[Cites 0, Cited by 0]

Securities And Exchange Board Of India

Securities And Exchange Board Of India (Venture Capital Funds) Regulations, 1996

SECURITIES AND EXCHANGE BOARD OF INDIA
India

Securities And Exchange Board Of India (Venture Capital Funds) Regulations, 1996

Rule SECURITIES-AND-EXCHANGE-BOARD-OF-INDIA-VENTURE-CAPITAL-FUNDS-REGULATIONS-1996 of 1996

Published on 4 December 1996
Commenced on 4 December 1996
[This is the version of this document from 4 December 1996.]
[Note: The original publication document is not available and this content could not be verified.]

Securities And Exchange Board Of India (Venture Capital Funds) Regulations, 1996Published vide Notification Gazette of India, Extra, Part 2, Section 3(ii), dated 4.12.1996.

1552.

S.O. 850(E), dated 4.12.1996.- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Securities and Exchange Board of India hereby, makes the following regulations.

Chapter I
Preliminary

1. Short title and commencement.-

(1)These regulations may be called the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996.

(2)They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.-

In these regulations, unless the context otherwise requires,

(a)"Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(aa)["associate company", means a company in which a director or trustee or sponsor or settlor of the venture capital fund or asset management company holds either individually or collectively, equity shares in excess of 15 per cent of the paid-up equity share capital of venture capital undertaking;] [Inserted by S.O. 1179(E), dated 30.12.2000]

(b)"certificate" means a certificate of registration granted by the Board under regulation 7;

(c)"company" means a company incorporated under the Companies Act, 1956 (1 of 1956);

(d)"economic offence" means an offence to which the Economic Offences (Limitation of Prosecutions) Act, 1974 (12 of 1974), applies for the time being;

(e)"enquiry officer" means an enquiry officer appointed by the Board under Regulation 33;

(ee)["equity linked instruments" includes instruments convertible into equity shares or share warrants, preference shares, debentures compulsorily [or optionally] [Inserted by S.O. 831(E), dated 15.9.2000] convertible into equity;]

(f)"Form" means any of the forms set out in the First Schedule;

(g)[* * *] [Omitted by the SEBI (Venture Capital Funds) Amendment Regulations, 2000, w.e.f. 15-09-2000]

(h)[ "inspecting or investigating officer" means an inspecting or investigating officer appointed by the Board under regulation 25;] [Substituted by S.O. 831(E), dated 15.9.2000]

(hh)["investible funds" means corpus of the fund net of expenditure for administration and management of the fund;] [Inserted by S.O. 831(E), dated 15.9.2000]

(i)"Schedule" means a Schedule annexed to these regulations;

(j)[ "negative list" means a list of items specified in the Third Schedule;] [Substituted by S.O. 831(E), dated 15.9.2000]

(k)"trust" means a trust established under the Indian Trusts Act, 1882 (2 of 1882) [or under an Act of Parliament or State Legislation] [Inserted by S.O. 1118(E), dated 17.11.1999];

(l)[ "unit" means beneficial interest of the investors in the scheme or fund floated by trust or [shares] [Substituted by S.O. 486(E), dated 5.4.2004] issued by a company including a body corporate;]

(m)"venture capital fund" means a fund established in the form of a trust or a company including a body corporate and registered under these regulation which-

(i)has a dedicated pool of capital;

(ii)raised in a manner specified in the regulations; and

(iii)invests [* * *] [Omitted by S.O. 486(E), dated 5.4.2004] in accordance with the regulations;

(n)[ "venture capital undertaking" means a domestic company- [Inserted by S.O. 831(E), dated 15.9.2000]

(i)whose shares are not listed on a recognized stock exchange in India;

(ii)[ which is engaged in the business for providing services, production or manufacture of article or things or does not include such activities or sectors which are specified in the negative list by the Board with the approval of the Central Government by notification in the Official Gazette in this behalf.]]

Chapter II
Registration Of Venture Capital Funds

3. Application for Grant of Certificate.-

(1)Any company or trust [or a body corporate] [Inserted by S.O. 831(E), dated 5.2.1998 ] proposing to carry on any activity as a venture capital fund on or after the commencement of these regulations shall make an application to the Board for grant of a certificate.

