You may be aware that the SEBI in May 2012 notified the SEBI (Alternative Investment Funds) Regulations, 2012 which is intended to regulate venture capital, private equity and other fund pooling activity. However, some doubts were expressed as to the reach of these regulations and different views were making rounds in the practitioners circle.
Here is an interesting post from Vinod Kothari and Soma Bagaria. The arguments laid out in their post can hardly be refuted on two counts: (a) meticulous interpretation of the regulations brought out (b) even on the basis of the first principles, the fundamental role of any securities regulator is to manage/regulate intricate issues flowing out of various so called agency / fiduciary relationships such as intermediary-client, company-investor, etc. But where the investor himself has a control over the ownership interest, the securities regulator should have no business.
Here is an interesting post from Vinod Kothari and Soma Bagaria. The arguments laid out in their post can hardly be refuted on two counts: (a) meticulous interpretation of the regulations brought out (b) even on the basis of the first principles, the fundamental role of any securities regulator is to manage/regulate intricate issues flowing out of various so called agency / fiduciary relationships such as intermediary-client, company-investor, etc. But where the investor himself has a control over the ownership interest, the securities regulator should have no business.
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