A variable capital company (VCC) is a corporate fund vehicle whose share capital rises and falls as investors subscribe and redeem, usually with ring-fenced sub-funds or cells. GIFT City does not have one yet: the VCC exists only in a consultation draft of the International Financial Services Centres Authority (Amendment) Bill, 2026. Singapore has had VCCs since January 2020, and the DIFC Variable Capital Company Regulations 2026 came into force on 9 February 2026, framed for proprietary investment activities rather than as a ready-made regulated fund vehicle. We found no ADGM VCC; ADGM offers cell companies and investment companies instead.

Until a VCC law exists, a GIFT City fund can only use the forms in the IFSCA Fund Management Regulations 2025 (trust, company or LLP). Fund documents can be drafted to contemplate a later move, but a clause in a PPM cannot create a statutory conversion route or secure a tax-neutral transfer.

Table of Contents

What a variable capital company is

A VCC is a company built for investment funds. Its capital moves with investor entries and exits, and it can hold several funds (“sub-funds” or “cells”) whose assets and liabilities are kept apart. That is the standard umbrella fund structure, put into company law.

India’s case for one is in the Ministry of Finance’s explanatory note. IFSC funds have “largely evolved within trust structures”, with fund features “introduced either through specific regulations or adopted contractually”. The note records that, as at 31 December 2025, IFSC schemes had cumulative commitments of USD 32.13 billion and had raised USD 17.34 billion (Explanatory Note, Part A).

The GIFT City VCC: where the draft stands

Two IFSCA expert committees prepared the ground: one chaired by Dr K.P. Krishnan reported on 26 May 2021, and one chaired by Dr M.S. Sahoo submitted a draft legal framework on 12 October 2022. The Budget for FY 2024-25 promised legislative approval for a “variable company structure” (Explanatory Note, Part B). The Department of Economic Affairs (DEA) then issued the draft Bill for consultation; its citizen engagement page shows an end date of 2 July 2026.

The DEA document carries no issue date and no comment deadline. Its pages are marked “For discussion purposes only” and “Privileged and Confidential”, and the Bill’s short title still reads “Act, 202[X]”. The note says it “is not a part of the Bill” (Part D). As of 28 October 2026 we found no Bill introduced in Parliament. Everything below describes proposals, not law.

What the GIFT City draft Bill would do

The draft would insert a new Chapter III-A (ss. 13A–13ZH) into the IFSCA Act, 2019.

Feature	Draft provision
Legal form	Body corporate with perpetual succession and limited liability (s. 13B(a))
Sub-funds	Every VCC “shall have one or more sub-funds” (s. 13B(b)); money is pooled at sub-fund level (Explanatory Note, Part E)
Ring-fencing	Sub-funds are not separate legal persons, but their assets and liabilities are segregated, including on winding up (s. 13C(1)(a))
Tax	Proposed: “each sub-fund shall be treated as a separate person for the purposes of taxation” (s. 13C(1)(d)). No Income-tax Act amendment found
Variable capital	Participating capital may be altered in line with each sub-fund’s strategy, if not disadvantageous to its participating shareholders (s. 13B(d)); the illustration shows issue and redemption at NAV without prior member approval
Shares and dividends	Management shares: votes, no dividends, not redeemable. Participating shares per sub-fund, with classes; dividends from profits or paid-up participating capital (s. 13O)
Management	Board appointed by management shareholders; the board appoints an IFSCA-registered fund management entity (FME) (ss. 13A(1)(j), 13W(1), (4)–(6))
Registrar and launch	Registrar of VCCs appointed by IFSCA (ss. 13A(1)(r), 13D); sub-funds launched through the FME (s. 13L)
Insolvency	IBC to apply on default “in such manner as may be prescribed”, each sub-fund a separate legal person (s. 13ZD)

A new s. 21A and Third Schedule would list the VCC “for launching of schemes by Fund Management Entities”.

Where the draft departs from the 2022 Committee. The Committee allowed a stand-alone VCC (Table 1, item 6); the draft requires at least one sub-fund. The Committee doubted the IBC was “workable” (para 5.2); the draft applies it. The Committee’s draft allowed re-domiciliation from FATF-compliant jurisdictions (draft s. 13A(6)); we found no inbound re-domiciliation provision in the 2026 draft, and none for converting an existing trust, company or LLP into a VCC. The draft only lets a VCC move its registered office between IFSCs (s. 13K(4)). Much of the detail is left to IFSCA regulations, which could be made only after the Act is in force.

