SEBI rolls out Guidelines for overseas investment by AIFs / VCFs, additionally requires AIFs/VCFs to report all overseas investments sold or divested till date by 17.09.2022
Guidelines have been issued by Securities and Exchange Board of India (“SEBI”) for overseas investment by Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs).
AIFs and VCFs can invest in securities of companies incorporated outside India subject to the following conditions :
1. File an application to SEBI for allocation of overseas investment limit in prescribed format
2. The requirement of the overseas investee company to have an Indian Connection has been removed.
3. Only 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 or a signatory to the bilateral Memorandum of Understanding with SEBI.
4. Do 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 jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or
• 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.
5. If investments made in an overseas investee company previously is liquidated, the sale proceeds received from such liquidation to the extent of investment made in the said overseas investee company, will be available to all AIFs/VCFs (including the selling AIF/VCF) for reinvestment.
6. Transfer or sell the investment in overseas investee company only to the entities eligible to make overseas investments under the Foreign Exchange Management Act, 1999
7. Furnish the sale or divestment details of the overseas investments to SEBI in the prescribed format within 3 working days of the divestment, by emailing to aifreporting@sebi.gov.in, for updating the overall limit available for overseas investment.
8. Report all the overseas investments sold or divested till date to SEBI within 30days from the date of this circular i.e 17th September, 2022 by emailing to aifreporting@sebi.gov.in .
9. The Trustees, Board or Designated Partners must submit an undertaking to SEBI with respect to the proposed overseas investment.
