AIF Regulations Amended

SEBI has amended the SEBI (Alternative Investment Funds) Regulations, 2012 (“Regulations”) by releasing the SEBI (Alternative Investment Funds) (Amendment) Regulations, 2018 (“Amendment”) on May 31, 2018.

Under the Amendment, SEBI has increased the maximum investment limit by Alternative Investment Funds (“AIFs”) in venture capital undertakings to Rs. 10 (Ten) crores from Rs. 5 (Five) crores. However, the minimum investment by an AIF will continue to be Rs. 25 (Twenty-Five) lakhs only.

Further, SEBI has also reduced the minimum corpus size required for an AIF to Rs. 5 (Five) crores. Besides, SEBI has raised the maximum period of accepting funds from an AIF to 5 (Five) years, from 3 (Three) years. This move will provide angel funds more time to identify opportunities and invest in venture capital firms.

The requirement of filing of scheme memorandum with SEBI by AIFs is replaced with the requirement of filing term sheet containing material information, as specified by SEBI within 10 (Ten) days of launching the scheme.

The amendment also clarified that the provisions of the Companies Act will apply to an AIF, if it is formed as a company.