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THE GAZETTE OF INDIA

EXTRAORDINARY

PART III - SECTION IV SUB SECTION (ii)

PUBLISHED BY AUTHORITY

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

MUMBAI, THE 5TH DAY OF APRIL 2004

SECURITIES AND EXCHANGE BOARD OF INDIA

(FOREIGN VENTURE CAPITAL INVESTORS) (AMENDMENT) REGULATIONS, 2004

S.O. No. 469(E).- In exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, namely:-

1. (i) These Regulations may be called the Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2004.

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

2. In the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulation, 2000; -

 

(i) In regulation 2, in sub-regulation (1), -

(a) in clause (f), after the word "compulsorily" the word "or optionally" shall be inserted.

(b) for clause (g), the following shall be substituted, namely; -

"(g) "Foreign Venture Capital Investor" means an investor incorporated, established outside India, is registered under these Regulations and proposes to make investment in accordance with these Regulations."

(c) in clause (l), in sub-clause (iii), the words, "in venture capital undertaking" shall be omitted.

(ii) In regulation 11, -

(a) in clause (b), -

(i) the word "while" shall be omitted.

(ii) the words, "it shall however not invest more than 25% of the funds committed for investment to India in one Venture Capital Undertaking" shall be omitted.

(b) in clause (c), -

(i) the words, "in the Venture Capital Undertaking" shall be omitted.

(ii) in sub-clause (i), -

(1) for the figure, "75%", the figure, "66.67%" shall be substituted.

(2) the words, "of Venture Capital Undertaking" shall be inserted after the words, "equity linked instruments".

(iii) in sub-clause (ii),

(1) for the figure, "25%", the figure, "33.33%" shall be substituted.

(2) in clause (a), the words, "subject to lock-in period of one year", shall be omitted.

(3) after clause (b), the following shall be added, namely;-

"(c) preferential allotment of equity shares of a listed company subject to lock in period of one year.

(d) the equity shares or equity linked instruments of a financially weak company or a sick industrial company whose shares are listed.

Explanation 1: - For the purpose of these regulations, a "financially weak company" means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50% but less than 100% of its networth as at the beginning of the previous financial year."

(e) Special Purpose Vehicles which are created for the purpose of facilitating or promoting investment in accordance with these Regulations.

Explanation - The investment conditions and restrictions stipulated in clause (c) of regulation 11 shall be achieved by the Foreign Venture Capital Investor by the end of its life cycle."

(c) after clause (c), the following shall be added namely:-

"(d) It shall disclose the duration of life cycle of the fund."

(iii) In Third schedule, -

(i) clause 1, shall be omitted.

(ii) In clause 2, the words, "excluding those Non-Banking Financial companies which are registered with Reserve Bank of India and have been categorized as Equipment Leasing or Hire Purchase companies", shall be inserted, after the words, "Non-banking Financial Services".

(iii) In clause 3, the words, "excluding those companies which are engaged in gold financing for jewellery" shall be inserted, after the words, "gold financing".

G N BAJPAI

CHAIRMAN

SEBI\LAD\DOP\6253\2004

Foot notes

(1) Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, the Principal Regulations were published in the Gazette of India on September 15th, 2000 vide S.O. No.832(E).

(2) The Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000 were subsequently amended

(a) on June 7th, 2001 by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2001 vide S.O. No. 501(E)

(b) on September 27, 2002 by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045 (E).