Recently, Securities and Exchange Board of India
(“SEBI”) had notified amendments to SEBI (Alternative Investment Funds)
Regulations, 2012 (“AIF Regulations”) which seek to insert new provisions for “Angel
Funds”. The amendments will play an important role especially since they intend
to provide a framework for angel funds and angel investors. In this post, I am highlighting
the important features of the “Amendments”, i.e., Securities and Exchange Board of India (Alternative
Investment Funds) (Amendment) Regulations, 2013].
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What
are Angel Funds: According to the newly inserted regulation 19A, an
“Angel Fund” is a sub-category of Venture Capital Fund under Category I –
Alternative Investment Fund (“AIF”). The definition of “Venture Capital Fund”,
provided under Regulation 2(1)(z) of AIF Regulations, has been amended
accordingly.
As per the amendments, Angel Funds can only be
raised by issuing units to angel investors. The corpus of an Angel Fund
shall be of at least ten crore rupees. In
addition to this, up to a maximum of three years, Angel Funds shall accept an investment
of not less than Rs. 25 lakhs (Of Course, through angel investors only!)
