Kotak India Growth Fund II has paid ₹10.88 lakh to settle a case with the market regulator Securities and Exchange Board of India (SEBI) concerning a delay of more than five years in winding up a venture capital fund scheme and distributing liquidation proceeds to investors. The settlement was reached without the fund admitting or denying SEBI’s findings.
According to the
settlement order issued by SEBI, Kotak India Growth Fund II, a venture capital fund registered with the market regulator, had launched a scheme on 27 March 2008 with an initial tenure of nine years. The scheme’s tenure was subsequently extended in accordance with applicable regulations and finally expired on 27 March 2020.
However, the Fund completed the winding-up process and distribution of liquidation proceeds to investors only on 16 October 2025, resulting in a delay exceeding five years beyond the scheme’s expiry date. SEBI noted that the delay amounted to an alleged violation of Regulation 23(1)(a), read with Regulations 23(3) and 24(2) of the SEBI (Venture Capital Funds) Regulations, 1996.
The Fund approached SEBI through a suo motu settlement application under the SEBI (Settlement Proceedings) Regulations, 2018, seeking to resolve any enforcement proceedings that could arise from the alleged violations. The application was filed on a without-admission and without-denial basis.
Following discussions with SEBI’s internal committee(IC) in February 2026, Kotak India Growth Fund II revised its settlement proposal and offered to pay ₹10.87 lakh as the settlement amount.
The proposal was subsequently reviewed by SEBI’s high-powered advisory committee (HPAC) at its meeting on 25 March 2026. The committee recommended acceptance of the settlement terms offered by the fund.
The recommendation was later approved by the panel of whole-time members (WTM) on 11 May 2026. SEBI thereafter issued a demand notice, and the fund informed the regulator on 21 May 2026 that the settlement amount had been remitted. SEBI confirmed receipt of the payment.
In its order, SEBI stated that no enforcement action would be initiated against Kotak India Growth Fund II for the alleged violations covered by the settlement. However, the regulator retained the right to reopen proceedings if any representations made during the settlement process are later found to be false, if settlement conditions are breached, or if any payment discrepancies emerge.
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