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Venture Capital Company Registration

Package inclusions:
  • Company Registration with MCA.
  • Documentation for Registration.
  • Application Submission with SEBI.
  • End to end assistance in licensing.
  • Legal Advisory.
Income Tax Notice

What is a Venture Capital Company?

Venture capital can be referred to as a company which helps in providing financial support by way of funds to small, emerging, early stage, startup firms. Venture capitalists engage in the areas where there is high growth potential in terms of profits. In exchange for equity these investments are made in the growing startups, where the venture capitalists have ownership stake. These companies take risk of finance in order to generate the outcome which is successful enough for the growing startups. Startups are evaluated by the venture capitalists on the basis of innovative technology, business model, strategies and urge of being successful. These companies focus on specific sectors which are running successfully and which have acquired the marketplace. The equity stake in the business depends upon the growth and profitability of the business, therefore venture capitalists are very selective in deciding where to invest. A proper evaluation of the company, in which the finance needs to be invested is done by way of well-developed business model, potential for rapid growth, impressive management team and the present scenario prevailing. Ventures are interested in companies with high growth potential as such opportunities are capable of providing financial returns and also exit after the specified time frame.

What is the procedure for venture capital registration?

The process to be followed for venture capital registration are:

  • Incorporation of the company, according to the Companies Act, 2013 with the objective to act as venture capitalists that is activity should be to carry on the business of venture capital funds. The memorandum should prohibit the invitation to the public to subscribe to its securities. The director of the proposed company should not be involved in litigations connected to securities market and should be a fit and proper person, not at any time convicted of an offence involving moral turpitude or any economic offence.
  • For the grant of registration, SEBI (Venture Capital Funds) Regulations, 1996 needs to be complied. An application Form A needs to be submitted along with the necessary documents and fees of Rs. 1,00,0000. In that, a copy of Memorandum and Articles of Association and Investment Management Agreement (if applicable).
  • Along with the application form and other documents, details relating to the investment manager, investment advisor, AMC activities, precise description and profile of the directors, shareholding pattern, key personnel/management team and any other such details as required needs to be given.
  • A statement relating to whether the company is registered with the SEBI in any capacity or not is to be disclosed.
  • A proper disclosure of Investment strategy needs to be done, specifying the investment style/pattern, proposed corpus, class of investors and life cycle of fund and other relevant information.
  • Some particular declarations such as undertaking under Regulation 11(3) of SEBI (Venture Capital Funds) Regulations, 1996, undertaking under third schedule to SEBI (Venture Capital funds) regulations, 1996, and declaration in respect of "fit and proper person" needs to be furnished.
  • On receipt of application the board evaluates the documents and after being satisfied, intimates the applicant.
  • The applicant on receipt of the intimation by board pays the fees, as specified.
  • Grant of certificate is received in Form B.

Advantages of Venture capital

High profitability

The new and innovative projects which are financed through venture capital help in achieving high profitability in the long run. The main motive of investment in growing business is to earn higher profits by taking risk. More the risk, more the profits is the key strategy of Venture capitalists.

Business expertise

A venture capital serves as a financial backing for the startups, by way of guidance and consultation. This can help in exploring and efficient implementation of business decisions, and making financial management and human resource management function more expediently. Making better decisions in this key areas help vitally for the growth of business.

Additional resources

Many a times areas like legal, tax and personnel matters, a Venture capital is helpful in providing support and most importantly support at the growth stage of the company is provided. The young company thus strives for faster growth and greater success.