Venture capital funds (VCFs) registered under the 1996 regime are being urged to assess their eligibility and apply to the Securities Exchange Board of India (SEBI) for migration before the 19 July 2025 deadline and ensure a smooth transition to the new regulatory framework.
VCFs with schemes whose liquidation period has not expired and those with at least one fund whose liquidation period has expired — but not wound up and continue to hold unliquidated investments — have been granted a one-time option to migrate into the alternative investment fund (AIF) regime under a newly introduced category-1 AIF called migrated venture capital funds (MVCFs).
The regulatory transition provides a strong framework for fund governance, investor protection and asset resolution. Despite the multiple incentives offered under the migration scheme, such as simple re-registration, fee waivers and tailored compliance, there has been a lacklustre response.
Due to the low uptake, the Indian Venture and Alternate Capital Association (IVCA) has VCFs to seek clarification or support from the IVCA or the SEBI to complete their migration. The SEBI issued the new migration framework in a last year after the SEBI (VCF) Regulations, 1996, was with the SEBI (AIF) Regulations, 2012.
The IVCA also urged VCFs, which had wound up all their schemes and/or had schemes with no investment, to surrender their registration to the SEBI.
VCFs under category-I AIF are those with positive spillover effects on the Indian economy and includes small and medium-sized enterprise funds, social venture funds and infrastructure funds.
