Market Regulator, Securities and Exchange Board of India (Sebi) is planning to increase the maximum investment for angel funds to INR 10 crore while it was previously limited to INR 5 crore.
India is going through a rapid change phase, especially concerning startups and funding. Angels investments are growing ever higher every passing week and the new regulation of the market will thereby provide additional opportunities to angel funds, according to regulatory officials. On the other hand, the minimum investment by an angel investor will remain INR 25 lakh.
The regulatory board would also like divide by two the minimum corpus size required for an angel fund to register with it as it currently stands at Rs5 crore. Another measure the Sebi is looking forward to update concerns the maximum period of accepting funds from an angel investor, which currently stands at three years; but will be reviewed to five years.
The measures are intended to provide angel funds more time to pinpoint prospects and invest in venture capital funds. Angel funds, a sub-category of alternative investment funds (AID) are essential for the startup development in India as they provide finance to startups when traditional sources of finance such as banks are reluctant to do so. Another advantage of seeking investment from angel funds is the strategic partners the venture funds will provide as well as mentoring. There are 398 AIFs that are presently registered with Sebi, 114 of them are registered under category I and includes eight angel funds.
In respect to the Companies Act, the market regulator is also considering amending the Sebi (Registrars to an Issue and Share Transfer Agents) norms and Sebi (Banker to an Issue) regulations which will consequently allow registrar and banker to an issue of maintaining records of books of accounts and documents for at least eight years after completing the appropriate transactions.
Moreover, the Sebi is looking to amend the restriction on listed companies benefiting from services of depositories to distribute their cash benefits.