Section 12J Funds
Jaltech’s Venture Capital Company Advisory Services
Jaltech has developed a niche in the South African market in assisting companies, family offices and high net-worth individuals with forming Section 12J Venture Capital Companies (VCC) as well as administering and structuring all aspects of the VCC.
Jaltech’s extensive professional team comprising of actuaries, accountants, an attorney and a full time risk officer is well resourced to assist clients interested in forming a VCC or who already have a VCC and only require administration/structuring services.
VCC structuring and formation services
Jaltech has developed an extensive suite of Section 12J compliant legal agreements, policy documents and processes, drafted and approved by leading law firms. This means that Jaltech has the necessary legal framework in place, which will allow the VCC to:
- have multiple share classes thereby permitting investors to ring fence their investments in the VCC; or/and
- have exposure to a portfolio of investments.
The ideal structure will ensure that the VCC is able to achieve the client’s objectives whilst simultaneously maximising tax efficiency for the client and potential investors in the VCC.
Once the client selects the ideal structure, Jaltech will assist with preparing and submitting the VCC application to the Financial Services Board (FSB), the South African Revenue Services (SARS) and the Financial Intelligent Centre (FIC), for the registration of the VCC.
This process (depending on the relevant institutions listed above) can take anywhere between 60 to 90 days.
During the registration process, Jaltech’s team will prepare the necessary documentation in order to ensure that the VCC is compliant, these include (but are not limited to):
- 21 operational registers (for example; new business, premature cancellations, key individual, representative, support staff, lodge document of title, non-compliance, cash report, gift, complaints, info request, training, supervision, honesty and integrity, experience, qualification, regulatory exam, CPD, FSP levy, financial soundness and contracts with product suppliers) required by the FSB;
- 9 policies (for example; anti-money laundering and counter terrorist risk management plan, FICA internal rules, fraud prevention and corruption combatting policy, conflicts of interest policy, complaints policy, PAIA manual, business continuity and disaster recover plan, and the FICA and FAIS compliance risk management plan) required by the FSB;
- Treating Customers Fairly policy;
- Standard Operating Procedures such as how to deal with record keeping, fit and proper requirements etc;
- FAIS compliant forms necessary to accept investments, which include, agreements detailing the rights of the shareholders of the VCC etc.
Once the VCC has been registered and all the legal agreements have been finalised, Jaltech will provide the extensive array of VCC administration services required. These services include (but are not limited to) the following:
- maintaining and updating the 21 operational registers and 9 policy documents;
- appointing and maintaining a key individual with the necessary FSB licence as required by the FSB;
- managing the VCC in accordance with the FSB’s requirements;
- liaising with the compliance officer of the VCC on a regular basis;
- preparation of monthly management accounts for the VCC;
- liaising with the VCC’s auditors and providing them with such information as they may require for the purposes of preparing the VCC’s annual financial statements;
- issuing, management and delivery of share and tax certificates to the shareholders of the VCC;
- providing the necessary reports on behalf of the VCC to SARS and the FSB;
- preparing and submitting PAYE, VAT and all other statutory returns required in respect of the VCC;
- reporting to investors.
Investment screening services
In order to ensure that the VCC’s investments are compliant with the legislation, Jaltech plays a lead role in screening investment opportunities. Jaltech will advise the VCC on how to structure a transaction, so that it is compliant with legislation. This service includes:
- structuring the potential investments in line with the VCC’s requirements;
- assessing the financial viability of an investment which will include, developing a financial model for the potential investment;
- understanding the likelihood of the investment achieving the return on investment required by the VCC’s investors;
- in conjunction with legal counsel, ensuring the investment falls within the legalisation.