• Could an Alternative investments funds dispatch a reserve/plan of any size?

    No, each scheme of the Alternative Investment Fund (other than angel fund) shall have corpus of at least INR twenty crore. In case of an angel fund, it shall have a corpus of at least INR ten crore.

    For more information, click here.

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  • What is the meaning of Angel Fund?

    "Angel Fund” is a sub-category of Venture Capital Fund under Category I Alternative Investment Fund that raises funds from angel investors and invests in accordance with the provisions of AIF Regulations.

    For more information, click here.

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  • What are the reporting requirements to SEBI for Alternate Investment Funds registered with SEBI?

    As per circular No.CIR/IMD/DF/10/2013 dated 29th July, 2013, Category I and II AIFs and the Category III AIFs which do not undertake leverage are required to submit report to SEBI on a quarterly basis while Category III AIFs which undertake leverage are required to submit the reports on a monthly basis. The formats for such reports are provided as a part of the said circular. All AIFs shall submit the report irrespective of whether or not the AIF has started activity.  

    Currently, all AIFs shall send reports to SEBI by email to aifreporting@sebi.gov.in. No physical reports are required to be filed with SEBI.

    For more information, click here.

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  • What are Category III AIFs?

    Alternate Investment Funds (AIFs), which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs.

    For more information, click here

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  • In what classifications can a candidate look for enrolment as an AIF?

    Applicants can seek registration as an AIF in one of the following categories, and in sub-categories thereof, as may be applicable

    • Category I AIF: 
      • Venture capital funds (Including Angel Funds) 
      • SME Funds
      • Social Venture Funds
      • Infrastructure funds
    • Category II AIF 
    • Category III AIF

    For more information, click here.

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  • What are Category II AIFs?

    Alternative Investment Funds (AIF) which do not fall in Category I and III and which do not undertake borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations, 2012 are Category II AIF.

    Various types of funds such as real estate funds, private equity funds, funds for distressed assets, etc. are registered as Category II AIF.

    For more information, click here

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  • In which authoritative documents can an Alternative Investment Fund be set up?

    An alternative investment fund (AIF) under the SEBI (Alternative Investment Funds) Regulations, 2012 can be established or incorporated in the form of a trust or a company or a limited liability partnership or a body corporate.

    For more information, click here

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  • What are Category I AIFs?

    Category I of the Alternative Investment Funds (AIF) include funds which invest in start-up, early stage ventures, social ventures, small & medium enterprises (SME), infrastructure or other sectors or areas which the Government or regulators consider as socially or economically desirable.

    It shall include venture capital funds, SME funds, social venture funds, infrastructure funds and such other AIF.

    For more information, click here

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  • What is the upper limit for investors under Alternative Investment Fund (AIF)?

    No scheme of Alternative Investment Fund (AIF) shall have more than 1,000 investors, subject to the provisions of the Companies Act, 1956 if the AIF is formed as a company.

    For more information, click here

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  • How can the investors redress their complaints against Alternative Investment Funds (AIFs)?

    SEBI has a web-based centralized grievance redress system called SEBI Complaint Redress System (SCORES) where investors can lodge their complaints against AIFs.

    For more information, click here.

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  • What are the requirements for converting External Commercial Borrowings/Lump entirety Fee/Royalty etc. into Equity?

    The conversion of External Commercial Borrowings (ECB) in convertible foreign currency into equity is subject to the following conditions:

    • The activity of the Company is covered under the Automatic Route for FDI or the Company has obtained Government approval for foreign equity
    • The foreign equity after conversion of ECB into equity is within the sectoral cap, if any Pricing of shares is as per the provision of section (2), Annexure 3 of the Consolidated FDI Policy
    • Compliance with the requirements prescribed under any other statute and regulation in force
    • The conversion facility is available for ECB availed under the Automatic or Government Route and is applicable to ECB, due for payment or not, as well as secured/unsecured loans availed from non-resident collaborators

    For more information, click here 

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  • What are the requirements in respect of currencies of ECB?

    ECB can be raised in Indian Rupees (INR) and / or any convertible currency. Further, any entity raising INR denominated ECB shall not be permitted to convert the liability arising out of this ECB into foreign currency liability in any manner or assume foreign currency risk in any manner by either entering into a derivative contract or otherwise.

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  • Could a qualified borrower raise crisp External Commercial Borrowings under Track II for reimbursement of existing Rupee named External Commercial Borrowings?

    Refinancing of Rupee denominated ECB with Foreign Currency denominated ECB under Track II is not permitted.

    For more information, click here

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  • What does the term framework division mean with the end goal of ECB?

