Regulations seek to amend existing SEBI (FVCI) Regulations, 2000 to streamline the framework for the registration of Foreign Venture Capital Investors (FVCIs).
- New Regulations align the FVCI framework with Foreign Portfolio Investors providing for a clear oversight.
About FVCI
- It is an investor incorporated outside India, registered under FVCI Regulations
- FVCI make investments in venture capital funds (registered with SEBI) or venture capital undertakings in India (company not listed in major stock exchanges).
- Venture Capital fund (VCF) is used for high-risk, high-return investment in return for equity stakes in business
- VCFs are governed by SEBI (VCF) Regulations, 1996.
- FVCI make investments in venture capital funds (registered with SEBI) or venture capital undertakings in India (company not listed in major stock exchanges).
- FVCI fill gap between capital needs of technology/knowledge based startups and available funding from traditional sources like banks.
Key Highlights of New Regulations
- Requires FVCI applicant to obtain a registration certificate from Designated Depository Participant (DPP).
- DPP means a person authorized by SEBI for issuing registration certificates.
- Individuals or entities must obtain a certificate from the DPP before dealing with FVCI.
- Broadened eligibility criteria for FVCIs with some conditions from existing entities like investment companies, pension funds, etc. to Resident Indians, NRIs, and OCI, (contributing to FVCI’s corpus without having control over it).
- An FVCI or its global custodian must enter into an agreement with both DDP and custodian before making any investments in India.
