Markets regulator Securities and Exchange Board of India (SEBI) is set to announce investment norms for angel funds on June 25, reports Moneycontrol, via CNBC-TV18, quoting sources. This follows a proposal in Union Budget 2013 earlier to recognize angel investor pools as Category I AIF venture capital funds under SEBI, pending the notification of rules by the markets regulator.
The likely list of norms to be announced on June 25 are as follow:
- Investment per company to be limited to Rs 50 lakh-Rs 5 crore (under than $1 million)
- Investee companies should be less than three years old
- Funds will have to stay invested for at least three years
- Investee company should be unlisted and revenues must not exceed Rs 25 crore
- Investee company must not be related to a larger corporate entity with revenues of more than Rs 300 crore
- Angel fund must not have any family connection with the investee company
- No angel scheme or pool may have more than 49 investors
Category I AIF venture capital funds under SEBI are able to avail of a pass-through under the Income Tax Act. The budget provided that angel funds who are recognized as category I AIF venture capital funds will also enjoy the pass through status.
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