(2)Any company or trust [or a body corporate] [Inserted by S.O. 831(E), dated 5.2.1998 ], who on the date of commencement of these regulations is carrying any activity as a venture capital fund without a certificate shall make an application to the Board for grant of a certificate within a period of three months from the date of such commencement:Provided that the Board, in special cases, may extend the said period upto a maximum of six months from the date of such commencement.

(3)An application for grant of certificate under sub-regulation (1) or subregulation (2) shall be made to the Board in Form A and shall be accompanied by a nonrefundable application fee as specified in Part A of the Second Schedule to be paid in the manner specified in Part B thereof.

(4)Any company or trust [or a body corporate] [Inserted by S.O. 831(E), dated 5.2.1998 ] referred to in sub-regulation (2) who fails to make an application for grant of a certificate within the period specified therein shall cease to carry on any activity as a venture capital fund.

(5)The Board may in the interest of the investors issue directions with regard to the transfer of records, documents or securities or disposal of investments relating to its activities as a venture capital fund.

(6)The Board may in order to protect the interests of investors appoint any person to take charge of records, documents, securities and for this purpose also determine the terms and conditions of such an appointment.

4. Eligibility Criteria.-

For the purpose of the grant of a certificate by the Board the applicant shall have to fulfil in particular the following conditions, namely:-

(a)if the application is made by a company :-

(i)memorandum of association as has its main objective, the carrying on of the activity of a venture capital fund;

(ii)it is prohibited by its memorandum and articles of association from making an invitation to the public to subscribe to its securities;

(iii)its director or principal officer or employee is not involved in any litigation connected with the securities market which may have an adverse bearing on the business of the applicant;

(iv)its director, principal officer or employee has not at any time been convicted of any offence involving moral turpitude or any economic offence;

(v)[it is a fit and proper person;] [Inserted by S.O. 19(E), dated 5.1.1998]

(b)if the application is made by a trust-

(i)the instrument of trust is in the form of a deed and has been duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908);

(ii)the main object of the trust is to carry on the activity of a venture capital fund;

(iii)the directors of its trustee company, if any or any trustee is not involved in any litigation connected with the securities market which may have an adverse bearing on the business of the applicant;

(iv)the directors of its trustee company, if any, or a trustee has not at any time, been convicted of any offence involving moral turpitude or of any economic offence;

(v)[ the applicant is a fit and proper person;] [Inserted by S.O. 19(E), dated 5.1.1998]

(c)the [applicant] [ Substituted by S.O. 831(E), dated 15.9.2000] has not been refused a certificate by the Board or its certificate has not been suspended under Regulation 30 or cancelled under Regulation 31.

(d)[ if the application is made by a body corporate: [Inserted by S.O. 1118(E), dated 17.11.1999]

(i)it is set up or established under the laws of the Central or State Legislature.

(ii)the applicant is permitted to carry on the activities of a venture capital fund.

(iii)the applicant is a fit and proper person.

(iv)the directors or the trustees, as the case may be, of such body corporate have not been convicted of any offence involving moral turpitude or of any economic offence.

(v)the directors or the trustees, as the case may be, of such body corporate, if any, are not involved in any litigation connected with the securities market which may have an adverse bearing on the business of the applicant.]

5. Furnishing of information, clarification.-

The Board may require the applicant to furnish such further information as it may consider necessary.

6. Consideration of application.-

An application which is not complete in all respects shall be rejected by the Board:Provided that, before rejecting any such application, the applicant shall be given an opportunity to remove, within thirty days of the date of receipt of communication, the objections indicated by the Board:Provided further that the Board may, on being satisfied that it is necessary to extend the period specified in the first proviso, extend such period by such further time not exceeding ninety days.

7. Procedure for grant of certificate.-

(1)If the Board is satisfied that the applicant is eligible for the grant of certificate, it shall send an intimation to the applicant.

(2)On receipt of intimation, the applicant shall pay to the Board, the registration fee specified in Part A of the Second Schedule in the manner specified in Part B thereof.

(3)The Board shall on receipt of the registration fee grant a certificate of registration in Form B.

8. Conditions of certificate.-

The certificate granted under regulation 7 shall be inter alia, subject to the following conditions, namely:-

(a)the venture capital fund shall abide by the provisions of the Act, [* * *] [Omitted by S.O. 1118(E), dated 17.11.1999] and these regulations;

(b)the venture capital fund shall not carry on any other activity other than that of a venture capital fund;

(c)the venture capital fund shall forthwith inform the Board in writing if any information or particulars previously submitted to the Board are found to be false or misleading in any material particular or if there is any change in the information already submitted.

