SEBI allows AIFs retain liquidation proceeds
Analysis based on 8 articles · First reported Jun 16, 2026 · Last updated Jun 16, 2026
The new India — Securities and Exchange Board of India guidelines are expected to positively impact the financial markets by providing greater operational flexibility and clarity for Nippon India Alternative Investments (AIFs) and Venture capital funds during their winding-up processes. This could lead to more efficient fund management and potentially reduce risks associated with unresolved liabilities, thereby improving investor confidence in these investment vehicles.
India — Securities and Exchange Board of India, the markets regulator in India, has issued new guidelines allowing Nippon India Alternative Investments (AIFs) to retain liquidation proceeds beyond their permissible fund life under specific circumstances. This framework also introduces an 'Inoperative Fund' status for wound-up funds with residual obligations, providing operational flexibility during winding-up and registration surrender. AIFs can retain funds due to litigation notices, regulatory demands, investor consent for anticipated liabilities (75% by value), or to cover residual operational expenses (up to three years). Inoperative Funds are prohibited from new investments, launching new schemes, or charging management fees, but are exempted from several compliance requirements. The Standard Setting Forum for AIFs (SFA) will formulate implementation standards. This framework, effective immediately, also applies to Venture capital funds.
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