Project Banking Law Shruti Kamble

8/17/2019 Project Banking Law Shruti Kamble

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LAWS GOVERNING VENTURE CAPITAL IN INDIA

Subject title- Banking Law

Submitted to- Asst. Prof. Kamaljeet Singh

Submitted by- Shruti Kamble

Student Id !"#$BALLB%%#

&lass- BA. LLB

'ear- (th

Semester- )th

!A*S "ni+ersity

!A*S Law School

#


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ACKNOWLEDGEMENT

I ha+e taken efforts in this ,roject. owe+er it would not ha+e been ,ossible without the kind

su,,ort and hel, of many indi+iduals. I would like to e/tend my sincere thanks to all of them.

I am highly indebted to my subject lecturer Asst Prof. Kamaljeet Singh for his guidance and

constant su,er+ision as well as for ,ro+iding necessary information regarding the ,roject 0

also for their su,,ort in com,leting the ,roject.

I would like to e/,ress my gratitude towards my ,arents for their kind co-o,eration and

encouragement which hel, me in com,letion of this ,roject.

I would like to e/,ress my s,ecial gratitude and thanks to my subject lecturer for gi+ing me

such attention and time.

!y thanks and a,,reciations also go to my friends in de+elo,ing the ,roject and ,eo,le who

ha+e willingly hel,ed me out with their abilities.

*hank 'ou

Shruti Kamble

$


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Contents

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5A* IS 671*"27 &API*AL...............................................................................................8

S7BI 9AL*721A*I67 I167S*!71* :"14S; 27


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INTRODUCTION

7+olution and de+elo,ment of mankind is unimaginable without In+ention and Inno+ation.

*he $#st human ci+ilisation which we are witnessing today com,rising of la+ish lifestyle and

wide range of o,tions is the result of our ancestor?s willingness to take risk. And the room is

still o,en for the new de+elo,ments and hence the risks. &on+ersion ence,halic imaginations

and ideas into reality reuires huge ,ool of money which +ery often denied by the banks thus

these entre,reneurs reuires certain source of finance which is done by the +enture ca,ital

funds. *he +enture ca,ital fund managers as those that not only ,ro+ide the money but also

the +alue added resources to entre,reneurial firms. 6enture ca,ital fund managers ,lay a

significant role in enhancing the +alue of their entre,reneurial in+estment as they ,ro+idefinancial administrati+e marketing and strategic ad+ice to entre,reneurial firms as well as

facilitating a network of su,,ort for them.# Among se+eral the major ad+antages of the

+enture ca,ital fund are that it brings wealth and e/,ertise to the com,any large sum of

euity finance can be ,ro+ided the business does not stand the obligation to re,ay the money

in addition to ca,ital it ,ro+ides +aluable information resources technical assistance to

make a business successful. *hus from time to time S7BI has come u, with regulations to

regulate the +enture ca,ital in India.

S7BI?s objecti+es and +ision for +enture ca,ital in India state that 6enture &a,ital funding is

different from traditional sources of financing. 6enture ca,italists finance inno+ation and

ideas which ha+e ,otential for high growth but with inherent uncertainties. *his makes it a

high-risk high return in+estment. A,art from finance +enture ca,italists ,ro+ide networking

management and marketing su,,ort as well. In the broadest sense therefore +enture ca,ital

connotes risk finance as well as managerial su,,ort. In the global +enture ca,ital industry

in+estors and in+estee firms work together closely in an enabling en+ironment that allows

entre,reneurs to focus on +alue creating ideas and +enture ca,italists to dri+e the industry

through ownershi, of the le+ers of control in return for the ,ro+ision of ca,ital skills

information and com,lementary resources. *his +ery blend of risk financing and hand

holding of entre,reneurs by +enture ca,italists creates an en+ironment ,articularly suitable

for knowledge and technology based enter,rises.$ At ,resent S7BI has listed #== 6enture

ca,ital funds in India.