VCC Singapore: the established model

Singapore’s Variable Capital Companies Act 2018 has been in force since January 2020. Introducing the Bill, MAS said it allows a VCC “to be established as a standalone fund, or as an umbrella fund with multiple sub-funds”. Each sub-fund’s assets and liabilities are segregated, and each is wound up separately (MAS Second Reading Speech, paras 20, 22–23). A VCC must at all times have a manager. Under s. 46(2) of the Act the manager must hold a capital markets services licence for fund management, be a Registered Fund Management Company, be a person within s. 99(1)(a), (b), (c) or (d) of the Securities and Futures Act 2001, or be a prescribed person. A VCC cannot be its own manager (s. 46(3)) (VCC Act 2018, s. 46; ACRA, choosing directors and key officers). The Variable Capital Companies Regulations 2020 came into operation on 14 January 2020 (reg 1).

For comparison, the GIFT draft would treat each sub-fund as a separate person for tax (draft s. 13C(1)(d)), allows dividends out of paid-up participating capital (s. 13O), and contains no inbound re-domiciliation provision.

The DIFC VCC Regulations 2026

The DIFCA Board made the Variable Capital Company Regulations 2026 under the DIFC Companies Law, in force from 9 February 2026. The DIFC VCC page covers them in more detail.

Not a ready-made regulated fund vehicle. DIFC’s announcement says the framework “is designed to accommodate proprietary investment activities”. Reg. 3.2.1 provides that a VCC, or a cell, “shall not be used by an Authorised Firm in the provision of a Financial Service in or from the DIFC, or to establish a Fund, unless expressly permitted to do so by the DFSA.”

The main points:

Form. A VCC is a Private Company incorporated as a VCC, converted from an existing DIFC Private Company, or continued into the DIFC (Reg. 2.1.1).
Standalone or cells, one type only. A VCC “may create Segregated Cells or Incorporated Cells but may not have both” (Reg. 2.1.2). It may also have no cells (Reg. 4.1.4). A Segregated Cell is not a separate legal person (Reg. 2.2.1). An Incorporated Cell is deemed a separate Private Company (Reg. 2.2.2).
Ring-fencing. Assets attributable to one cell cannot be used to meet another cell’s liabilities (Reg. 8).
Capital equals NAV. Share capital “shall always be equal to the Net Asset Value” of the non-cellular assets or of each cell’s assets (Reg. 6.1.2). All shares are redeemable on their terms of issue (Reg. 6.1.3), at a price based on NAV (Regs. 6.2.3(b), 6.2.4). The Regulations do not themselves require redemption on demand.
Administration. A Corporate Service Provider is required unless the VCC is an “Exempt VCC”, for example one controlled by an Authorised Firm (Regs. 3.1.1, 1.1.7). It may not employ staff (Reg. 11.3).

Use for funds. Reg. 3.2.2 allows a VCC to hold assets for certain structures, including a Fund; its exact scope should be read in the official text. DIFC’s announcement says the framework needs no DFSA authorisation or regulated fund manager unless the vehicle carries on regulated activities. We found no DFSA instrument expressly permitting VCC funds. On the material reviewed, a regulated DIFC fund would use one of the DFSA fund vehicles; the VCC is described as a vehicle for proprietary investment activities.

DIFC regulated funds: DFSA fund vehicles

The DFSA describes three legal forms: an Investment Company incorporated in the DIFC, an Investment Trust constituted by trust deed between a Fund Manager and a Trustee, and an Investment Partnership registered as a DIFC limited partnership (DFSA funds page). For umbrella funds, DIFC’s fund handbook lists a “Protected Cell Company (open ended only)” and an “Incorporated Cell (open-ended or closed-ended)”; an Incorporated Cell Company “must be set up as a Fund Platform before setting up Incorporated Cells” (DIFC-CS-HB-01, Rev. 03, 5 Dec 2024).

Funds are Public, Exempt or Qualified Investor Funds (minimum subscriptions USD 50,000 and USD 500,000 for the last two, per the DFSA page). DFSA Consultation Paper No. 173 (7 July 2026, closed 7 September 2026) proposes “moving away from rigid specialist private fund classifications” and removing the external fund manager regime. As of 28 October 2026 no final rules were found.

