Section 12 in Securities And Exchange Board Of India (Venture Capital Funds) Regulations, 1996
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]
