What Is Investor Compliances And Its Checklist

Raising capital is a critical role for any firm, and equity finance has grown in popularity over the last decade due to to the success of e-commerce companies such as Flipkart, Snapdeal, In-Mobi, and others. Increased interest in startups has resulted in the formation of a robust angel investor community, venture capital investors, and private equity firms. Before investing, all equity investors perform extensive due diligence on the target firm in a variety of areas.

What is Investor Compliance

Investor compliance, which comprises complete investment limitation monitoring and administration, is a very difficult and sophisticated process in the investment industry. Investor Compliance Checklist ensures that the investee complies with the rules and regulations and is not in default.

Investor Compliances Checklist:

• The business entity: Equity investing is issuing company shares to investors instead of equity/shares. Because of their capabilities, only a limited company or a private limited company may facilitate such a transaction. If you haven’t previously done so, the first step in raising capital is to form a business entity (a corporation or LLP). Regardless of the age of the company, it is critical to ensure that the Memorandum and Articles of Association are designed in such a way that equity investments can be handled without the need to change the MOA or AOA.
• ROC compliance: The corporation must comply with all of the provisions of the Companies Act of 2013. Every corporation must keep a statutory register. A company’s key post-incorporation compliances include appointing an auditor, filing statutory annual returns, holding board meetings, and maintaining statutory registers. During the investment due diligence process, ROC compliance in the aforementioned categories is checked.
• Tax compliance: A company’s tax compliance varies depending on the nature of its business and the stage of its operations. Businesses that trade goods and products, for example, must comply with state VAT requirements, which include sales tax registration, payment, and return filing. Similarly, businesses that provide services are required to register, file service tax filings, and make service tax payments. In addition, income tax compliance is reviewed during the investment due diligence process, which includes TDS payments and TDS return filing.
• Compliance with labor laws: ESIC registration documents, PF registration documents, ESIC and PF return filing, ESIC and PF payments, and other ESIC and PF regulation compliances are reviewed for investee companies with more than 20 employees.
• Intellectual property: The protection of a company’s intellectual property in the form of a trademark, copyright, patent, or design is one of its most valuable assets. As a result, the Investors Compliance Checklist always checks to see if the company’s relevant trademark registration, copyright registration, patent registration, or design registration has been completed to safeguard its intellectual property. As a result, whether or not the registration certificate is issued, investors want to verify the intellectual property registration by requesting documentation of trademark application filing, patent application filing, copyright application filing, or design application filing.

What is the point of investment compliance?

Regulatory requirements are getting more difficult and important for investment managers by the day, but compliance will assist portfolio managers in not just strengthening their market presence but also efficiently managing their portfolios. Investment compliance can be defined in a variety of ways based on industry rules, including compliance within the asset management industry or investment banking with regulatory guidelines for trading in the market and adhering to both internal management standards and external compliance set forth by legal or regulatory authorities.

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