The Securities and Exchange Board of India (“SEBI”) has, vide the SEBI (Alternative Investment Funds) (Amendment) Regulations, 2018 (available here) (“Amendment”) liberalised the regulatory regime for Angel Funds. Some of the key changes are as follows:
1. Reduction in minimum corpus: The minimum corpus for an Angel Fund has been reduced to Rs. 5 Crore from the earlier requirement of Rs. 10 crore.
2. Period for accepting investments: The maximum period during which an Angel Fund can accept investments from angel investors has been increased to 5 years from the previous period of 3 years.
3. Increase in investment limits: The maximum amount that can be invested by an Angel Fund in venture capital undertakings has been increased to Rs. 10 Crore, from the previous limit of Rs. 5 Crore.
4. Term Sheet for launching Schemes: For launching a scheme, an Angel Fund is now required to file a term sheet containing material information about the scheme with SEBI (“Scheme Term Sheet”), instead of a scheme memorandum as previously required. Prior to the Amendment, the scheme memorandum would be reviewed by SEBI, and SEBI’s comments thereon were required to be incorporated. This process has been done away with.
SEBI has also, vide Circular No. CIR/IMD/DF1/102/2018 dated June 29, 2018 (available here) (“Circular”), specified the following requirements in relation to the Scheme Term Sheet:
1. Time period for filing: The Scheme Term Sheet shall be filed with SEBI within 10 days of the scheme being launched.
2. Format: The format of the Scheme Term Sheet has been annexed to the Circular, and consists of three parts with details of the following:
(i) the investment and the investee company;
(ii) compliances under the SEBI (Alternative Investment Funds) Regulations, 2012; and
(iii) material changes from the last scheme memorandum or Scheme Term Sheet filed with SEBI.
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