The Securities and Exchanges Board of India (SEBI) has issued a new amendment to its Alternative Investment Funds (AIF) 2012 regulations, to finalize the angel fund guidelines with a few changes. These guidelines were first introduced in June 2013.
The changes to the guidelines include –
– Social venture funds shall now collect a minimum amount of Rs 25 lakhs as grants. However, the grant provider shall not receive any profit or gains.
– Angel funds should raise funds only from angel investors and these investors will also have to comply with the conditions imposed on the individual angel investors by SEBI. Earlier, SEBI had informed that individual investors should have early stage investment experience, or been a serial entrepreneur or had 10 years experience as a senior management executive. They should also have Rs 2 crore in net tangible assets.
– Angel Funds have now been included in the definition of ‘Venture Capital Funds’, which means that Angel funds will now be allowed only as an alternative investment fund which mandates registration.
– Existing funds which do not accept any fresh commitments after the introduction of these regulations are not required to obtain registration under these regulations, provided they submit information on their activities to the board.
Other Regulations which were previously announced include:
– Angel Funds need a corpus of at least Rs 10 crore and the minimum investment by an investor should be Rs 25 lakhs. Fund managers should invest a minimum 2.5% of the corpus or Rs 50 lakhs, whichever is lesser.
– To ensure the investments are genuine angel investments, angel funds should invest only in venture capital undertakings which are less than 3 years old, have a turnover of less than 25 crore, have no family connection in the angel fund and are not promoted, sponsored or related to any Industrial group whose group turnover exceeds Rs 300 crore.
– Angel Fund shall not invest less than Rs 50 lakh and more than Rs 5 crore in an company and they will have to stay invested for a minimum 3 years.
– Angel Fund Guidelines: Helps Superangels, Keeps Out Smaller Investors – Capital Mind
– How SEBI Clipped The Wings Of India’s Real Angels – StartupCentral
– SEBI’s Angel Fund Norms A Good Step But Need Tweaking: K.Ganesh – StartupCentral
– #Budget2013: Funds For Technology Incubators In Academic Institutions Get CSR Status; Startup Tax
– SEBI Angel Fund Rules Could Help Ease Startup Tax – Capital Mind
– SEBI Finalizes Regulations For VC, PE Funds