The Securities and Exchange Board of India on Wednesday made a number of amendments to SEBI (Alternative Investment Funds) Regulations, 2012 regarding angel funds, including reducing the lock-in period from three years to one year.
The minimum investment amount by an angel fund in any venture capital undertaking has also been reduced from R50 lakh to R25 lakh.
Moreover, angel funds will be allowed to invest in start-ups incorporated within five years, against three years earlier. The new regulations are part of the decisions Sebi took after its board meet in Mumbai on Wednesday.
The upper limit for a number of angel investors in a scheme has also been increased from 49 to 200. Moreover, angel funds are allowed to invest in overseas venture capital undertakings up to 25% of their investible corpus in line with other Alternate Investment Funds (AIFs).
The regulator had constituted a committee of experts called the “Alternative Investment Policy Advisory Committee” (AIPAC) under the chairmanship of NR Narayana Murthy to further develop the alternative investment industry and the start-up ecosystem in India, in March 2015.
The committee had submitted its report to Sebi with various recommendations, including certain recommendations relating to angel funds. The market regulator approved amendments to AIF regulations with respect to angel funds after the recommendations in the report and public comments .