Sebi settles cases with 29 venture capital funds

Synopsis

The Securities and Exchange Board of India has resolved cases with 29 venture capital funds. These funds faced allegations of violating securities laws. They have agreed to pay a total of approximately '2 crore. The settlements address non-compliance with older rules regarding venture capital funds. This involved holding investments beyond the permitted liquidation period.

Mumbai: The Securities and Exchange Board of India (Sebi) has settled cases with 29 venture capital funds including funds managed by Gaja Capital, Faering Capital, SBI Macquarie Infrastructure Trust, Blume Ventures and True North Fund, for alleged securities law violations.

These firms agreed to pay a total settlement amount of about '2 crore, the regulator said in an order on Monday.

The settlement relates to non-compliance with Sebi's erstwhile regulations governing venture capital funds. These funds continued to hold unliquidated investments even after the expiry of their liquidation period in violation of the rules.

Under the regulatory framework, venture capital funds were required to wind up schemes within the specified tenure and liquidation timeline.

The issue arose after Sebi introduced the Alternative Investment Funds (AIF) Regulations, 2012, which replaced the earlier VCF regime. While existing venture capital funds were allowed to continue under the old rules until their schemes were wound up, several schemes remained active beyond their permitted liquidation period.

To address this issue, Sebi tweaked the AIF Regulations in 2024 to allow venture capital funds to migrate to the AIF framework and deal with residual investments. At the same time, the regulator also introduced the VCF Settlement Scheme 2025, offering funds an opportunity to resolve potential enforcement actions by paying a settlement fee.

Following a public notice issued in July last year, 29 venture capital funds opted for the scheme. Settlement amounts ranged from '2 lakh to '9.5 lakh per scheme, depending on the case.

The regulator said the settlement would close enforcement proceedings related to the identified violations for the applicants.

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