Investment process and post-investment management

What supporting documents will the investor receive from the VCC?

The approved VCC must issue investor certificates to its investors. This will provide SARS with the proof it needs to allow the investor the relevant tax deduction.

Investment process

The Alumni Investment Committee with the assistance of the manager applies rigorous investment criteria in its investment decisions and conducts a rigorous due diligence process before committing to any investment.

Post investment management

Alumni will become actively involved in each of the companies invested in order to mitigate risk. This involvement does not only include the executive directors and staff but also the non-executive directors to ensure the maximum value is unlocked from every asset.

Besides a board seat, the Alumni team will be involved in a number of business building activities (engineering growth) including:

  • A sophisticated techno-economic reporting tool developed by the founder – which took 17 years in creation, tracks innovation through to financial success. This allows for daily planning through to multi-decade planning
  • Networks – identify, monitor and continuously evaluate the partner universe
  • Corporate governance – supplementing the board with external experts
  • Financial reporting in line with best practices
  • Involvement in sourcing and recruiting with hiring human capital
  • Sales – guidance with the establishment of a measurable sales process as well as attendance at sales meetings, if required
  • Development of sales leads where the crowdfunding is base incentivized to offer potential sales leads
  • Access to a website cluster around an innovative charities support social media/SEO strategy
  • Marketing strategy – clearly articulate value proposition to the client base
  • Legal compliance with tax, fundraising IP and other legal requirements

In Summary

An investor in Alumni will obtain a 45 % tax incentive (for an individual tax payer at the maximum marginal rate) at the time of investment

No recoupment of tax incentive at the time of realisation of investment in Alumni if the investment is held for a minimum period by the investor of 5 years.

The onus will be on the VCC to ensure that it invests in companies (i.e. investees) that meet the stipulated requirements.

The VCC must issue “VCC investor certificates” to qualifying investors in the year in which the investment is received. The certificates issued by the VCC must include at least the following details:

  • The VCC reference number
  • The name and address of the VCC issuing the certificate to which enquiries may be directed
  • The date of receipt of the investment
  • The name and address of the Investor
  • The Tax Reference Number of the Investor
  • The amount of the investment

On request from the Minister of Finance, a VCC must submit a report providing information that the Minister may prescribe.

Investors not resident in South Africa

Investors not resident in South Africa should seek professional advice as to the consequences of making an investment in a VCC as they may be subject to tax in other jurisdictions as well as in South Africa.

Procedure to claim tax deduction of investment

Subject to the Qualifying Application, Investors will be entitled to deduct the full amount of their investment in Alumni from their taxable income in the tax year the investment is made.

A certificate to substantiate a claim for tax deduction will be sent to investors within 6 weeks of the closing date.

Investors can claim the tax relief as follows:

  • By obtaining a directive from SARS for a reduction in their PAYE deduction, or
  • By reducing their estimate of taxable income when submitting their first, second or third Provisional Tax returns, or
  • By claiming the deduction in their Income Tax Return

Would you like to discuss how you can invest in South Africa’s energy future with no risk to your capital? Please let us know using the form below.