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  • Presentation On: Venture Capital & Sebi

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    The document summarizes regulations for venture capital funds (VCFs) under SEBI. It outlines that VCFs must register with SEBI and can be set up as companies or trusts. VCFs can raise money from Indian or foreign investors with a minimum of Rs. 5 lakhs per investor. VCFs must invest at least 80% of funds in venture capital enterprises and are restricted from investing in financial services. VCFs cannot list securities for 4 years and have obligations around record keeping, reporting, and winding up. The regulatory environment should enable flexibility for VCFs to operate and spur innovation through start-ups.

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    SEBI &Venture-Capital

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    The document summarizes regulations for venture capital funds (VCFs) under SEBI. It outlines that VCFs must register with SEBI and can be set up as companies or trusts. VCFs can raise money from Indian or foreign investors with a minimum of Rs. 5 lakhs per investor. VCFs must invest at least 80% of funds in venture capital enterprises and are restricted from investing in financial services. VCFs cannot list securities for 4 years and have obligations around record keeping, reporting, and winding up. The regulatory environment should enable flexibility for VCFs to operate and spur innovation through start-ups.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    Download as ppt, pdf, or txt
    356 views14 pages

    Presentation On: Venture Capital & Sebi

    Uploaded by

    vineeta4604
    The document summarizes regulations for venture capital funds (VCFs) under SEBI. It outlines that VCFs must register with SEBI and can be set up as companies or trusts. VCFs can raise money from Indian or foreign investors with a minimum of Rs. 5 lakhs per investor. VCFs must invest at least 80% of funds in venture capital enterprises and are restricted from investing in financial services. VCFs cannot list securities for 4 years and have obligations around record keeping, reporting, and winding up. The regulatory environment should enable flexibility for VCFs to operate and spur innovation through start-ups.

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    of 14

    PRESENTATION ON

    VENTURE CAPITAL & SEBI


    SEBI(VENTURE CAPITAL FUND)
    REGULATIONS, 1996
     I). Registration of venture capital funds:

    1. Application of grant of Certificate


    2. Eligibility Criteria:
    (i) if the application made by the
    Company
    (ii) if the application by the trust
    (iii) if the application made by the
    body corporate
     II) Investment conditions and restrictions:
    Minimum investment in a VC fund:
    1.) A Venture Capital fund may raise
    monies from any investor whether
    Indian, foreign, or non-resident
    Indian.
    2.) No Venture Capital fund set up as a
    company.
     III) General Obligation and responsibilities:-
    Prohibition on investing subscription from
    the public.
    Private Placement
    Maintenance of Books and Records
    Submission of Reports to the Board
    Winding Up
    IV) Inspection and Investigation:-
    1. To ensure that the books of account, records
    and documents are being maintained by the
    venture capital
    2. Investigate into complaints received from
    investors.
    V) Liability for action in Case of Default
    1. Contravenes any of the provisions of the act
    2. Fails to furnish any information relating to its
    activity as a venture capital.
     VCF are regulated by the SEBI (Venture Capital
    Fund) Regulations, 1996.
     The following are the various provisions:

     A venture capital fund may be set up by a company


    or a trust, after a certificate of registration is
    granted by SEBI on an application made to it. On
    receipt of the certificate of registration, it shall be
    binding on the venture capital fund to abide by the
    provisions of the SEBI Act, 1992.
    A VCF may raise money from any investor,
    Indian, Non-resident Indian or foreign,
    provided the money accepted from any
    investor is not less than Rs 5 lakhs. The
    VCF shall not issue any document or
    advertisement inviting offers from the
    public for subscription of its security or
    units
    • SEBI regulations permit investment by
    venture capital funds in equity or equity
    related instruments of unlisted companies
    and also in financially weak and sick
    industries whose shares are listed or
    unlisted
     At least 80% of the funds should be
    invested in venture capital companies and
    no other limits are prescribed.

     SEBI Regulations do not provide for any


    sectoral restrictions for investment except
    investment in companies engaged in
    financial services.
    A VCF is not permitted to invest in the
    equity shares of any company or
    institutions providing financial services.

     The securities or units issued by a venture


    capital fund shall not be listed on any
    recognized stock exchange till the expiry
    of 4 years from the date of issuance .
    A Scheme of VCF set up as a trust shall be
    wound up
    (a) when the period of the scheme if any, is
    over
    (b) If the trustee are of the opinion that the
    winding up shall be in the interest of the
    investors
    (c) 75% of the investors in the scheme pass
    a resolution for winding up or,
    (d) If SEBI so directs in the interest of the
    investors.
     The regulatory, tax and legal environment should play an enabling
    role as internationally  venture funds have evolved in an
    atmosphere of structural flexibility, fiscal neutrality and operational
    adaptability.
     Resource raising, investment, management and exit should be as
    simple and flexible as needed and driven by global trends.
     Venture capital should become an institutionalized industry that
    protects investors and investee firms, operating in an environment
    suitable for raising the large amounts of risk capital needed and for
    spurring innovation through start-up firms in a wide range of high
    growth areas.
     In view of increasing global integration and mobility of capital
    it is important that Indian venture capital funds as well as
    venture finance enterprises are able to have global exposure
    and investment opportunities

     Infrastructure in the form of incubators and R&D need to be


    promoted using government support and private management
    as has successfully been done by countries such as the US,
    Israel and Taiwan. This is necessary for faster conversion of
    R&D and technological innovation into commercial products.
    THANKS

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