Nature and structure of Scheme
Regulation 21
Nature and structure of Scheme
IFSCA (Fund Management) Regulations, 2025No change in 2026Chapter III · Schemes for Fund Management
Chapter III · Schemes for Fund Management
Regulation 21 – Nature and structure of Scheme
High importance about 3 min
Venture Capital schemes: Structure, eligible investors, permissible investments and the FME's own contribution for VC schemes.
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In plain English
VC schemes must be close-ended with a minimum 3-year tenure disclosed in the PM; tenure may be extended by up to 2 years with two-thirds (by value) investor approval.
In plain English
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The rule, in its own words
Read the exact text of Regulation 21
21. (1) A Venture Capital scheme shall only be a close ended scheme.
(2) The amount to be raised under a Venture Capital scheme and the tenure of the scheme, which shall not be less than three (3) years, shall be disclosed in the placement memorandum.
(3) The tenure of a close ended scheme may be extended up to two (2) years, subject to approval of two-thirds (2/3rd) of the investors by value of their investment in the Venture Capital scheme.:
(4) Further extension to the tenure of a Venture Capital scheme beyond the two (2) year period shall be subject to express consent of the willing investors and exit opportunity being made available to the dissenting investors.
(5) A Venture Capital scheme shall be constituted in IFSC as Company or LLP or Trust under the applicable laws of India.
Statutory text — Principal Regulations, 2025 (as amended to 30 January 2026), consolidated where amended. The notified Gazette text prevails. Tap a highlighted word for how it functions.
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Exceptions and conditions
Taken from the wording of this provision — the carve-outs and conditions worth reading closely.
(3) The tenure of a close ended scheme may be extended up to two (2) years, subject to approval of two-thirds (2/3rd) of the investors by value of their investment in the Venture Capital scheme.:
(4) Further extension to the tenure of a Venture Capital scheme beyond the two (2) year period shall be subject to express consent of the willing investors and exit opportunity being made available to the dissenting investors
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What this means in practice
Compliance actions
- Applies to
- Venture Capital scheme
- Frequency
- At launch; event-driven for extension
- Evidence
- Placement memorandum tenure disclosure; Investor approval records for any extension
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Where it connects
Read alongside
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Check yourself
Quiz Centre
Test yourself on Regulation 21
8 questions in the unified bank test this regulation. Each explains every option and cites the provision.
A Venture Capital scheme may be open-ended.
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Your notes
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Venture Capital schemes