By Simran Jalan (email@example.com)
The Securities and Exchange Board of India (SEBI) came out with a circular on July 3, 2018 (Circular) to liberalise the regulatory regime surrounding overseas investments by Alternative Investments Funds (AIF) and Venture Capitals Funds (VCF). However, before we delve further into the contents of the notification, let us have a quick discussion on what AIFs and VCFs are.
AIFs are privately pooled investment vehicles established in India and registered with the SEBI and is not a mutual fund or collective investment scheme. AIFs can be of following three categories –
- Category I – These funds invest only in early stage start-ups.
- Category II – Category II AIFs shall include AIFs which do not fall in Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements
- Category III – These include AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.