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WHAT IS VENTURE CAPITAL

6enture ca,ital fund is mode of financing the startu,s or early stage com,anies ha+ing a

no+el technology or risky business models. 4ouglas &umming has stated +enture ca,ital as

Cmoney of in+entionD( as the start u, com,anies with a ,otential to grow need a certain

amount of in+estment. 5ealthy in+estors like to in+est their ca,ital in such businesses with a

long-term growth ,ers,ecti+e. *his ca,ital is known as +enture ca,ital and the in+estors are

called +enture ca,italists.8

*erm +enture ca,ital is defined under Section $9E; of the S7BI 9Alternati+e In+estment

:unds; 2egulations $%#$ which means an Alternati+e In+estment :und which in+ests

,rimarily in unlisted securities of start-u,s emerging or early-stage +enture ca,ital

undertakings mainly in+ol+ed in new ,roducts new ser+ices technology or intellectual ,ro,erty right based acti+ities or a new business model.

Section $ 9b; of the regulation defines Alternati+e In+estment :und as any fund established

or incor,orated in India in the form of a trust or a com,any or a limited liability ,artnershi,

or a body cor,orate which-

9i; is a ,ri+ately ,ooled in+estment +ehicle which collects funds from in+estors whether

Indian or foreign for in+esting it in accordance with a defined in+estment ,olicy for the

benefit of its in+estorsF and

9ii; is not co+ered under the Securities and 7/change Board of India 9!utual :unds;

2egulations #>>@ Securities and 7/change Board of India 9&ollecti+e In+estment Schemes;

2egulations #>>> or any other regulations of the Board to regulate fund management

acti+ities

And the following are e/cluded from the ,ur+iew of his regulation

$ 3bjecti+es And 6ision :or 6enture &a,ital In India

htt,GGwww.sebi.go+.inGcommre,ortG+enre,$.html

htt,GGwww.sebi.go+.inGin+estorG+entureca,.html

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9i; family trustsF

9ii; 7S3P *rusts

9iii; em,loyee welfare trusts or gratuity trustsF

9i+; holding com,aniesH within the meaning of Section $9(@; of the &om,anies Act $%#F 9+;

other s,ecial ,ur,ose +ehicles not established by fund managers including securitiEation

trusts regulated under a s,ecific regulatory frameworkF

9+i; funds managed by securitisation com,any or reconstruction com,any which is registered

with the 2eser+e Bank of India under Section of the Securitisation and 2econstruction of

:inancial Assets and 7nforcement of Security Interest Act $%%$F and

9+ii; any such ,ool of funds which is directly regulated by any other regulator in IndiaF

And the term +enture ca,ital undertaking is defined under Section $9aa; as a domestic

com,any 9i; which is not listed on a recognised stock e/change in India at the time of

making in+estmentF and 9ii; which is engaged in the business for ,ro+iding ser+ices

,roduction or manufacture of article or things and does not include following acti+ities or

sectors

9#; non-banking financial com,aniesF

9$; gold financingF

9; acti+ities not ,ermitted under industrial ,olicy of


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SEBI (ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2!2

S7BI had earlier framed the S7BI 96enture &a,ital :unds; 2egulations #>>@ to encourage

in+estments into strat-u,s and mid-siEe com,anies. Since the introduction of 6&:

2egulations it was obser+ed by S7BI that the +enture ca,ital route was being used by se+eral

other categories of funds such as ,ri+ate euity funds real estate funds etc. :urther since

registration as a +enture ca,ital fund was not mandatory under 6&: 2egulations not all

,ri+ate euity or other categories of funds were registering with S7BI. 5hile these funds did

not enjoy certain e/em,tions that were a+ailable to 6&:s they were not subjected to any

restriction either. &urrently while in+estors such as mutual funds and collecti+e in+estment

schemes are well regulated S7BI noted the need for com,rehensi+e regulations to deal with

the in+estments that are sourced from di+erse ,arts of the ,ri+ate ,ool of ca,ital.

Accordingly S7BI notified the Alternati+e In+estment :und 9AI:; and re,lace the ,re+ious

S7BI 96enture &a,ital :unds; 2egulations #>>@ to go+ern unregulated entities and create a

le+el ,laying ground for e/isting +enture ca,ital in+estors. *he AI: regualtions aim to reulate

funds in+ol+ed in the ,ooling or raising of ,ri+ate ca,ital from institutional in+estors or high

net worth in+estors with a +iew to in+est such funds in accordance with defined in+estmet

,olicy for benefit of the in+estors and the manager of such fund irres,ecti+e of their legaldomicile. *hese regulations ,ro+ide that an entity seeking ,ool and manage such ,ri+ate ,ool

of ca,ital for in+esting in securities or acting as an alternati+e in+estment fund should be

registered with S7BI under these regualtions.

