SEBI Update | Overseas investments by AIFs and VCFs

The Securities and Exchange Board of India (SEBI) has, in consultation with the Reserve Bank of India, vide circular number HO/IMD/DF1/CIR/P/2018/103/2018 dated July 3, 2018 (available here), enhanced the limit of overseas investment by Alternative Investment Funds (“AIFs”) and Venture Capital Funds (“VCFs”) to USD 750 million from the previous limit of USD 500 million.

Please note that the limit of USD 750 million is an overall investment limit for all AIFs and VCFs. These entities shall still be required to submit each proposal for overseas investment to SEBI for prior approval. The limits allocated must be utilised with 6 months from the date of the SEBI approval (“Validity Period”).

All other requirements for overseas investments by these entities, as specified in SEBI circulars no. SEBI/VCF/Cir no. 1/ 98645 /2007 dated August 9, 2007 (available here) and CIR/IMD/DF/7/2015 dated October 01, 2015 (available here), shall remain unchanged and shall be required to be complied with.

For the purposes of monitoring utilisation of the limits, AIFs and VCFs are required to make the following disclosures on the SEBI intermediary portal:

(i)     Utilisation of the overseas investment limits, within 5 working days of utilisation;

(ii)   Non-utilisation of the allocated limits (or any part thereof), within 2 working days of the expiry of the Validity Period; and

(iii)  Surrender of allocated limits within the Validity Period, within 2 working days from the date of the decision to surrender.

While the circular was issued on July 3, 2018, its provisions have been made applicable from July 2, 2018.