SEBI amends alternative investment funds regulation 2012

To further develop the alternative investment industry and the start-up ecosystem in India, SEBI, in March 2015, had constituted a committee of experts drawn across market participants, called the "Alternative Investment Policy Advisory Committee" ("AIPAC") under the chairmanship of Shri. N.R. Narayana Murthy. AIPAC had submitted its report to SEBI with various recommendations including certain recommendations relating to Angel Funds. Considering the recommendations in the report and public comments thereon, the SEBI Board has approved following amendments to SEBI (Alternative Investment Funds) Regulations, 2012 with respect to ‘Angel Funds’:

i) The upper limit for number of angel investors in a scheme has been increased from forty-nine to two hundred.

ii) The definition of start-up for Angel Funds’ investments be similar to definition of DIPP as given in their start-up policy. Accordingly, Angel Funds will be allowed to invest in start-ups incorporated within five years, which was earlier 3 years.

iii)The requirements of minimum investment amount by an Angel Fund in any venture capital undertaking is reduced from fifty lakhs to twenty-five lakhs.

iv) The lock-in requirements of investment made by Angel Funds in the venture capital undertaking is reduced from three years to one year.

v)Angel Funds can invest in overseas venture capital undertakings upto 25 per cent of their investible corpus in line with other AIFs.