SEBI Guidelines for VENTURE CAPITAL
SEBI amended regulations for VCFs are:
(i) VCF is a fund established in the form of a trust/a company including a body corporate and registered with SEBI. It has a dedicated pool of capital, raised in the specified manner and invested in VCUs in accordance with the regulations. VCU is a domestic company whose shares are not listed on a stock exchange and is engaged in specified business.
(ii) The minimum investment in a VCF from any investor would not be less than Rs. 5 lakh and the minimum corpus of the fund before it could start activities should be at least Rs. 5 crore.
(iii) The norms of investment were modified. A VCF seeking to avail benefit under the relevant provisions of the Income Tax Act will be required to divest from the investment within a period of one year from the listing of the VCU.
(iv) The VCF will be eligible to participate i the IPO through book building route as Qualified Institutional Buyer.
(v) The mandatory exit requirement by VCF from the investment within one year of the listing of the shares of VCUs to seek tax pass-through was removed under the SEBI (VCF) Regulation to provide for flexibility in exit to VCFs.
(vi) The VCFs were directed to provide with the information pertaining to their venture capital activity for every quarter starting form the quarter ending December 31, 2000.
(viii) Automatic exemption was granted from applicability of open offer requirements in case of transfer of shares form VCFs in Foreign Venture Capital Investors (FVCIs) to promoters of a VCU.
There were 35 VCFs registered with SEBI as at end June 2001. During the year 2000-01, 13 new domestic VCFs and only 1 FVCI were registered. All VCFs are now required to provide information pertaining to their venture capital activity for every quarter starting from the quarter ending December 2000.