Sebi settles proceedings with 29 venture capital funds over violations

Sebi has settled enforcement proceedings with 29 venture capital funds that failed to liquidate assets after their schemes' tenure expired, under the VCF Settlement Scheme 2025

The Securities and Exchange Board of India (Sebi) has settled enforcement proceedings with 29 venture capital funds (VCFs) that had failed to liquidate investments after the expiry of their schemes’ tenure.

 

The settlement was carried out under the Venture Capital Fund Settlement Scheme, 2025, which was introduced to resolve regulatory violations linked to legacy VCFs that continued to hold unliquidated investments beyond their permitted liquidation period.

 

Gaja Capital, SBI Macquarie, ASK Real Estate, SIDBI SME Venture and Kotak India Venture are among the 29 funds that paid settlement amounts ranging between Rs 2 lakh and Rs 9 lakh.

 

 

Sebi said the issue arose after the introduction of the Alternative Investment Funds (AIF) Regulations, 2012, which replaced the earlier Venture Capital Funds Regulations, 1996. While existing VCFs were allowed to continue under the old framework until their schemes were wound up, several funds failed to liquidate investments even after their liquidation period had expired.

 

To address the situation, Sebi amended the AIF framework in 2024 to allow VCFs to migrate to the AIF regime and provided mechanisms to deal with unliquidated assets. However, schemes that continued beyond their liquidation period were considered non-compliant with Regulation 23(1) read with Regulation 17(1) of the erstwhile VCF Regulations.

 

Following this, the regulator introduced the VCF Settlement Scheme, 2025, offering eligible VCFs an opportunity to settle potential enforcement proceedings by submitting settlement applications and paying prescribed settlement amounts.

 

According to the order, 29 VCFs availed themselves of the scheme and remitted the specified settlement amounts after a public notice was issued on July 15, 2025.

 

“In view of the above… the proceedings that may be initiated for the prima facie violations… are settled,” Sebi said in the order, adding that the regulator will not initiate enforcement action against the applicants for the identified defaults.