ADGM: protected cell company and investment company

We found no ADGM or FSRA statement, consultation or rule on a VCC; that is a search finding, not proof. ADGM’s toolkit is in the Companies Regulations 2020: Part 36 (cell companies, ss. 1047–1068) and Part 36A (investment companies, ss. 1068A–1068I).

Cell companies. A company is an incorporated cell company (ICC) or protected cell company (PCC) if its articles say so; it cannot be a restricted scope company (s. 1047).
Status of cells. An ICC cell “is a company”. A PCC cell is treated as a company for applying the Regulations (s. 1050(1)). A cell “is not a subsidiary of the cell company” (s. 1050(9)).
Segregation. A claim on a PCC cell’s transaction “extends only to the cellular assets of the cell”; on an ICC cell’s, “only to the assets of the cell” (s. 1050(10)–(11)).
Investment companies. A company is an investment company if its articles say so and it is “established for the purpose of collective investment”. It may be a company limited by shares or a cell company, or a cell of one (s. 1068B(1)–(2)).
Redemption. Shares may be redeemable at the option of the company or the shareholder (s. 1068H(2)), but any redemption “is also subject to” the FSRA’s Collective Investment Fund rules (s. 1068H(3)). A closed-ended investment company may buy back its shares only by market purchase on a Recognised Investment Exchange or other prescribed market (s. 1068H(4)).

On 16 September 2026 the FSRA finalised enhancements to its funds framework (Consultation Paper No. 12 of 2025). They add manager categories, not a vehicle: Sub-Threshold Fund Managers (closed-ended funds not available to retail clients, up to USD 200 million aggregate committed capital), Institutional Fund Managers (Qualified Investor Funds or equivalent, USD 5 million minimum subscription, no natural-person unitholders) and Institutional Fund Asset Managers. A transition period runs to 31 March 2027 for venture capital and foreign fund managers (ADGM announcement; FSRA declaration forms). These do not change the finding that ADGM has no VCC. The final rule text is not reviewed here.

Variable capital company comparison: GIFT, Singapore, DIFC, ADGM

	GIFT City VCC (draft)	Singapore VCC	DIFC VCC	DFSA fund vehicles	ADGM cell and investment companies
Status	Consultation draft; not law	In force; available since 14 Jan 2020	In force from 9 Feb 2026; designed for “proprietary investment activities”	In force; CP 173 proposals pending	In force
Legal basis	Draft Ch. III-A, IFSCA Act 2019	VCC Act 2018	VCC Regulations 2026, DIFC Companies Law	DFSA funds regime (Collective Investment Rules)	Companies Regulations 2020, Parts 36 and 36A
Umbrella / sub-funds	At least one sub-fund (s. 13B(b))	Standalone or umbrella	Standalone, or Segregated or Incorporated Cells, not both (Reg. 2.1.2)	PCC (open-ended only) or ICC fund platform	PCC or ICC; investment company may be a cell company (s. 1068B(2))
Segregation	Statutory; sub-fund not a separate person (s. 13C)	Each sub-fund segregated	Cell assets ring-fenced (Reg. 8); Incorporated Cell a separate company	Through PCC or ICC cells	Claims limited to the cell’s assets (s. 1050(10)–(11))
Use for third-party funds	Schemes of an IFSCA-registered FME (s. 13W)	Manager must be CMS-licensed, a Registered Fund Management Company, an SFA s. 99(1)(a)–(d) person or prescribed (VCC Act s. 46(2))	Not a ready-made regulated fund vehicle; an Authorised Firm needs express DFSA permission to establish a Fund (Reg. 3.2.1)	Public, Exempt and Qualified Investor Funds	Collective investment (s. 1068B(1)); FSRA fund rules apply to redemptions
Regulator	IFSCA; Registrar of VCCs appointed by IFSCA	ACRA (registrar); MAS for licensed or registered managers	DIFC Registrar; DFSA only for regulated activity	DFSA	FSRA for funds

For the manager, see where to set up your fund manager.

