SEBI VCF settlement scheme 2025 sees 29 funds settle delayed liquidation cases
As many as 29 venture capital funds, including LICHFL Fund, settled alleged VCF norms breaches with the Securities and Exchange Board of India under the VCF settlement scheme 2025. The cases involved delayed liquidation of investments under the 1996 VCF framework. Settlement amounts ranged from INR 2 lakh to INR 9.5 lakh, totalling nearly INR 2 crore.
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As many as 29 venture capital funds, including LICHFL Fund, settled a Sebi case over alleged breaches of old VCF rules. The funds together paid nearly Rs 2 crore as settlement charges. Sebi said the matter involved delayed winding-up and schemes that stayed active after expiry. The settlements were accepted under a dedicated VCF settlement scheme.
Sebi’s order said the case linked to schemes registered under the earlier VCF norms, 1996. These schemes did not sell or close investments within the set tenure. As a result, the schemes continued beyond the permitted period. Sebi treated this as a prima facie breach of regulatory provisions. The settlement route allowed closure of enforcement proceedings.
Sebi VCF settlement scheme 2025 and applications
The regulator used Sebi’s venture capital funds VCF settlement scheme, 2025 to resolve the lapses. The scheme aimed to handle compliance issues tied to delayed liquidation of older VCF schemes. Under this framework, eligible VCF entities and their schemes could settle ongoing or proposed enforcement action. Sebi said it received settlement applications from 29 VCF entities.
According to the order, the applicants paid settlement amounts between Rs 2 lakh and 9.5 lakh. Sebi recorded that all 29 VCFs remitted the specified amounts. The regulator said the settlement option was available to entities that met the scheme conditions. The order also noted the settlements were made under the VCF settlement scheme, 2025.
VCF entities named in Sebi order
The order listed several funds that were part of the settlement process. These included SBI Macquarie Infrastructure Trust and Canbank Venture Capital Fund. It also named True North Fund IV and Karnataka Information Technology Ventures Capital Fund – 2. Tata Capital Special Situations Fund – Trust and Gujarat Information Technology Fund were also included, among others.
“…it is hereby ordered that the proceedings that may be initiated for the prima facie violations… be settled qua the applicants 29 VCF entities on the terms that SEBI shall not initiate any action against the said applicants for the defaults,\” Sebis Whole Time Members Kamlesh Chandra Varshney and Amarjeet Singh said in the order.
Sebi said the settlement does not fully close its oversight options. The regulator stated it can act further if it finds any misrepresentation. It also kept the right to proceed if any VCF entity breaks settlement terms. This clarification was included in the same order that recorded the settlement.
Sebi VCF norms 1996 and shift to AIF regulations
Sebi announced the settlement scheme in July 2025 for violations tied to winding-up provisions by migrated venture capital funds. The scheme ended on January 19, 2026. Sebi had earlier repealed the VCF Regulations after notifying Alternative Investment Funds AIF Regulations in May 2012. The AIF rules also set out how eligible VCFs could migrate.
Sebi said it considered representations from VCFs on difficulties in liquidating investments during scheme tenure. It noted that some funds faced challenges during wind-up under the older structure. The AIF regulations addressed this by allowing migration into the AIF regime. They also prescribed the modalities for such migration and related compliance steps.
With inputs from PTI
