Venture capital is a dynamic force that fuels the growth and innovation of small and medium-sized businesses. In Kenya, the process of establishing a venture capital company (VCC) involves a meticulous application and registration procedure set out by the Capital Markets (Registered Venture Capital Companies) Regulations, 2007.
Let’s explore the essential steps and documentation required for the registration of a VCC in Kenya.
Submission of Application:
An application for registration as a venture capital company must be made in the prescribed form, known as the “APPLICATION FOR REGISTRATION AS A VENTURE CAPITAL COMPANY.” This form, outlined in the First Schedule, serves as the initial step in the registration process.
The application must be accompanied by a comprehensive set of documents to ensure the transparency and suitability of the venture capital company. The required documentation includes:
- Certified copy of the certificate of incorporation or certificate of compliance.
- Certified copy of the memorandum and articles of association.
- Certified copy of the board resolution approving the application.
- Details of the investment policy for each fund, covering investment objectives, amounts, rules, and exposure limits.
- Letter of acceptance from the appointed fund manager.
- Management agreement between the VCC and the fund manager, including required particulars.
- Audited financial statements for the last three financial years.
- Declaration by directors in the prescribed form.
- Individual declarations by directors addressing specific questions.
- Bank reference from a licensed commercial bank.
- Business references from at least two companies in which the applicant has invested.
- The prescribed application fee.
Upon receiving the application and accompanying documents, the Authority evaluates the eligibility of the venture capital company. The CMA carefully assesses the financial stability, experience, and adherence to regulatory requirements.
Certificate of Registration:
If the Authority is satisfied that the applicant meets all requirements, it proceeds to register the venture capital company. A Certificate of Registration, outlined in the Second Schedule, is then issued to the successful applicant. This certificate remains valid unless revoked by the Authority.
Payment of Fees:
Upon registration, the VCC is required to pay the prescribed approval fees for itself and each of its funds. Additionally, each fund is obligated to pay an annual fee, excluding the year of registration.
Changes and No Objection:
The registered VCC is prohibited from changing its shareholders, directors, or fund manager without obtaining a written confirmation from the Authority stating that it has no objection to the proposed changes.
Establishing a venture capital company in Kenya is a structured process aimed at ensuring the credibility and financial stability of registered entities. By following these steps and meeting the stipulated requirements, aspiring venture capital companies can contribute to the growth and development of small and medium-sized businesses in Kenya’s dynamic economic landscape.