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June 17, 2024
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SEBI proposes relaxed rules for illiquid PE, VC investments

SEBI proposes relaxed rules for illiquid PE, VC investments

Madhabi Puri Buch, chairperson of Securities and Exchange Board of India (SEBI), reacts during a conversation inside her office at the SEBI headquarters in Mumbai | Credit: Reuters

India’s markets regulator, on Monday, proposed a relaxed framework for alternative investment funds (AIFs) and venture capital funds (VCFs) to deal with their unliquidated investments after the fund tenure expires.

The Securities and Exchange Board of India (SEBI) suggested that instead of launching a new scheme to liquidate their investments, the tenure of the fund be extended, according to a discussion paper on the regulator’s website.

Currently, VCFs have to liquidate their investments within three months of the fund expiring, while AIFs have a 12-month window.

The regulator said VCFs can migrate to the AIF regime to avail the longer window for liquidating their investments.

SEBI has invited comments from the market till Feb. 2, after which it will finalise the rules.

The proposed changes come after the funds industry sent SEBI representations saying the current process had tax issues and was a costly, time-consuming exercise.

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