The Securities Exchange Board of India (SEBI) on February 21, 2025, issued a Consultation Paper on expanding the definition of Qualified Institutional Buyers under SEBI (ICDR) Regulations, 2018, to include Accredited Investors for the limited purpose of investments in Angel Funds.
SEBI is reviewing the regulatory framework for Angel Funds, a type of Category I AIF - Venture Capital Fund, to address gaps in operational clarity and ensure that investment opportunities are offered only to investors with a commensurate risk appetite.
Restricting Investments to Accredited Investors (AIs), Angel Funds should be on board and offer investments only to Accredited Investors (AIs) to enhance investor protection and regulatory comfort.
Expanding the Definition of Qualified Institutional Buyers (QIBs), the Companies Act, of 2013 limits private placements to 200 investors, but QIBs (as per SEBI (ICDR) Regulations, 2015) are exempt from this cap.
SEBI proposes to include AIs as QIBs for Angel Funds, allowing more investors to participate and increasing funding avenues for startups.
SEBI has invited public comments on the proposed amendments on or before March 14, 2025.
This move aims to scale up Angel Funds, attract verified investors, and maintain regulatory compliance while enhancing startup funding.
