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Informist, Wednesday, Jun. 18, 2025

MUMBAI – The Securities and Exchange Board of India took note of the decision to introduce a one-time settlement scheme for venture capital funds for not winding up their schemes within the prescribed timeframes, the regulator said in a press release Wednesday. The scheme was recommended by the high-powered advisory committee of the regulatory body, and it provides a settlement opportunity to venture capital funds that have migrated to alternative investment funds, the release said.

Under the scheme, settlement amount consists of two parts. Firstly, venture capital funds will be required to pay INR 100,000 for a delay of up to one year in winding up the scheme, and INR 50,000 for every subsequent year of delay or part thereof. Secondly, an amount based on slab-wise structure ranging from INR 100,000 to INR 600,000 depending on the size of unliquidated investments as on the migration application date will apply, the regulator said.

To qualify for the scheme, venture capital funds must have completed their migration to AIFs. The regulator in the release clarified that the entire cost of settlement, including the settlement amount and related expenses, will be borne solely by the investment manager or sponsor. The modalities for making applications under this scheme will be communicated by SEBI in due course. 

In response to persistent industry concerns over the difficulty in liquidating assets within the original scheme tenures, SEBI had earlier issued a circular on Aug. 19, 2024. The circular detailed the process through which venture capital funds could transition to the AIF framework. 

"Migration to AlF Regulations would help the venture capital funds to secure an additional liquidation period to liquidate the assets and wind up the schemes," SEBI said in the release. "However, such migration would not absolve the VCFs from their past delays for winding up such schemes. The Scheme is intended to provide expeditious settlement of the past non-compliance related to tenure of scheme only, without any additional burden to investors."  End

Reported by Vaishali Tyagi

Edited by Deepshikha Bhardwaj

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