When we discuss the transfer of shares, there is no denying the fact that it is an essential element for all of us. It may be a physical asset or title ownership. There should be a standard set of protocols to monitor the allocation of these shares. To further dive into the details we must get our concept regarding the stock market very clear. Stocks are share units of a corporate business. Transfer of shares means reallocating the assets of an active business entity. Shares are compared and bought by share market enthusiasts under legal contracts. The contract also defines the conditions for selling any occupied shares. 

Overview of the Chandrasekhar Committee 

After noticing the large-scale industrial and infrastructural advancements, the Indian Government realized the importance of foreign investment in the advent of the 21st Century. Here arises the necessity for a council of members who will look into the legal matters involving foreign exchange. The objectives of the Chandrasekhar Committee were furnished as a report in January 2000. K. M. Chandrasekhar appeared as the Revenue Secretary of the Finance department and made notable contributions to consolidating the foreign investment procedures. He was the pioneer in this field. SEBI formulated the Chandrasekhar Committee for a few specific objectives. The objectives of the Chandrasekhar Committee were to monitor progressive capital affairs that favor technological improvements. The committee was also entrusted with the responsibility of flourishing the country’s existing industries by learning global strategies.

Objectives of the Chandrasekhar Committee

At the beginning of the 21st Century, India needed a capital surge to boost industrialization throughout the country. Thus the Government of India had to come up with a well-planned strategy. This led to the creation of the Chandrasekhar Committee. The objectives of the Chandrasekhar Committee revolved around the motive of expanding foreign funds. The key features of Chandrasekhar Committee describe the procedures for transferring shares of a company to the investors. This further encouraged more people to enter the world of trading and share markets. The stamp duty protocols are also explained in the reports filed by the Chandrasekhar Committee. 

Here are a few crucial objectives of the Chandrasekhar Committee:

  • Foreign Institutional Investors and Qualified Foreign Investors were intended to be replaced by a diverse portfolio of market investors. 
  • For Foreign Portfolio Investments (FPIs) the identity recording of the clients must be made an absolute mandate. It should be done based on a standardized categorization of potential risk factors as drafted by the RBI. The provided information should be verified using the proper KYC tool. A nominal check is to be done for class 1 while more elaborate procedures have to be executed for class 2.
  • Foreign Portfolio Investment cannot be aggravated by a margin of more than 24% for a fiscal year. 
  • Foreign investment through asset management corporate bodies, investment bankers, mutual funds, pension plans, and even banks are to be regulated under a specific methodology. 

All these objectives were furnished by the SEBI guidelines. This created an ideal environment for investment in the Indian market. 

Venture capital cycle

A type of private equity funding is offered by start-ups or capital firms that are at their nascent stage. This form of venture capital has been proven to contribute to the development of the organization in the long run. During the 2000s such industries were starting to boom in India. Thus bulk investments from banks and other financial organizations during that period would help to reduce the margin between large-cap businesses and these start-ups. In comparison to conventional businesses, venture enterprises have minimum physical assets, and thus investing in them will involve less risk for the banks. The Chandrasekhar Committee facilitated investment plans in start-up companies that are hassle-free and do not even require RBI approval. 

Factors that contributed to the boom in the venture capital cycle:

  • The tax and lawful endorsements were made flexible based on the scale of operations. The yearly tenures were also adjusted accordingly. 
  • Global trends were incorporated into company management and fundraising. 
  • Venture capital enterprises grew in an environment that involved lower risk chances. Gradually they developed into institutionalized industries. 
  • The start-up firms got access to improved mobility due to large foreign investments. This is an important integrating aspect of the global scenario. 

Conclusion 

The features of Chandrasekhar Committee enabled extensive scope of improvement in the transfer of shares. This was essential for India’s development. The committee was nurtured by the SEBI. Based on the provisions the share market of India rose remarkably. There was a clear regulation regarding the ways of buying and selling shares.