Lok Sabha Question No. 2802 (UNSTARRED), answered on 2018-12-28
Subject: Investments in Startups
Ministry: CORPORATE AFFAIRS
Asked by: RAGHAV LAKHANPAL, KALIKESH NARAYAN SINGH DEO

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 2802 ANSWERED ON FRIDAY, THE 28THDECEMBER, 2018 [ PAUSHA 7, 1940 (SAKA)]

## INVESTMENTS IN STARTUPS QUESTION

2802. SHRI RAGHAV LAKHANPAL: SHRI KALIKESH N. SINGH DEO:

## Will the Minister of CORPORATE AFFAIRS be pleased to state:

कॉर्पोरे ट कार्य मंत्री

- (a) whether the Government has received any complaints regarding irregularities  in  the  investments  in  startups  and  conducted  any investigation therein and if so, the details thereof;
- (b) whether  the  Government  has  framed  any  rules  and  regulations regarding  angel  investments  in  startups  and  if  so,  the  details thereof;
- (c) the  details  of  all  the  startups  with  decline  in  share  value  post first round of funding;
- (d) whether the Government has any specific parameters to predict the valuation of startups in the country and if so, details of the parameters  considered  and  the  method  used  for  valuation  of startups; and
- (e) whether the process of valuation of startups affects the ease of doing business index of the nation and if so, the details thereof?

## ANSWER

MINISTER OF STATE FOR LAW AND JUSTICE AND CORPORATE AFFAIRS विविऔर न्यार् एिं कॉर्पोरेट कार्य मंत्रालर् में राज्यमंत्री

(SHRI P.P.CHAUDHARY)

( श्री र्पी.र्पी.चौिरी )

- (a) Startup  Company  is  not  defined  under  the  Companies  Act,  2013. However in clause 40 of the Section 2 in chapter I of the Companies Act,  2013,  under  the  definition  of  Financial  Statement  and  under Explanation,  it  is  mentioned  that  the  term  'start-up'  or  'startup company' means a private company incorporated under the Companies Act, 2013 or the Companies Act, 1956 and recognised as  start-up  in  accordance  with  the  notification  issued  by  the Department of Industrial Policy and Promotion, Ministry of

Commerce and Industry. As per the provisions of the Companies Act, 2013,  there is  well  defined  mechanism  to  investigate  a  company. The company is taken up for investigation if any irregularity or fraud is reported. There is no separate mechanism for startup companies in the Companies  Act.  As  per  the  information provided  by Department  of Industrial  Policy  and  Promotion,  Ministry  of  Commerce  and  Industry, Start -up India Hub Team receives and resolves over 1000 queries per week . H owever the details of the complaints received are not compiled .

- (b) Department of Industrial Policy and Promotion, Ministry of Commerce and  Industry  issued  a  notification  on  April  11,  2018  to  provide  a mechanism through which exemption could be extended to startups that have raised angel investments.
- (c) Out of 176 start -ups covered under Fund of Funds for Startups, there are around 9 Start -ups with decline in share value post first round of funding.
- (d) No  specific  parameters  to  predict  the  valuation  of  startups  in  the country have been put in place by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.
- (e) No Madam.

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