SEBI looking at reducing compliance norms for PEs, VCs: Report

The Securities and Exchange Board Of India (SEBI) is looking at simplifying the various regulations which govern the venture capital and private equity industry, with a key focus on easing the compliance burden, according to a report

SEBI has written to 20 fund officials and senior experts that it would conduct a comprehensive review of regulations to simplify, ease and reduce the cost of compliance for alternative investment funds (AIFs). It has asked these funds what measures could be bought in to lessen the compliance burden, The Economic Times has reported.

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In the last one year, SEBI has ushered in many changes that regulate AIFs, which include a code of conduct for fund directors, managers, and intermediaries. It also brought in new regulations such as the segregation of assets and liabilities of various schemes, confining the tenure of the funds to what is stated in the fund document etc.

These measures were seen as stifling for the VC-PE industry, which has been a key funnel for funding many businesses.

According to the report, the number of local AIFs has grown to around 1,000, making over Rs 1.3 lakh crore investments in the past two years. There is a view that SEBI has added new rules to probably avoid any blow-ups in a sector that has grown very fast but it also senses that there is a need to lighten the compliance burden as it has become a steady source of finance for many businesses.