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Union of India - Act

Energy Conservation (Venture Capital Fund for Energy Efficiency) Rules, 2017

UNION OF INDIA
India

Energy Conservation (Venture Capital Fund for Energy Efficiency) Rules, 2017

Rule ENERGY-CONSERVATION-VENTURE-CAPITAL-FUND-FOR-ENERGY-EFFICIENCY-RULES-2017 of 2017

Published on 31 March 2017
Commenced on 31 March 2017
[This is the version of this document from 31 March 2017.]
[Note: The original publication document is not available and this content could not be verified.]

Energy Conservation (Venture Capital Fund for Energy Efficiency) Rules, 2017Published vide Notifications No. G.S.R. 311(E), 31st March, 2017Ministry of PowerG.S.R. 311(E). - In exercise of the powers conferred by clause (v) of sub-section (2) of section 56 read with clauses (l), (m) and (n) of sub-section (2) of section 13 and section 46 of the Energy Conservation Act, 2001 (52 of 2001), the Central Government, in consultation with the Bureau of Energy Efficiency, hereby makes the following rules, namely:-

1. Short title and commencement.

(1)These rules may be called the Energy Conservation (Venture Capital Fund for Energy Efficiency) Rules, 2017.

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

2. Definitions.

(1)In these rules, unless the context otherwise requires,-

(a)"Act" means the Energy Conservation Act, 2001 (52 of 2001);

(b)"Bureau" means the Bureau of Energy Efficiency established under section 3 of the Act;

(c)"fund manager" means the public financial institution appointed by the Bureau for the purpose of management of the funds of Venture Capital Fund for Energy Efficiency under agreement;

(d)"invested entities" means the companies or projects wherein the Venture Capital Fund for Energy Efficiency has made investments;

(e)"National Mission for Enhanced Energy Efficiency" means one of the eight National Missions under the National Action Plan on Climate Change;

(f)"projects" means the energy efficiency projects under the Venture Capital Fund for Energy Efficiency for the government buildings, private buildings having commercial or multi-storey residential accommodations, and municipalities;

(g)"Securities and Exchange Board of India" means the Securities Exchange Board of India established under the Securities and Exchange Board of India Act, 1992 (5 of 1992);

(h)"Special Purpose Vehicle" means a company incorporated under the Companies Act, 2013 (18 of 2013) for a specific purpose with an asset or liability structure and legal status that makes its obligations secure;

(i)"trust" means a body formed by the Bureau, as a legal entity created by a Deed of Trust, consisting of Board of Trustees;

(j)"Venture Capital Fund for Energy Efficiency" means a fund to provide equity capital for energy efficiency project.

3. Establishment of Venture Capital Fund for Energy Efficiency.

(1)The Bureau shall establish a Venture Capital Fund for Energy Efficiency to provide equity capital for energy efficiency projects.

(2)The fund shall be administered by a trust created and managed by the Bureau and registered with the Securities and Exchange Board of India as a Venture Capital Fund.

(3)The Director General of the Bureau shall be the founder and settler of Venture Capital Fund for Energy Efficiency trust.

(4)The trust shall provide overall guidance for operation of the Venture Capital Fund for Energy Efficiency.

(5)The Chairman of the Board of Trustee shall be the Director General, Bureau, who shall implement the National Mission for Enhanced Energy Efficiency.

(6)The investment management of the fund shall be carried out by a fund manager appointed by the Bureau which shall be a public financial institution.

4. Investment pattern of the fund.

(1)The fund shall invest in the form of equity but a single investment by the fund shall not exceed rupees two crore.

(2)The fund shall provide last mile equity support to specific energy efficiency projects, limited to a maximum of fifteen per cent of total equity required, through special purpose vehicle or rupees two crore, whichever is less.

(3)The fund shall not invest in projects of invested entities or special purpose vehicle of invested entities.

(4)Each project shall meet the following criteria, namely:-

(a)seek to achieve demonstrable energy savings and mitigating emissions of greenhouse gases and project sponsors or participants must offer a viable method to monitor and verify the same;

(b)be a new project but shall not takeover of an existing project; and

(c)use viable technologies and to be developed after energy audit or feasibility studies.

(5)The period of investment of the fund shall be up to five years, with the option of early exit.

(6)In case of successful completion of the project prior to five years of investment, Venture Capital Fund for Energy Efficiency may exit at the discretion of its Board of Trustees.

(7)The fund may opt for the exit through the following exit routes, but not limited to: -

(a)repurchase by the invested entities or promoters;

(b)strategic sale- mergers and acquisition; and

(c)initial public offering, India, foreign capital markets.

5. Duration and amount of the fund.

(1)The total life of the fund shall be ten years from the date of commencement of the project.

