In the intricate landscape of venture capital, where trust and transparency are paramount, the Capital Markets Authority (CMA) in Kenya has established a comprehensive set of regulations governing the obligations of fund managers.
These regulations, outlined in the Capital Markets (Registered Venture Capital Companies) Regulations 2007, delineate the responsibilities of fund managers in maintaining records, filing regular returns, and providing essential information to the regulatory body.
Records to be Maintained by Fund Manager (Regulation 19):
Fund managers play a pivotal role in the venture capital ecosystem, and the regulations emphasize the importance of meticulous record-keeping. According to Regulation 19, fund managers must maintain books of account and records that accurately reflect the affairs of the funds under their management.
These records, covering transactions and activities, are required to be preserved for a minimum of seven years after the completion of the transaction to which they relate.
Quarterly Returns (Regulation 20):
To ensure ongoing transparency and regulatory oversight, each fund manager is mandated to file quarterly returns with the Authority.
Within one month after the end of each quarter, including the final quarter of the financial year, fund managers must provide detailed information on investments made during the quarter, including consideration paid, and disposals of investments.
This quarterly reporting mechanism facilitates real-time monitoring and evaluation of fund activities.
Annual Returns (Regulation 21):
Annual returns serve as a comprehensive overview of the registered venture capital company’s performance and governance. Directors of the company are required, within three months of the end of the financial year, to file annual returns with the Authority.
These returns include crucial information such as changes in shareholding, details of each shareholder, changes in the board of directors, and, notably, the annual audited accounts of the registered venture capital company. The accompanying report from the fund manager delves into proposed changes and particulars of investments in eligible venture capital enterprises.
Additional Information (Regulation 22):
Recognizing the evolving nature of the venture capital landscape, Regulation 22 empowers the Authority to request additional information deemed necessary. This provision ensures that the regulatory body can adapt to emerging trends and swiftly address any areas requiring further scrutiny.
In conclusion, these regulations underscore the commitment of the CMA to fostering transparency, accountability, and regulatory compliance in the venture capital sector.
By delineating the obligations of fund managers in maintaining records and providing regular and annual returns, these regulations establish a robust framework that not only safeguards investor interests but also contributes to the overall health and sustainability of the venture capital ecosystem in Kenya.
