Reporting norm for FVCI Investments

Last week , the Reserve Bank of India (RBI) notified that a Foreign Venture Capital Investor (FVCI) investing directly in an entity would be required to report this in Form FC-GPR while separate instructions would be issued in due course as changes were being made in the e-biz portal.

This notification was issued pursuant to the RBI notification dated April 28,2016 that amended the Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations. As per this, an FVCI registered  with SEBI requires no  approval for the following kinds of investments:

(a) Equity or equity linked instrument or debt instrument issued by an Indian company whose shares are not listed on a recognised stock exchange at the time of issue of the said securities/instruments and engaged in the followings sectors:Biotechnology, IT related to hardware and software development, Nanotechnology, Seed research and development, Research and development of new chemical entities in pharmaceutical sector, Dairy industry, Poultry industry, Production of bio-fuels, Hotel-cum-convention centres with seating capacity of more than three thousand, Infrastructure sector (This will include activities included within the scope of the definition of infrastructure under the External Commercial Borrowing guidelines / policies notified under the extant FEMA Regulations as amended from time to time);

(b) Equity or equity linked instrument or debt instrument issued by an Indian ‘startup’ irrespective of the sector in which the startup is engaged; and

(c) Units of a Venture Capital Fund (VCF) or of a Category I Alternative Investment Fund (Cat-I AIF) or units of a Scheme or of a fund set up by a VCF or by a Cat-I AIF.

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