Timing: what exists now and what is pending

No GIFT VCC law exists, and no draft IFSCA regulations for VCCs were found. Even after a Bill is passed, the Act would come into force only on a notified date (draft s. 1(2)), and IFSCA regulations would follow.
A single-strategy fund can sit in one scheme of a trust or company under the FM Regulations 2025.
On tax, the “specified fund” rules cover a fund “in the form of a trust or a company or a limited liability partnership or a body corporate” (Schedule VI, Note 1(g), Income-tax Act 2025), but only a Category III AIF, a retail scheme or an Exchange Traded Fund (plus the investment division of an offshore banking unit) falls within the definition. The Schedule VI page read is the text before the Finance Act 2026 amendments, and Note 1(g) still refers to the 2022 Fund Management Regulations. The draft’s rule making each sub-fund a separate taxable person is a proposal only. We found no Income-tax Act amendment, and no reference to VCCs in the Finance Act 2026 or the Income-tax Rules 2026, so existing fund exemptions do not automatically extend to a VCC or its sub-funds.
A plan that depends on many sub-funds in one Indian legal entity with statutory ring-fencing cannot be built until a VCC law is in force.

For an umbrella company outside India, the Singapore VCC and the UAE cell structures above are in force. In the DIFC, an Authorised Firm needs express DFSA permission before using a VCC to establish a Fund.

What to use in GIFT City today

The FM Regulations 2025 (as amended up to 10 September 2026) permit these forms:

Vehicle	Permitted legal forms
Fund management entity	Company, LLP or branch, or another form IFSCA permits; a Registered FME (Retail) cannot be an LLP or branch (Reg. 5(1))
Venture capital scheme	Company, LLP or trust (Reg. 21(5))
Restricted scheme	Company, LLP or trust (Reg. 33(5))
Retail scheme	Company or trust (Reg. 45(4))
Special situation fund	Company, LLP, trust or another permitted form (Reg. 56(3))

An FME may run several schemes (FAQ Q9), each “segregated and ring-fenced” from the others (Third Schedule, Part A(i)). That is a regulatory duty, not statutory segregated liability. Under Regs. 21(5) and 33(5) each scheme is a separate vehicle (company, LLP or trust), so assets are kept apart by using separate entities. We found no IFSC statute giving segregated-cell protection between sub-funds of one entity, as the DIFC and ADGM cell regimes and the Singapore VCC Act do. Setup steps are in GIFT City AIF setup.

Keeping the option to convert

Without a conversion route, moving later may mean transferring assets and investors to a new sub-fund. Points commonly considered when documents are drafted:

A mergeable vehicle: one scheme per trust or company.
A migration clause in the PPM and constitution: a manager power, subject to an investor vote and an exit for dissenters, to move the scheme into a VCC sub-fund on substantially the same terms. Such a clause is contractual. It cannot create a statutory conversion route, which the draft does not contain.
Simple unit classes. The draft supports classes and sub-classes of participating shares (s. 13O(2)).
A registered FME. The draft requires an IFSCA-registered FME (ss. 13A(1)(j), 13W(4)).
The tax cost of a transfer. Nothing was found in Schedule VI, the Finance Act 2026 or the Income-tax Rules 2026 that makes a transfer tax neutral, and a PPM clause cannot guarantee it.

Common questions

Can I set up a variable capital company in GIFT City now? No. As of 28 October 2026 the GIFT VCC exists only in a consultation draft, and we found no Bill introduced in Parliament.

How is the GIFT City VCC different from a VCC in Singapore? The concept is similar. The draft requires at least one sub-fund, has no inbound re-domiciliation route, and proposes taxing each sub-fund separately (no tax amendment found). Singapore requires a licensed, registered or exempt manager (VCC Act s. 46(2)).

Can a DIFC VCC be used for a regulated fund? It is designed for proprietary investment activities, not as a ready-made regulated fund vehicle. An Authorised Firm may not use one to establish a Fund unless the DFSA expressly permits it (Reg. 3.2.1). We found no such DFSA permission, so on the material reviewed a regulated DIFC fund would use one of the DFSA fund vehicles. Reg. 3.2.2 allows a VCC to hold assets for a Fund; its exact wording should be read in the official text.

Does ADGM have a VCC? We found none. ADGM has protected and incorporated cell companies and investment companies under Parts 36 and 36A of its Companies Regulations 2020.