9. Procedure where certificate is not granted.-

(1)After considering an application made under regulation 3, if the Board is of the opinion that a certificate should not be granted, it may reject the application after giving the applicant a reasonable opportunity of being heard.

(2)The decision of the Board to reject the application shall be communicated to the applicant within thirty days.

10. Effect of refusal to grant certificate.-

(1)Any applicant whose application has been rejected under regulation 9 shall not carry on any activity as a venture capital fund.

(2)Any company or trust [or a body corporate] [Inserted by S.O. 831(E), dated 15.9.2000] referred to in sub-regulation (2) of regulation 3, whose application for grant of certificate has been rejected under regulation 9 by the Board shall, on and from the date of the receipt of the communication under sub-regulation (2) of regulation 9, cease to carry on any activity as a venture capital fund.

(3)The Board may in the interest of the investors issue directions with regard to the transfer of records, documents or securities or disposal of investments relating to its activities as a venture capital fund.

(4)The Board may in order to protect the interests of the investors appoint any person to take charge of records, documents, securities and for this purpose also determine the terms and conditions of such an appointment.

Chapter III
Investment Conditions And Restrictions

11. Minimum investment in a Venture Capital Fund.-

(1)A venture capital fund may raise monies from any investor whether Indian, Foreign or non-resident Indian [by way of issue of units] [Inserted by S.O. 831(E), dated 15.9.2000].

(2)No venture capital fund set up as a company or any scheme of a venture capital fund set up as a trust shall accept any investment from any investor which is less than five lakh rupees:Provided that nothing contained in sub-regulation (2) shall apply to investors who are,-

(a)employees or the principal officer or directors of the venture capital fund, or directors of the trustee company or trustees where the venture capital fund has been established as a trust;

(b)[ the employees of the fund manager or asset management company.] [Substituted by S.O. 831(E), dated 15.9.2000]

(c)[* * *] [ Omitted by S.O. 831(E), dated 15.9.2000]

(3)[ Each scheme launched or fund set up by a venture capital fund shall have firm commitment from the investors for contribution of an amount of at least rupees five crores before the start of operations by the venture capital fund.] [Inserted by S.O. 831(E), dated 15.9.2000]

12. [ Investment conditions and restrictions.- [Substituted by S.O. 831(E), dated 15.9.2000]

All investment made or to be made by a venture capital fund shall be subject to the following conditions, namely:-

(a)venture capital fund shall disclose the investment strategy at the time of application for registration;

(b)venture capital fund shall not invest more than 25% corpus of the fund in one venture capital undertaking;

(c)shall not invest in the associated companies; and

(d)venture capital fund shall make investment [* * *] as enumerated below:

(e)[ venture capital fund shall disclose the duration life cycle of the fund.] [Inserted by S.O. 468(E), dated 5.4.2004]

(i)at least [66.67%] [Substitued by S.O. 468(E), dated 5.4.2004] of the investible funds shall be invested in unlisted equity shares or equity linked instruments.

[* * *] [Omitted by S.O. 1179(E), dated 30.12.2000]

(ii)Not more than [33.33%] [Substitued by S.O. 468(E), dated 5.4.2004] of the investible funds may be invested by way of:

(a)subscription to initial public offer of a venture capital undertaking whose shares are proposed to be listed [* * *] [Inserted by S.O. 468(E), dated 5.4.2004];

(b)debt or debt instrument of a venture capital undertaking in which the venture capital fund has already made an investment by way of equity.]

(c)[ preferential allotment of equity shares of a listed company subject to lock in period of one year;

(d)the equity shares or equity linked instruments of a financially weak company or a sick industrial company whose shares are listed.

Explanation 1.- For the purpose of these regulations, a "financially weak company" means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50% but less than 100% of its networth as at the beginning of the previous financial year;

(e)Special Purpose Vehicles which are created by a venture capital fund for the purpose of facilitating or promoting investment in accordance with these Regulations.

Explanation.- The investment conditions and restrictions stipulated in clause (d) of regulation 12 shall be achieved by the venture capital fund by the end of its life cycle;] [Inserted by S.O. 468(E), dated 5.4.2004]

Chapter IV
General Obligations And Responsibilities

14. Prohibition on inviting subscription from the public.-

No venture capital fund shall issue any document or advertisement inviting offers from the public for the subscription or purchase of any of its units.

