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private equity and venture capital

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9058 Points)

17 July 2009

i want to know regulation related to Private Equity and Venture Capitla in india ??

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Krunal Raichura (Financial Advisory) (2134 Points)
Replied 17 July 2009

Venture Capital Regulatory Guidelines & Framework

A study was undertaken by the World Bank to examine the possibility of developing Venture Capital in the private sector, based on which the Government of India took a policy initiative and announced guidelines for Venture Capital Funds (VCFs) in India in 1988.

However, these guidelines restricted setting up of VCFs by the banks or the financial institutions only. Thereafter, the Government of India issued guidelines in September 1995 for overseas investment in Venture Capital in India.

For tax-exemption purposes, guidelines were also issued by the Central Board of Direct Taxes (CBDT) and the investments and flow of foreign currency into and out of India have been governed by the Reserve Bank of India’s (RBI) requirements. Further, as a part of its mandate to regulate and to develop the Indian capital markets, the Securities and Exchange Board of India (SEBI) framed the SEBI (Venture Capital Funds) Regulations, 1996. These guidelines were further amended in April 2000 with the objective of fuelling the growth of Venture Capital activities in India.

Source https://www.ventureitch.com/?p=123

Private equity is treated as any other form of investment and hence is subject to the same regulations that are applicable to other foreign investors (whether financial or strategic).