Category Archives: VENTURE CAPITAL FINANCING

Investment Conditions and Restrictions Minimum Investment in VCF

Investment Conditions and Restrictions Minimum Investment in VCF The VCFs are authorized to raise funds money from (i) Indian, (ii) foreign and (iii) non resident Indians (NRIs) investors by way of issue of units, that is, beneficial interest of the Investors in the scheme fund floated by trust or shares issued by a company, including a body corporate. Included in such funds raised is the, actual money from inve

Registration

Registration All VCFs must be registered with SEBI and pay Rs 25,000 as application fee Rs 5,00,000 as registration fee for grant of certificate. The eligibility criteria for registration is: The applicant should be either a (i) company under the Companies Act or a (ii) trust u the Indian Trust Act, 19\882, or under an Act of Parliament or state legislature or a (iii) corporate set up under the law of the Centra

SEBI Venture Capital Funds (VCFs) Regulations 1996

SEBI Venture Capital Funds (VCFs) Regulations, 1996 According to these regulations, a VCF means a fund established in the form of a trust company including a body corporate, and registered with SEBI which (i) has a dedicated pool of capital raised in a manner specified in the regulations and (ii) invests in versifier capital undertaking (VCUs) in accordance with these regulations. A VCU means a domestic company (

Company Law Related Issues

Company Law Related Issues In India, most VCFs are organised as trusts, mainly due to the lack of an alternative pass through structure for taxation in the hands of the contributors investors in funds. Moreover, there is the problem of extent of liability on the trustees who manage the funds. With the changes recommended earlier in the Income Tax Act to provide for VCFs to all pass through vehicles, following chan

SEBI Regulations

SEBI Regulations (a) A broad based definition of a VCU may he included in the regulations. (b) The definition of a VCF should be amended to include the funds set up, scheme floated by a trust, company body corporate or other legal entities. (c) The investment criteria needs to be redefined to permit investment by a VCF, primarily in equity or equity related instruments or securities convertible into equity of VCU

Exit Related Issues

Exit Related Issues (a) The provisions under the Companies Act for a buyback of securities need to be amended as under: 24 months probation period for fresh issue of capital to be reduced to six months in the case of unlisted companies where the buyback of shares is from VC investors; negotiated deals be permitted in unlisted companies here one of the parties to the deal is a venture capital investor, permit V

Resource Raising

Resource Raising It is recommended that mutual fund, banks and insurance companies should be permitted to invest in SEBI registered VCFs. Investment Related Issues (a) Investments by VCFs in VCUs should not be subject to any sect oral restrictions except those to be specified as a negative list by SEBI in consultation with the Government. These may include areas like real estate, finance companies and activities

VCF Structures

VCF Structures (a) The necessary legislative provisions for incorporation of entities such as Limit Partnership (LP), Limited Liability Company (LLC) may be made by which of e separate Act or by the way of amending the existing Indian Partnership Act and Companies Act. (b) SEBI regulations should be amended to include (i) the eligibility for registration entities such as LP, LLC, and so on and when permitted to

Recommendations of SEBI (Chandrasekhar) Committee 2000

Recommendations of SEBI (Chandrasekhar) Committee 2000 Recognizing the acute need for higher investment in venture capital activities to promote technology and knowledge based enterprises, SEBI appointed the Chandrasekhar Committee to the impediments in the growth of venture capital industry in the country and suggest measures for its rapid growth. Its report was submitted in January, 2000. The recommendations cer

INDIAN VENTURE CAPITAL SCENARIO

INDIAN VENTURE CAPITAL SCENARIO The venture capital industry in India is of relatively recent origin. Before its emergence, the elopement finance institutions (DFIs) had been partially playing the role of venture capitalists by dividing assistance for direct equity participation to ventures in the pre-public issue stage and by elusively supporting new technologies. The need for venture capital in the country was