7/isting 6&:s will be ,ermitted to continue and shall be go+erned by the 6&: regualtions

till such fund or scheme managed by the fund is wound u,.@ 6&: will not be ,ermitted to

raise any fresh funds after notification of these regulations e/ce,t for commitments already

made by in+estors as on the date of the notification. *hese 6&:s may seek re-registration

under AI: relations subject to a,,ro+al of two thirds of their in+estors by +alue. *hese funds

will not be allowed to float any news scheme without registration under AI: regulations.

:or this ,ur,ose S7BI has classified AI: into the following three broad categories

C"te#o$% I

@ 2egulation 9$; S7BI 9Alternati+e In+estment :und; $%#$

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:und that in+est in startu, early stage +entures or social +entures or small medium enter,rises

or infrastructure or other sectors which the go+ernment or regulators consider as socially or

economically desiarable which include 6enture ca,ital :und S!7 funds Social 6enture

:unds Infra :unds and other such Alterati+e in+estment funds as may be s,ecified in the AI:

regulations.=

C"te#o$% II

:unds that do not fall in &ategory I and III AI: and those who do not undertake le+erage or

borrowing other that to meet the ,ermitted day to day o,erational reuirement including

Pri+ate 7uity funds or debt funds)

C"te#o$% III

:unds that em,loy di+erse or com,le/ trading stratagies and may em,loy le+erage including

through in+estment in listed and unlisted deri+ati+es for e.g. edge :unds. >

REGISTRATION

All the AI: are reuired to e mandatorily registered under anyone of the abo+e mentioned

categories#%. AI: regulations ,ermit launch of multi,le schemes under an AI: without

se,arate registration from S7BI subject to filing of information memorandum with S7BI. *he

certificate of registration once granted shall be +alid till winding u, of the concerned AI:.##

INVESTMENT STRATAG&

All Alternati+e In+estment :und shall state in+estment strategy in+estment ,ur,ose and its

in+estment methodology in its ,lacement memorandum to the in+estors. Any material

= 2egulation 9(;9a; S7BI 9Alternati+e In+estment :und; $%#$

)2egulation 9(;9b; S7BI 9Alternati+e In+estment :und; $%#$

> 2egulation 9(;9c; S7BI 9Alternati+e In+estment :und; $%#$

#% 2egulation 9#; S7BI 9Alternati+e In+estment :und; $%#$

##2egulation 9#%; S7BI 9Alternati+e In+estment :und; $%#$

)


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alteration to the fund strategy shall be made with the concent of atleast two third of unit

holders by +alue of their in+estment in the AI:.#$

INVETMENT IN ALTERNATE INVESTMENT FUNDIn+estment in all categories of Alternati+e In+estmet :unds shall be subject to the follosing

conditions#

• *he AI: may raise fund from any in+estor whether Indian :oreign or 12Is by way of

issue of units

• 7ach scheme of AI: shall ha+e cor,us of atleast $% &rore 2u,ees

• *he AI: shall not acce,t from an in+estor an in+estmet of +alue less than one crore

ru,ees. owe+er in case of in+estors who are em,loyees or directors of the AI: or

em,loyees or directors of the !anager the minimum +alue of in+estment should be

$8 lakh 2u,ees

• *he manager s,oncer shall ha+e a continuing interest in the AI: of not less two and

half ,ercent of the cor,us or fi+e crore ru,ees whiche+er is lower in the form of

in+estment in the Alternati+e In+estment :und and such interest shall not be through

the wai+er of management feesowe+er for &ategory III Alternati+e In+estment :und the continuing interest shall

be not less than fi+e ,ercent of the cor,us or ten crore ru,ees whiche+er is lower.• 9e; the !anager or S,onsor shall disclose their in+estment in the Alternati+e

In+estment :und to the in+estors of the Alternati+e In+estment :undF

• 9f; no scheme of the Alternati+e In+estment :und shall ha+e more than one thousand

in+estorsF

• 9g; the fund shall not solicit or collect funds e/ce,t by way of ,ri+ate ,lacement.

