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 certain to (1) harmonization of multiplicity of regulations, (2) VCF structures, (3) resource (4) investments, (5) exit, (6) SEBI regulations, (7) company law related issues, and (8) other issues.
Multiplicity of Regulations and Need for Harmonisation
(a) Since SEBI is responsible for overall regulation and registration of VCFs, the need harmonies and consolidate multiple regulatory requirements within the framework regulations to provide for uniform, hassle free, single window clearance.
(b) In view of point (a) the Government of India may consider repealing the Government of India Guidelines for Overseas Venture Capital Investments in India dated September, 20, 1995.
(c) The existing Section 10(23FA) of Income Tax Act needs to be re-enacted to provide automatic income tax exemption to VCFs registered with SEBI (like in the case of funds). The new income tax Section 10(23FA) would then read as Any income of registered venture capital fund under the SEBI Act, or regulations made there under frequently, no separate rules as in Section 2-0 would be needed.