True North settles SEBI violations over delay in winding up two schemes

New Delhi, Sept. 24 -- Venture capital firm True North Enterprise Ltd has settled possible violations of the Venture Capital Fund (VCF) Regulations for delaying the winding up of two of its schemes by 10 years and seven years, respectively.

The VCF Regulations were the earlier framework under which venture capital funds were regulated. VC funds, along with other alternative investment funds (AIFs), are now regulated under the SEBI (Alternative Investment Funds) Regulations, 2012.

Through two separate settlement orders issued on September 23, the Securities and Exchange Board of India (SEBI) said Truth North had filed suo moto applications to prevent any enforcement proceedings against it for possibly violating the VCF Regulations while managing schemes under True North Fund III A and True North Fund.

True North paid a total of Rs 21.75 lakh (around $22,660), including Rs 10.47 lakh for each scheme.

True North Fund's True North Scheme B was to be closed by December 20, 2004, and its tenure, after extensions permissible under its private placement memorandum (PPM), ended on December 19, 2014. The scheme should have wound up within three months, by March 19, 2015, with its assets liquidated and proceeds distributed among investors.

However, the manager extended the scheme by five years and six months to June 19, 2020. It then liquidated the last of its investments between December 30, 2021, and January 7, 2022, and finished the winding up after distributing the proceeds to investors on March 31, 2025. This resulted in a delay of about 10 years in the winding up.

According to the settlement order, True North Fund III A was to be closed on October 20, 2007, and its extensions, permissible under its PPM, ended on October 20, 2017. The winding up, therefore, should have been started on that date and completed within three months, by January 20, 2018.

However, True North extended the scheme by another six years to October 2023. Also, certain investments of the scheme were not liquidated even after this period and the last of these were liquidated only by July 2024. After distributing the proceeds, True North completed the winding up on March 29, 2025, resulting in a delay of around seven years and two months.

Published by HT Digital Content Services with permission from VC Circle.