Securities and Exchange Board of India
The provision for investment in sick companies and financial assistance in any other manner may be dispensed with.
The existing provisions for approval of placement memorandum by SEBI may be dispensed with but the content of placement memorandum may be strengthened to include all the significant information necessary for an investor to arrive at a fair decision.
SEBI regulations should be amended to dispense with the requirement of registration of the instrument of trust under the Indian Registration Act.
10.1Venture capital industry in India is still in its early stages and to give it a proper fillip it is important to develop related infrastructure as has been successfully done internationally specially in US, Taiwan and Israel. Following areas need due attention.
10.2Incubators: Incubators are mostly non profit entities that provide value added advisory, informational and certain support infrastructure which includes productive office environment, finance and complementary resources. Incubators are mostly promoted by Government or professional organisations seeking to develop small enterprises in a particular area. In US even city government have promoted several incubators to capture a portion of Silicon Valley high technology business. Some times venture capitals funds also have their own incubators and companies also set up in-house incubators. Incubators typically give a very initial stage support to young entrepreneurs who want to develop their idea to a viable commercial proposition which could be financed and supported by venture capitalist. Incubators have been started by Government and public institutions, to encourage young talent by providing initial facilities and finance has really helped countries like US, Israel, Taiwan etc. According to US SBA statistics about 25% of incubator firms are successful (defined as profitability within 5 years of establishment).
10.2.1Increasingly there are transnational incubators in Silicon Valley, Israel and Taiwan which provide the head start advantage of accessing global experience and environment to young entrepreneurs of the respective countries. In India, Central and State Governments, public institutions should support and set up incubators. Government should also consider giving infrastructural support and other incentives including tax incentives for promotion of incubators.
10.2.2There is also need to consider some successful models which have supported venture capital activity and enterprise building in a substantial manner two such models are discussed hereunder:
Report of K B Chandrasekhar Committee on Venture Capital38