Sebi allows AIFs to retain liquidation proceeds beyond fund life

SEBI has allowed Alternative Investment Funds (AIFs) to retain liquidation proceeds beyond the fund's liquidation period under specific conditions, including pending litigation, investor consent (75% by value), or residual operational expenses capped at three years. The regulator also introduced an 'Inoperative Fund' framework for wound-up AIFs holding retained proceeds or awaiting litigation outcomes, exempting them from several compliance requirements while barring new investments and management fees. The framework is effective immediately and also extends to Venture Capital Funds registered under the erstwhile 1996 regulations.