Sebi Notifies Guidelines for Angel Funds; Caps Angel Rounds Between Rs 50 lakh to Rs 5 cr

angelMarket regulator Sebi  has notified the proposed regulatory changes to Angel funds and investors in India. Angel funds have to pay Rs 2 lakh to register as an alternative investment fund, according to the new gazette notification by Sebi.

Angel funds will now be treated as alternative investment funds.

The initial set of guidelines was issued in late June 2013. Most of the provisions are same though the registration fees for angel funds are lower compared to other AIFs, where fees are higher.

The investments made by the angel funds are to be locked for the minimum period of 3 years. Funds must be raised withing 3 years as well. Investments are subjected to a cap of Rs 5 cr and the minimum amount invested should not be less than Rs 50 lakh.

Apart from these, there are regulations on becoming an angel fund, like for instance; an angel fund should have a minimum corpus of Rs 10 cr with each angel investor making an investment of not less than Rs 25 lakh.

Further Sebi has drawn up criterias for investee companies.  Portfolio companies should have a turnover of less than Rs 25 cr. Angel funds cannot invest in an associate company and cannot invest more than 25% of its total investment under all its all schemes in one venture.

Also an angel fund cannot have more than 49 investors.

Individuals seeking to become an angel investor must have Rs 2 cr of tangible net worth and it does not include one’s primary residence. An organization must have a worth Rs 10 cr for being able to make angel investments.

View the complete guidelines here.

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