    For the purpose of raising ECB, Infrastructure Sector has the same meaning as given in the Harmonised Master List of Infrastructure sub-sectors approved by the Government of India vide Notification F. No. 13/06/2009-INF as amended / updated from time to time. Further, for the purpose of ECB, Exploration, Mining and Refinery sectors are also deemed as in the infrastructure sector.

    For more information, click here.

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  • What is the currency in which ECBs can be raised?

    External Commercial Borrowing (ECB) can be raised in Indian Rupees (INR) and/ or any convertible currency. Any entity raising INR denominated ECB is not permitted to convert the liability arising out of this ECB into foreign currency liability in any manner or assuming foreign currency risk in any manner by either entering into a derivative contract or otherwise.

    For more information, click here.

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  • Can External Commercial Borrowing be used for making contribution in Limited Liability Partnership?

    No, it is not permitted under any track.

    For more information, click here

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  • What is the currency of borrowing in case of ECBs?

    ECB can be raised in Indian Rupees (INR) and / or any convertible currency. Any entity raising INR denominated ECB is not permitted to convert the liability arising out of this ECB into foreign currency liability in any manner or assuming foreign currency risk is any manner by either entering into a derivative contract or otherwise.

    For more information, click here.

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  • Can proceeds of External commercial borrowing raised under Track I of the framework be used for payment of overdue import bills?

    No, though proceeds from external commercial borrowing (ECB) raised under Track I can be utilized for the purposes, among others, such as refinancing of existing trade credit raised for import of capital goods and payment of capital goods already shipped but unpaid, the borrowing are not prescribed for payment of overdue import bills.

    For more information, click here.

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  • Can External Commercial Borrowing be used for importing services?

    No, ECB is not permitted for import of services.

    For more information, click here.

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  • What are the end-utilize solutions for ECB raised under track I?

    1) Investment in real estate or purchase of land

    2) Investment in capital market.

    3) Investment in capital market.

    For more information, click here.

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  • What is procedure of issuing Foreign Currency Convertible Bonds?

    A.  For listed companies

    • Any Indian company not eligible to raise funds from the Indian capital market or restrained from accessing securities market by SEBI is not eligible to issue FCCB
    • Erstwhile Overseas Corporate Bodies not eligible to invest in India through portfolio and entities prohibited to buy, sell or deal in securities by SEBI are not eligible to subscribe to FCCB
    • Pricing of GDR/ FCCB should not be less than the higher of either average of weekly high and low of closing prices of related shares for six months preceding the relevant date or average of weekly high and low of closing prices of related shared for two weeks preceding the relevant date
    • The voting rights shall be as per the provisions of The Companies Act 2013

    B. For unlisted companies

    • Companies which have not yet accessed GDR/ FCCB route for raising capital in international market need to get listed in the domestic market
    • Companies which have already issued GDR/ FCCB in the international market would now require listing in the domestic market on making profit beginning 2005-06 or within 3 years of such issue

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  • What is the procedure for reporting the issue of shares against conversion of External Commercial Borrowing?

    In case of partial or full conversion of external commercial borrowing (ECB) into equity, the reporting to the Reserve Bank of India (RBI) happens as under:

    • For partial conversion -  Converted portion to be reported to the concerned Regional Office of the Foreign Exchange Department of RBI in Form FC-GPR, while monthly reporting to the Department of Statistics and Information Management (DSIM) in ECB 2 Return (Annex III)
    • For full conversion - Entire portion is to be reported in Form FC-GPR, while reporting to DSIM in ECB 2 Return.
    • For conversion in phases - Reporting through ECB 2 Return will also be in phases

    For more information, click here

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  • What is meant by Downstream Investment?

    ‘Downstream Investment’ means indirect foreign investment, by an eligible Indian entity, into another Indian company / LLP, by way of subscription or acquisition.

    For more information, click here.

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  • What is the subsidy under Micro Units Development and Refinance Agency?

    There is no subsidy for the loan given under Pradhan Mantri Mudra Yojana (PMMY). However, if the loan proposal is linked to some Government scheme, wherein the Government is providing capital subsidy, it will be eligible under PMMY also.

    For more information, click here

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  • What is the procedure for reporting of transfer of shares?

    Reporting of transfer of shares between residents and non-residents and vice- versa is to be done in Form FC-TRS (Section-4). The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration.

    For more information, click here.

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  • What documents are required for sale of shares by a person resident outside India?

