The guidelines provide greater flexibility to Alternative Investment Funds (AIFs) and erstwhile Venture Capital Funds (VCFs) during the winding-up process. It permits funds to retain liquidation proceeds beyond their permissible fund life in specific circumstances, including pending or anticipated litigation, potential tax liabilities, or residual operational expenses linked to winding up. Where retention is based on anticipated liabilities, approval from at least 75% of investors by value is required, along with clear disclosure of the amount and proposed retention period. It has also introduced the concept of an “Inoperative Fund,” allowing eligible AIFs to surrender active registration while resolving outstanding liabilities.