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Relevance of VIMA documents in the region

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Brian Ng

Rajah & Tann Singapore LLP


Lee Jin Rui
Senior Associate
Rajah & Tann Singapore LLP


Chua Joo Hock
Managing Partner
Vertex Ventures Southeast Asia and India

The relevance of VIMA documents in the region will only increase as they get utilised in more transactions involving Singapore-based investors, and ultimately become the market standard for early-stage fundraising in Singapore, which will have an impact on regional transactions.


The Venture Capital Investment Model Agreements (“VIMA”) documents are primarily intended for use in connection with investments into Singapore companies with business operations in Singapore. Increasingly, many businesses and start-ups in the region have chosen to incorporate holding companies in Singapore (with some not even having any business operations in Singapore) and many investors have chosen Singapore as the home base to establish their funds or investment vehicle for investments into the region. The relevance of VIMA documents in the region will only increase as they get utilised in more transactions involving Singapore-based investors, and ultimately become the market standard for early-stage fundraising in Singapore, which will have an impact on regional transactions.

Singapore has, over the years, grown to become a leading investment hub and the transformation journey of Grab illustrates the attractiveness of doing business here. A familiar name to most Southeast Asians, Grab was originally known as MyTeksi and founded in Malaysia. In 2014, the company moved its headquarters to Singapore before rebranding itself as Grab; the entire process for Grab to commence its operations was quick and smooth-sailing. This allowed the company to gain access to a deep pool of talent and a high-value taxi ride market, where governmental policies and people alike are forward-looking in the adoption of new technologies and business models. Being in a business-friendly environment, coupled with the strong support from its investors, Grab was able to use Singapore as its testbed to scale up its operations rapidly and replicate this learning to expand to other Southeast Asian countries.

Grab’s journey in Singapore is a good example for the reasons behind the prevalence of Singapore holding/parent companies. First, the ease of incorporation of companies in Singapore means that entrepreneurs can focus on building their businesses, rather than spending time on matters which are more administrative. It takes 1.5 days to start a business in Singapore via an electronic filing system, which is considerably shorter than the average 25.9 days required in the East Asia and Pacific regions.[1] Further, enterprises can tap into a global pool of skilled workers in Singapore. Singapore was ranked top in Asia Pacific and second globally for the 2019 Global Talent Competitiveness Index. Under this Index, Singapore came out top in the “global knowledge skills” pillar (a measure of entrepreneurial talent) and was also one of the strongest performer in the “vocational and technical skills” pillar.[2] Thus, the convenience and availability of talent will continue to pull investors and entrepreneurs into operating within or out of Singapore.

At the same time, there is also a vibrant start-up ecosystem in Singapore, backed by robust support from governmental agencies and availability of incentives. There are currently more than 220 private equity and venture capital managers located in Singapore, with assets under management reaching a total of S$190 billion.[3] To complement the private sector, the Monetary Authority of Singapore (“MAS”) has also allocated US$5 billion to be placed for management with top global fund managers who are committed to deepening their presence in Singapore. This ecosystem of accelerators, incubators, angel investors and venture capital network provides enterprises based in Singapore with access to regional funding and business opportunities.

Together with the aforementioned, Singapore’s stable political climate, good business infrastructure and legal system (which accords strong intellectual property protection) offer investors and entrepreneurs a sense of security and comfort in operating from the country. As such, with the rise of the adoption of Singapore holding companies and Singapore law as the choice of governing law, and investors basing their funds or investment vehicle in Singapore (for similar reasons), VIMA documents will remain a valuable tool in reducing transaction and negotiation costs, enabling investors and entrepreneurs to focus on their common goal of growing their businesses.


As the utilisation of VIMA documents become more widespread and VIMA terms become viewed as the market standard balancing both the interests of the investors and founders, investors may consider using VIMA documents as the starting point to facilitate negotiations for direct investments into foreign companies in the region. VIMA documents will serve as good reference and assist in comparisons between Singapore companies and the companies in the region, allowing for more efficient investment decisions to be taken.

