REGULATORY REGIME FOR RUNNING A PRIZE COMPETITION IN INDIA Conduct of prize draws and competitions by sellers (herein referred to as the ‘ Sponsor’ ) to attract customers and sale of their products is a common practice in India. Promotional schemes offering gifts, prizes, or other items free of charge on its closure is intended to entice customers to buy multiple packs of products sold by the Sponsor. The organizers’ of such prize draws and competitions should however assess if they are subject to certain central and separate state legislations concerning prize competitions. This update is limited to the regulatory regime concerning prize competitions and doesn’t cover gambling, gaming or lotteries legislations or regulations applicable in India. Central Legislation: The Central Government has enacted the Prize Competition Act, 1955 (“ PC Act ”) to inter alia control and regulate the prize competitions. The term ‘prize competitions’ has been defined under section 2(d) of the
VC SERIES | PART IV – THE INVESTMENT PROCESS! Once the founders are done negotiating and signing the term sheet , the transaction moves to the process of subscription. The subscription process essentially starts with the due diligence and proceeds with signing the detailed transaction documents. Broadly speaking, closing of an investment round is subject to satisfactory completion of a ‘due diligence’ exercise by the VC fund and signing of the transaction documents such as share subscription, shareholders’ and employment agreements. Immediately upon execution of the term sheet, a VC fund commences its due diligence process – legal, tax, financial, technical, as they deem fit. Along with conducting the due diligence, the negotiations for the transaction documents are also commenced. Due diligence Due diligence is essentially a review conducted on the startup’s business and operations to find out any material issues that the investors need to be aware of before making their investment.