(2)The administrative expenses shall not exceed five percent of the corpus provided the interest earned on fund corpus and dividends earned on the investments shall also be utilised for meeting administrative expenses related to Venture Capital Fund for Energy Efficiency.

6. Documentation and reporting.

(1)The Board of Trustees shall be provided with the following reports by the fund manager of the Venture Capital Fund for Energy Efficiency; namely:-

(a)quarterly reports about the performance of investments of the fund, new investments made in the quarter, and other reports;

(b)semi-annual reports concerning unaudited financial statements of the fund; industry dynamics, regulation, technologies, competing investments, new opportunities for investments and the other reports and charges debited to the fund;

(c)annual reports concerning audited financial statements; and

(d)any other information as required by Trust.

7. Deed of Trust.

- The Trust managing the Venture Capital Fund for Energy Efficiency shall be a legal entity created by a Deed of Trust.

8. Appointment of Trustees.

- The Ministry of Power may appoint, nominate or select experts in the field of energy efficiency, finance, law and other experts for the purpose of these rules.

9. Administration of the Trust.

(1)The administration of the trust shall vest with the Board of Trustees with Director General, Bureau as the managing trustee and chairman of the trust.

(2)The management, administration, direction and control of the affairs of the Trust shall vest in the Board of Trustees, which shall consist of not less than three and not more than ten trustees to be appointed by the Ministry of Power.

(3)The Board of Trustees shall consist of the following members, namely:-

(a)	Director-General of the Bureau	Ex-officio Chairperson and Managing Trustee;
(b)	Deputy Director General (Finance) of the Bureau	Ex-officio Joint Managing Trustee;
(c)	Joint Secretary (Ministry of Law)	Ex-officio Member, Trustee;
(d)	Joint Secretary (Ministry of Finance)	Ex-officio Member, Trustee;
(e)	Expert (Energy Efficiency) (The Experts shall befrom the Ministry of Power or from any other Government orGovernment Organization or a non-governmental organisation asdecided by the Ministry of Power)	Ex-officio Member, Trustee;
(f)	Any other member nominated by the Ministry ofPower	Ex-officio Member, Trustee.

(4)The appointment of the member trustees specified at in items (c) to (f) of sub-rule (3) of rule 9 shall be made by the Ministry of Power on the basis of their experience in the field of energy efficiency, finance, law and other relevant areas.

(5)The remaining Trustees for the Venture Capital Fund for Energy Efficiency Trust shall be appointed by the Ministry of Power.

(6)A vacancy caused under sub-rule (3) of rule 9 or otherwise shall be filled by seeking nomination from the same organisation or any other relevant organisation as approved by the Managing Trustee.

10. Role of the Bureau.

- The Bureau shall -

(a)formulate the trust and register the fund with the Securities and Exchange Board of India as required under the law;

(b)appoint a public financial institution as a fund manager for Venture Capital Fund for Energy Efficiency under agreement with the Bureau;

(c)monitor the progress of Venture Capital Fund for Energy Efficiency and fund manager; and

(d)incur administrative expenses for Venture Capital Fund for Energy Efficiency by taking due approval from Director General, Bureau.

11. Power of the Trustees.

- The Board of Trustees shall have the control and management of the Trust and exercise the following powers namely:-

(a)to determine from time to time, the commencement and taking up the object and purposes for which the funds of the trust shall be used and allot and allocate to each of the objects such portion of the funds as they deem fit;

(b)to finalise investment strategy and operations manual of the fund;

(c)to incur all expenditure necessary as in their own opinion useful for administration of the trust;

(d)to open one or more bank accounts of the trust with any bank or banks as the Trustees may deem fit and deposit monies of the Trust in the Bank accounts;

(e)to institute, conduct, defend, compound, withdraw, compromise, adjust, refer to arbitration or to do such things as are incidental and necessary, concerning the affairs of the Trust and to sign and verify vakalats, pleadings, affidavits and other powers;

(f)to accept contributions in cash or in kind either by way of addition to the trust funds generally or for any one or more of the specified objects of the Trust; and

(g)to establish ad-hoc committees for any purpose.

12. Meetings of the Trustees.

(1)The meeting of the trustee shall be convened by the managing trustee or under his direction by any other Trustees.

(2)The quorum for the meeting of the Trustees shall be three trustees, personally present.

(3)In the event of equality of votes, the person presiding such meeting shall exercise casting vote.

13. Cessation of Trusteeship.

(1)A Trustee shall cease to be the trustee if he:-

(a)resigns or dies; or

(b)becomes an undischarged insolvent; or

(c)becomes unsound mind and stands so declared by a competent court; or

(d)refuses to act or becomes incapable of acting; or

(e)has been absent without obtaining leave of absence from three consecutive meetings of the Board of Trustees; or

(f)is found guilty by the Competent Court of Law of an offence involving moral turpitude; or

(g)is found to have acted against the interest of the Trust.

