SEBI rolls out settlement scheme for venture capital funds from July 21

The Securities and Exchange Board of India (SEBI) on Tuesday announced a settlement scheme for venture capital funds (VCFs) whose schemes have crossed their tenure but are yet to be wound up.

The VCF Settlement Scheme, 2025, will open on July 21, 2025 and remain valid till January 19, 2026, SEBI said in a public notice.

Under the scheme, VCFs with at least one scheme whose tenure has expired but has not been wound up, and which have completed their migration to the Alternative Investment Funds (AIF) regime, will be eligible to apply for settlement.

SEBI had repealed the VCF Regulations after the notification of the Alternative Investment Funds (AIF) Regulations in May 2012.

However, some VCFs were unable to liquidate their investments during the tenure of the fund and continue to hold the unliquidated investments beyond the expiry of their tenure.

The scheme provides an opportunity for such VCFs to settle actions arising out of delays in winding up their schemes despite the expiry of their tenure.

VCFs have been facing difficulties in liquidating their investments within the fund tenure, SEBI noted.

Entities availing the settlement scheme will be required to submit a settlement application along with a non-refundable fee of ₹25,000 plus 18% GST.

The base amount for settlement is ₹1 lakh for delays up to one year, with an additional ₹50,000 for each subsequent year or part thereof.

An amount ranging between ₹1 lakh to ₹6 lakh will be payable depending on the value of unliquidated investments held beyond the scheme tenure.

SEBI clarified that the settlement amount and related expenses shall be borne by the investment manager or sponsor and cannot be recovered from the scheme, fund, or investors.

VCFs have been provided an additional period of one year to liquidate their investments and wind up the schemes.

Once migrated, VCFs could also enter into a dissolution period after obtaining approval from their investors. The last date for applying for such migration is July 19, 2025, SEBI said.

"Upon expiry of the last date of migration, i.e. July 19, 2025, Sebi may initiate action against such VCFs that have schemes whose liquidation period has expired but not wound up and that continue to hold the unliquidated investments, and have not availed the opportunity under the VCF Settlement Scheme, 2025," it added.