It is possible to use VIMA documents as the base for the preparation of transaction documents. However, there are differences in the legal and regulatory landscape across the various jurisdictions in the region, and investors should seek the advice of local counsel before using VIMA documents for investment into non-Singapore companies, as they would be able to advise on local law issues as well as market practices and standards in that particular jurisdiction. The following are some of the issues to be considered in determining whether VIMA documents can be used, and if so, how they should be modified for investments in the region.

1.  Corporate governance structures

In Singapore, the board of directors undertakes both management and supervisory roles. In other countries like Vietnam and Indonesia, the board of directors is a separate organ from the inspection committee or board of supervisors/commissioners. Investors will, therefore, have to understand the duties and obligations of such corporate organs that are absent in Singapore companies before considering requesting for certain rights of representation within the target.

2.  Prescribed shareholder approvals

The types of matters requiring shareholder approvals (and the requisite approval thresholds, especially for supermajority) may be prescribed by local laws and some jurisdictions do not allow the shareholders to contract out of them. This would have an impact on the parties’ considerations when negotiating the list of reserved matters and other consent rights (as well as the respective consent thresholds).

3.  Different classes of shares

Whilst Singapore laws allow for different classes of shares with different rights attached, there are certain jurisdictions which may not recognise or permit such creation of shares for certain types of corporate vehicles. Investors will, therefore, have to take into consideration the type of entity they are investing in, and whether they require the target to be restructured in order to provide for the desired rights and level of control, as well as to facilitate future rounds of fundraising.

4.  Foreign shareholding restrictions

It is usual for some countries to have foreign shareholding restrictions or a “negative list”, under which certain types of businesses are not open for foreign investment or are subject to a maximum percentage of foreign ownership. Other conditions could also include mandatory requirements to partner with local individuals or entities. Investors should, therefore, ascertain whether the proposed investment would be affected by such shareholding restrictions, which may potentially affect the rights of the investor, such as exit rights, rights of first refusal, and put and call options.

5.  Currency controls and tax

Finally, one should be mindful of the foreign exchange or currency controls in place in some jurisdictions as well as the respective tax regimes. For instance, in some countries, funds have to be routed through the local banking system and cash currencies may be taken out only in amounts as pre-determined by the bank. This may affect the target’s dividend and distribution policies, and investors may have to consider whether such restrictions will affect the manner and amount of distributions from the target.

6.  Closing process

The regulatory and legal steps involved in allotting and issuing shares, creating a new class of shares and/or amending the authorised capital or constitutional documents of the target company will differ amongst the countries in the region. For example, investors or the target company may have to make certain filings or notifications with the authorities, seek the consent of the authorities (sometimes substantive in nature), hold mandatory shareholder meetings, publish advertisements in local newspapers and/or even open a local currency account for the capital contribution. Local counsel’s advice should be sought on the closing process as well as to amend the relevant provisions in VIMA documents, so as to ensure that the capital contribution process is completed smoothly, properly and cost-efficiently.


[1] EDB website (accessed 25 May 2019).

[2]Singapore Business Review website (accessed 6 June 2019).

[3] Wealth and Society website (accessed 25 May 2019).


Brian Ng

Brian is a partner with Rajah & Tann Singapore LLP. His core areas of practice are in venture capital financing and fundraising, and private equity mergers and acquisitions. He also advises the government of Singapore on various venture capital and start-ups initiatives, and has journeyed with various start-ups in their push to expand into South East Asia.

Lee Jin Rui

Jin Rui is a senior associate with Rajah & Tann Singapore LLP. His core areas of practice are in venture capital financing and fundraising, mergers and acquisitions, and general corporate and employment law. He has advised various start-ups in their fundraising, from early-stage Series A rounds to later-stage Series E rounds, and a majority of which are headquartered in Singapore with operations across South East Asia.

Chua Joo Hock

Mr. Chua Joo Hock is the Managing Partner of Vertex Ventures Southeast Asia and India. Joo Hock currently represents Vertex on the Board of Nium, StoreHub, HappyFresh, Cicil, Get, M17, Warung Pintar and Roomme.


Disclaimer: This article is intended for your general information only. It is not intended to be nor should it be regarded as or relied upon as legal advice. You should consult a qualified legal professional before taking any action or omitting to take action in relation to matters discussed herein. This article does not create an attorney-client relationship and is not attorney advertising.


Published 29 May 2020