They say, “Building smart cities is not about putting in place glossy skyscrapers; but about imparting a human face to urban development so that the aspirations of socio-economic advancement are fulfilled through adequate employment and livelihood opportunities.” The urban areas in our country are in need of infrastructure improvements and various amenities to better the quality of living. The Special Purpose Vehicle (SPV) is introduced by the government to realise this very desire.
The Special Purpose Vehicle scheme is set up for the specific purpose of raising money from the market for the objective of building smart cities to achieve sustainable, long-term results.
How can a city benefit from this scheme?
A city can benefit from this scheme in the following ways:
- Reduction in the levels of risk, by sharing risk
- Security of loans or receivables
- Encouragement for investment in property
- Bankruptcy-proofing of the parent company in the event of default
- Transference of off-balance sheet assets to an SPV, thereby assisting banks meet their regulatory needs
- Maintenance of secrecy of intellectual property
What is the eligibility criteria of this scheme?
The eligibility criteria of this scheme is as follows:
The paid up capital of the SPV should be such that the Urban Local Body’s share is at least equal to ₹100 crore with an option to increase it to the full amount of the first installment of Funds provided by Government of India (₹194 crore).
What is the application procedure for the SPV?
The application procedure for the SPV is the same as for the registration of companies as per the Companies Act 2013.
You can read about the process by clicking, here.
What documents are required to apply for an SPV?
The documents required to apply for an SPV are:
- A copy of agreement for Joint Venture and detailed description of the major objects of the proposed company
- Declaration of compliance in forms no INC – 7 stating that the provisions for the companies act are followed
- Form no. INC – 22 indicating the notice of situation, change of situation of registered office, verification or change of registered office with same locality
- Form no. DIR – 12 for submission of details of director, manager, or secretary
- Special Power of Attorney details in favour of practicing CA or CS responsible for all the formalities with respect to incorporation of the company
Additional documents required in case the SPV which is proposed to be set up is a Public Limited Company:
- Payment for application or allotment money by all directors on shares taken or having an agreement to be taken
- Declaration in Form no 20 signed by one of the directors
- Certificate of Commencement of Business
For further queries and guidelines with regards to this scheme, click here