PLACEMENT MEMORANDUM

AI: can raise fund through ,ri+ate ,acement by issue of memorandumor ,lacementmemorandum by whate+er name called. Such information memorandum or ,lacement

memorandum must containall material information about the AI: and the !anager back

ground of key in+estment team of manager targeted in+estoes fees and all other e/,enses

,ro,osed to be charged tenure of AI: or scheme conditions or limits on redem,tion

in+estment strategy risk management tools and ,arameters em,loyed key ser+ice ,ro+iders

#$ 2egulation > S7BI 9Alternati+e In+estment :und; $%#$

#2egulation #% S7BI 9Alternati+e In+estment :und; $%#$

>


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conflict of interest and ,rocedures to identify and address them disci,linary history the

terms and conditions on which the !anager offers in+estment ser+ices its affiliations with

other intermediaries manner of winding u, of AI: or the Scheme and such other

informations as may be necessary for the in+estor to take an infrmed decision on whether to

in+est in AI:.#(

SCHEMES

*he AI: may launch schemes subject to filing of a scheme memorandum at least ten working

days ,rior to launch of the scheme with S7BI. Such Scheme memorandum shall contain all

material information about the in+estments ,ro,osed under such scheme.#8

LISTING

"nits of close ended Alternati+e In+estment :und may be listed on stock e/change subject to

a minimum tradable lot of one crore ru,ees. Listing of Alternati+e In+estment :und units

shall be ,ermitted only after final close of the fund or scheme.

TRANSPARENC&

All Alternati+e In+estment :unds shall ensure trans,arency and disclosure of information to

in+estors on the following#@

• financial risk management o,erational ,ortfolio and transactional information

regarding fund in+estments shall be disclosed ,eriodically to the in+estorsF

• any fees ascribed to the !anager or S,onsorF and any fees charged to the Alternati+e

In+estment :und or any in+estee com,any by an associate of the !anager or S,onsor

shall be disclosed ,eriodically to the in+estorsF

• 9c;any inuiriesG legal actions by legal or regulatory bodies in any jurisdiction as and

when occurredF

• any material liability arising during the Alternati+e In+estment :undHs tenure shall be

disclosed as and when occurredF

#( 2egulation ## S7BI 9Alternati+e In+estment :und; $%#$

#8 2egulation #$ S7BI 9Alternati+e In+estment :und; $%#$

#@2egulation $$ S7BI 9Alternati+e In+estment :und; $%#$

#%


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• any breach of a ,ro+ision of the ,lacement memorandum or agreement made with the

in+estor or any other fund documents if any as and when occurredF

• change in control of the S,onsor or !anager or In+estee &om,any.

• Alternati+e In+estment :und shall ,ro+ide at least on an annual basis within #)% days

from the year end re,orts to in+estors including the following information as may be

a,,licable to the Alternati+e In+estment :und-

A. financial information of in+estee com,anies.

B. material risks and how they are managed which may include

a; concentration risk at fund le+elF

b; foreign e/change risk at fund le+elF

c; le+erage risk at fund and in+estee com,any le+elsF

d; realiEation risk 9i.e. change in e/it en+ironment; at fund and in+estee com,any le+elsF

e; strategy risk 9i.e. change in or di+ergence from business strategy; at in+estee com,any

le+elF

f; re,utation risk at in+estee com,any le+elF

g; e/tra-financial risks including en+ironmental social and cor,orate go+ernance risks

at fund and in+estee com,any le+el.

• 9h; &ategory III Alternati+e In+estment :und shall ,ro+ide uarterly re,orts to

in+estors in res,ect of clause 9g; within @% days of end of the uarterF

• any significant change in the key in+estment team shall be intimated to all in+estorsF

• 9j; alternati+e In+estment :unds shall ,ro+ide when reuired by the Board

information for systemic risk ,ur,oses 9including the identification analysis and

mitigation of systemic risks;.

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GENERAL OBLIGATION

All Alternati+e In+estment :unds shall re+iew ,olicies and ,rocedures and their

im,lementation on a regular basis or as a result of business de+elo,ments to ensure their

continued a,,ro,riateness. *he S,onsor or !anager of Alternati+e In+estment :und shall

a,,oint a custodian registered with the Board for safekee,ing of securities if the cor,us of the

Alternati+e In+estment :und is more than fi+e hundred crore ru,ees. All Alternati+e

In+estment :unds shall inform the Board in case of any change in the S,onsor !anager or

designated ,artners or any other material change from the information ,ro+ided by the

Alternati+e In+estment :und at the time of a,,lication for registration. In case of change in

control of the Alternati+e In+estment :und S,onsor or !anager ,rior a,,ro+al from the

Board shall be taken by the Alternati+e In+estment :und. *he books of accounts of the

Alternati+e In+estment :und shall be audited annually by a ualified auditor.

