The Securities and Exchange Board of India (SEBI) has cancelled the registration of ESG Impact Fund as an Alternative Investment Fund (AIF) with immediate effect after the fund failed to file mandatory quarterly activity reports for four consecutive quarters. According to reports from Essential Business Intelligence, SEBI issued the order on June 17 after noting persistent non-compliance with reporting requirements applicable to registered AIFs. The regulator initiated summary proceedings against the fund under Section 12(3) of the SEBI Act and Regulation 30A of the SEBI (Intermediaries) Regulations, 2008, after noting persistent non-compliance with reporting requirements applicable to registered AIFs.
SEBI stated that the fund did not submit Quarterly Activity Reports (QARs) for the quarters ending March 2025, June 2025, September 2025 and December 2025, despite repeated regulatory reminders and follow-ups. As reported by Essential Business Intelligence, the regulator noted that the fund, which has been registered as an AIF since May 2017, had not raised any funds or made investments. The regulator clarified that AIF regulations do not exempt inactive funds from reporting obligations, stating that 'The Master Circular on AIFs does not carve out an exception for AIFs which have not launched any schemes'. The fund was required to submit 'NIL' reports even in the absence of business activity, and failed to furnish a chartered accountant's certificate after being advised to do so while claiming that certain reporting requirements were not applicable because it had not commenced operations.
ESG Impact Fund defended its failure to file reports by citing technical and system-related issues on SEBI's Intermediary (SI) Portal. According to reports from Essential Business Intelligence, the fund said it had been corresponding with SEBI officials, the AIF reporting team and the portal helpdesk since 2022 to resolve XML validation and upload errors that allegedly prevented successful filing of reports. The fund submitted that unresolved issues with previously uploaded reports had blocked subsequent quarterly filings despite repeated attempts. However, SEBI rejected this explanation, observing that while the fund had initially approached the regulator regarding technical issues in 2023, it failed to demonstrate sufficient efforts to resolve the problems or complete its filings during 2025. The regulator noted that SEBI had provided guidance and technical assistance to address filing-related issues and that other market participants had successfully filed their reports during the same period.
SEBI concluded that the technical glitches cited by the fund could not justify prolonged non-compliance, stating that the entity had demonstrated a lack of diligence in meeting its regulatory obligations. According to reports from Essential Business Intelligence, the market regulator subsequently cancelled ESG Impact Fund's certificate of registration as an Alternative Investment Fund, with the order taking effect immediately. The regulator emphasized that the fund's failure to comply with mandatory reporting requirements, despite being registered since May 2017 and having no operational activity, represented a significant regulatory lapse that warranted immediate action. SEBI's decision highlights the regulator's strict enforcement of AIF reporting requirements, regardless of fund activity levels, demonstrating that compliance with regulatory obligations is mandatory for all registered funds, even those that have not commenced operations.
SEBI's decision highlights the regulator's strict enforcement of AIF reporting requirements, regardless of fund activity levels. As reported by Essential Business Intelligence, the market regulator's action demonstrates that compliance with regulatory obligations is mandatory for all registered funds, even those that have not commenced operations. The cancellation order underscores SEBI's commitment to maintaining high standards of regulatory compliance across all registered entities, with the regulator noting that other market participants had successfully filed their reports during the same period, highlighting the fund's specific failure to comply with mandatory reporting requirements. The decision reinforces SEBI's role as the primary regulator for protecting investor interests in securities markets and promoting the development of the securities market through strict adherence to regulatory frameworks.
