VCF Settlement Scheme 2025

The VCF Settlement Scheme 2025 is a significant regulatory development introduced by the Securities and Exchange Board of India (SEBI). It provides a final chance for Venture Capital Funds (VCFs), especially those that have transitioned to the Alternative Investment Fund (AIF) regime, to comply with long-pending winding-up norms.

The scheme aims to resolve critical gaps in VCF compliance and ensure investor protection across legacy funds.

What is the VCF Settlement Scheme 2025?

The VCF Settlement Scheme 2025 is a time-bound scheme introduced by SEBI to help VCFs that failed to wind up after their fund tenure ended. These funds had migrated from the older VCF regulations to the updated AIF regime, but did not complete the liquidation process. As a result, funds remained locked, creating regulatory and investor risks.

With this initiative, SEBI provides a one-time opportunity for such funds to settle past violations and align with current SEBI regulations without facing enforcement actions.

Why Did SEBI Launch This Scheme?

In May 2012, SEBI notified the AIF Regulations, replacing the outdated VCF Regulations. VCFs were given a framework for AIF migration. However, several VCFs still hold unliquidated assets even after their liquidation periods expired, resulting in non-compliance.

This led to a regulatory vacuum, posing threats to investor protection and clarity in fund closure. The VCF Settlement Scheme 2025 fills this gap by offering a structured mechanism for legacy fund settlement and dissolution.

Key Features of the VCF Settlement Scheme 2025

• Opening Date: July 21, 2025

• Closing Date: January 19, 2026

• Eligibility: Only applicable to VCFs that have already completed AIF migration before July 19, 2025

• Scope: For VCFs whose liquidation period has expired and are yet to wind up

• Action: SEBI may initiate enforcement actions after the deadline for non-compliant funds

• Process: Requires investor consent and execution of a defined VCF dissolution framework

This SEBI scheme ensures VCFs can wind up operations without facing penalties, provided they opt in within the specified timeline.

Objectives of the VCF Settlement Scheme 2025

The core aims of the VCF Settlement Scheme 2025 are:

• To resolve violations related to the non-winding-up of expired VCFs

• To offer a final window for SEBI voluntary compliance

• To ensure investor exit from funds stuck in the system

• To prevent enforcement actions post-deadline

• To streamline legacy venture capital migration to current norms

This initiative is also a part of SEBI’s broader mission to enforce AIF compliance norms and reinforce market discipline.

Who Can Apply Under This Scheme?

Funds that meet the following criteria can apply:

• The fund must have migrated to the AIF regime on or before July 19, 2025

• The fund’s tenure and liquidation period must have expired

• The winding-up process must still be incomplete

These VCFs are encouraged to take advantage of the VCF Settlement Scheme 2025 and align with the SEBI fund closure scheme.

How to Apply for SEBI’s VCF Settlement Scheme 2025

VCFs that wish to benefit from the scheme must follow these steps:

1. Log in to SEBI’s portal and file the required application form

2. Provide data about unliquidated investments and investor details

3. Submit a detailed winding-up plan by the SEBI regulations

4. Get investor approval for a new dissolution period

5. Complete the process under the updated VCF dissolution framework

The process for legacy VCF winding up under SEBI is now clearly defined under this scheme.

Significance for SSC Aspirants

For candidates preparing for SSC CGL, SSC CHSL, or SSC exams with a finance/economics section, this topic holds high importance.

Understand these key concepts:

• What is the VCF Settlement Scheme by SEBI

• VCF winding-up process under financial market regulation

• AIF regime compliance and transition from legacy schemes

• The importance of investor protection and regulatory oversight

Questions may be framed on SEBI schemes, venture capital migration, and financial sector reforms.

Why is This Scheme Important?

The VCF Settlement Scheme 2025 helps:

• Ensure smoother VCF AIF regulatory shift

• Avoid market uncertainty by enabling fund settlement

• Enforce transparency and SEBI deadlines

• Empower investors by unlocking funds held in non-compliant schemes

• Maintain trust in India’s alternative fund structure

By providing a structured, non-punitive path, SEBI is offering clarity on the VCF winding-up process while maintaining accountability.

Final Thoughts

The VCF Settlement Scheme 2025 is a critical step by SEBI to resolve long-pending regulatory gaps in India’s venture capital landscape. By offering a final window for compliance, it ensures that legacy VCFs can wind up operations responsibly while safeguarding investor interests. This scheme also highlights SEBI’s evolving approach toward voluntary compliance and transparent regulation.

For SSC aspirants, understanding the scheme’s objectives, timelines, and impact is essential for tackling questions on financial reforms and governance. As India’s financial market transitions into more structured frameworks like AIFs, such regulatory moves become vital.

This is not just a compliance update — it’s a reflection of regulatory maturity and investor-centric policymaking.