Securities and Exchange Board of India
24 months prohibition period for fresh issue of capital to be reduced to 6 months in the case of unlisted companies where the buyback of shares is from the VC investors ;
negotiated deals be permitted in unlisted companies where one of the party to the deal is venture capital investor;
permit VCC / VCU to redeem their equity shares / preference shares to an extent of 100% of their paid up capital out of sale proceeds of investment and assets and not necessarily out of free reserves, securities premium account or the proceed of fresh issue should apply to them.
Relaxing Takeover Code : The venture capital fund while exercising its call or put option as per the terms of agreement should be exempt from applicability of takeover code and 1969 circular under section 16 of SC(R)A issued by the Government of India.
Relaxing the IPO norms :The existing requirement under the SEBI (Initial Public Offer) Guidelines for three years track record of profit should be relaxed in the case of companies funded by VCFs. Further, the companies whose shares are already listed on stock exchanges outside India, the listing rules should be relaxed to permit the listing of shares of these companies on Indian Stock exchanges. Those companies which are funded by Venture capitalists and their securities are listed on the stock exchanges outside the country, these companies should be permitted to list their shares on the Indian stock exchanges.
QIB market for unlisted securities : The market for trading in unlisted securities should be promoted. The VCF / joint promoters should be eligible as qualified investor to participate in the unlisted equity segment of OTCEI or any other stock exchange permitted by SEBI.
NOC requirement : In the case of transfer of securities by FVCIs to any another person, the RBI requirement of obtaining NOC from joint venture partner or other shareholders should be dispensed with.
RBI pricing norms : The FVCI should be permitted to invest and exit from any investment as like FIIs without any requirement of prior approval of the pricing of securities by RBI.
8.1Incentive for Employees - Employees Stock Option Plan (ESOP)
8.1.1Currently, the Stock Options shall be available to non-resident and resident permanent employees (including Indian and overseas working directors) of the company. The Stock options shall not be available to the promoters and their relatives as( defined under the Companies Act). Venture Capital funded companies typically have a large option pool for their employees from 5-30% of the Issued equity. This would include Incubator, CEO and the Start-up team. Currently, these persons would come under the meaning of “Promoter” under the ESOP guidelines and hence may not qualify for ESOP. This has to be amended to
Report of K B Chandrasekhar Committee on Venture Capital34