Securities and Exchange Board of India
undertakings as enumerated below :
atleast 70% of the investible funds shall be invested in unlisted equity shares or equity related instruments or other instruments convertible into equity;
not more than 30% of the investible funds may be invested by way of -
subscription to the initial public offer of a VCU whose shares are proposed to be listed subject to lock in period of one year;
preferential allotment of equity of a listed VCU subject to lock in period of one year;
debt / debt instrument to a venture capital undertaking in which VCF has already made investments by way of equity.
The existing provisions under the SEBI regulations for investment in listed securities of financially weak or sick companies may be dispensed with as such investments would get covered under the 30% limit.
The existing provisions under SEBI regulations permitting financial assistance in any other manner, to companies in whose equity shares venture capital fund has invested, needs to be dispensed with as this also gets covered in 30% limit.
The registered FVCI should be permitted to invest and exit in a hassle free automatic route as permitted to FIIs without requirement of approval of pricing by RBI.
The provisions under Section 370 & 372 under the Companies Act relating to Inter-corporate Investment and Inter-corporate Loan should be relaxed in the case of venture capital funds incorporated as Companies.
In order to facilitate investment by VCF in new enterprises, the Companies Act may be amended so as to permit issue of shares by unlisted public companies with a differential right in regard to voting and dividend. Such a flexibility already exists under the Indian Companies Act in the case of private companies which are not subsidiaries of public limited companies.
Report of K B Chandrasekhar Committee on Venture Capital31