• investor.relations@yournest.in
Submit Your Proposal

Regulatory Updates – Half-yearly Report – September 30, 2025 - YourNest Venture Capital

Regulatory Updates – Half-yearly Report – September 30, 2025

A. SEBI UPDATES:

  1. SEBI introduced an Investor Charter for KYC Registration Agencies (KRAs) to enhance investor awareness regarding services provided by KRAs, rights of investors, and grievance redressal mechanisms.
  2. Change: SEBI has amended Regulation 17(a) for Category II AIFs. Now, If a Category II AIF invests in listed debt securities rated ‘A’ or below (i.e., bonds or debentures listed on a stock exchange and rated A, BBB, BB, or lower by a SEBI-registered credit rating agency), such investment shall be treated as an unlisted investment for compliance purposes.
  3. SEBI has allowed Category II AIFs to invest more than 50% of their corpus in listed debt securities rated ‘A’ or below by a SEBI-registered credit rating agency. Earlier, AIFs were required to invest mainly in unlisted securities.
  4. AIFs are permitted to offer co-investment opportunities to their investors within the same fund structure without setting up a separate Portfolio Management Services (PMS) entity. Investors may co-invest in specific portfolio companies through a Co-Investment Vehicle (CIV) under the same AIF.
  5. Settlement Scheme for Venture Capital Funds (VCFs) migrating to AIF Regulations:
    SEBI has introduced a one-time settlement scheme for old VCFs that have migrated or are in the process of migrating to the AIF framework but still hold unliquidated investments after their liquidation period. The scheme allows such funds to regularise past non-compliances by paying a settlement fee, with applications open till January 19, 2026.
  6. Flexibility in Accreditation Process for AIFs : SEBI has proposed that KYC agencies can also certify accredited investors. AIFs can start taking investors based on their own checks before the final certificate comes. The money will be added to the fund only after the certificate is approved. This will help AIFs raise money faster and with less delay.
  7. Relaxations to Simplify Compliance and Attract Investors: SEBI has introduced the following relaxations under the AIF framework.
    • Accredited Investor-only Scheme: Schemes exclusively for Accredited Investors, with no limit on the number of investors, reduced compliance requirements, and a fixed tenure of five years.
    • Large Value Funds (LVFs): The minimum investment requirement has been reduced from ₹70 crore to ₹25 crore.
    • Glide Path Transition: Existing AIFs may either continue under the earlier regulatory framework or opt to migrate to the new framework as per their choice.
  1. Draft Circular on Reporting of NAV of Units of AIFs: SEBI has proposed that all Alternative Investment Funds (AIFs) must report the Net Asset Value (NAV) of their units through depositories to ensure timely and transparent disclosure. AIFs will be required to upload NAVs within 15 days of portfolio valuation, while existing schemes must do so within 45 days from the issue of the circular.

Depositories will set up the required system for reporting, and trustees or sponsors must ensure proper compliance.

  1. SEBI imposed monetary penalties on a Category III AIF, its Investment Manager, Trustee, and KMP for significant non-compliance with AIF Regulations. The adjudicating officer observed that the entities failed to ensure regulatory adherence and did not act on key compliance issues highlighted in PPM audit reports. SEBI levied a penalty of ₹5,00,000 on the AIF and ₹1,00,000 each on the Investment Manager, Trustee, and KMP.

B. RBI Updates:

Reporting on FIRMS portal – Issuance of partly paid units by AIFs: RBI, through its circular dated May 23, 2025, has provided a 180-day window for AIFs to report issuances of partly paid units made to foreign investors prior to this circular in Form InVI on the FIRMS portal. No late submission fees will apply for such reporting if completed within this period. Going forward, any new issuances of partly paid units must be reported within 30 days as per FEMA regulations.

C. Income Tax Updates:

In a recent ITAT judgement in the case of Teacher Retirement System of Texas (Mumbai ITAT), it was held that short-term capital loss from any share transaction can be set off against short-term capital gains from any other transaction, irrespective of STT payment or differing tax rates. The ruling confirms that Section 70(2) does not permit rate-wise segregation, reinforcing a single pool for all STCG/STCL.