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THE GAZETTE OF INDIA

EXTRAORDINARY

PART II- SECTION 3-SUB-SECTION (ii)

PUBLISHED BY AUTHORITY

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

MUMBAI, DECEMBER 4, 1996

SECURITIES AND EXCHANGE BOARD OF INDIA

(VENTURE CAPITAL FUNDS) REGULATIONS, 1996

(including amendments made upto December 30, 2000)

S.O. 850(E) In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Securities and Exchange Board of India hereby, makes the following regulations.

CHAPTER I

PRELIMINARY

1 Short title and commencement

(1) These regulations may be called the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions

In these regulations, unless the context otherwise requires, -
    1. "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);


      2. [(aa) "associate company" means a company in which a director or trustee or sponsor or settlor of the venture capital fund or asset management company holds either individually or collectively, equity shares in excess of 15% of its paid-up equity share capital of venture capital undertaking".]1

    2. "certificate" means a certificate of registration granted by the Board under regulation 7 ;
    3. "company" means a company incorporated under the Companies Act, 1956 (1 of 1956);
    4. "economic offence" means an offence to which the Economic Offences (Limitation of Prosecutions) Act, 1974 (12 of 1974) applies for the time being;
    5. "enquiry officer" means an enquiry officer appointed by the Board, under regulation 33 ;


      6. [(ee) `equity linked instruments’ includes instruments convertible into equity shares or share warrants, preference shares, debentures compulsorily convertible into equity.]2

    6. "Form" means any of the forms set out in the First Schedule;
    7. [***]3
[(h) `inspecting or investigating officer’ means an inspecting or investigation officer appointed by the Board under regulation 25. ]4

[(hh) ‘investible funds’ means corpus of the fund net of expenditure for administration and management of the fund.]5
    1. "Schedule" means a schedule annexed to these regulations;
[(j) `negative list’ means a list of items specified in Third Schedule]6.
  1. "trust" means a trust established under the Indian Trusts Act, 1882 (2 of 1882) [or under an Act of Parliament or State Legislation};7
8 [(l) ‘unit’ means beneficial interest of the investors in the scheme or fund floated by trust or shares9 issued by a company including a body corporate.]

[(m) ‘venture capital fund’ means a fund established in the form of a trust or a company including a body corporate and registered under these regulations which-
    1. has a dedicated pool of capital,
    2. raised in a manner specified in the regulations, and
    3. invests in venture capital undertaking in accordance with the regulations.]10
    [(n) `venture capital undertaking’ means a domestic company –
    1. whose shares are not listed on a recognised stock exchange in India;
    2. which is engaged in the business for providing services, production or manufacture of article or things or does not include such activities or sectors which are specified in the negative list by the Board with the approval of the Central Government by notification in the Official Gazette in this behalf. ]11

1 Substituted for "associate person" by SEBI (Venture Capital Funds) (Second Amendment) Regulations, 2000 published in the Gazette of India dated December 30, 2000, vide S.O. No. 1179 (E). Prior to substitution, the definition of ‘associate’ in relation to venture capital fund means a person, –
  1. who, directly or indirectly, by himself, or in combination with relatives, exercises control over the venture capital fund; or
  2. in respect of whom the venture capital fund, directly or indirectly, by itself, or in combination with other persons, exercises control;
  3. or whose director, is also a director, of the venture capital fund ."
2 Inserted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E) .
3Omitted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E). Prior to omission it read as, "(g) "Government of India Guidelines" means the guidelines dated September 20, 1995 issued by the Government of India for Overseas Venture Capital Investments in India as amended from time to time;"
4Substituted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E). Prior to substitution is read as, " "(h) "inspecting officer" means an inspecting officer appointed by the Board under regulation 25 ;"
5Inserted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E)
6Substituted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E). Prior to substitution is read as "(j) "sick industrial company" has the same meaning as is assigned to it in clause (o) of sub-section (1) of section (3) of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);"
7Inserted by the Securities and Exchange Board of India (Venture Capital Funds) Amendment Regulations, 1999 dated November 17th, 1999 by S.O. 1118 (E).
8Substituted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E) . Prior to substitution is read as ""units" means the interest of the investors in a scheme of a venture capital fund set up as a trust, which consist of each unit representing one undivided share in the assets of the scheme".
9Substituted for the words "any other securities" by SEBI (Venture Capital Funds) (Second Amendment) Regulations, 2000 published in the Gazette of India dated December 30, 2000, vide S.O. No. 1179 (E).
10Substituted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No.831 (E). Prior to substitution is read as, "(m) "venture capital fund" means a fund established in the form of a company or trust which raises monies through loans, donations, issue of securities or units as the case may be, and makes or proposes to make investments in accordance with these regulations."
11Inserted by SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 published in the Gazette of India dated September 15, 2000, vide S.O. No. 831(E) .