The Indian capital market regulator, SEBI, is likely to ease the burden on venture capital (VC) and private equity (PE) firms, which have emerged as major pools of risk capital for enterprises that are frequently overlooked by the public market and high-street banks.
SEBI, on Friday, said that it would conduct a "comprehensive review" of laws in order to "simplify, ease, and reduce the cost of compliance" for alternative investment funds (AIFs) --- the regulatory name for VC and PE funds.
According to media reports, Sebi asked 20 fund officials and senior experts in an email to recommend methods to reduce the compliance load on the funds, which many in the industry say has resulted in regulatory overkill.
Some believe that while Sebi has implemented new restrictions to likely avoid any blow-ups in a rapidly growing sector, it also recognises the need to ease the regulatory load for AIFs, which have become a reliable source of capital for many enterprises.
Recently, SEBI, looked at increasing the minimum investment in an AIF for non-accredited investors (those with lesser earnings and net worth) from Rs 1 crore to Rs 2-3 crore - a suggestion that would keep less sophisticated investors away from such funds.
SEBI has made numerous adjustments to AIF regulations over the last year. These include: a code of conduct for fund directors, managers, and intermediaries; rules for closing funds; treating all investors equally; segregating assets and liabilities of various schemes; limiting fund tenure to what is stated in the fund document; and rules for disclosing and resolving investor grievances.