15. Private placement.-

A venture capital fund may receive monies for investment in the venture capital fund [only] [Inserted by S.O. 831(E), dated 15.9.2000] through private placement of its units.

16. [ Placement memorandum or subscription agreement.- [Substitued by S.O. 831(E), dated 15.9.2000]

(1)The venture capital fund shall-

(a)issue a placement memorandum which shall contain details of the terms and conditions subject to which monies are proposed to be raised from investors; or

(b)enter into contribution or subscription agreement with the investors which shall specify the terms and conditions subject to which monies are proposed to be raised.

(2)The Venture Capital Fund shall file with the Board for information, the copy of the placement memorandum or the copy of the contribution or subscription agreement entered with the investors along with a report of money actually collected from the investor.]

17. Contents of placement memorandum.-

(1)The placement memorandum [or the subscription agreement with investors] [Inserted by S.O. 831(E), dated 15.9.2000] referred to in sub-regulation (1) of regulation 16 shall contain the following, namely:-

(a)details of the trustees or trustee company [and the directors or chief executives] [Inserted by S.O. 831(E), dated 15.9.2000] of the venture capital fund;

(b)[ (i) the proposed corpus of the fund and the minimum amount to be raised for the fund to be operational.

[Substituted by S.O. 831(E), dated 15.9.2000]

(ii)the minimum amount to be raised for each scheme and the provision for refund of monies to investor in the event of non-receipt of minimum amount;

(c)details of entitlements on the [* * *] units of venture capital fund for which subscription is being sought;]

(d)tax implications that are likely to apply to investors;

(e)manner of subscription to the units of the trust [of the venture capital fund] [Inserted by S.O. 831(E), dated 15.9.2000];

(f)the period of maturity, if any, of the [fund] [Inserted by S.O. 831(E), dated 15.9.2000];

(g)the manner, if any, in which the [fund] [Inserted by S.O. 831(E), dated 15.9.2000] be wound up;

(h)the manner in which the benefits accruing to investors in the units of the trust are to be distributed;

(i)[ details of the fund manager or asset management company if any, and the fees to be paid to such manager;] [Substituted by S.O. 831(E), dated 15.9.2000]

(j)[ the details about performance of the fund, if any, managed by the Fund Manager;

[Inserted by S.O. 831(E), dated 15.9.2000]

(k)investment strategy of the fund;

(l)any other information specified by the Board.]

(2)[* * *] [Inserted by S.O. 831(E), dated 15.9.2000 ]

18.

[* * *] [Omitted by S.O. 831(E), dated 15.9.2000]

19.

[* * *] [Omitted by S.O. 831(E), dated 15.9.2000]

20. Maintenance of books and records.-

(1)Every venture capital fund shall maintain for a period of [eight years] [Substitued by S.O. 831(E), dated 15.9.2000] books of account, records and documents which shall give a true and fair picture of the state of affairs of the venture capital fund.

(2)Every venture capital fund shall intimate the Board, in writing, the place where the books, records and documents referred to in sub-regulation (1) are being maintained.

21. Power to call for information.-

(1)The Board may at any time call for any information from a venture capital fund with respect to any matter relating to its activity as a venture capital fund.

(2)Where any information is called for under sub-regulation (1) it shall be furnished [within the time specified by the Board] [Substitued by S.O. 831(E), dated 15.9.2000].

22. Submission of reports to the Board.-

The Board may at any time call upon the venture capital fund to file such reports as the Board may desire with regard to the activities carried on by the venture capital fund.

23. Winding-up.-

(1)A scheme of a venture capital fund set up as a trust shall be wound up,

(a)when the period of the scheme, if any, mentioned in the placement memorandum is over;

(b)if it is the opinion of the trustees or the trustee company, as the case may be, that the scheme shall be wound up in the interests of investors in the units;

(c)if seventy-five per cent of the investors in the scheme pass a resolution at a meeting of unit holders that the scheme be wound up; or

(d)if the Board so directs in the interests of investors.

(2)A venture capital fund set up as a company shall be wound up in accordance with the provisions of the Companies Act, 1956 (1 of 1956).

