Filing of Term Sheet by Angel Funds

uandia vfayfa atx fafa at e ~ | Securities and Exchange Board of India CIRCULAR CIRAMD/DF1/ 102 /2018 June 29, 2018 All Registered Alternative Investment Funds Dear Sir/ Madam, Sub.: Filing of Term Sheet by Angel Funds. 1. In order to provide ease of doing business to Angel Funds, SEBI had formed a working group to study SEBI (Alternative Investment Funds) Regulations, 2012 (hereinafter referred to as ‘AIF regulations’) and suggest changes required, if any. Based on the recommendations of the working group, SEBI has amended the AIF Regulations vide notification dated June 1, 2018 (copy of the notification enclosed as Annexure 1), simplifying certain regulatory provisions regarding the Angel Fund _inciuding Regulation 19(E) which deals with filing of scheme details with SEBI. 2. Pursuant to the aforesaid amendment of AIF regulations, it is specified that : 2.1 angel funds may now launch schemes subject to filing of a Term Sheet in the format as specified in Annexure II; 2.2 such Term Sheet shall contain material information regarding the scheme; and 2.3 such Term Sheet shall be filed with the Board within ten days of launching the scheme. 3. This circular is issued in exercise of powers conferred by sub-section (1) of section 11 and section 11A of the Securities and Exchange Board of India Act, 1992 read with the provisions of the AIF regulations, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. The provisions of this circular shall be applicable with immediate effect. 4. This Circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework-Circulars” and “Info for — Alternative Investment Funds’. Yours faithfully, Naveen Sharma Deputy General Manager Investment Management Department Tel No.022-2644 9709 Email id - naveens@sebi.gov.in THE GAZETTE OF INDIA EXTRAORDINARY PART -III - SECTION 4 PUBLISHED BY AUTHORITY NEW DELHL JUNE 01, 2018 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 31* of May, 2018 SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUNDS) (AMENDMENT) REGULATIONS, 2018 No. SEBI/LAD-NRO/GN/2018/19.- In exercise ofthe powers conferred by subsection (1) of section 30 read with sub-section (1) of section 11, clause (ba) and clause (c) of sub- section (2) of section 11 and sub-sections (1) and (1B) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, namely,- 1. These regulations may be called the Securities and Exchange Board of India {Alternative Investment Funds) (Amendment) Regulations, 2018. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012,- (i) in regulation 2, in sub-regulation (1),- (a) _inclause (b), Page 1 of 5 1. in proviso, in clause (i), the words “Companies Act, 1956” shall be substituted with the words “Companies Act, 2013”. 2. in proviso, the existing clause (ii) shall be substituted with the following clause, namely,- “(ii) ESOP Trusts set up under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 or as permitted under Companies Act, 2013;” 3. in proviso, the existing clause (iv) shall be substituted with the following clause, namely,- “(iv) "holding companies’ as defined under sub-section 46 of section 2 ofCompanies Act, 2013;” (b) in clause. (g), the words “Companies Act, 1956” shall be substituted with the words “Companies Act, 2013” (c) in clause (u), the existing sub-clause (iii) shall be substituted with the following sub-clause, namely;- “(iii) company registered under section 8 of the Companies Act, 2013” Page 2 of 5 (ii) in regulation 2, in sub-regulation (2), the words “Companies Act, 1956 (1 of 1956)” shall be substituted with the words “Companies Act, 2013 (18 of 2013)” (iii) in regulation 10, in clause (f), in the proviso, the words “Companies Act, 1956” shall be substituted with the words “Companies Act, 2013”. (iv) in regulation 19A, in sub-regulation (3), in clause (a), in Explanation I, the words “section 6 of the Companies Act, 1956 (1 of 1956)” shall be substituted with the words “sub-section 77 of section 2 of the Companies Act, 2013”. (v) in regulation 19D, in sub-regulation (2), the word “ten” shall be substituted with the word “five”. (vi) in regulation 19D, in sub-regulation (3), the word “three” shall be substituted with the word “five”. (vii) in regulation 19D, in sub-regulation (4), the following proviso shall be inserted, namely,- “Provided that the provisions of the Companies Act, 2013 shall apply to the Angel Fund, if it is formed as a company.” (viii) in regulation 19E,- (a) sub-regulation (1) shall be substituted with the following, namely,- Page 3 of 5 “The angel fund may launch schemes subject to filing of a term sheet with