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 Central or state legislature;
Its main objective, as contained in the memorandum of association in case it is a com instrument of the trust deed duly registered in the form of a deed under the provisions of Indian Registration Act, 1908, in case of a trust, is to carry on the activity of a VCF and body corporate is permitted to carry on activities of a VCF.
In the case of a company applicant, its memorandum and articles of association invitation to public to subscribe to its securities;
Its director principal officer employee trustee director of trustee company body corporate not involved in any litigation connected with the securities industry which may have adverse bearing on its business.
Its’ director principal officer employee trustee director of trustee company body corporate has not at any time been convicted of any offence involving more in turpitude any economic offence.
The applicant is a fit and proper person; and
The applicant has not been refused registration or its registration not suspended cancelled by SEBI.
The applicant would have to furnish further information as the SEBI may require. The certificate of registration from the SEBI is, inter alia, subject to the following conditions:
(i) The VCF has to abide by the provisions of the SEBI Act and SEBI VCP regulations;
(ii) The VCF cannot carry on any other activity; and
(iii) It would immediately inform the SEBI in writing (a) if any information particulars submitted to it earlier are found to be false misleading in any material particular, or (b) there Is any’ change in the material already submitted.
An applicant, whose application has been rejected by SEBI, would not carry on any activity as a VCF. In the interest of investors, SEBI can issue directions with regard to transfer of records documents securities disposal of investments relating to its activities as a VCF. In order to protect the interest of the investors, it can also appoint any person to take charge of the records documents securities including the terms and conditions of such appointment.