(2A)[ A venture capital fund set up as a body corporate shall be wound up in accordance with the provisions of the statute under which it is constituted.] [Inserted by S.O. 831(E), dated 15.9.2000]

(3)[ The trustees or trustee company of the venture capital fund set up as a trust or the Board of Directors in the case of the venture capital fund is set up as a company (including body corporate) shall intimate the Board and investors of the circumstances leading to the winding up of the Fund or Scheme under subregulation (1).] [Substituted by S.O. 831(E), dated 15.9.2000]

24. Effect of winding-up.-

(1)On and from the date of intimation under sub-regulation (3) of regulation 23, no further investments shall be made on behalf of the scheme so wound up.

(2)Within three months from the date of intimation under sub-regulation (3) of regulation 23, the assets of the scheme shall be liquidated, and the proceeds accruing to investors in the scheme distributed to them after satisfying all liabilities.

(3)[ Notwithstanding anything contained in sub-regulation (2) and subject to the conditions, if any, contained in the placement memorandum or contribution agreement or subscription agreement, as the case may be, in specie distribution of assets of the scheme, shall be made by the venture capital fund at any time, including on winding up of the scheme, as per the preference of investors, after obtaining approval of at least 75% of the investors of the scheme.] [Inserted by S.O. 468(E), dated 5.4.2004]

Chapter V
Inspection And Investigation

25. Board's right to inspect or investigate.-

(1)The Board may [suo motu or upon receipt of information or complaint] [Inserted by S.O. 831(E), dated 15.9.2000] appoint one or more persons as inspecting or investigating officer to undertake inspection or investigation of the books of account, records and documents relating to a venture capital fund for any of the following reasons, namely:-

(a)to ensure that the books of account, records and documents are being maintained by the venture capital fund in the manner specified in these regulations;

(b)to inspect or investigate into complaints received from investors, clients or any other person, on any matter having a bearing on the activities of the venture capital fund;

(c)to ascertain whether the provisions of the Act and these regulations are being complied with by the venture capital fund; and

(d)to inspect or investigate suo motu into the affairs of a venture capital fund, in the interest of the securities market or in the interest of investors.

26. Notice before inspection or investigation.-

(1)Before ordering an inspection or investigation under regulation 25, the Board shall give not less than ten days notice to the venture capital fund.

(2)Notwithstanding anything contained in sub-regulation (1) where the Board is satisfied that in the interest of the investors no such notice should be given, it may by an order in writing direct that the inspection or investigation of the affairs of the venture capital fund be taken up without such notice.

(3)During the course of an inspection or investigation, the venture capital fund against whom the inspection or investigation is being carried out shall be bound to discharge its obligations as provided in regulation 27.

27. [ Obligations of venture capital fund on inspection or investigation by the Board.- [Substituted by S.O. 831(E), dated 15.9.2000]

(1)It shall be the duty of every officer of the Venture Capital Fund in respect of whom an inspection or investigation has been ordered under regulation 25 and any other associate person who is in possession of relevant information pertaining to conduct and affairs of such Venture Capital Fund including Fund Manager or asset management company, if any, to produce to the Investigating or Inspecting Officer such books, accounts and other documents in his custody or control and furnish him with such statements and information as the said Officer may require for the purposes of the investigation or inspection.

(2)It shall be the duty of every officer of the Venture Capital Fund and any other associate person who is in possession of relevant information pertaining to conduct and affairs of the Venture Capital Fund to give to the Inspecting or Investigating Officer all such assistance and shall extend all such co-operation as may be required in connection with the inspection or investigations and shall furnish such information sought by the Inspecting or Investigating Officer in connection with the inspection or investigation.

(3)The Investigating or Inspecting Officer shall, for the purposes of inspection or investigation, have power to examine on oath and record the statement of any employees, directors or person responsible for or connected with the activities of venture capital fund or any other associate person having relevant information pertaining to such Venture Capital Fund.

(4)The Inspecting or Investigating Officer shall, for the purposes of inspection or investigation, have power to obtain authenticated copies of documents, books, accounts of Venture Capital Fund, from any person having control or custody of such documents, books or accounts.]

28. Submission of report to the Board.-

The inspecting or investigating officer shall, as soon as possible, on completion of the inspection or investigation submit an inspection or investigation report to the Board:Provided that if directed to do so by the Board, he may submit an interim report.Communication of findings etc., to the venture capital fund.-

(1)The Board shall, after consideration of the inspection or investigation report or the interim report referred to in regulation 28, communicate the findings of the inspection officer to the venture capital fund and give him an opportunity of being heard.

(2)On receipt of the reply if any, from the venture capital fund, the Board may call upon the venture capital fund to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act and these regulations.