OBLIGATION OF MANAGER .

*he !anager shall be obliged to

• address all in+estor com,laintsF

• ,ro+ide to the Board any information sought by BoardF

• maintain all records as may be s,ecified by the BoardF

• take all ste,s to address conflict of interest as s,ecified in these regulationsF

• ensure trans,arency and disclosure as s,ecified in the regulations.#=

MAINTENANCE OF RECORDS

*he !anager or S,onsor shall be reuired to maintain following records describing

• the assets under the schemeGfundF

• +aluation ,olicies and ,racticesF

• in+estment strategiesF

• ,articulars of in+estors and their contributionF

#= 2egulation S7BI 9Alternati+e In+estment :und; $%#$

#$


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• rationale for in+estments made#).

WINDING UP'

An Alternati+e In+estment :und set u, as a trust shall be wound u,a; when the tenure of the Alternati+e In+estment :und or all schemes launched by the

Alternati+e In+estment :und as mentioned in the ,lacement memorandum is o+erF or

b; if it is the o,inion of the trustees or the trustee com,any as the case may be that the

Alternati+e In+estment :und be wound u, in the interests of in+estors in the unitsF or

c; if se+enty fi+e ,ercent of the in+estors by +alue of their in+estment in the Alternati+e

In+estment :und ,ass a resolution at a meeting of unitholders that the Alternati+e

In+estment :und be wound u,F or

d; if the Board so directs in the interests of in+estors.

An Alternati+e In+estment :und set u, as a limited liability ,artnershi, shall be wound u, in

accordance with the ,ro+isions of *he Limited Liability Partnershi, Act $%%)

a; when the tenure of the Alternati+e In+estment :und or all schemes launched by the

Alternati+e In+estment :und as mentioned in the ,lacement memorandum is o+erF or

b; if se+enty fi+e ,ercent of the in+estors by +alue of their in+estment in the Alternati+e

In+estment :und ,ass a resolution at a meeting of unitholders that the Alternati+e

In+estment :und be wound u,F or

c; if the Board so directs in the interests of in+estors.

9; An Alternati+e In+estment :und set u, as a com,any shall be wound u, in accordance

with the ,ro+isions of the &om,anies Act #>8@ 9# of #>8@;.

9(; An Alternati+e In+estment :und set u, as a body cor,orate shall be wound u, in

accordance with the ,ro+isions of the statute under which it is constituted.

98; *he trustees or trustee com,any or the Board of 4irectors or designated ,artners of the

Alternati+e In+estment :und as the case maybe shall intimate the Board and in+estors of the

circumstances leading to the winding u, of the Alternati+e In+estment :und.

#) 2egulation $= S7BI 9Alternati+e In+estment :und; $%#$

#


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9@; 3n and from the date of intimation under sub-regulation 98; of regulation $> no further

in+estments shall be made on behalf of the Alternati+e In+estment :und so wound u,.

9=; 5ithin one year from the date of intimation under sub-regulation 98; of regulation $> the

assets shall be liuidated and the ,roceeds accruing to in+estors in the Alternati+e In+estment

:und shall be distributed to them after satisfying all liabilities.

9); 1otwithstanding anything contained in sub-regulation 9=; and subject to the conditions if

any contained in the ,lacement memorandum or contribution agreement or subscri,tion

agreement as the case may be in s,ecie distribution of assets of the Alternati+e In+estment

:und shall be made by the Alternati+e In+estment :und at any time including on winding u,

of the Alternati+e In+estment :und as ,er the ,reference of in+estors after obtaininga,,ro+al of at least se+enty fi+e ,ercent of the in+estors by +alue of their in+estment in the

Alternati+e In+estment :und.

9>; ",on winding u, of the Alternati+e In+estment :und the certificate of registration shall

be surrendered to the Board#>.

