CIRCULAR
SEBI/HO/AFD-1/PoD/CIR/P/2022/108 August 17, 2022
To
All Alternative Investment Funds
All Venture Capital Funds [registered under erstwhile SEBI (Venture Capital
Funds) Regulations, 1996]
Sir/ Madam,
Sub: Guidelines for overseas investment by Alternative Investment Funds (AIFs) /
Venture Capital Funds (VCFs)
1. In terms of Regulation 12(ba) of erstwhile SEBI (Venture Capital Funds)
Regulations 1996 and Regulation 15(1)(a) of SEBI (Alternative Investment Funds)
Regulations, 2012, AIFs/VCFs may invest in securities of companies incorporated
outside India subject to such conditions or guidelines that may be stipulated or
issued by the Reserve Bank of India and SEBI from time to time.
2. 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 at 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 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 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 at Annexure B within 3 working days
of the divestment, by emailing to aifreporting@sebi.gov.in, for updating the
overall limit available for overseas investment by AIFs/VCFs.
(viii) All the overseas investments sold/divested by AIFs/VCFs till date, shall also be
reported to SEBI in the format given at Annexure B within 30 days from the
date of this circular, by emailing to aifreporting@sebi.gov.in.
3. The Trustee/Board/Designated Partners of the AIFs/VCFs shall submit an
undertaking to SEBI as specified at Annexure A with respect to the proposed
overseas investment.
4. This Circular shall come into force with immediate effect.
5. This circular is issued with the approval of the competent authority.
6. This Circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
7. The circular is available on SEBI website at www.sebi.gov.in under the categories
"Legal framework - Circulars" and "Info for - Alternative Investment Funds”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in
Annexure A:
Information to be submitted while filing application for allocation of overseas investment limit
A. Details of the proposed overseas investment:
Sr. Information
Particulars Details
No. related to
a) Name of the Alternative Investment Fund
(AIF)/Venture Capital Fund (VCF)
b) Category of the AIF
c) Registration number
Applicant
d) Name of the scheme
1 and its
e) Name and Address of the branch of the
scheme
bank through which Foreign Currency
Transaction are proposed to made
f) Date of filing of periodic investment report
on SI Portal for last quarter
a) Name of the overseas investee company
b) Country of the overseas investee company
c) Date of Incorporation of the overseas
investee company (also enclose copy of
incorporation certificate/document of the
overseas investee company)
Overseas
d) Whether any investor of the AIF is a
2 investee
connected person of the overseas investee
company
company. If yes, provide details of the
investor and also the said investor’s pro-
rata share in the proposed investment.
e) In case of Angel Fund, the number of
investors participating in the proposed
overseas investment
a) Type of instrument(s) in which the
investment is proposed
b) Nature of investment (Primary subscription,
secondary purchase, etc.)
Details of
3 c) Amount proposed to be invested (in USD)
investment
d) Amount invested in previous overseas
investments (in USD)
e) Investible corpus of the scheme of the
AIF/VCF (in INR)
B. Details of overseas investments made by the Scheme in the past:
Date of If yes,
Name of Amount Date of Whether
Date of Date Amount reporting
overseas allocated Amount reporting the Date of
Sr. SEBI of surrend of the Amount Date of
investee by SEBI invested of investme reporting
No. commu invest ered (in amount receive sale/div
compan (in USD) (in USD) investme nt is sold/ of the
nication ment USD) surrender d (in estmen
y nt to SEBI divested sale/dive
ed to SEBI USD) t
stment
C. Undertaking to be submitted by the Trustee/Board/Designated Partners of the
AIF/VCF (as applicable depending on the form of AIF/VCF):
We have carried out independent due diligence with respect to the proposed
investment in [name of the overseas investee company] by [name of the scheme and
the AIF] and we are satisfied that –
(a) the proposed overseas investment transaction is bona fide in nature
(b) the proposed overseas investment is consistent with the investment objective
of the scheme
(c) the proposed overseas investment is in compliance with the regulatory
frameworks for overseas investment by AIFs/VCFs.
D. Undertaking to be submitted by the Manager of the AIF/VCF:
1. The manager has exercised due diligence with respect to the investment decision.
2. The proposed investment is in [name of instrument], which is an equity/equity
linked instrument.
3. [name of the overseas investee company] is an offshore venture capital undertaking
i.e. it is a foreign company whose shares are not listed on any of the recognized
stock exchange in India or abroad.
4. [name of the overseas investee company] 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.
5. [name of the overseas investee company] is not incorporated in a country identified
in the public statement of 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
6. The AIF/VCF shall not invest in Joint venture/Wholly Owned Subsidiary while making
overseas investments.
7. The AIF/VCF shall adhere to FEMA Regulations and other guidelines specified by RBI
from time to time with respect to any structure which involves Foreign Direct
Investment under Overseas Direct Investment route.
8. The AIF/VCF shall comply with all requirements under RBI guidelines on opening of
branches/subsidiaries/Joint venture /undertaking investment abroad by NBFCs,
where more than 50% of the funds of the AIF/VCF has been contributed by a single
NBFC.
9. In case the AIF/VCF transfers/sells the invested stake in [name of the overseas
investee company] to any entity, it shall be ensured that the entity is eligible to
make overseas investments, as per the extant FEMA guidelines.
(Note: The aforesaid undertakings at para C and D above are to be submitted in place of the
declarations specified in Annexure of SEBI Circular CIR/IMD/DF/7/2015 dated October 1, 2015)
Annexure B:
Information with respect to sale/divestment of overseas investment
Sr. Information Particulars Details
No. related to
a) Name of the AIF/VCF
Details of
1 b) Category of the AIF
AIF/VCF
c) Registration number
a) Date of filing of application with SEBI for
allocation of overseas investment limit for
the said investment
b) Application number provided in SEBI
Details of Intermediary portal
investment
2 c) Name of the overseas investee company
which has been
and country of incorporation
sold/divested
d) Date of investment
e) Type of securities/instruments purchased
f) Amount invested in the overseas investee
company (in USD Million)
a) Date of receipt of sale/divestment proceeds
Details of b) Amount received (in USD Million)
3
sale/divestment c) Proportionate cost of investment in case of
partial sale/divestment) (in USD Million)