In July 2025, the Securities and Exchange Board of India (SEBI) unveiled ‘Venture Capital Fund (VCF) Settlement Scheme 2025’, aimed to aid the settlement of violations of winding-up provisions by migrated VCFs.
- The scheme will commence on July 21, 2025 and expires on January 19, 2026 (both dates are inclusive) or other such date as approved by the competent authority.
Background:
i.SEBI repealed the VCF Regulations after introducing the Alternative Investment Funds (AIF) Regulations in May 2012, but some VCFs could not liquidate their investments within the fund tenure.
- To address this, SEBI allowed a transition period till July 19, 2025.
ii.SEBI may initiate action after July 19, 2025, against VCFs that fail to wind up expired schemes and do not opt for the VCF Settlement Scheme 2025.
Key Features of VCF Settlement Scheme 2025:
i.Eligibility Criteria: The new scheme is eligible for VCFs with minimum one scheme whose tenure has expired but not wound up and has completed the migration.
ii.Filing of the Settlement Application: An entity who is interested in making an application for availing settlement under the VCF Settlement Scheme, 2025, is required to submit a settlement application along with a non-refundable application fee of Rs 25,000 with 18% Goods and Services Tax (GST).
iii.Terms of Settlement of the Scheme: As per the new scheme, the base amount for settlement for maximum delay of 1 year in winding up the scheme will be Rs 1 lakh.
- The scheme has further clarified that for every subsequent year of delay or part thereof, an additional amount of Rs 50,000 shall be payable.
- Also, a slab-wise amount will be required to pay based on the amount of unliquidated investment corpus, which ranges from Rs 1 lakh to Rs 6 lakh.
Key Conditions:
SEBI laid out certain conditions for applying for settlement under VCF Settlement Scheme, 2025:
i.Before applying under this new scheme, VCFs are required to complete their migration under AIF Regulations.
ii.The Investment Manager or Sponsor will borne the settlement amount and all expenses related to settlement and these expenses will not be recoverable from the scheme or investors.
iii.Any interested entity can apply for settlement under this scheme from July 19, 2025 to July 19, 2026, or any other date as may be notified by SEBI.
Recent Related News:
In May 2025, SEBI has mandated the use of Electronic Book Platform (EBP) for all private placement debt issues of 20 crore or above. This move is aimed to enhance transparency and streamline the fundraising process in the private debt market.
