The Securities and Exchange Board of India (SEBI) on August 18, 2022, issued guidelines for overseas investment by Alternative Investment Funds (AIFs) / Venture Capital Funds (VCFs).
In this regard, the following is specified –
(i)AIFs/VCFs shall file an application to SEBI for allocation of overseas investment limit in the format specified in Annexure A.
(ii)The requirement of the overseas investee company to have an Indian Connection, as specified in para 3(ii) of SEBI Circular No. SEBI/VCF/CIR No. 1/98645/2007 dated August 09, 2007 and para 2(A)(e)(i) and para 2(B)(c)(iv) of SEBI Circular No. CIR/IMD/DF/7/2015 dated October 01, 2015, has been done away with.
(iii)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.
(iv)AIFs/VCFs shall not invest in an overseas investee company, which is incorporated in a country identified in the public statement of the Financial Action Task Force (FATF)as:
(a)A jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or
(b) A 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.
(v)If an AIF/VCF liquidates an 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.
(vi)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.
(vii)AIFs/VCFs shall furnish the sale/divestment details of the overseas investments to SEBI in the format given in Annexure B within 3 working days of the divestment, for updating the overall limit available for overseas investment by AIFs/VCFs.
(viii)All the overseas investments sold/divested by AIFs/VCFs to date shall also be reported to SEBI in the format given in Annexure B within 30 days from the date of this circular.
The Trustee/Board/Designated Partners of the AIFs/VCFs shall submit an undertaking to SEBI as specified in Annexure A with respect to the proposed overseas investment.
This Circular shall come into force with immediate effect.
[Circular No.: SEBI/HO/AFD-1/PoD/CIR/P/2022/108]
