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How to setup a vc Fund in India - Inno Garage

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Venture Capital (VC Funding) helps in driving entrepreneurship and thereby the economy. This presentation explains about the procedures involved in initiating and managing VC Fund in India.

Inno Garage is one of the leading consulting companies in India with experience in diversified portfolio.

http://www.innogarageconsulting.com/

Published in: Business, Economy & Finance
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How to setup a vc Fund in India - Inno Garage

  1. 1. • A diversified consulting company in India with over 10 years of experience in branding, business consulting, legal consulting
  2. 2. • It is either of the following: – Trust – Company – Body Corporate • Has a dedicated pool of capital • Raised in the prescribed manner • Invests in a venture capital undertaking
  3. 3. • It means a Domestic Company – Whose shares are not listed – Which is engaged in the business of providing services, production or manufacture
  4. 4. • Monies can be raised from any investor, whether Indian, Foreign or Non-resident • Contribution made by each investor should be equal to or more than Rupees Five Lakhs • The minimum capital at the start-up of the VCF should be at least Rupees Five Crores
  5. 5. • Disclose the investment strategy at the time of application for registration • Shall not invest more than 25% corpus of the fund in one VC undertaking • Shall not invest in associated companies
  6. 6. • Investment in A Venture Capital UndertakingEquity At least 75% of the investible funds should be invested in equity or equity linked instruments Debt Not more than 25% should be invested in debt or debt instruments, provided that investment has already been done in the company by way of equity
  7. 7. • Invested In Listed Companies – Subscriptions to IPOs is restricted to 25% of the investible funds – Such IPO investments shall not be liquidated for at least a year – Investment in Debt or debt instruments in listed companies is not allowed
  8. 8. • VCF is allowed to be listed on a recognized stock exchange • But such listing can be done only after the expiry of 3 years from the date of issue of units of the Venture Capital Fund
  9. 9. • Subscription or purchase of units of a VC fund shall not be made through public offerings • It shall be done only through private placements of its units
  10. 10. The applicant will submit: – Form A along with the Application fees of Rs.1,00,000 and documents as under– Copy of Memorandum and Articles of Association in case the applicant is set up in the form of a Company (Reg. 4(a) ) or – Copy of Registered Trust Deed in case the applicant is set up in the form of a trust (Reg. 4(b) ) or – Copy of Main objective of constitution in case the applicant is set up in the form of a body corporate. (Reg 4(c) ) – Copy of Investment Management Agreement (only if applicable).
  11. 11. Other Documents to be submitted– – – – – Details of the Sponsor/Settlor Details of the Trustees/Trustee Company Details of the Investment Manager/Investment Advisor/Asset Management Company (AMC) State whether, the applicant is registered with SEBI in any capacity or has applied for registration in any other capacity with SEBI. – List of all the associates registered with SEBI along with their Registration No. Please, refer to Reg. 2(aa) of SEBI (Venture Capital Funds) regulations, 1996 for the definition of the “associate company”. – Investment Strategy
  12. 12. SEBI will grant the applicant, certification of registration as a SEBI Registered Venture Capital Fund: – When all requirements including the Fit and Proper Person criteria have been complied with, and, – On intimation from SEBI for payment of Registration fees of Rs.5,00,000 as per Second Schedule to Regulations
  13. 13. If the application is made by a company : – The Memorandum of Association mentions the Venture Capital Fund as its main activity – It is not allowed to make an offer to the public for subscription to its shares – Its director or principal officer or employee is neither involved in any litigation connected with the securities market nor has at any time been convicted of any offence involving moral turpitude or any economic offence
  14. 14. If the application is made by a trust: – The instrument of trust is in the form of a deed and has been duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908) – The main object of the trust is to carry on the activity of a venture capital fund – Its director or principal officer or employee is neither involved in any litigation connected with the securities market nor has at any time been convicted of any offence involving moral turpitude or any economic offence – The applicant is a fit and proper person
  15. 15. If the application is made by a body corporate – It is set up or established under the laws of the Central or State Legislature, – The applicant is permitted to carry on the activities of a venture capital fund, – Its director or principal officer or employee is neither involved in any litigation connected with the securities market nor has at any time been convicted of any offence involving moral turpitude or any economic offence – The applicant has not been refused a certificate by the Board or its certificate has not been suspended
  16. 16. A scheme of a venture capital fund set up as a trust shall be wound up: – When the period of the scheme, if any, mentioned in the placement memorandum is over; – If it is the opinion of the trustees or the trustee company, as the case may be, that the scheme shall be wound up in the interests of investors in the units; – If seventy-five per cent of the investors in the scheme pass a resolution at a meeting of unit holders that the scheme be wound up; or
  17. 17. – A venture capital fund set up as a company shall be wound up in accordance with the provisions of the Companies Act, 1956 (1 of 1956) – A venture capital fund set up as a body corporate shall be wound up in accordance with the provisions of the statute under which it is constituted – The trustees or trustee company or the Board of Directors shall intimate the Board and investors, of the circumstances leading to the winding up of the Fund or Scheme under subregulation
  18. 18. Feel free to give us a call or drop us a mail to take make your interest into a business Inno Garage Consulting No 32, Janapriya Enclave, LB Nagar, Hyderabad, India – 500068 Phone: 040 64561365, 91 880 188 9344 info@innogaragebranding.com www.innogarageconsulting.com

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