Venture Capital Fund (VCF) is a form of fund established in the form of a trust or a company including a body corporate registered with SEBI that provides capital to early-stage or high-growth companies (start-ups). While VCF offers high level of risk associated with the investments, returns offered are also exponential in nature

how does Venture Capital Registration practically happens ?

Venture Capital Registration in a simplified manner below:-

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’

(a) MoA in case of a company
(b) Trust Deed in case of a Trust
(c) Partnership Deed in case of a LLP

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

(a) Trust: Instrument of trust – Deed, has been duly registered under the provisions of the Registration Act 1908
(b) LLP: Partnership Deed – Duly filed with the Registrar under the Provisions of Limited Liability Partnership Act 2008 and Partnership      duly incorporated.
(c) 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 people behind it:-

1. Applicant or Sponsor or Manager

(a) Are fit and proper persons based on the criteria specified in Schedule II of SEBI Regulations 2008 or not ?
(b) Have necessary infrastructure and manpower to effectively discharge its activities or not ?
(c) 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
(d) 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 year 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 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. Pls note:-

• Attach a covering letter with the following checklist:-

(a) Current status of registration with SEBI as VCF. (If yes, provide details)
(b) History of undertaking activities of VCF prior to this application (If yes, provide details)
(c) 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 favour
• 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 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, applicant must pay registration fee of Rs.5,00,000/- (If applicant is not registered with SEBI as a Venture Capital Fund) / Re-registration fees of Rs. 1,00,000/- (If applicant is registered with SEBI as a Venture Capital Fund) by way of bank draft in favour 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

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Professional Fees: Rs. 25,000

Registration Fees: Rs. 1,00,000 if Registered with SEBI, else Rs. 5,00,000