India’s alternate investment funds (AIFs) and venture capital funds (VCFs) can now invest in any company they want across the world, thanks to market regulator SEBI relaxing its norm on Thursday. Earlier, it was mandated that AIFs and VCFs raising funds in India should invest in only those companies globally that have connection to India or at least a back-office in the country.
“The requirement has been done away with. Now they can invest in companies across the world in countries that are signatories to the IOSCO (International Organization of Securities Commissions) multilateral memorandum of understanding between the regulators, barring countries having Financial Action Task Force (FATF) restrictions,” said Deepika V Sawhney, Founder, Transique Corporate Advisors.
However, AIFs and VCFs still cannot invest in companies incorporated in countries that do not follow global money laundering norms, don’t have bilateral MoU with SEBI or jurisdictions which are blacklisted or face restrictions by FATF. Also, transfer or sale of investment in overseas companies can only be made to the entities eligible as per existing guidelines under India’s Foreign Exchange Management Act (FEMA) 1999, SEBI has said. The regulator has asked all AIFs and VCFs to make disclosure in specified format of all overseas investments sold/divested by them till date, within 30 days.