K.P. Krishnan Committee on Variable Capital Company submits report

Dr. K.P. Krishnan committee on “Variable Capital Company” has submitted its report to International Financial Services centres Authority (IFSCA) regarding feasibility of Variable Capital Companies in International Financial Services Centres in India.

Background

IFSCA had set up K.P. Krishnan committee to explore potential for allowing variable capital company (VCC) as an additional option using which asset managers could pool investors’ funds.

Variable Capital Company (VCC)

VCC is an alternative form of corporate vehicle which can be used for open-ended as well as closed-ended alternative and traditional fund strategies. It is a corporate vehicle with flexible capital because of which shares are created when investments are made and shares are readily redeemable by shareholders. It has been designed for fund management industry.

Recommendations of K.P. Krishnan Committee

  • VCC structure dispenses with some of key limitations of companies and LLPs. It provides for higher regulatory standards.
  • Committee assessed features of VCC or its equivalent, in jurisdictions of Singapore, UK, Ireland and Luxembourg.
  • It recommended to adopt a VCC-like legal structure to conduct fund management activity in IFSCs.
  • It recognized that, legal framework governing entities which undertake fund management should provide certainty and clarity to each

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