[Guidelines for approval [under clause (xx) of sub-section (2) of section 80C or] under clause (xvii) of sub-section (2) of section 88.

20A. (1) For the purpose of [clause (xx) of sub-section (2) of section 80C or] clause (xvii) of sub-section (2) of section 88, the prescribed authority shall be the Central Board of Direct Taxes.

(2) An application for approval shall be made in Form No. 59A by the Mutual Fund to the Board referred in sub-rule (1) three months before the public issue.

(3) Every application for approval under sub-rule (2) shall be accompanied by the following documents, namely :—

(a) audited balance sheets and profit and loss account for three previous years immediately preceding the previous year in which the application is made :

Provided that where a Mutual Fund has been in existence for a period of less than three years, in that case that company may furnish balance sheet and profit and loss account for the period of its existence;

(b) a copy of the certificate of registration issued by the Securities and Exchange Board of India.

(4) Every such Mutual Fund shall invest its total paid-up capital (hereinafter referred to as such capital) raised through equity issue or debentures in the following manner :—

(i) twenty-five per cent or more of such capital shall be invested in the "eligible issue of capital of any company" referred to in [clause (i) of Explanation to clause (xix) of sub-section (2) of section 80C or in] clause

(i) of Explanation to clause (xvi) of sub-section (2) of section 88, before the end of one year from the date of approval of the Board;

(ii) the balance of such capital shall be invested within a period of three years from the date of approval.

(5) Every such Mutual Fund shall submit a certificate from an accountant, as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year, from the date of approval of the Board.

(6) The Board shall pass an order in writing granting approval or refusing approval to such Mutual Fund, as the case may be :

Provided that no order of refusing approval shall be passed by the Board without an opportunity of being heard given to the Mutual Fund.

(7) The Board shall have the power to withdraw the approval granted under sub-rule (6) under the following circumstances, namely :—

(a) if such Mutual Fund fails to make investments as mentioned in sub-rule (4); or

(b) if such Mutual Fund fails to file the certificate referred to in sub-rule (5).]