Concept
Satellite strategy is the construction of a group of several independent legal vehicles around a core structure. Each satellite carries its own license, balance sheet, regulatory regime, and capital; the main company retains strategic management, brand, and team.
The architecture is applied when a new function conflicts with the core structure in terms of risk, regulation, or investment mandate. A bank spins out a new product into a separate license to avoid burdening the parent balance sheet. An operating company moves assets into a holding SPV before creditor claims arise. A fund manager with a single mandate opens a carve-out for side deals.
Three Types of Satellites
Banking
Spins out a new bank or EMI product into a separate licensed company: crypto custody, embedded finance, payment institution, regional private banking.
Own capital, regulator, audit. The core group's team, IT, and back office are used under an operational support agreement.
Timeline: 6–12 months.
Operating
Moves assets—IP, real estate, shares, investments, retained earnings—into a holding SPV before claims arise.
The operating company uses the assets through lease, license, or service agreement; capital is held separately.
Timeline: 2–6 weeks.
Investment
Carve-out for deals adjacent to the fund manager's core mandate: secondaries, co-investments, continuation vehicles, bridge financing.
In Singapore VCFM—the 80/20 formula: core venture mandate and 20% non-core assets.
Timeline: 4–6 months.
Banking Satellite
A bank or EMI operates under a strict regime: capital adequacy, AML / KYC, recovery and resolution, conduct risk. A new product within the main license expands regulatory exposure across the entire balance sheet. Therefore, the product is spun out into a separate licensed company.
Application: crypto custody, payment institution, offshore banking, separate private banking booking centre, regional product line. The parent jurisdiction for an Asian perimeter is often a Hong Kong company or Singapore company.
Assembly for fund business in Singapore: VCC + VCFM + Section 13O / 13U. Full overview—private fund in Singapore.
Operating Satellite
Over time, an operating company accumulates IP, real estate, shares, and financial investments. Within the operating company, these assets carry the risk of lawsuits, tax claims, regulatory fines, labor disputes, and counterparty bankruptcy.
Capital strategy—move assets into a holding SPV or asset-SPV before claims arise. The operating company uses the assets under lease, license, or service agreement; capital is held in a separate legal vehicle.
Two-Fence Principle
| Fence | What it separates | Claim |
|---|---|---|
| External | Group from third parties | Counterparties contract with the operating company. There is no direct claim against the holding or asset-SPV. |
| Internal | Operating company from asset-SPV | Intra-group transactions at arm's length, assets transferred before claims arise, SPV has its own director, bank account, board minutes, local management, separate accounting. |
Investment Satellite
A fund manager license is issued for a specific mandate. Singapore VCFM—Venture Capital Fund Manager—works with venture funds investing in private companies. But deal flow brings secondaries, continuation vehicles, co-investments, mezzanine, and bridge financing—outside the core mandate.
The regulatory answer is a carve-out: a limited pocket for deals adjacent to the core mandate. Under the 80/20 rule the manager keeps at least 80% of committed capital in private companies no older than ten years, leaving up to 20% for more mature private assets and secondary-market purchases.
What the 20% Satellite Covers
- pocket for opportunistic secondaries and late-stage deals;
- smoothing the j-curve and early distributions to LPs before main exits;
- protection against accidental mandate breach—for example, when a portfolio company IPOs and a convertible note turns into a listed share.
The carve-out must be disclosed in the LPA, allocation policy, and LP advisory committee procedures. Otherwise, the GP can dump inconvenient deals into the satellite pocket—a conflict of interest that LPs will not forgive.
Singapore Parameters
MAS's VCFM regime rests on the 80/20 rule in its precise form: at least 80% of committed capital goes into securities issued directly by private companies no older than ten years at the time of first investment; the remaining up to 20% may go to more mature private companies and secondary-market purchases. The fund holds only private assets and is closed to new subscriptions after the close of fundraising. In exchange MAS drops capital and manager track-record requirements, keeping fit-and-proper and AML.
The tax wrapper comes from Section 13O and 13U. From 1 January 2025 the threshold is measured on Designated Investments: 13O requires SGD 5m and two investment professionals, 13U requires SGD 50m and three, with local business spending from SGD 200,000 to 500,000 depending on size. Both regimes are extended to 31 December 2029. Separately from the tax perimeter, a MAS class exemption for single family offices has applied since 15 June 2026 — structure-agnostic, with a Notice of Commencement of Business due within 14 days for new offices and by 15 June 2027 for existing ones; it does not affect Sections 13O and 13U. Update (re-verified 2026-08-19): by Circular FDD Cir 05/2026 of 31 July 2026 MAS removed the annual AUM-in-DI maintenance condition for non-SFO funds, retroactive to 1 January 2025; the entry thresholds at application — SGD 5m for 13O (grace period up to the end of the third year of assessment) and SGD 50m for 13U (no grace period) — remain in force.
Legal Risks
Insufficient Substance
A satellite without a local director, office, operations, bank account, and audit may be recharacterized as a branch of the main company. Place of effective management shifts to the main company's jurisdiction; tax and regulatory benefits disappear.
