Sebi Circulars On AIF: The Securities and Exchange Board of India (Sebi) has extended the last date for additional liquidation for venture capital funds (VCFs) that plan to migrate to Sebi’s alternative investment fund (AIF) norms, to July 16, 2026.
Sebi announced in a circular that the last date to apply for migration to AIF norms is July 19, 2025. Earlier on August 19, 2024, Sebi had allowed VCFs to switch to the norms governing AIFs.
“....modalities for migration including conditions under which Venture Capital Funds(VCFs) will be allowed to migrate to SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). Paragraph 5 of the said circular contained provisions for VCFs having at least one scheme which has not been wound up post expiry of its liquidation period (in terms of Regulation 24(2) of VCF Regulations),” Sebi said in a circular.
What are AIFs
An AIF is a privately-pooled investment vehicle that gathers capital from multiple investors to invest in a broad range of traditional and non-traditional assets, such as private equity, venture capital, real estate, hedge strategies, and so on.
On the other hand, VCFs are pooled investment vehicles that invest in early-stage and high-growth potential companies. Notably, VCFs are governed by the Sebi (Venture Capital Funds) Regulations, 1996, and AIFs are governed by the Sebi (Alternative Investment Funds) Regulations, 2012.
What is the Migration Option
As part of the migration option, VCFs which have a minimum of one scheme which has not yet wound up after their liquidation period, were given an extension in the liquidation period till July 19, 2025. However Sebi has now postponed the last date to migrate from VCF norms to AIF norms to July 19, 2026, following feedback from the industry.
It added that all other provisions of the circular dated August 19, 2024 will remain unchanged. Additionally, VCFs that wish to migrate to AIF norms should submit the original registration certificate and other specific information mandated by Sebi.
The market regulator also said that once the migration is complete, existing investors, investments, and units will be transferred under the AIF Regulations. Once the transfer is complete, the migrated VCF will be registered as a VCF under Category-I AIFs.
Greater Flexibility in Managing Unliquidated Investments
Migration from VCF norms to AIF norms aim to offer such funds greater flexibility in managing unliquidated investments towards the completion of their tenure and align them with the comprehensive AIF regulatory framework.
On the other hand, investors benefit from such migrations as it can potentially lead to increased transparency and investor protection, since migrated VCFs are subject to more stringent and comprehensive disclosure requirements under Sebi’s AIF regulations.