(3)[ The Board may after consideration of the investigation or inspection report and after giving reasonable opportunity of hearing to the venture capital fund or its trustees, directors issue such direction as it deems fit in the interest of securities market or the investors including directions in the nature of:-

(a)requiring a venture capital fund not to launch new schemes or raise money from investors for a particular period;

(b)prohibiting the person concerned from disposing of any of the properties of the fund or scheme acquired in violation of these regulations;

(c)requiring the person connected to dispose of the assets of the fund or scheme in a manner as may be specified in the directions;

(d)requiring the person concerned to refund any money or the assets to the concerned investors along with the requisite interest or otherwise, collected under the scheme;

(e)prohibiting the person concerned from operating in the capital market or from accessing the capital market for a specified period.]

Chapter VI
Procedure For Action In Case Of Default

30. Suspension of Certificate.-

The Board may suspend the certificate granted to a venture capital fund where the venture capital fund;

(a)contravenes any of the provisions of the Act or these regulations;

(b)fails to furnish any information relating to its activity as a venture capital fund as required by the Board;

(c)furnishes to the Board information which is false or misleading in any material particular;

(d)does not submit periodic returns or reports as required by the Board;

(e)does not co-operate in any enquiry, inspection or investigation conducted by the Board;

(f)fails to resolve the complaints of investors or fails to give a satisfactory reply to the Board in this behalf.

31. Cancellation of certificate.-

The Board may cancel the certificate granted to a venture capital fund:-

(a)when the venture capital fund is guilty of fraud or has been convicted of an offence involving moral turpitude;

(b)the venture capital fund has been guilty of repeated defaults of the nature specified in regulation 30; or

Explanation:- In this regulation, "fraud" has the same meaning as is assigned to it in section 17 of the Indian Contract Act, 1872 (9 of 1872).

(c)contravenes any of the provisions of the Act or these regulations.

32. Manner of making order of cancellation or suspension.-

No order of suspension or cancellation of certificate shall be made by the Board, except after holding an enquiry in accordance with the procedure specified in regulation 33.

33. Manner of holding enquiry before suspension or cancellation.-

(1)For the purpose of holding an enquiry under regulation 32, the Board may appoint one or more enquiry officers.

(2)The enquiry officer shall issue to the venture capital fund, at its registered office or its principal place of business, a notice setting out the grounds on which action is proposed to be taken against it and calling upon it to show cause against such action within a period of fourteen days from the date of receipt of the notice.

(3)The venture capital fund may, within fourteen days from the date of receipt of such notice, furnish to the enquiry officer a written reply, together with copies of documentary or other evidence relied on by it or sought by the Board from the venture capital fund.

(4)The enquiry officer shall give a reasonable opportunity of hearing to the venture capital fund to enable him to make submissions in support of its reply made under sub-regulation (3).

(5)Before the enquiry officer, the venture capital fund may appear through any person duly authorised by the venture capital fund:Provided that no lawyer or advocate shall be permitted to represent the venture capital fund at the enquiry:Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the venture capital fund to present its case through a lawyer or advocate.

(6)The enquiry officer may, if he considers it necessary, ask the Board to appoint a presenting officer to present its case.

(7)The enquiry officer shall, after taking into account all relevant facts and submissions made by the venture capital fund, submit a report to the Board and recommend the penal action, if any, to be taken against the venture capital fund as also the grounds on which the proposed action is justified.

34. Show-cause notice and order.-

(1)On receipt of the report from the enquiry officer, the Board shall consider the same and may issue to the venture capital fund a show-cause notice as to why the penal action as proposed by the enquiry officer [or such appropriate action] [Inserted by S.O. 831(E), dated 15.9.2000] should not be taken against it.

(2)The venture capital fund shall, within fourteen days of the date of the receipt of the showcause notice, send a reply to the Board.

(3)The Board, after considering the reply, if any, of the venture capital fund, shall, as soon as possible pass such order as it deems fit.

35. Effect of suspension and cancellation of certificate.-

(1)On and from the date of the suspension of the certificate, the venture capital fund shall cease to carry on any activity as a venture capital fund during the period of suspension, and shall be subject to such directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as venture capital fund, as the Board may specify.

(2)On and from the date of cancellation of the certificate, the venture capital fund shall, with immediate effect, cease to carry on any activity as a venture capital fund, and shall be subject to such directions of the Board with regard to the transfer of records, documents or securities that may be in its custody or control, relating to its ativities as venture capital fund, as the Board may specify.