Mitigation: real CEO or Compliance Officer on-site, board minutes in the satellite jurisdiction, local bank account, separate audit, separate reporting.
Piercing the Corporate Veil
If the SPV looks like an alter ego of the main company, a court may disregard the corporate veil. Risks are amplified by shared management without decisions, lack of separate will, undercapitalization, fraudulent intent.
Mitigation: independent director, capitalization above minimum requirements, business logic for intra-group transactions, regular audit, transfer pricing.
Challenge to Asset Transfer
Transfer of assets after a creditor claim arises may be reversed. Look-back period: from 1 year in offshore jurisdictions to 6 years in the US and UK, in some cases up to 10 years.
Mitigation: build the architecture in advance, confirm market price with independent valuation, document payment for assets, record the business case for restructuring.
CFC and Personal Perimeter
Each satellite may become a controlled foreign company for the beneficiary. This does not eliminate the disclosure obligation.
Solution: correct tax residency, regimes without CFC, or trust structuring with real separation of legal and beneficial ownership.
Assembly Timeline
| Satellite Type | Timeline | What Determines Timeline |
|---|---|---|
| Operating SPV | 2–6 weeks | registration, bank account, intra-group agreements |
| Investment VCFM | 4–6 months | MAS VCFM license, VCC vehicle, mandate documentation |
| Banking / licensed | 6–12 months | regulator license, capital adequacy, AML framework |
| Preliminary CFC analysis | • 1–2 months | verification of beneficiary residency and control structure |
Canonical Upper Structure for Mature Client
Trust → family office → holding SPV → operating, investment, and banking satellites.
Personal Level
Beckham Law, Beckham Law + Hong Kong—individual's tax perimeter.
Management Level
Wealth Planning in Singapore, Trust structuring—who manages assets and separation of legal and beneficial ownership.
Operating Level
SPV, Transfer Pricing—separation and market pricing within the group.
Q/A
When is a satellite needed, and when is one company enough?
A satellite is needed when the new activity has a different risk, different regulatory regime, or different economic profile. For a mature business, the first satellite created is usually an asset-holding SPV. For entering a new geography or product—a banking / licensed satellite. For a fund manager with a side deal flow—an investment carve-out. If the new activity fits within the existing license, carries no additional risk, and works with the same counterparties—a satellite is redundant.
How many tiers of corporate veil are enough?
Minimum two—the external fence separates the group from third parties, the internal fence separates the operating company from the asset-SPV. One tier does not protect: a creditor of the operating company will reach the assets. More than three tiers without business logic increases the risk of substance challenge and transfer pricing claims.
Where should a satellite be registered?
Jurisdiction is chosen based on the licensing regime and tax logic of the specific function. Crypto custody—Hong Kong or Singapore under VATP / DPT. EMI / payment institution—Singapore (MPI), UK (FCA EMI), Lithuania, Hong Kong (MSO / SVF). Holding SPV—Gibraltar, Cyprus, Luxembourg, or Hong Kong / Singapore company, depending on the beneficiary's tax residency and investment direction. Family office—Singapore (Section 13O / 13U).
Isn't this just a way of dodging responsibility?
Satellite architecture is not a way to evade obligations to existing creditors. Transfer of assets after a claim arises is challenged through actio Pauliana / fraudulent conveyance. The architecture is built before claims arise, on a clean perimeter, with confirmed market price and business logic for restructuring.
What matters more — substance or the formal structure?
Substance. A perfectly structured corporate arrangement without a local director, office, and operations will be recharacterized by a court or regulator as a branch of the main company. Tax and regulatory benefits disappear, and the beneficiary receives claims in the parent jurisdiction. Substance is the real will of the company: own decisions, own accounting, own bank account, own audit.
What is the banking perimeter vs the operating perimeter?
The operating perimeter is where contracts are concluded, staff work and profits economically arise — it sets the tax source. The banking perimeter is where accounts, custody and licences sit — it sets which regulator and AML regime reads the flows. They need not coincide, but they must be consistent: a group banked in one hub and managed from another is the first mismatch a compliance team is trained to catch. The satellite architecture keeps each perimeter deliberate: an operating company where the work is, a booking centre where the banking is deepest, and documentation that explains both.
How do I prove my new tax residency to my old country's tax authority?
There is no universal proof document — the old country's authority assembles a picture, and the new residence is proven by a pack, not a page. The working proof pack: (1) the new country's own certificate — a Certificate of Residence from the new jurisdiction (IRAS issues the Singapore COR; Hong Kong issues the CoRS via eTAX, around 21 working days — both verified); (2) day-count evidence — passport stamps, boarding records, travel logs matching the claimed presence; (3) severed-tie evidence — ended lease or sold home, closed local registrations, moved family and economic centre; (4) the new life's footprint — home, employment or business, bank and utility trail. If the old country disagrees, the treaty route is the tie-breaker: OECD Model Art. 4 (permanent home, centre of vital interests, habitual abode, nationality) applied through the competent-authority procedure. The pack is country-specific — what persuades one authority is insufficient for another — so the checklist is built against the old country's domestic tests, not around a generic «residence letter».