BOARDS RIGHT TO INSPECT

*he Board may suo motu or u,on recei,t of information or com,laint a,,oint one or more

,ersons as Ins,ecting Authority to undertake ins,ection of the books of account records and

documents relating to an Alternati+e In+estment :und for any of the following reasons

namely

• to ensure that the books of account records and documents are being

maintained by the Alternati+e In+estment :und in the manner s,ecified in

these regulationsF

• to ins,ect com,laints recei+ed from in+estors clients or any other ,erson on

any matter ha+ing a bearing on the acti+ities of the Alternati+e In+estment

:undF

• to ascertain whether the ,ro+isions of the Act and these regulations are being

com,lied with by the Alternati+e In+estment :undF

#>2egulation $> S7BI 9Alternati+e In+estment :und; $%#$

#(


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9d; to ins,ect suo motu the affairs of an Alternati+e In+estment :und in the interest of the

securities market or in the interest of in+estors$%.

NOTICE BEFORE INSPECTIONBefore ordering an ins,ection under regulation % the Board shall gi+e not less than ten days

notice to the Alternati+e In+estment :und. 5here the Board is satisfied that in the interest of

the in+estors no such notice should be gi+en it may by an order in writing direct that the

ins,ection of the affairs of the Alternati+e In+estment :und be taken u, without such notice.

4uring the course of an ins,ection the Alternati+e In+estment :und against whom the

ins,ection is being carried out shall be bound to discharge its obligations as ,ro+ided in

regulation $$#.

OBLIGATION OF ALTERNATIVE INVESTMENT FUND ON INSPECTION

9#; It shall be the duty of e+ery officer of the Alternati+e In+estment :und in res,ect of whom

an ins,ection has been ordered under regulation % and any other associated ,erson who is in

,ossession of rele+ant information ,ertaining to conduct and affairs of such Alternati+e

In+estment :und including !anager if any to ,roduce to the Ins,ecting Authority such

books accounts and other documents in his custody or control and furnish him with such

statements and information as the said Authority may reuire for the ,ur,oses of the

ins,ection.

9$; It shall be the duty of e+ery officer of the Alternati+e In+estment :und and any other

associated ,erson who is in ,ossession of rele+ant information ,ertaining to conduct and

affairs of the Alternati+e In+estment :und including the manager to gi+e to the Ins,ecting

Authority all such assistance and shall e/tend all such co-o,eration as may be reuired in

connection with the ins,ection and shall furnish such information as sought by the Ins,ecting

Authority in connection with the ins,ection.

9; *he Ins,ecting Authority shall for the ,ur,oses of ins,ection ha+e ,ower to e/amine on

oath and record the statement of any em,loyees directors or ,erson res,onsible for or

$%2egulation % S7BI 9Alternati+e In+estment :und; $%#$

$#2egulation # S7BI 9Alternati+e In+estment :und; $%#$

#8


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connected with the acti+ities of Alternati+e In+estment :und or any other associated ,erson

ha+ing rele+ant information ,ertaining to such Alternati+e In+estment :und.

9(; *he Ins,ecting Authority shall for the ,ur,oses of ins,ection ha+e ,ower to obtain

authenticated co,ies of documents books accounts of Alternati+e In+estment :und from any

,erson ha+ing control or custody of such documents books or accounts.$$

SUBMISSION OF REPORT TO THE BOARD

*he Ins,ecting Authority shall as soon as ,ossible on com,letion of the ins,ection submit an

ins,ection re,ort to the Board. owe+er if directed to do so by the Board he may submit an

interim re,ort.$ &ommunication of fi ndings etc. to the Alternati+e In+estment :und.

*he Board may after consideration of the ins,ection re,ort and after gi+ing reasonable

o,,ortunity of hearing to the Alternati+e In+estment :und or its trustees directors or

manager issue such direction as it deems fit in the interest of securities market or the

in+estors including directions in the nature of

9a; reuiring an Alternati+e In+estment :und not to launch new schemes or raise money from

in+estors for a ,articular ,eriodF

9b; ,rohibiting the ,erson concerned from dis,osing of any of the ,ro,erties of the fund or

scheme acuired in +iolation of these regulationsF

9c; reuiring the ,erson connected to dis,ose of the assets of the fund or scheme in a manner

as may be s,ecified in the directionsF

9d; reuiring the ,erson concerned to refund any money or the assets to the concerned

in+estors along with the reuisite interest or otherwise collected under the schemeF

