TLDR:
Key Points:
- Sebi to provide flexibility to Venture Capital Funds to deal with unliquidated investments.
- Sebi to put in place a framework for NRIs, OCIs, and RIs to participate in FPIs based out of IFSCs.
The Securities and Exchange Board of India (Sebi) has decided to provide flexibility to Venture Capital Funds (VCFs) to manage unliquidated investments of their schemes beyond the tenure expiration. Additionally, Sebi has introduced a framework to enable NRIs, OCIs, and RIs to participate in Foreign Portfolio Investors (FPIs) located in International Financial Services Centres (IFSCs) in India. The move aims to address issues faced by VCFs in fully liquidating investments within their scheme’s tenure. This decision comes after receiving feedback from the AIF industry regarding tax-related issues and the complexities of setting up liquidation schemes.
Highlights of the framework for migration include the creation of a sub-category under Category I AIFs-VCFs called “Migrated VCFs.” VCFs registered under the previous regulations may opt to register themselves as Migrated VCFs without any additional fees. Migrated VCFs can benefit from the flexibilities under AIF Regulations for extension of tenure, liquidation period, and dissolution period to manage unliquidated investments. The option to migrate will be available for a 12-month period. Additionally, Sebi has approved a regulatory framework to allow increased contributions from NRIs, OCIs, and RIs in certain FPIs based out of IFSCs.
The regulatory changes aim to provide more flexibility and opportunities for VCFs and investors, ultimately enhancing the efficiency and effectiveness of the investment landscape.
