Expectation and Compliance Statement
Innovation Australia, through its Venture Capital Committee, regulates venture capital funds registered under the Early Stage Venture Capital Limited Partnerships (ESVCLP) program.
Registration as an ESVCLP entitles a venture capital fund to certain benefits but is conditional upon meeting certain obligations. Failure to meet these obligations can result in the loss of registration and a loss of the associated benefits.
ESVCLPs can only make and hold investments as permitted by the Venture Capital Act 2002 and the Income Tax Assessment Act 1997 (subdivision 118F). Innovation Australia will monitor compliance through examining relevant documents including both an ESVCLP's quarterly and annual returns. Innovation Australia may also ask for additional information it considers necessary for the purposes of administering the program. Compliance assessment is also undertaken by the Australian Taxation Office (ATO), which receives copies of all ESVCLP reports submitted to Innovation Australia. The ATO may undertake risk assessment activities to ensure compliance with the legislation under its administration.
In the quarterly and annual returns an ESVCLP is required to declare whether it has complied with the relevant legislation. ESVCLPs must maintain an appropriate audit trail to demonstrate legislative compliance. For example, an ESVCLP must be able to show that each investment it holds is an eligible venture capital investment and that it was made in accordance with its approved investment plan.
Innovation Australia intends to monitor compliance rigorously and failure to comply could result in sanctions up to and including revocation.
Innovation Australia expects that the General Partner of an ESVCLP will:
- operate the ESVCLP in accordance with the relevant legislation
- operate the ESVCLP in accordance with its approved investment plan
- maintain an appropriate audit trail and be able to demonstrate legislative compliance
- hold all investments in the name of the ESVCLP
- provide accurate and timely reports to Innovation Australia as required by the relevant legislation.
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