Sebi releases guideliens for VCFs

Mumbai, Aug 9 (UNI) Securities and Exchange Board of India (SEBI) today issued a series of guidelines for the Venture Capital Funds, (VCFs) registered with it and aspirants to invest in equity and equity linked instruments.

The SEBI in its guidelines, clarified that the 'Offshore Venture Capital Undertakings' (VCFs) means a foreign company whose shares are not listed on any of the recognized stock exchanges in India or abroad, are only eligible to invest as per the scheme.

It said that Investments by these VCFs would be made only in those companies which have an Indian connection (i.e. company which has a front office overseas, while back office operations are in India).

The investments should be upto 10 per cent of the investible funds of a VCF.

The capital market regulator has ruled that the allocation of investment limits would be done on 'first come- first serve' basis, depending on the availability in the overall limit of USD 500 million.

The SEBI has clarified that in case a VCF, who is allocated certain investment limit, and wishes to apply for allocation of further investment limit, needs to give fresh application.

The applicant VCF will have a time limit of 6 months for making allocated investments in offshore venture capital undertakings once allowed by SEBI.

SEBI said the VCFs registered with it can invest in equity and equity linked instruments only of off-shore venture capital undertakings, subject to overall limit of USD 500 million and applicable SEBI regulations.

It asked the VCFs to submit their proposal for investment for its prior approval. There is no need to seek separate permission from RBI in this regard, the Sebi guidelines stated.

UNI