Variable Capital Company (VCC)

Definition

The Variable Capital Company (VCC) is an investment fund structure specific to Mauritian law. As its name indicates, its capital varies freely according to investors' subscriptions and redemptions of units, without any need to amend the company's constitution with each movement. This flexibility makes it a vehicle well suited to collective asset management, whether for open-ended or closed-ended funds. The VCC may be constituted as a stand-alone fund or as an umbrella fund, with each compartment ring-fencing its own assets, liabilities, and investors from the other compartments of the same company.

Framework in Mauritius

In Mauritius, the incorporation and operation of a VCC fall within the competence of the Financial Services Commission (FSC), the country's regulator of non-bank financial services. An FSC licence is required before any activity involving the raising or management of assets on behalf of third parties. As with other Mauritian collective investment vehicles, the VCC is administered through a management company licensed by the FSC, which handles compliance, record-keeping, and regulatory reporting obligations on behalf of the structure.

In practice

The VCC is used to house collective investment funds, private equity funds, or multi-strategy structures, where the compartment approach is of interest: each compartment may correspond to a distinct strategy, asset class, or group of investors. The segregation of assets and liabilities between compartments is a central point of caution: it must be rigorously organised in the constitutive documents and in the keeping of accounts for it to take full effect. Setting up a VCC remains subject to the eligibility of the project and to the FSC's assessment, on a case-by-case basis; it should never be presented as automatic or guaranteed.

Related terms

The VCC differs from the Protected Cell Company (PCC), another Mauritian compartmentalised structure, in terms of the legal regime applicable to each compartment. Its management generally involves a Management Company licensed by the Financial Services Commission (FSC), the regulator competent for this type of vehicle. The performance of each compartment is measured in particular through its Net Asset Value (NAV), calculated periodically to determine the price of subscriptions and redemptions.

Related terms