What is the difference between a protected cell company and an incorporated cell company? In ADGM, an ICC cell is a company; a PCC cell is not, but is treated as one for applying the Regulations. In both, claims on a cell’s dealings reach only that cell’s assets (s. 1050).

Sources

Explanatory Note to the draft IFSCA (Amendment) Bill, 2026 for Variable Capital Companies, with draft Bill. Ministry of Finance, DEA; undated (file name contains “08012026”). dea.gov.in
Citizen engagement: “Draft Framework for Variable Capital Companies in IFSCA for Public Consultation”. DEA; end date 2 Jul 2026. dea.gov.in
Report of the Expert Committee for drafting a Legal Framework for allowing Variable Capital Company Structure in the IFSCs (chair Dr M.S. Sahoo). IFSCA, 12 Oct 2022. ifsca.gov.in
Report of the Expert Committee on VCC in IFSCs (chair Dr K.P. Krishnan). IFSCA, 2021. ifsca.gov.in
“Expert Committee on Variable Capital Company submits its report to IFSCA”. PIB, 1 Jun 2021. pib.gov.in
IFSCA (Fund Management) Regulations, 2025, as amended up to 10 Sep 2026 (consolidated). IFSCA, 14 Sep 2026. ifsca.gov.in
FAQs on IFSCA (Fund Management) Regulations, 2025. IFSCA, 3 Aug 2026. ifsca.gov.in
Income-tax Act, 2025, Schedule VI. Income Tax Department. incometaxindia.gov.in
Finance Act, 2026 (No. 4 of 2026). Gazette of India Extraordinary, 30 Mar 2026 (searched for VCC provisions; none found).
Income-tax Rules, 2026 (G.S.R. 198(E)). CBDT, 20 Mar 2026. incometaxindia.gov.in
MAS and ACRA Launch Variable Capital Companies Framework. MAS, 15 Jan 2020. mas.gov.sg
MAS Notice VCC-N01. MAS, effective 14 Jan 2020. mas.gov.sg
Second Reading Speech on the Variable Capital Companies Bill (Ms Indranee Rajah). MAS, 1 Oct 2018. mas.gov.sg
Overview of managing a variable capital company; VCC FAQs; VCC Act legislation page. ACRA, updated 16 Mar 2026, 30 Jan 2026, 13 Feb 2026. acra.gov.sg ; acra.gov.sg ; acra.gov.sg
The Variable Capital Company (VCC): infographic. MAS, 2019. mas.gov.sg
Variable Capital Company Regulations 2026 (in force 9 Feb 2026). DIFC Authority. assets.difc.com
“DIFC announces enactment of new Variable Capital Company Regulations”. DIFC, 10 Feb 2026. difc.com
Key Features of the DFSA Funds Regime (web page, undated, read 27 Oct 2026). DFSA. dfsa.ae
Setting up an Investment Fund in DIFC (DIFC-CS-HB-01, Rev. 03). DIFC, 5 Dec 2024. edge.sitecorecloud.io
Notice of amendments to legislation (CIR Rule-Making Instrument No. 388 of 2024, in force 1 Aug 2024). DFSA, 16 Jul 2024. dfsa.ae
DFSA proposes significant updates to its Collective Investment Fund framework (Consultation Paper No. 173). DFSA, 7 Jul 2026. dfsa.ae
Companies Regulations 2020, Part 36 (ss. 1047, 1050; s. 1050 amended 24 Apr 2026) and Part 36A (ss. 1068B, 1068H). ADGM rulebook. en.adgm.thomsonreuters.com (and adjacent section pages)
Public consultations (searched for a VCC consultation; none found). ADGM. adgm.com
Regulatory Update – ADGM FSRA Finalises Enhancements to its Funds Framework. ADGM, 16 Sep 2026. adgm.com
Variable Capital Companies Act 2018 (Singapore), s. 46 (version in force from 31 Jul 2024). Singapore Statutes Online. sso.agc.gov.sg
Step 2: Choosing directors & key officers for a VCC (web page, undated). ACRA. acra.gov.sg
Declaration – Sub Threshold Fund Managers or Institutional Fund Managers; Declaration – Institutional Fund Asset Managers (forms, undated). FSRA, ADGM. assets.adgm.com ; assets.adgm.com

Variable Capital Company: GIFT City vs Singapore, DIFC, ADGM