the Board, containing material information regarding the scheme, in the format and time period as may be specified by SEBI.” (b) sub-regulation (2) and (3) shall be omitted. (c) existing sub-regulation (4) shall be re-numbered as sub-regulation (2) (d) in sub-regulation (2), the following proviso shall be inserted, namely, “Provided that the provisions of the Companies Act, 2013 shall apply to the Angel Fund, if it is formed as a company” (ix) in regulation 19F, in sub-regulation (2), the words “five crores” shall be substituted with the words “ten crores”, (x) in regulation 29, in sub-regulation (3), the words “Companies Act, 1956 (1 of 1956)” shall be substituted with the words “Companies Act, 2013” Sd/- AJAY TYAGI CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA Footnote: 1. The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 were published in the Gazette of India on 21st May, 2012 vide No. LAD-NRO/GN/2012-13/04/11262. Page 4 of 5 2. The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 were subsequently amended on: a. 16 September, 2013 by Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2013 vide No. LAD-NRO/GN/2013-14/24/6573. b. 23 May, 2014 by Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014- 15/03/1089. c. 26" September, 2014 by Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 vide No. LAD- NRO/GN/2014-15/11/1576. d. 14 August, 2015 by Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2015 vide No. SEBI/LAD- NRO/GN/2015-16/011. e. 4 January, 2017 by Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2016 vide No. SEBI/LAD/NRO/GN/2016-17/026. f. 6® March, 2017 by Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide No. SEBI/LAD/NRO/GN/2016-17/037. ae ee BEE op ob OEE RE Page 5 of 5 Annexure fl Term Sheet A - Investment and Investee Company Related Information Nameof the Angel Fund Po SEBI Registration No. P Name of investee company Pe Investee Company profile and Product details/ services offered by the investee company “| Business/ industry details of the Investee company Po Present Investment size/ Amount of the offering Po Investment highlights Po Total Capital Commitment by investors Po Capital drawn by the fund Po Type of Securities (Equity Shares / Compulsorily Convertible Preference Shares / Compulsorily Convertible Debenture) Number of securities along with description Po Price per share/ unit of the security ee Conversion Price and terms, in case convertible securities Be Details of lock in for share/ unit of fund Po Co-investment, if any Po Details of Valuation of investee company Po Fee and expenses details for the fund PY Exit strategy for the Angel Fund - Termination of the investment / exit provisions Distribution waterfall {distribution to the investors) Ps Exit/ transfer rights for investors Po : B - Compliance with SEBI {Alternative Investment Fund) Regulations List of investors in the scheme and compliance with AIF regulations in this regard in detail {Regulation 19D(1)} Whether the fund has a corpus of at least 5 crore rupees Po Details of compliance of Regulation 19D(3) PY Whether funds have been raised through private placement by issue of information memorandum or placement memorandum. Details of compliance of Regulation 19(F) (1) FP Investment by an angel fund in any venture capital undertaking shall not be less than twenty five lakh rupees and shall not exceed ten crore rupees. Details of compliance of Regulation 19(F) (3) PF humane || provide reasons for such investments. Whether investments of the Angel fund is more than twenty-five per cent of the total investments under all its schemes in one venture capital undertaking. If yes, provide detailed explanation. Conditions or guidelines stipulated /issued by the Reserve Bank of India and the Board have been complied with, in case of investment in the securities of companies incorporated outside India fpechednabrepiaion Blorepuainis | | specified in sub-regulation (2) of regulation 19A. A declaration that the manager/ sponsor have a continuing interest in the angel fund of not less than two and half percent of the corpus or fifty lakh rupees, whichever is lesser, and such interest is not through the waiver of management fees. {Regulation 19G(2)} oriwenmnen,plotometingsuchinesmen equation 9G) | for investment, prior to making such investment {Regulation 19G(3)} C - Material changes Angel Fund shall submit details of material changes from the last PPM/ Term Sheet in the following tabular format: Provisions in the PPM / | Material change Rationale for change Date of intimation to last Term sheet SEBI / date of approval from SEBI a a