Anthill Capital Ventures, Top Management Fined Rs6 Lakh by SEBI for Violations of AIF Regulations
Moneylife Digital Team 29 January 2025
Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs6 lakh on Anthill Capital Ventures (noticee 1), its investment manager Anthill Venture Capital Advisors LLP (noticee 2) and key managerial personnel (KMP), including founder and chief executive officer (CEO) Prasad Vanga (noticee3), partner Sailesh Sigatapu (noticee 4) and Kabir Kochhar (noticee 5) for non-compliance with SEBI Regulations. 
 
The penalty follows an investigation into the private placement memorandum (PPM) audit report of Anthill Capital Ventures for its scheme, Anthill Early Stage Fund-1, covering the period from 1 April 2022 to 31 March 2023
 
In an order, Asha Shetty, adjudicating officer (AO) of SEBI, says, "The noticees were under a statutory obligation to abide by the provisions of the Alternative Investment Fund (AIF) Regulations and circulars issued by the regulator, which they failed to do. The non-compliances on the part of the noticees clearly show that they had failed in their duties and need to be adequately penalised."
 
During SEBI's investigation, one of the significant violations identified was the non-obtaining of share certificates on time by Anthill Capital Ventures. SEBI observed that for FY21-22 and FY22-23, the noticees failed to secure share certificates on time for investments in Ronin Wines Pvt Ltd. Despite submissions by the noticees claiming that the delay was operational and due to the issuer's actions, SEBI found no follow-up regarding the certificates for almost a year, which indicated a lack of due diligence. Consequently, SEBI concluded that this lapse violated Regulation 20(1) and 20(2) of the AIF Regulations and the code of conduct specified in the 4th Schedule.
 
Another significant issue was the unauthorised granting of loans to portfolio companies. “The scheme had extended loans to several portfolio entities, which is a direct violation of AIF regulations, which prohibit AIFs from using investor funds for loans unless explicitly mentioned in the PPM.” 
 
The noticees claimed that the loans were meant to be converted into equity, but SEBI rejected this justification, as the PPM did not authorise such investments. SEBI stressed that the AIF Regulations specifically bar the extension of loans; hence, the violation was established.
 
Additionally, the noticees were found guilty of delayed submission of the PPM audit report for FY21-22 and FY22-23. The report for FY21-22 was delayed by seven days, while the one for FY22-23 was delayed by five days. The noticees admitted to the delays but cited reasons such as internal approvals and audit processes. 
 
 
SEBI emphasised that the timely submission of these reports is critical for investors to make informed decisions. These delays were found to violate Regulation 28 of the AIF Regulations and the Master Circular dated 31 July 2023.
 
As a result of these violations, SEBI imposed a penalty of Rs2 lakh on Anthill Capital Ventures, with each of the other noticees receiving a penalty of Rs1 lakh.
 
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