9e; ,rohibiting the ,erson concerned from o,erating in the ca,ital market or from accessing

the ca,ital market for a s,ecified ,eriod.$(

$$2egulation $ S7BI 9Alternati+e In+estment :und; $%#$

$2egulation S7BI 9Alternati+e In+estment :und; $%#$

$( 2egulation ( S7BI 9Alternati+e In+estment :und; $%#$

#@


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LIABILIT& FOR ACTION IN CASE OF DEFAULT

An Alternati+e In+estment :und which

9a; contra+enes any of the ,ro+isions of the Act or these regulationsF

9b; fails to furnish any information relating to its acti+ity as an Alternati+e In+estment :und

as reuired by the BoardF

9c; furnishes to the Board information which is false or misleading in any material ,articularF

9d; does not submit ,eriodic returns or re,orts as reuired by the BoardF

9e; does not co-o,erate in any enuiry ins,ection or in+estigation conducted by the BoardF

9f; fails to resol+e the com,laints of in+estors or fails to gi+e a satisfactory re,ly to the Board

in this behalf shall be dealt with in the manner ,ro+ided under the Securities and 7/change

Board of India 9Intermediaries; 2egulations $%%) shall be dealt with in the manner ,ro+ided

under the Securities and 7/change Board of India 9Intermediaries; 2egulations $%%).

9$; Sub-regulation 9#; shall not ,rejudice the ,owers of the Board to issue directions or

measures under regulation ( or under sections ## ##B ##4 sub-section 9; of section #$ or

section $( or &ha,ter 6IA of the Act or under any other law for the time being in force$8.

RECOMMENDATION B& ALTERNATIVE INVESTMENT POLIC& ADVISOR&

COMMITTEE

*he Alternati+e In+estment Policy Ad+isory &ommittee under the chairmanshi, of Shri 1 2

1arayan !urthy ,ro,osed introduction of securities transaction ta/ at an a,,ro,riate rate on

all distribution of AI: in+estments short term gains and other income and elimination of any

with holding of ta/. After S** income from AI: should be ta/ free to in+estors.$@ It has also

susggested for making safe-harbour effecti+e for managing funds from India. *o attract

foreign ca,ital by ha+ing fund managers based in India it is im,ortant that their o,erations in

India are not treated as ,ermanent establishments under 4ouble *a/ation A+oidance

Agreements 94*AAs; the committee has suggested. &urrently most fund managers of

$8 2egulation 8 S7BI 9Alternati+e In+estment :und; $%#$

$@ 2eena Jachariah Sebi ,anel headed by 12 1arayana !urthy ,ro,oses easier norms for 6& P7fundshtt,GGarticles.economictimes.indiatimes.comG$%#@-%#-#)GnewsG@>)=%@#%#sebi-,anel-+enture-ca,ital-

alternati+e-in+estment-funds

#=


18/20

offshore funds manage their in+estments from offshore locations rather than from India. *his

is a disad+antage to both them and India. *he ,anel said that ,roacti+e measures need to be

taken to attract fund managers to India due to the beneficial im,act on the Indian economy

and the creation of a robust eco-system to boost entre,reneurshi, job creation and


19/20

CONCLUSION

6enture &a,italists in Indian ha+e notice of newer a+enues and regions to e/,and. 6&s ha+e

mo+ed beyond I* ser+ice but are cautious in e/,loring the right business model for finding

o,,ortunities that generate better returns for their in+estors. Between $%%#-$%#8 +enture

ca,ital and ,ri+ate euity funds in+ested o+er #% Billion in more than #%% Indian

com,anies across #$ major sectors ranging from startu,s to mature midsiEed com,anies. $)

In terms of im,ediments to e/,ansion few concerning factors to 6enture ca,ital includeF

unfa+orable ,olitical and regulatory en+ironment com,ared to other countries difficulty in

achie+ing successful e/ists and administrati+e delays in documentation and a,,ro+al. In s,ite

of few non attracting factors Indian o,,ortunities are no doubt ,romising which is e+ident by

the large number of new entrants in ,ast years as well in coming days. 1onetheless the

market is challenging for successful in+estment. *herefore 6enture ca,italists res,onses are

u,beat about the attracti+eness of the India as a ,lace to do the business.

$) 2e,ort Submitted By Alternati+e In+estment Policy Ad+isory &ommittee a+ailable athtt,GGwww.sebi.go+.inGcmsGsebidataGattachdocsG#(8$=)$==8>.,df

#>


20/20

REFERENCES

SASI K

Documents

Project Banking Law Shruti Kamble