Registering as a venture capital fund manager (“RVECA”) with the UK Financial Conduct Authority (“FCA”) is now more straightforward than ever.

In this age of financial innovation, where expertise meets stringent regulation, this type of registration offers you a unique opportunity to launch a venture capital fund management business in the UK quickly and with minimal red tape.

This guide aims to shed light on the intricate details of gaining this registration.

1.     Are there registration fees?

Yes, there’s a £1,000 application fee payable to the FCA. Firms also incur periodic or annual fees, with the current minimum annual fee being £718.

2.     How do I register?

Begin by submitting a detailed application to the FCA via their Connect system, a secure online portal for regulatory submissions.

3.     What are the primary registration requirements?

To use the RVECA label, firms must prove that 70% of investor capital goes to qualifying small and medium-sized enterprises. The fund should also ensure that no more than 30% of its total capital is used for non-qualifying investments.

RVECA managers need an initial capital of €50,000 and must maintain on an ongoing basis capital that is at least equal to one-eighth of the previous year’s fixed overheads.

The application should include essential documents such as a liquidity management plan, plans for ensuring good outcomes for retail customers (Consumer Duty), and Environmental, Social, and Governance (ESG) strategies.

4.     What constitutes a qualifying investment?

This includes equity or quasi-equity instruments, certain secured or unsecured loans, shares from existing shareholders, and units or shares from other qualifying venture capital funds.

5.     What defines a qualifying portfolio undertaking?

It’s an SME that meets specific regulatory criteria, encouraging investments in companies poised for economic and technological growth.

The definition includes, for example, non-listed companies that employ up to 499 persons.

Companies that operate in certain sectors (e.g. banking, investment and insurance) are not eligible for investment.

6.     Which forms are required?

Firms need to fill out specific forms available on the FCA’s Connect system, including applications for RVECA manager registration, a schedule of registered AIFs, and notifications for senior personnel.

7.     What should the financial forecast cover?

A detailed three-year financial forecast is essential, with clear assumptions, formulas, and monthly breakdowns for the first year.

8.     Is there a cap on the number of investment funds managed?

No such limit exists.

9.     Are there asset management limits for RVECA managers?

Yes, the caps are €500 million for unleveraged investment funds with no redemption rights for five years, and €100 million for all other cases.

10.     How long does registration take?

Typically, three months, but this can be longer if the FCA needs more information.

11.     Who are the potential investors for the venture capital fund?

Professional clients and other investors who commit a minimum of €100,000 and acknowledge the associated risks.

12.     Can you help us with the RVECA registration process? If so, what are your fees?

We would be thrilled to help you register as an RVECA manager with the FCA!

As part of our services we can guide you through every step of the registration process and help you prepare all necessary documents including:

(1) RVECA registration form;

(2) senior persons forms;

(3) regulatory business plan;

(4) conflicts of interest, valuation, liquidity management, Consumer Duty and ESG policies;

(5) schedule of AIFs.

Our fees typically start from £10,000 (plus VAT) and are payable 40% upfront and 60% upon successful registration.

Don’t hesitate – contact us today to embark on your exciting venture capital journey!

Disclaimer: This article provides general information only. It is not comprehensive and does not constitute the provision of legal, investment or regulatory advice. FSREG is not responsible for any action taken or omitted to be taken on the basis of information contained in this article. © 2024 FS REG Limited (www.fsreg.com). All rights reserved.