(2)The trustees may unanimously decide that the activities of the trustee are detrimental to the objectives or activities or administration of the Trust.

(3)A nominated trustee shall cease to be a trustee on expiry of the period of nomination:Provided that no person shall be removed under this rule before the expiry of his term without giving that person a reasonable opportunity of being heard.

14. Dissolution.

- On dissolution of the trust, the net assets of the trust shall be transferred to the Government of India.

15. Role and responsibility of the Fund Manager.

(1)A Public Financial Institution registered under section 4A of the Companies Act,1956 (1 of 1956), shall be selected as the fund Manager and shall be primarily responsible for making investment on behalf of the Venture Capital Fund for Energy Efficiency in energy efficiency projects as envisaged under these rules including the following; namely:-

(a)create a detailed investment strategy based on objectives as specified by the Bureau or Trust, such as segmental market size, impact on energy efficiency, types of technologies, financial returns, risks and other objectives;

(b)develop a pipeline of investment options or deals;

(c)screen investment opportunities;

(d)establish term sheets for investments;

(e)due-diligence of investment opportunities-

(i)business plan, business space;

(ii)technical matters relating to technology;

(iii)financial and accounting matters;

(iv)legal issues relating to the fund.

(2)The appointed Fund Manager shall be required to make decisions on investments, exit strategies, management of liquidity and participation in the management of investee entities and any other matter with respect to the investment strategy approved by Venture Capital Fund for Energy Efficiency Trust.

(3)Reviewing operating results and compliance reports of the invested companies and ensuring course corrections when needed.

(4)Deposit the dividend received on investments back into Venture Capital Fund for Energy Efficiency Trust account which shall further be used to meet the administrative expenses relating to the Venture Capital Fund for Energy Efficiency.

(5)The Fund Manager shall ensure that each investment meets pre-agreed criteria.

(6)The Fund Manager shall assess and review the progress reports and statement of accounts provided by the companies on utilisation of the fund and in case of any deviation from the agreement, accordingly bring them to the notice of the Board of Trustees and shall take suitable actions to safeguard the investments and the invested projects.

(7)The staff of Fund Manager shall, during the examination of investment proposals, ensure complete independence from the appraisal of the project by other agencies and from the development of the project by the project developer.

(8)The Fund Manager shall organise quarterly meeting of Venture Capital Fund for Energy Efficiency Trust, where progress reports, statement of accounts etc. shall be presented to the Board of Trustees for overall monitoring.

(9)The Fund Manager shall prepare and publish an annual report setting out the accounts showing all the income and expenditure of the trust, including administrative expense, after taking approval from the Venture Capital Fund for Energy Efficiency trust.

(10)The Venture Capital Fund for Energy Efficiency shall not consider any investment projects in which the organisation that is providing manpower for the Fund Manager is an investor, or is considering to be an investor.

16. Resolutions.

(1)The Trustees may exercise all the powers vested in them in rule 11 and pass resolution at a simple majority of the trustees attended such meetings of the Board of Trustees;

(2)Any resolution in writing signed by all Trustees holding office for the time being shall be valid and binding.

17. Suits.

- The Managing Trustee of the Trust is authorised to sue and liable to be sued on behalf of the Trust.

18. Accounts and Audit.

(1)The administrative expense of the fund shall include the fees of Fund Manager, workshops, staff for Trust administration, and other related expenses.

(2)The Trustees shall maintain true and correct accounts of all Trust monies and of all the income and investments and all the outgoing expenses.

(3)The year of account shall be the financial year commencing from the 1st April and ending on the 31st March.

(4)The Fund Manager shall each year issue a report setting out the accounts showing the income and expenditure of the Trust for the preceding year not later than six months from the end of the preceding year of accounts.

(5)The accounts of the Trust shall be audited every year by statutory Auditor and the audited statement of accounts together with the report of the auditor shall be laid before the Board of Trustees for approval. The accounts shall be open to CAG audit as per their requirements.

19. Supplementary and General Provisions.

- In respect of any matter not specifically provided for in these rules, the Bureau may make such supplementary or additional rules or issue instructions and clarifications as may be necessary for the purpose of the fund with the approval of Ministry of Power.

20. Power to amend Rules and Regulations.

- The Ministry of Power shall have the power and authority to make, amend, or rescind the rules and regulation for the management and administration of the Trust and the Fund.

21. Residuary provisions.

- With respect to the registration of Venture Capital Fund for Energy Efficiency the guidelines issued by Securities and Exchange Board of India from time to time shall apply.

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