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Venture Capital Fund Registration

SETTING UP VENTURE CAPITAL FUND:

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startups and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities.

Venture capital funds differ from mutual funds and hedge funds in that they focus on a very specific type of early-stage investment. All firms that receive venture capital investments have high-growth potential, are risky, and have a long investment horizon. Venture capital funds take a more active role in their investments by providing guidance and often holding a board seat. 

6 EASY STEPS TO REGISTER VENTURE CAPITAL FUND:

Step #1: Check the Eligibility Criteria

Following are some points that helpS in identifying the eligibility criteria. Unless the following stated conditions are met, Board may not grant the certificate to the applicant:

  • Check whether the company registration document permits to carry the activity of ‘Alternative Investment Fund’ or ‘Venture Capital Fund’

  1. MoA in case of a company

  2. Trust Deed in case of a Trust

  3. Partnership Deed in case of a LLP

  • Check whether the following compliance is followed in each of the following company types:-

  • Trust: Instrument of trust – Deed, has been duly registered under the provisions of the Registration Act 1908

  • LLP: Partnership Deed – Duly filed with the Registrar under the Provisions of Limited Liability Partnership Act 2008 and Partnership duly incorporated.

  • Body Corporate: Setup or established under the laws of the Central or State Legislature and is permitted to carry on the activities of VC Fund

  • Check whether the following criteria are met by the people behind it:-

Applicant or Sponsor or Manager

Are fit and proper persons based on the criteria specified in Schedule II of SEBI Regulations 2008 or not ?

Have necessary infrastructure and manpower to effectively discharge its activities or not?

Have clearly described at the time of registration the investment objective, the targeted investors, proposed corpus, investment style or strategy, and proposed tenure of the fund or scheme

Have earlier been refused registration by the Board (including other entities of the Sponsor or Manager)  or not?

 

Key Investment Team of the Manager of the Fund

(a) Have adequate experience with at least one key personnel have not less than five years experience in advising or managing pools of capital or in fund or asset or wealth or portfolio management or in the business of buying, selling and dealing of securities or other financial assets and has a relevant professional qualification.

Step #2: Apply to SEBI

Apply to SEBI in Form A as provided in the SEBI (Alternative Investment Funds) Regulations, 2012 along with all the necessary documents. Please note:-

  • Attach a covering letter with the following checklist:-

  • Current status of registration with SEBI as VCF. (If yes, provide details)

  • History of undertaking activities of VC prior to this application (If yes, provide details)

  • Whether applying for registration of a new fund or not?

  • Form A should be appropriately filled, numbered, duly signed, and stamped

  • Submit an application fees of Rs.1,00,000/- by way of bank draft in favor

  • The applicant shall also make an online application in terms of the guidelines as prescribed by SEBI from time to time.

Step #3: Check Application Status

If the applicant fulfills the requirements as specified in the Regulations, SEBI shall approve the application and inform the applicant – simple!

Step #4: Pay Registration Fee

On receipt of approval from SEBI, the applicant must pay a registration fee of Rs.5,00,000/- (If the applicant is not registered with SEBI as a Venture Capital Fund) / Re-registration fees of Rs. 1,00,000/- (If the applicant is registered with SEBI as a Venture Capital Fund) by way of bank draft in favor of “The Securities and Exchange Board of India”, payable at Mumbai.

Step #5: Collect Certificate of Registration from SEBI

On receipt of registration/ re-registration fees, SEBI will grant the applicant the certificate of registration as an ‘Alternative Investment Fund’.

Step #6: Follow Compliance Post the Registration

  • Comply with SEBI’s reporting requirements from time to time

  • Check SEBI website regularly for updation/circulars/guidelines issued with respect to AIF activity

  • Intimate SEBI in any material change in the details already furnished to SEBI within a reasonable period of time.

Document Required

For a smooth and continuous registration process, the following documents and details should be kept ready:

  • Some options for the name of the proposed company

  • Amount of Share Capital and also the proposed ratio for holding the shares.

  • A passage explaining the major line of commerce of the organisation.

  • City of Registered Office of the company.

  • Copy of ownership deed or sale deed (if you own the premises)

  • Multiple Copies of PAN Card of directors along with the shareholders.

  • Copy of latest serviceableness bills, for example, electricity bill or telephone bill as proof of registered office.

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