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8/17/2019 Project Banking Law Shruti Kamble
1/20
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
I1*234"&*I31......................................................................................................................(
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.
# 43"
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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
( 43"
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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; $%#$
)
8/17/2019 Project Banking Law Shruti Kamble
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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; $%#$
#%
8/17/2019 Project Banking Law Shruti Kamble
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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; $%#$
#@
8/17/2019 Project Banking Law Shruti Kamble
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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
#=
8/17/2019 Project Banking Law Shruti Kamble
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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
8/17/2019 Project Banking Law Shruti Kamble
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
#>
8/17/2019 Project Banking Law Shruti Kamble
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REFERENCES
SASI K