Sebi relaxes compliance requirements for VCs, AIFs amid COVID-19

With an aim to reduce the compliance burden on venture capital funds and alternative investment funds, market regulator Sebi on Monday extended the due date for various regulatory filings till September-end.

The move comes in the wake of the second wave of the COVID-19 pandemic and restrictions imposed by various state governments, Sebi said in a circular.

The decision has been taken after Sebi received representation from the AIF industry, requesting the extension of timelines for various regulatory filings and compliances for venture capital funds (VCFs) and alternative investment funds (AIFs).

After consideration, it has been decided to extend the due dates for regulatory filings by AIFs and VCFs, during the period ending March 2021 to July 2021 as prescribed under Sebi (Alternative Investment Funds) Regulations, it said.

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AIFs and VCFs may submit regulatory filings for these periods, as applicable, on or before September 30, 2021, it added.

AIFs are privately-pooled investment funds, which collect funds from investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of their investors.

Commenting on the SEBI's new development, Tushar Sachade, Partner, Price Waterhouse & Co LLP and Member of Regulatory Affairs Committee at Indian Private Equity and Venture Capital Association (IVCA) stated,

"SEBI has extended the compliance deadlines relating to AIFs and VCFs, which are falling during the period ending March 21 and July 21 to September 21 considering the second wave of Covid 19. This is a welcome step by SEBI and will give much needed breather to the fund managers."

"However, industry players are also looking for relaxation in terms of the fund given that Covid 19 has resulted in the delay of portfolio exits for many fund houses due to prevailing market conditions. SEBI should consider this request of the industry subject to investors' approval," added Tushar.

Earlier in May 2021, with an aim to boost the listing of startups, SEBI notified a slew of relaxations to norms, including reducing the holding period for pre-issue capital and allowing discretionary allotment to eligible investors.

This is aimed at making the platform more accessible to companies in view of the evolving startup ecosystem.