Restrictions on foreign investment by AIFs and VCFs

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On 1 October, the Securities and Exchange Board of India (SEBI) issued a circular dealing with regulatory restrictions concerning overseas investments by alternative investment funds (AIFs) and venture capital funds (VCFs) which are registered under the Venture Capital Fund Regulations, 1996. SEBI has also provided clarifications with respect to issues concerning the term of a fund and certain other requirements for the investment managers to AIFs.

The key aspects of the circular are highlighted below:

Overseas investments by VCFs and AIFs

Both VCFs and AIFs can invest 25% of their investable funds in offshore venture capital undertakings. Formerly, such investments by VCFs were limited to 10% (all having Indian connections).

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