The Capital Markets (Registered Venture Capital Companies) Regulations

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Registered Venture Capital Companies) Regulations.

Section 2. Interpretation Section is not and has not been in the employment of the registered venture capital company in an executive capacity within the five year period preceding the date of application;

Section 3. Eligibility Requirements Section been duly incorporated under the Companies Act ( Cap. 486 ) as a company limited by shares;

Section 4. Application Section a certified copy of the applicant's certificate of incorporation or certificate of compliance;

Section 5. Certificate of Registration Section 5(1) The Authority may, on satisfying itself that an applicant meets the requirements for registration, register the applicant and issue a certificate of registration in the form set out in the Second Schedule. Section 5(2) The certificate of registration issued under this Regulation shall remain in force until it is revoked by the Authority.

Section 6. Fees Section 6(1) Upon registration, the registered venture capital company shall pay the prescribed approval fees in respect of itself and each of its funds. Section 6(2) Every fund of the registered venture company shall pay the prescribed annual fee each year, provided that no annual fee shall be payable in the year of registration.

Section 7. Letter of no objection Section The registered venture capital company shall not change its shareholders, directors or fund manager unless it has received a written confirmation stating that the Authority has no objection to the proposed change.

Section 8. Eligible venture capital entreprises Section 8(1) For purposes of these Regulations, investment in an eligible venture capital enterprise shall include investments in a company or person associated or acting in concert with an eligible venture capital enterprise. Section 8(2)(a) trading in real property; Section 8(2)(b) banking and financial services; Section 8(2)(c) retail and wholesale trading services.

Section 25. Transition provision Section Any venture capital company registered prior to the commencement date of these Regulations shall within twelve months of the commencement of these Regulations comply with these Regulations.

Section 26. Extension of transition period Section The Authority may extend the period of compliance further for a period of not more than twelve months upon request of a venture capital company registered prior to the commencement of these Regulations.

Section 27. Deregistration on expiry of transition period Section Upon the expiry of the twelve months under Regulation 25 or the extended period under Regulation 26, as the case may be, the Authority may deregister any registered venture capital company that has not complied with these Regulations

Section 28. Prohibition on investing in related parties Section A registered venture capital company shall not lend to, invest in, provide finance to, act as a guarantor to or otherwise be exposed to any of its directors, affiliate companies or companies in which any of its directors and or their close relations hold a substantial interest.

Section 29. Verification of source of funds Section A registered venture capital company shall take all reasonable measures to verify the sources of its funds as well as its investments to ensure it is not used as a conduit for funds sourced from or to be applied to criminal or socially undesirable activities including but not limited to money laundering and corruption.

Section 30. Disclosure of registration Section A registered venture company shall ensure that it includes in its written communications a statement that it is registered by the Capital Markets Authority.

Section 9. Approval of fund manager Section No person shall act or be appointed as a fund manager for the purposes of a registered venture capital company or any of its funds unless such person is duly approved by the Authority to manage venture capital funds.

Section 10. Obligations of the fund manager Section ensure that a prudent investment policy is in place in respect of each fund;

Section 11. Resignation of the fund manager Section 11(1) A fund manager may resign by giving a written notice to the board of directors of the registered venture capital company and copied to the Authority stating the reasons for the resignation. Section 11(2) The notice period shall be one month or such longer period as may have been stipulated in the management agreement.

Section 12. Removal of fund manager Section immediately upon the suspension or revocation of its licence by the Authority or

Section 13. Hand-over to new fund manager Section statements pertaining to all the funds under its management;

Section 14. Appointment of new fund manager Section The board of directors of the registered venture shall within one month of the resignation or removal of the fund manager, appoint another fund manager and shall within seventy two hours of the appointment forward to the Authority a certified copy of the fund manager's letter of consent to appointment in the prescribed form set out in Fourth Schedule and provide the Authority with a copy of the management agreement with the new fund manager.

Section 15. Prohibition on offers to the public Section A registered venture capital company shall not raise funds by way of offers to the public.

Section 16. Filing of placement memorandum Section A registered venture capital company shall file the placement memorandum with the Authority at least thirty days before publication.

Section 17. Private placements Section A registered venture capital company seeking to raise funds shall publish a placement memorandum which shall contain details on the terms and conditions on which funds are to be raised from investors.

Section 18. Placement returns Section A registered venture capital company shall make returns of the funds raised to the Authority within fourteen days of the close of the offer.

Section 19. Records to be maintained by Fund Manager Section 19(1) The fund manager shall keep books of account and maintain records that accurately reflect the affairs of the funds under its management. Section 19(2) Every record shall be preserved for at least seven years after the completion of the transaction to which it relates.

Section 20. Quarterly Returns Section details of any investments made by each fund under its management during the quarter, and the consideration paid for those investments; and

Section 21. Annual Returns Section 21(1)(a) name and address of each shareholder (including details of any beneficial interests) of the registered venture capital company and details of their investment; Section 21(1)(b) changes in shareholding in the financial year; Section 21(1)(c) names and address of' each director of the registered venture capital company; Section 21(1)(d) changes in the board of directors of the registered venture capital company within the year; and Section 21(1)(e) annual audited accounts of the registered venture capital company for that financial year. Section 21(2)(a) proposed changes in information specified under Regulation 4 or the investment policy; and Section 21(2)(b) the level of investment in each eligible venture capital enterprise and the return thereon; and Section 21(2)(b)(i) the level of investment in each eligible venture capital enterprise and the return thereon; and Section 21(2)(b)(ii) disposals of investments during that year including any profits derived or losses incurred from that disposal.

Section 22. Additional information Section Notwithstanding the foregoing, the Authority may require such further information as it may deem necessary.

Section 23. Deregistration Section the board of directors of the registered venture capital company requests in writing that the venture capital company be deregistered;

Section 24. Notification of Commissioner of Income Tax and publication Section The Authority shall within five days of de-registration of a registered venture capital company notify the Commissioner of Income Tax and within thirty days publish the deregistration in the Gazette .