SEBI Announces Settlement Scheme For Venture Capital Funds
The information was provided to the public through a notice on the regulatory body’s official website
The Securities and Exchange Board of India (SEBI) has announced the Venture Capital Funds (VCF) Settlement Scheme 2025 to provide resolution options to VCFs that were unable to wind up their schemes due to possession of unliquidated investments even after the repeal of the SEBI (Venture Capital Funds) Regulations, 1996.
The public was informed about the scheme through a notice on SEBI’s official website.
Meanwhile, following the promulgation of the SEBI (Alternative Investment Funds) Regulations, 2012, the earlier VCF Regulations of 1996 stand repealed. However, VCFs registered under the older framework will be governed by the repealed regulations until their existing funds or schemes wind up.
Several VCFs encountered challenges in liquidating their investments earlier, which resulted in the continuation of unliquidated assets even after the expiry of the order.
Thus, to address such concerns, SEBI amended the AIF Regulations on 20 July 2024, issuing a circular on 19 August 2024, suggesting detailed modalities for the migration.
Under the structure, VCFs had to apply to the market watchdog for migration as a ‘Migrated Venture Capital Fund’ by submitting their original registration certificate, detailed information about their structure, schemes, and unliquidated assets. They had to ensure compliance with conditions, including the absence of pending investor complaints.
The circular had clarified that a one-time additional liquidation period of one year from the date of notification of the amendment would be available, giving such funds until 19 July 2025, to wind up their legacy schemes.
The new scheme is open to VCFs with at least one such scheme, provided they have completed the migration process. It would be valid from 21 July 2025 to 19 January 2026.
SEBI clarified that the applications must be submitted in the specified format available on its website. It should be and accompanied by a non-refundable fee of Rs.25,000 plus 18 per cent Goods and Services Tax (GST). The settlement payments must be made online through the designated gateway.
The market regulator addressed the stakeholders that the settlement amounts must be paid for holding unliquidated investments of investors beyond the tenure of the fund/scheme. Moreover, all costs and settlement expenses must be borne solely by the investment manager or sponsor, with no recovery from the fund, scheme, or investors.
The final date for application is 19 January 2026.
The announcement also mentioned that VCFs failing to act accordingly shall face action from the regulatory body.
It stated publishing Frequently Asked Questions (FAQs) on the portal starting 21 July 2025, to address queries and assist applicants with resolution procedures.