36. Publication of order of suspension or cancellation.-

The order of suspension or cancellation of certificate passed under Regulation 35 may be published by the Board in two newspapers.Action against intermediaries.-The Board may initiate action for suspension or cancellation of registration of an intermediary holding a certificate in the performance of its functions or fails to comply with its obligations under these regulation:Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in the regulations applicable to such intermediary is complied with.Appeal to the Central Government.-Any person aggrieved by an order of the Board under these regulations may prefer an appeal to the Securities Appellate Tribunal in accordance with Section 15T of the Act.FIRST SCHEDULE-FORMFORM ASecurities and Exchange Board of India (Venture Capital Funds) Regulations, 1996(See regulation 3)Application For Grant Of Certificate Of Registration As Venture Capital FundSecurities And Exchange Board Of India Mittal Court, `b' Wing, 1st Floor Nariman Point, Mumbai 400 021 - IndiaInstructions

(i)This form is meant for use by the company or trust (hereinafter referred to as the applicant) for application for grant of certificate of registration as venture capital fund.

(ii)The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.

(iii)This application form should be filled in accordance with these regulations.

(iv)The application shall be considered by the Board provided it is complete in all respects.

(v)All answers must be legible.

(vi)Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form.

(vii)The application must be signed and all signatures must be original.

(viii)The application must be accompanied by an application fee as specified in the Second Schedule to these regulations.

1. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) of the applicant and the name of the contact person.

2. Please indicate to which of the following categories the applicant belongs.

(i)a company established under the Companies Act, 1956 (1 of 1956)

(ii)a trust set up under the Indian Trusts Act, 1882 (2 of 1882).

3. Date and place of incorporation or establishment and date of commencement of business (enclose certificate of incorporation, memorandum and articles of association or trust deed in terms of which incorporated or established).

4. (a) Details of members of the Board of Trustees or directors of the trustee company, as the case may be, in case the applicant has been set up as a trust.

(b)Details of members of the Board of Directors of the venture capital fund in case the applicant has been set up as a company.

5. Please state whether the applicant, his partner, director or principal officer is involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant; or has at any time been convicted for any moral turpitude or at any time has been found guilty of any economic offence. In case the applicant is a trust, the above information should be provided for the members of the Board of Trustees or of the abovementioned persons connected with the trustee company. If yes, the details thereof.

6. Please also state whether there has been any instance of violation or nonadherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent or holding company or affiliate may have been subject to economic, or criminal, liability, or suspended from carrying out its operations, or the registration revoked temporarily.

7. Details of asset management company, if any (enclose copy of agreement with the asset management company).

8. Declaration statement (to be given as below).

We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.AND we further agree that, we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996, and Government of India guidelines/instructions as may be announced by the Securities and Exchange Board of India from time to time.We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.For and on behalf of_________________(Name of the applicant)Authorized signatory_________________

(Name)Date:

Place:FORM B[See regulation 7(3)]Securities And Exchange Board Of India (Venture Capital Funds) Regulations, 1996Certificate Of Registration As Venture Capital FundI. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made thereunder, the Board hereby grants a certificate of registration to .....................as a venture capital fund subject to the conditions specified in the Act and in the regulations made thereunder.II. The Registration Number of the venture capital fund is IN/VCDate :Place : MumbaiBy OrderSd/-For and on behalf of Securities and Exchange Board of IndiaSecond ScheduleSecurities and Exchange Board of India (Venture Capital Funds) Regulations, 1996(See regulations 3(3) and 7)Fees[PART AAmount to be paid as fees

Application fee	Rs.1,00,000
Registration fee for grant of certificate	Rs.[5,00,000] [Substitued by Notification No. F.No. 11/LC/GN/2008/21669, dated 31.3.2008]

Part B

1. The fees specified above shall be payable by bank draft in favour of "The Securities and Exchange Board of India" at Mumbai.

[THIRD SCHEDULE[Inserted by S.O. 83(E), dated 15.4.2000]Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996(See Regulation 2(3))NEGATIVE LIST

1. Real Estate.

2. Non-banking financial services [excluding those non-banking financial companies which are registered with Reserve Bank of India and have been categorized as equipment leasing or hire purchase companies.] [Inserted by S.O. 831(E), dated 15.9.2000]

Legal Document View

Unlock Advanced Research with PRISMAI