Alerts & Updates 8th Jan 2024

A review of SEBI’s order in CIG Realty Fund case


Vinod Joseph Partner | Mumbai
Paridhi Jain Associate

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  • On December 29, 2023, the Securities and Exchange Board of India (SEBI) issued an order (Order) in the matter of CIG Realty Fund – Scheme I, II and IV.

    SEBI received 139 complaints on the SCORES Portal[1] between May 30, 2011 and January 28, 2022 against CIG Realty Fund (CIGRF / VCF-CIGRF / Fund), a SEBI registered Venture Capital Fund with respect to its Schemes I, II and IV.

    The complaints primarily revolved around the extension of the tenure of the mentioned Schemes beyond the period specified in the Scheme’s private placement memorandum (PPM), as well as the failure to liquidate the assets of the Schemes upon the expiration of their tenure. Additionally, some complaints included concerns about non-receipt of invested funds, instances of cheating, and poor fund performance.

    SEBI forwarded the complaints against CIGRF to the Fund through SCORES. Regrettably, CIGRF was unable to address the complaints forwarded by SEBI.As per the relevant PPM, the tenure of Scheme-I was till October 05, 2015 and that of Scheme-II was till September 28, 2016. However, the Fund had extended the tenures beyond the permissible period in the relevant PPM. As a consequence, adjudication proceedings had been initiated against CIGRF’s investment manager and trustees, for failure to wind up the operations of Scheme I and II upon expiry of the time-period of the schemes. The Adjudicating Officer, vide an order dated March 28, 2019, had imposed monetary penalties on CIGRF’s investment manager and trustees. However, even after a lapse of more than two years of passing of the said order by the Adjudicating Officer, Schemes I and II were not wound up.

    Scheme IV’s tenure was scheduled to have expired, after two extensions, on September 25, 2017. However, Scheme IV had not exited from any of its investments as at March 31, 2020. Further, Scheme IV had invested in associate companies in violation of Regulation 12(c) of Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 (SEBI VCF Regulations).

    SEBI emphasized in the Order that, in accordance with Regulation 23(1)(a) of the VCF Regulations, a scheme must be compulsorily wound up when the specified period outlined in the Private Placement Memorandum (PPM) concludes. The winding-up process should be completed within three months from the date of intimation (regarding the term’s expiration) by the trustee to both SEBI and the investors.

    It was explicitly stated that a scheme cannot be extended beyond the timeframe outlined in the placement memorandum, even if an extension is approved by a seventy-five percent resolution of the investors in the scheme. Consequently, SEBI mandated the winding up of Schemes I, II, and IV and ordered that an exit be provided to the investors within six months from the date of the Order. In this case, SEBI noted that the alleged extension was not approved by seventy-five percent of the investors in Schemes I and II. However, even if it had been approved by seventy-five percent of the investors, this extension would not have been valid and the Scheme would have been in violation of SEBI regulations for failure to windup on expiry and liquidate within three months from the date of intimation by the trustee to SEBI and the investors.

    The Order follows the principles outlined in SEBI’s order in the Urban Infrastructure Venture Capital Fund case dated October 31, 2022, but the Order does not refer to the Urban Infrastructure Venture Capital Fund case.

  • ELP Comments

    Though this case and the Urban Infrastructure Venture Capital Fund case relate to a venture capital fund (“VCF”) established under the SEBI VCF Regulations, the principles set out in these cases are equally applicable to alternative investment funds (“VCF”) registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“SEBI AIF Regulations”). The term of a VCF cannot be extended beyond the tenure provided for in the relevant scheme’s PPM, even with the consent of all investors in such VCF. The SEBI AIF Regulations allow the term of an AIF to be extended by up to two years’ after expiry of the tenure provided for in the relevant scheme’s PPM, with the consent of two-thirds of the unit holders by value of their investment in the AIF. The term of an AIF cannot be extended by more than the aforesaid period of two years’ beyond the tenure provided for in the relevant scheme’s PPM, even with the consent of all investors in such AIF.

  • We hope you have found this information useful. For any queries/clarifications please write to us at  or write to our authors:

    Vinod Joseph, Partner – Email –
    Paridhi Jain, Associate – Email –

  • References:

    [1] SEBI Complaints Redress System (

Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.