Regulation 11 - Investment Criteria for a Foreign Venture Capital Investor. - Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations 2000

CHAPTER III NVESTMENT CONDITIONS AND RESTRICTIONS Investment Criteria for a Foreign Venture Capital Investor. 11. All investments to be made by a foreign venture capital investors shall be subject to the following conditions:- (a) it shall disclose to the Board its investment strategy. (b) 1 [* * *] it can invest its total funds committed in one venture capital fund 2 [or alternative investment fund] 3 [***]. (c) it shall make investments 4 [* * *] as enumerated below: (i) atleast 5 [66.67%] of the investible funds shall be invested in unlisted equity shares or equity linked instruments 6 [of 7 [venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012]; (ii) not more than 8 [33.33%] of the investible funds may be invested by way of: (a) subscription to initial public offer of a 9 [venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012] whose shares are proposed to be listed 10 [* * *]; (b) debt or debt instrument of a 11 [venture capital undertaking or investee company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Alternative Investment Funds) Regulation, 2012] in which the 12 [foreign venture capital investor] has already made an investment by way of equity; 13 [(c) preferential allotment of equity shares of a listed company subject to lock in period of one year. Explanation 1.─ For the purposes 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; (d) it shall disclose the duration of life cycle of the fund; (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.] ************* NOTES:- 1 Word while omitted by the SEBI (Foreign Venture capital Investors) (Amendment) Regulations, 2004, w.e.f. 5-4-2004. 2 Inserted by the SEBI(Alternative Investment Funds) Regulations, 2012 w.e.f. May 21, 2013. 3 Words it shall however not invest more than 25% of the funds committed for investments to India in one Venture Capital Undertaking omitted by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2004, w.e.f. 5-4-2004. 4 Words in the Venture Capital Undertaking omitted, ibid. 5 Substituted for 75% , ibid. 6 Inserted, ibid. 7 Substituted by the SEBI(Alternative Investment Funds) Regulations, 2012 w.e.f. May 21, 2013 for the words Venture Capital Undertaking . 8 Substituted for 25% , ibid. 9 Substituted by the SEBI(Alternative Investment Funds) Regulations, 2012 w.e.f. May 21, 2013 for the words Venture Capital Undertaking . 10 Words subject to lock-in period of one year omitted, ibid. 11 Substituted by the SEBI(Alternative Investment Funds) Regulations, 2012 w.e.f. May 21, 2013 for the words Venture Capital Undertaking . 12 Substituted for Venture capital fund by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2001, w.e.f. 7-6-2001. 13 Inserted by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2004, w.e.f. 5-4-2004.