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TMI BlogGuidelines on overseas investments and other issues/clarifications for AIFs/VCFsX X X X Extracts X X X X X X X X Extracts X X X X ..... specified as under: A. Overseas Investment by Venture Capital Funds (VCFs) registered under SEBI (Venture Capital Funds) Regulations, 1996 (now repealed) a. VCFs registered under erstwhile SEBI (Venture Capital Funds) Regulations, 1996 are permitted to invest in Offshore Venture Capital Undertakings which have an Indian connection upto 10% of the investible funds of a VCF in terms of the SEBI circular no. SEBI/VCF/Cir no.1/98645/2007 dated August 09, 2007. b. SEBI has received several representations from the industry that there has been, in recent times, an increased interest of Indian entrepreneurs outside India. Many Indian entrepreneurs have been setting up their headquarters outside India with back end operations and/ or researc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. v. The VCFs desirous of making investments in offshore venture capital undertakings shall submit their proposal for investment (in the attached format at Annexure) to SEBI for its prior approval. B. Overseas Investment by Alternative Investment Funds a. Under Regulation 15(1)(a) of AIF Regulations, "Alternative Investment Fund may invest in securities of companies incorporated outside India subject to such conditions or guidelines that may be stipulated or issued by the Reserve Bank of India and the Board from time to time." b. In this regard, Reserve Bank of India (RBI) vide its A.P.(DIR Series) Circular No.48 dated December 09, 2014 has permitted an Alternative Investment Fund (AIF), registered with SEBI, to invest overs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of further investment limit, the fresh application shall be dealt with on the basis of the date of its receipt and no preference shall be granted to it in fresh allocation of investment limit. viii. The AIF shall have a time limit of 6 months from the date of approval from SEBI for making allocated investments in offshore venture capital undertakings. In case the applicant does not utilize the limits allocated within the stipulated period, SEBI may allocate such unutilized limit to other applicants. ix. These investments would be subject to Notification No. FEMA120/RB-2004 dated July 7, 2004 [Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004] including amendments thereof and related directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her oral or written, either about their qualifications or capability to render investment management services or their achievements. c. The AIF, manager, trustee and sponsor shall: i. act in the interest of unitholders of the AIF/scheme and not take any action which is prejudicial to the interest of the unitholders and not place the interest of the sponsor/manager/trustee of the AIF or any of their associates above the interest of the unitholders of the scheme/AIF. ii. maintain high standards of integrity and fairness in all their dealings and in the conduct of the business and render at all times high standards of service, exercise due diligence and exercise independent professional judgment. iii. not offer any assured returns to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme/fund (Declaration to be provided by trustee. In case the AIF is not a Trust, sponsor shall provide such declaration). 3. The AIF/VCF shall not invest in Joint venture/Wholly Owned Subsidiary while making overseas investments. (Declaration to be provided by manager) 4. The AIF/VCF shall adhere to FEMA Regulations and other guidelines specified by RBI from time to time with respect to any structure which involves Foreign Direct Investment (FDI) under Overseas Direct Investment (ODI) route. (Declaration to be provided by manager) 5. The AIF/VCF shall comply with all requirements under RBI guidelines on opening of branches/subsidiaries/Joint venture /undertaking investment abroad by NBFCs, where more than 50% of the funds of the AIF/V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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