SEBI cancels Firstcapital AIF registration over unfiled quarterly reports

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has cancelled the certificate of registration of Firstcapital Alternate Investment Trust, a registered Alternative Investment Fund, by an order dated 28 July 2026. The order, bearing reference CGM/HO/AFD/I/17452/2026 and signed by designated authority S Madhusudhanan at Mumbai, was passed under Section 12(3) of the SEBI Act, 1992 read with Regulation 30A of the SEBI (Intermediaries) Regulations, 2008. It directs that the fund's registration, numbered IN/AIF2/15-16/0181, stands cancelled "with immediate effect".

The action is a regulatory compliance measure, not an allegation of fraud, mis-selling or investor loss. SEBI found that the fund had failed to file its Quarterly Activity Reports (QARs) for four consecutive quarters ending March 2025, June 2025, September 2025 and December 2025. There is no monetary penalty or disgorgement in the order; the sanction is the cancellation of the registration itself.

In its own submissions recorded in the order, Firstcapital told SEBI it had "not raised any capital or made any investments" and had onboarded no investors since registration, and described the default as a procedural lapse. SEBI did not accept that this excused the non-filing. The order notes that the show-cause notice could not be delivered by post or email and had to be affixed at the fund's last known address before the matter was decided.

How the Scheme Worked

This was not a scheme in the sense of an investor-facing fraud; it was a reporting default, and the order sets out how the summary proceeding unfolded. Under Regulation 28 of the SEBI (Alternative Investment Funds) Regulations, 2012, read with clause 15.1.1 of the SEBI Master Circular dated 7 May 2024, every registered AIF must file a quarterly activity report with SEBI within 15 calendar days of the end of each quarter, through the SEBI Intermediary Portal, as also mandated by a SEBI circular dated 31 July 2017.

According to the order, Firstcapital, registered as an AIF since 2015-16, did not file these reports for four straight quarters through 2025. On that basis SEBI initiated summary proceedings under Regulation 30A of the Intermediaries Regulations, read with Section 12(8) of the SEBI Act, and issued a show-cause notice dated 27 April 2026 asking why the registration should not be cancelled. The order records that the notice, sent by registered post and email to the fund's Andheri (East), Mumbai address, "returned undelivered", and was therefore affixed at the last known address on 23 June 2026.

The fund replied by emails dated 29 June and 13 July 2026. Per the order, it admitted a delay in filing, said the reports were nil returns because it had no capital, investments or investors, and attributed the lapse to a key person's medical condition and to technical problems on the portal, adding that some previously filed reports appeared to be missing. SEBI recorded that the fund had since attempted to file the pending nil reports but was still facing portal issues.

The designated authority held that none of this cured the default. The order observes that the master circular carves out no exception for AIFs that have launched no schemes, so a nil report was still due on time. It states that "the operational or commercial position of an intermediary does not suspend its regulatory accountability", and that a later attempt to file "does not cure the past violations", invoking the settled principle that "when a statute requires a thing to be done in particular manner" it must be done that way or not at all.

The Law Invoked

The order rests on Section 12 of the SEBI Act, 1992. Section 12(1) requires intermediaries such as AIFs to hold a valid certificate of registration; Section 12(3) empowers SEBI to suspend or cancel that certificate; and Section 12(8) supports action for a regulatory default. The cancellation was passed in exercise of powers under Section 12(3) read with Section 19 of the Act, which allows SEBI to delegate its powers to its officers.

The procedure came from Regulation 30A of the SEBI (Intermediaries) Regulations, 2008, which provides for "summary proceedings" against reporting defaults. The order notes a distinctive feature of that route: under Regulation 30A, "no opportunity of personal hearing shall be granted" while disposing of such proceedings, and the competent authority may pass an order of cancellation or suspension on the written record alone.

