Under SEBI (Alternative Investment Funds) Regulations 2012, “Angel Fund” is a sub-class of Venture Capital Fund under Category I Alternative Investment Fund that raises stores from angel investors and puts resources into agreement with the arrangements of Chapter III-An of AIF Regulations. AIFs which put resources into start-up or early stage endeavours or social endeavours or SMEs or foundation or different segments or territories which the governments consider as socially or financially alluring are classification I AIFs.
If there should arise an occurrence of an angel funding, it might just raise supports by method for issue of units to angel investors. Under the AIF Regulations, “angel investor” implies any individual who proposes to put resources into an angel fund and fulfils one of the accompanying conditions, to be specific,
(a) an individual financial specialist who has net unmistakable resources of no less than two crore rupees barring estimation of his key home, and who:
(i) has early stage investment experience,
or, (ii) has involvement as a serial entrepreneur,
or, (iii) is a senior administration proficient with no less than ten years of experience;
(‘Early stage investment experience’ might mean related knowledge in putting resources into start-up or rising or early-organize endeavours and ‘serial entrepreneur’ should mean a man who has advanced or co-advanced more than one start-up wander.)
(b) a body corporate with a total asset of no less than ten crore rupees;
(c) an AIF enrolled under these controls or a VCF enlisted under the SEBI (Venture Capital Funds) Regulations, 1996. Angel funds might acknowledge, up to a most extreme time of 3 years, a venture of at the very least 25 lakh from an angel investor.
An AIF under the SEBI (Alternative Investment Funds) Regulations, 2012 can be built up or consolidated as a trust or a company or a limited liability partnership or a body corporate. No plan of an AIF (other than angel funding) might have more than 1000 speculators. Nonetheless, if there should arise an occurrence of an angel funding, no plan might have more than forty-nine angel investors. In the event of an angel funding, it should have a corpus of no less than ten crore rupees.
Angel funds are required to submit reports to SEBI on a quarterly premise. At present, all AIFs should send reports to SEBI by email to firstname.lastname@example.org. No physical reports are required to be documented with SEBI. The reports are required to be submitted inside 7 schedule days from the end of quarter/end of month as the case possibly.
Be that as it may, in November 2016, a large portion of the old tenets and directions were changed by SEBI. The accompanying changes were made:
- i) Upper limit for number of angel investors in a plan is expanded from forty nine to two hundred.
- ii) The meaning of startup for Angel Funds ventures will be like meaning of DIPP as given in their startup arrangement. As needs be, Angel Funds will be permitted to put resources into new businesses incorporated within five years, which was prior three years.
iii) The necessities of least investment sum by an Angel Fund in any investment undertaking is lessened from Rs. 50 lakh to Rs. 25 lakh.
- iv) The lock-in requirement of investment made by Angel Funds in the investment undertaking is diminished from three years to one year.
- v) Angel Funds are permitted to put resources into overseas venture capital undertakings up to 25% of their investible corpus in accordance with different AIFs.
What upgrades these progressions may bring, are yet to be seen.