Securities and Exchange Board of India (SEBI) launched the VCF Settlement Scheme, 2025 to address the issue of Venture Capital Funds (VCFs) whose liquidation periods have expired but are not yet wound up. The scheme will be open from July 21, 2025, to January 19, 2026. It provides a one-time opportunity for VCFs to settle regulatory actions and complete migration to the AIF regime.
Key Highlights
| Aspect | Details |
| Scheme Name | VCF Settlement Scheme 2025 |
| Launch Authority | SEBI – Securities and Exchange Board of India |
| Valid From–To | July 21, 2025 to January 19, 2026 |
| Eligibility | VCFs whose liquidation period has expired but not yet wound up, and have completed migration |
| Purpose | To enable settlement of regulatory actions related to delayed winding-up of VCF schemes |
Settlement Fee Structure
| Parameter | Amount |
| Application Fee (Non-refundable) | ₹25,000 + 18% GST |
| Base Settlement Amount | ₹1,00,000 for delay up to 1 year |
| Incremental Charges | ₹50,000 for each additional year or part thereof |
| Based on Unliquidated Holdings | ₹1 lakh – ₹6 lakh based on residual value held beyond scheme tenure |
| Who Pays? | Sponsor or Investment Manager (not recoverable from investors or fund assets) |
| Extra Provision | VCFs get an additional 1-year window to liquidate investments and complete winding-up |
Background Context
- SEBI’s Venture Capital Fund Regulations were repealed after the Alternative Investment Fund (AIF) Regulations were introduced in May 2012.
- Several VCFs could not liquidate their holdings within the fund tenure.
- The AIF Regulations allowed such VCFs to migrate and provided a framework for winding up after investor approval.
- SEBI launched this settlement window after receiving representations from such legacy funds facing compliance hurdles.
Significance of Scheme
- Regulatory Relief for legacy venture capital funds.
- Supports closure and compliance for funds in transition to the AIF regime.
- Encourages orderly wind-up of illiquid investment schemes without legal penalties.
- Enhances market transparency and investor confidence in the alternative investment space.
About SEBI
| Parameter | Details |
| Full Form | Securities and Exchange Board of India |
| Established | Constituted in April 1988, given statutory powers by SEBI Act, 1992 |
| Headquarters | Mumbai, with regional offices in Delhi, Kolkata, Chennai, Ahmedabad |
| Parent Ministry | Ministry of Finance, Government of India |
| Madhabi Puri Buch | First woman chairperson of SEBI |
| Appointed By | Appointments Committee of the Cabinet (headed by PM), based on FSRASC recommendations |
Structure of SEBI Board
Composition:
1 Chairperson (nominated by GoI)
2 members from Union Finance Ministry
1 member from Reserve Bank of India
5 other members (including at least 3 full-time), appointed by the Government
Key Powers and Functions of SEBI
- Regulates: Capital markets, mutual funds, venture capital, and alternative investment sectors
- Protects Investors: Investigates fraud, ensures fair disclosures, penalises violations
- Market Development: Promotes demat systems, online trading, financial literacy
- Initiatives:
- SCORES Portal: Investor grievance redressal
- IEPF: Investor Education & Protection Fund
- Financial Literacy Drives: Nationwide investor education programs