Venture Capital Limited Partnerships (VCLP)

Venture Capital Limited Partnership

What is the Venture Capital Limited Partnerships?

The Venture Capital Limited Partnerships is a program that offers tax benefits to fund managers and eligible foreign investors to help stimulate venture capital investment. Benefits include an exemption for eligible foreign investors from capital gains tax on their share of a fund’s returns from eligible venture capital investments.

Background

A Venture Capital Limited Partnership must be a new partnership rather than a restructured existing partnership. The investments must also meet other criteria and be held for a minimum of 12 months. Venture Capital Limited Partnerships can make venture capital investments in companies or unit trusts with total assets of not more than $250 million.

Applicants must apply to Innovation and Science Australia for registration under the Venture Capital Act 2002 (VCA). Innovation and Science Australia has delegated its decision-making powers for VCLPs to authorised delegates.

A VCLP must meet ongoing registration and reporting requirements under the VCA to maintain its registration. Once registered both eligible foreign investors and fund managers can claim tax benefits. VCLP tax benefits differ for eligible foreign investors and fund managers.

Objective

The Venture Capital Limited Partnership (VCLP) program aims to stimulate Australia’s venture capital sector. The program:

  • helps fund managers attract pooled capital, so they can raise new venture capital funds of over $10 million to invest in innovative Australian businesses
  • offers tax benefits to fund managers and eligible foreign investors
  • connects investors with innovative Australian businesses
  • helps Australian businesses grow by receiving financial support

There is no ‘early stage’ test for investments as there is with Early Stage Venture Capital Limited Partnerships.

Eligibility

You can apply to register if you are:

  • a new venture capital fund
  • a limited partnership or an incorporated limited partnership
  • established in Australia or a country that has a double tax agreement with Australia

You must have:

  • a general partner (often also the fund manager) who is a resident of either Australia or a country that has a double tax agreement with Australia
  • at least $10 million in committed capital (although a partnership that doesn’t satisfy this requirement may be eligible for conditional registration)

In addition, you must have a qualifying partnership agreement that:

  • ensures the partnership remains in existence for between 5 and 15 years
  • requires partners to contribute capital when required
  • prohibits adding new partners except as provided for in the agreement
  • prohibits increasing committed capital except as provided for in the agreement
  • confers on the general partner the right to require partners to contribute their committed capital to the partnership
  • includes a plan outlining the partnership’s intended investment activities

VCLP Application

If you would like to apply for registration as an VCLP, complete and submit the online application  form.

You’ll need to include the following documents.

  • A certificate of registration as a limited partnership or an incorporated limited partnership. This is issued by the relevant state or territory government authority.
  • A certificate of registration if the general partner is a venture capital management partnership.
  • An investment plan that is included in the signed partnership deed.
  • A signed limited partnership deed which includes the investment plan and includes the clauses set out below.
  • Details of all individual investors and their committed capital. The delegate may request documentary evidence of committed capital.
  • The partnership’s information memorandum or any public offer documents.
  • CVs of the key people active in your partnership.

The partnership deed must include the following clauses (use the wording below):

  • Require partners to contribute their committed capital as and when required under the agreement.
  • Prohibit the addition of new partners to the partnership except as provided for in the agreement.
  • Prohibit increases in the partnership’s committed capital except as provided for in the agreement.
  • Confer on a general partner the right to require partners to contribute their committed capital to the partnership.
  • The partnership must remain in existence for a period not less than 5 years and not more than 15 years from formation of the partnership (this is the date the partnership was registered as a limited partnership or incorporated limited partnership).

The delegate may request further information, documents or evidence relating to the application for registration.

Timing

Applications open on an ongoing basis.

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