    Documents required for the sale of shares by a person resident outside India:

    i) Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred.

    ii) Where the Consent Letter has been signed by their duly appointed agent the Power of Attorney Document authorizing the agent to purchase/sell shares by the seller/buyer. In case there is no formal Sale Agreement, letters exchanged to this effect may be kept on record.

    iii) If the sellers are NRIs/OCBs, the copies of RBI approvals evidencing the shares held by them on repatriation/non-repatriation basis. The sale proceeds shall be credited NRE/NRO account, as applicable.

    iv) Certificate indicating fair value of shares from a Chartered Accountant.

    v) No Objection / Tax Clearance Certificate from Income Tax authority/Chartered Account.

    vi) Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to.

    Please refer to subsection 5.2 of 'section 1' of Annexure-3 Consolidated FDI Policy at link for more information.

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  • Could ECB be profited for reimbursement of local INR credit?

    Yes, however, it is only permitted if external commercial borrowing (ECB) is raised from direct and indirect equity holders or from a Group company, and provided the loan is for a minimum average maturity of five years.

    ECB raised under Tracks I or III for repayment of Rupee loans, must be raised from a foreign equity holder.

    For more information, click here

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  • Is it possible for Indian Companies to issue employees' stock option and/or sweat equity shares?

    Yes, an Indian company may issue “employees’ stock option” and/or “sweat equity shares” to its employees/ directors or employees/ directors of its holding company or joint venture or wholly owned overseas subsidiary/ subsidiaries who are resident outside India subject to provisions contained in Companies Act 2013 and SEBI Act 1992.

    For more information, click here

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  • What is the method of payment and remittance/credit of sale proceeds for a person residing outside India?

    The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels. 

    In case the buyer is a FII, FPI, payment should be made by debit to its Special Non-Resident Rupee Account. 

    In case the buyer is a NRI, the payment may be made by way of debit to his NRE/FCNR (B) accounts. 

    However, if the shares are acquired on non-repatriation basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR (B)/NRO accounts. 

    The sale proceeds of shares (net of taxes) sold by a person resident outside India may be remitted outside India. In case of FII/FPI, the sale proceeds may be credited to its special Non-Resident Rupee Account. In case of NRI, if the shares sold were held on repatriation basis, the sale proceeds (net of taxes) may be credited to his NRE /FCNR (B) accounts and if the shares sold were held on non repatriation basis, the sale proceeds may be credited to his NRO account subject to payment of taxes. The sale proceeds of shares (net of taxes) sold by an OCB may be remitted outside India directly if the shares were held on repatriation basis and if the shares sold were held on non-repatriation basis, the sale proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the case of OCBs whose accounts have been blocked by Reserve Bank.

    Please refer to subsection-4 of 'Section 1' of Annexure-3 of Consolidated FDI Policy at link for more information.

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  • What are the reporting requirements for foreign currency convertible bond/depository receipts Issues?

    The domestic custodian needs report the issue/transfer of sponsored/unsponsored depository receipts as per DR Scheme 2014 in ‘Form DRR’ given in Section 5, Annexure 6 of the Consolidated FDI Policy, 2017, within 30 days of close of the issue/ program.

    For more information, click here

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  • What is the rate of interest on MUDRA loans?

    The interest rates are deregulated and the banks have been advised to charge reasonable interest rates within the overall RBI guidelines.

    Please refer to link for more information.

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  • What is Pradhan Mantri Mudra Yojana?

    Pradhan Mantri Mudra Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister for providing loans upto INR 10 Lakhs to non-corporate, non-fam small/ micro enterprises.

    For more information, click here.

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  • Under PMMY-Shishu loans, what is the turn around time for processing the loan proposal?

    For Shishu loans, normally 7 to 10 days is the turn around time for processing the loan proposals on receipt of complete information.

    Please refer to link for more information

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  • How much interest rate is charged on a Micro Units Development and Refinance Agency (MUDRA) loan?

    The interest rates are deregulated, and the banks have been advised to charge reasonable interest rates within the overall RBI guidelines.
    For more information, click here.

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  • I intend to work on franchisee model. Can MUDRA help me?

    MUDRA operates a special refinance scheme for traders and shopkeepers. You can avail the facilities under the scheme as per your requirements from any banks/MFIs/NBFCs in the area.

    Please refer to link for more information

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  • I want to start my own business. Can Micro Units Development and Refinance Agency help me?

    Micro Units Development and Refinance Agency (MUDRA) does provide loans up to INR10 Lakhs to the non-corporate, non-farm, small/ micro enterprises (SMEs). These loans are given by Commercial bank, RRBs, Small finance bank, Cooperative banks, MFIs and NBFC

    For more information, click here.

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  • What are the agencies providing loans under Micro Units Development and Refinance Agency?

