Gurgaon | 09 Jul, 2016 (5 years, 5 months ago)

Environment Related Compliances

I need to get help regarding Crowd funding status in India?

I wanted to ask that according to companies act 2013 and SEBI draft in 2014, is "Equity crowd funding illegal in India" ? If yes then what are the clauses and condition with which a company can start Equity Crowd Funding Business in India.? some companies operating in US on similar business models are - www.microventures.com and some companies doing business in India are - www.letsventure.com In future I would require a lawyer for my company to help in legal issue, so can you provide the costing part details also?
Answers
15 Jul, 2016 | 10:49

Equity Crowd Funding is not illegal in India. As rightly pointed out by you, while the SEBI had come out with the draft regulations for regulating crowd funding in India, however, so far nothing has come off it, in form of any definite regulations. Having said that, while one may argue that, this is sector is not regulated, in our view, any such activity shall be regulated under Section 42 of the Companies Act 2013. Section 42 provides for private placement of shares to not more than 50 persons. This regulation has come about, especially in light of the Sahara matter, the details of which are in the public domain.


12 Jul, 2016 | 12:19

Hi, Crowdfunding is currently not permitted in India. The Securities Exchange Board of India (SEBI) last year had released a consultation paper on regulating Equity Based Crowdfunding. However, as off now, no regulation exists in India which permits Equity Based Crowdfunding in India. Further, the Companies Act, 2013 and Rules thereunder prohibit investments of less than INR 20,000 of the face value of the shares per investor, also the number of members of private limited company and the number of people who are offered shares are limited by the Act and Rules, which makes Equity Based Crowdfunding in India practically impossible.

For prices and costing please contact separately.


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