The reporting obligation itself flows from the SEBI (Alternative Investment Funds) Regulations, 2012. Regulation 28 lets SEBI call upon an AIF to file reports on its activities, and Regulation 35 provides that an AIF which does not submit periodic returns or reports shall be dealt with under the Intermediaries Regulations. The filing format and timeline are fixed by the SEBI Master Circular dated 7 May 2024 and the earlier circular of 31 July 2017.

What Happens Next

The cancellation takes effect immediately, so Firstcapital ceases to be a SEBI-registered Alternative Investment Fund and can no longer carry on that regulated activity. Because the fund told SEBI, on the record, that it had no investors, capital or investments, the order does not deal with the return of any investor money; on the facts recorded there is no pool of subscribers whose holdings are affected.

An order of this kind is a regulator's finding and is not the last word. A party aggrieved by a SEBI order may challenge it before the Securities Appellate Tribunal (SAT), and onward before the Supreme Court on questions of law. The summary-proceedings route under Regulation 30A does not provide a personal hearing at the SEBI stage, but the cancellation remains open to appeal on the merits. As of the order date, there is no public record of Firstcapital having announced an appeal.

What It Means

The practical lesson is that a SEBI registration is a continuing responsibility, not a one-time licence to be filed away. As the order stresses, the duty to report survives a fund's commercial inactivity: even a dormant AIF that has raised nothing must file its nil returns on time, because reporting is what lets the regulator monitor the market. The order is also a reminder that SEBI's Regulation 30A summary machinery can move quickly, from show-cause to cancellation within months, where filings are simply not made.

For ordinary investors, the useful takeaway is verification. Before committing money to any fund, portfolio manager or adviser, an investor can confirm its status on SEBI's public register of recognised intermediaries on sebi.gov.in, and check that the registration is live rather than suspended, cancelled or surrendered. A cancelled registration means the entity can no longer lawfully solicit or manage money in that capacity. There is no suggestion in this order that any investor was harmed; the value here is in the habit of checking registration status, and in understanding that a fund which stops filing with its regulator is a fund worth asking questions about.

FAQ

What exactly did SEBI order?

SEBI cancelled the certificate of registration (No. IN/AIF2/15-16/0181) of Firstcapital Alternate Investment Trust as an Alternative Investment Fund, with immediate effect, by an order dated 28 July 2026. The sole ground was the fund's failure to file quarterly activity reports for the four quarters of 2025. There is no monetary penalty in the order.

Why cancel the registration if the fund had no investors?

The order records the fund's submission that it had no capital, investments or investors. SEBI held that this did not remove the obligation to file, noting the rules carve out no exception for inactive funds and that a nil report was still due. In its words, commercial inactivity "does not suspend its regulatory accountability".

Did SEBI find fraud or investor loss in this matter?

No. SEBI's order makes no finding of fraud, mis-selling or investor loss; it is a compliance action about unfiled quarterly reports. The fund itself stated it had onboarded no investors, and the sanction is limited to cancelling the fund's registration.

Can the order be appealed?

Yes. A SEBI order of this nature can be challenged before the Securities Appellate Tribunal, and onward before the Supreme Court on questions of law. The Regulation 30A summary route does not grant a personal hearing at the SEBI stage, but the cancellation itself remains open to appeal. No appeal had been announced publicly as of the order date.

How can I check whether a fund or adviser is registered with SEBI?

SEBI publishes searchable lists of registered intermediaries, including AIFs, portfolio managers and investment advisers, on sebi.gov.in. Investors can confirm the registration number, the category, and whether the registration is active. Treat an entity that is unregistered, or whose registration has been cancelled or suspended, with caution.

Where can I read the official order?

The full order is published in the enforcement section of SEBI's website, dated 28 July 2026, in the matter of Firstcapital Alternate Investment Trust.

This report is based on the official SEBI order dated 28 July 2026 in the matter of Firstcapital Alternate Investment Trust, passed under Section 12(3) of the SEBI Act read with Regulation 30A of the SEBI (Intermediaries) Regulations, 2008.