The Securities and Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 19AF(4),Regulation 36 and Regulation 39(2) of SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), vide Circular No. SEBI/HO/AFD/SEC-3/P/CIR2025/85,[1] dated June 06, 2025, has issued a significant update concerning the migration of Venture Capital Funds (“VCFs”) to the AIF Regulations (“Circular”).
I. Background
SEBI, vide Circular dated August 19, 2024, laid down the modalities for the migration of VCFs to the AIF Regulations. Among other matters, the circular addressed the conditions under which VCFs, particularly those with at least 1 (one) scheme that had not been wound up post-expiry of its liquidation period in terms of Regulation 24(2) of the SEBI (Venture Capital Funds) Regulations, 1996, could transition to the AIF regime.
II. Key Highlights of the Circular
Paragraph 5.2 of the said Circular dated August 19, 2024, had specified that VCFs with schemes whose liquidation periods had expired (but had not been wound up) and which opt for migration to AIF Regulations, would be granted an additional liquidation period up to July 19, 2025.
Pursuant to industry representations and consultations, and with a view to facilitating the migration process, SEBI has extended the additional liquidation period mentioned in Paragraph 5.2 of the above-referenced circular. The new extended additional liquidation period shall be up until July 19, 2026.
All other provisions of SEBI Circular dated August 19, 2024, remain unchanged. Importantly, the last date for submission of applications for migration by all eligible VCFs continues to be July 19, 2025.
[1] https://www.sebi.gov.in/legal/circulars/jun-2025/extension-of-timeline-of-additional-liquidation-period-for-vcfs-migrating-to-sebi-alternative-investment-funds-regulations-2012_94433.html