    Pradhan Mantri Mudra Yojana (PMMY) loans will be extended by all Public sector Banks such as PSU banks, Regional Rural Banks (RRBs), Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Companies.
    For more information, click here.

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  • What is the application form to apply for a MUDRA loan?

    Click on any of the 3 categories under MUDRA Scheme for application forms and checklist

    1. Shishu: Covering loans up to INR 50,000

    2. Kishor: Covering loans above INR 50,000 and up to INR 500,000

    3. Tarun: Covering loans above INR 500,000 up to INR 1 m

    Note: MUDRA is a refinance agency and not a direct lending institution. MUDRA provides refinance support to its intermediaries viz. banks, micro finance institutions and non-banking financial companies, who further extend these loans to businesses/ entrepreneurs

    For more information, click here.

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  • Who all are eligible under MUDRA?

    Any Indian citizen who has a business plan for a non-farm income-generating activity such as manufacturing, processing, trading or service sector whose credit need is less than INR 1 m can approach either banks, micro finance institutes or non-banking financial companies for availing of MUDRA loans under PMMY. The usual terms and conditions of the lending agency may have to be followed for availing of loans under Pradhan Mantri Mudra Yojana (PMMY). The lending rates are as per the RBI guidelines issued in this regard from time to time.

    For more information, click here.

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  • Can Micro Units Development and Refinance Agency provide loans for running a franchise?

    MUDRA Scheme operates a special refinance scheme for traders and shopkeepers. You can avail the facilities under the Scheme as per your requirements from any bank/ micro finance institute/ non-banking financial company in your area.

    For more information, click here.

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  • What does composite issue of shares mean?

    A Composite Issue is an issue of shares or Convertible Securities on Public-cum-Right basis, wherein the allotment in both Public Issue and Rights Issue is proposed to be made simultaneously.

    For more information, click here.

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  • What does private placement of shares mean?

    A Private Placement is the issue of shares or convertible securities to a select group of persons not exceeding 49%.

    For more information, click here.

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  • What does rights issue of shares mean?

    A rights issue is an issue of shares or convertible securities to existing shareholders as on a record date fixed by the issuer. The rights are offered in a ratio to the number of shares or convertible securities held as on the record date.

    For more information, click here.

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  • What do offer documents imply?

    An offer document contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue, etc. and is used for inviting subscription to the issue being made by the issuer. Offer document is called a ’Prospectus’ in case of a Public Issue and ’Letter of Offer’ in case of a Rights Issue.

    For more information, click here

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  • What happens if a shareholder does not receive the letter of offer in time?

    The Public Announcement contains procedure for such cases i.e. where the shareholders do not receive the letter of offer or do not receive the letter of offer in time. The shareholders are usually advised to send their consent to Registrar to offer, if any or to MB on plain paper stating the name, address, number of shares held, Distinctive Folio No, number of shares offered and bank details along with the documents mentioned in the Public Announcement, before closure of the offer.

    The public announcement and the letter of offer along with the form of acceptance is available on the SEBI website.

    For more information, click here.

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  • What is a Draft Offer Document, Red Herring Prospectus, Prospectus and Letter of Offer? How are they different from one another?

    Draft Offer Document, Red Herring Prospectus, Prospectus and Letter of Offer are all types of offer documents. Since 1992, entire IPO/ FPO of companies is driven by disclosures, i.e., informing the investors as much as possible to enable them to take informed decision. The offer documents contain all the relevant information about the company, promoters, projects, financial details, objects of raising money, forms of the issue, etc.

    For more information, click here.

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  • What is SEBI takeover code?

    SEBI has notified the Takeover Regulations namely SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “SEBI (SAST) Regulations, 2011”). Acquisition or sale of shares of Listed Company shall be governed by provisions of SEBI (SAST) Regulations, 2011.

    For more information, click here.

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  • Is a listed company making a rights issue required to satisfy any entry norm?

    No, there is no entry norm for a listed company making a Rights Issue.

    For more information, click here

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  • Are there any mandatory provisions which an issuer is expected to comply before making an issue?

    Yes, there are mandatory provisions which an issuer is expected to comply before making an issue w.r.t. Minimum Promoter’s contribution and lock‐in period:

    • Public issue by an Unlisted Issuer: Promoters shall contribute not less than 20% of the post-issue capital which should be locked in for a period of 3 years. The remaining pre-issue capital of the promoters should also be locked in for a period of 1 year from the date of listing.
    • Public issue by a Listed Issuer: Promoters shall contribute not less than 20% of the post-issue capital or 20% of the issue size.

    For more information, click here.

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