SEBI vide its Circular dated 17th August, 2022 came out with guidelines which said that Alternative Investment Funds (AIFs) / Venture Capital Funds (VCFs) can invest in securities of companies incorporated outside India subject to such conditions or guidelines that may be stipulated or issued by the Reserve Bank of India and SEBI from time to time.
| Sr. No. | SEBI specified guidelines |
| 1. | AIFs/VCFs shall file an application to SEBI for allocation of overseas investment limit in the format specified at Annexure A. |
| 2. | SEBI circular dated 09th August, 2007 pertained a condition that overseas investment were allowed only in those companies which had an Indian connection. Which has now been done away with. |
| 3. | AIFs/VCFs shall invest in an overseas investee company, which is incorporated in a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to the bilateral Memorandum of Understanding with SEBI. |
| 4. | AIFs/VCFs shall not invest in an overseas investee company, which is incorporated in a country identified in the public statement of Financial Action Task Force (FATF) as: a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; ora jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with FATF to address the deficiencies. |
| 5. | If an AIF/VCF liquidates investment made in an overseas investee company previously, the sale proceeds received from such liquidation, to the extent of investment made in the said overseas investee company, shall be available to all AIFs/VCFs (including the selling AIF/VCF) for reinvestment. |
| 6. | AIFs/VCFs shall transfer/sell the investment in overseas investee company only to the entities eligible to make overseas investments, as per the extant guidelines issued under the Foreign Exchange Management Act, 1999. |
| 7. | AIFs/VCFs shall furnish the sale/divestment details of the overseas investments to SEBI in the format given at Annexure B within 3 working days of the divestment, by emailing to aifreporting@sebi.gov.in, for updating the overall limit available for overseas investment by AIFs/VCFs. |
| 8. | All the overseas investments sold/divested by AIFs/VCFs till date, shall also be reported to SEBI in the format given at Annexure B within 30 days from the date of this circular, by emailing to aifreporting@sebi.gov.in. |
| 9. | The Trustee/Board/Designated Partners of the AIFs/VCFs shall submit an undertaking to SEBI as specified at Annexure A with respect to the proposed overseas investment. |
The Trustee/Board/Designated Partners of the AIFs/VCFs shall submit an undertaking to SEBI as specified at Annexure A with respect to the proposed overseas investment.
The provisions of this Circular shall come into force with immediate effect and are applicable to all Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs).
About the Author
