisdictions.
The complexities of these structures may require customised constitutions to address the rights of different classes of shares such as:
- Entitlement to dividend
- Voting rights
- Redemption of preference shares for varying investors.
The considerations in setting up a SPV
Without incorporating an appropriate constitution at the start of setting up a SPV, it can poorly reflect the intended purpose of the set up. This can also restrict future corporate transactions, such as mergers, asset sales, or reorganisations. Correcting these foundational issues later will require extensive legal and operational revisions - a process that can be time-consuming and expensive.
SPVs in Singapore at glance
Singapore's tax incentives make it ideal for fund SPVs, but to qualify for these key incentives, it requires active Singapore-based management and control.
The SPV must demonstrate that:
- Substantial management activities are conducted in Singapore
- Key decisions relating to investments, distributions, and operations are made locally
- It has economic substance in Singapore, particularly where tax incentives are being sought
This is where professional SPV management becomes essential. Ensuring that board decisions are properly documented, not just made, is a key aspect of good governance. Effective governance practices, supported by thorough documentation, help the SPV operate with clarity and purpose, reduce compliance risk and strengthen its strategic intent.
How CorpServe can help?
We offers a full spectrum of corporate secretarial services for the entire life cycle of an SPV, from incorporation, maintenance to cessation. We handle all corporate secretarial, compliance and administrative back-office tasks, allowing our clients to focus on finding the right deals and establishing/building investor relations.
Our Fund SPV Management Services:
- Engage with and review the client’s requirements.
- Set up the SPV with a customised constitution to define the rights of each specific class of shares, with or without reserved matters.
- Facilitate the conduct of Board meetings and draft meeting minutes for new deals/investments, deal updates, and fund usage (dividend, extension of loans, capital reduction and/or redemption of preference shares).
- Attend to on-going corporate secretarial matters relating to statutory audit, conduct of general meetings (annual or extraordinary), members’ resolution for shares related matters, change in the company details and that of its officers etc.
- Maintain statutory records in digital copies in our in-house CS8 system for ease of retrieval/access by clients 24/7.
- Assist with the pre-closure matters and the subsequent cessation of SPV.
Case Studies
Provision of corporate secretarial services for a large Group with many SPVs: A global alternative investment firm with Asia Pacific HQ in Singapore.
Challenges faced by the Group
- High frequency of corporate transactions for SPVs, requiring close tracking of progress.
- Short notice to call for Board meetings and circulate documents/meeting minutes by the next working day.
- Statutory records were not organised and maintained efficiently.
Our solutions
- Conducted health check of existing records to ensure completeness and compliance.
- Advised and standardised workflow for various corporate transactions and deliverables, including tracking of transactions progress.
- Organised and stored corporate documents in our CS8 portal for client access 24/7.
Contact us today to learn how we can assist with managing your SPVs throughout their full lifecycle.
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