SEBI has issued Modalities for migration of Venture Capital Funds registered under erstwhile SEBI (Venture Capital Funds) Regulations, 1996 to SEBI (Alternative Investment Funds) Regulations, 2012.
Migration Procedure
To migrate to the AIF Regulations as a “Migrated VCF,” a VCF must submit an application to SEBI in the specified format. The application requires:
- The original certificate of registration issued under VCF Regulations.
- Relevant information as per the format specified in Annexure I of the notification.
- The flexibility to migrate is available until July 19, 2025.
For VCFs with schemes whose liquidation periods have not yet expired, the tenure of the schemes will be determined based on the Private Placement Memorandum (PPM). If the PPM disclosed a definite tenure, it remains unchanged post-migration. If the PPM did not specify a tenure, the remaining tenure will be determined with the approval of 75% of investors by value.
Conditions for Schemes with Expired Liquidation Periods
For VCFs that have at least one scheme with an expired liquidation period, migration is allowed only if there are no pending investor complaints regarding non-receipt of funds or securities. A one-time additional liquidation period of one year is available for schemes with expired liquidation periods, allowing them to wind up by July 19, 2025.
Post-Migration Provisions
Upon migration, the investors, investments, and units of the VCF or its schemes registered under VCF Regulations will be deemed as those of the Migrated VCF under AIF Regulations. Additionally, the applicability of the SEBI Master Circular for AIFs (dated May 7, 2024) and subsequent circulars will extend to Migrated VCFs, as detailed in Annexure II of the notification.
Non-Migrating VCFs
For VCFs that choose not to migrate, Schemes with unexpired liquidation periods will be subject to enhanced regulatory reporting. Schemes with expired liquidation periods will face appropriate regulatory action if they continue operating beyond their original tenure. VCFs that have wound up all their schemes or have made no investments must apply to SEBI to surrender their registration by March 31, 2025. Failure to do so will result in the cancellation of their registration.
