The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, (AIF Regulations) regulate all forms of investment vehicles set up in India to pool money from investors (Indian or foreign). The funds must be registered under these regulations unless they have been specifically excluded in the AIF Regulations.
Scope of regulations
The SEBI (Venture Capital Funds) Regulations, 1996, (VCF Regulations) have been repealed. However, existing VCFs will continue to be regulated until the existing fund or scheme managed by the fund is wound up. Unregistered pools of capital must register under the AIF Regulations within six months (or 12 months at SEBI’s discretion) and are not permitted to raise any new capital until they have registered.
Fund categories
The AIF Regulations have defined several categories of funds with the intent to distinguish the investment criteria and relevant regulatory concessions they are allowed. They are:
Category I is for AIFs with a positive spillover effect on the economy, such as venture capital funds, SME funds, social venture funds, infrastructure funds and other AIFs as may be specified.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
