MASTER CIRCULAR
SEBI/HO/AFD/PoD1/P/CIR/2023/130 July 31, 2023
To,
All Alternative Investment Funds
All Custodians
All Depositories
All Registrar to an Issue and Share Transfer Agents
Sir/Madam,
Sub: Master Circular for Alternative Investment Funds (AIFs)
1. With an objective to ensure an effective regulatory framework for AIFs, Securities
and Exchange Board of India (SEBI) has been issuing various circulars from time to
time. The provisions of the aforesaid circulars issued by SEBI up to March 31, 2023,
which are operational as on date, have been incorporated in this Master Circular for
AIFs.
2. Circulars providing temporary relaxations with regard to certain compliance
requirements for AIFs have not been included in the Master Circular.
3. In addition to the requirements specified under this Master Circular, the AIFs
shall be required to independently comply with the other requirements specified
by SEBI for market intermediaries such as the ‘Levy of Goods & Services Tax
(GST) on the fees payable to SEBI’, ‘Approach to securities market data access and
terms of usage of data provided by data sources in Indian securities market’,
‘Digital mode of payment’, ‘Information regarding Grievance Redressal
Mechanism’ and ‘Guidelines on Outsourcing of Activities by Intermediaries’, etc.
4. With respect to any other directions or guidance issued by SEBI, as specifically
applicable to AIFs, the same shall continue to remain in force in addition to the
provisions of this Master Circular or any other law for the time being in force.
5. This Master Circular shall come into force from the date of its issuance. The circulars
mentioned in Annexure 19 of this Master Circular shall stand rescinded with the
issuance of the Master Circular.
6. Notwithstanding such rescission:
a) anything done or any action taken or purported to have been done or taken under
the rescinded circulars, including registrations or approvals granted, fees
collected, registration suspended or cancelled, any inspection or investigation or
enquiry or adjudication commenced or show cause notice issued prior to such
Page 1 of 113
rescission, shall be deemed to have been done or taken under the corresponding
provisions of this Master Circular;
b) any application made to SEBI under the rescinded circulars, prior to such
rescission, and pending before it shall be deemed to have been made under the
corresponding provisions of this Master Circular;
c) the previous operation of the rescinded circulars or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired, accrued
or incurred under the rescinded circulars, any penalty, incurred in respect of any
violation committed against the rescinded circulars, or any investigation, legal
proceeding or remedy in respect of any such right, privilege, obligation, liability,
penalty as aforesaid, shall remain unaffected as if the rescinded circulars have
never been rescinded.
7. This circular is issued with the approval of the competent authority.
8. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 to protect the interests of investors
in securities and to promote the development of, and to regulate the securities
market.
9. The circular is available on SEBI website at www.sebi.gov.in under the categories
"Legal framework – Master Circulars" and "Info for - Alternative Investment Funds”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in
Page 2 of 113
Table of Contents
Chapter 1 – Online Filing System for AIFs ................................................................ 6
Chapter 2 – Filing of Private Placement Memorandum (‘PPM’) and related
compliance requirements ........................................................................................... 7
Chapter 3 – Registration related clarifications ....................................................... 13
Chapter 4 - Investment in AIFs ................................................................................. 14
Chapter 5 - Operational and prudential norms for Category III AIFs .................... 17
Chapter 6 – Norms for Special Situation Funds (SSF) ........................................... 22
Chapter 7 - Guidelines for overseas investments by AIFs and related reporting 23
Chapter 8 – Investment in units of AIFs .................................................................. 26
Chapter 9 – Participation of AIFs in Credit Default Swaps .................................... 27
Chapter 10 – Transaction in Corporate Bonds through Request for Quote (RFQ)
platform by AIFs ........................................................................................................ 29
Chapter 11 - Other prudential and operational norms and related clarifications 30
Chapter 12 – Framework for Accredited Investors................................................. 32
Chapter 13 – Obligations of manager, sponsor and trustee of AIFs .................... 34
Chapter 14 – Constitution of investment committee .............................................. 36
Chapter 15 – Reporting by AIFs ............................................................................... 37
Chapter 16 – Performance Benchmarking of AIFs ................................................. 39
Chapter 17 – Investor Charter and Disclosure of complaints by AIFs ................. 41
Chapter 18 - Collection of stamp duty on issue, transfer and sale of units of AIFs
.................................................................................................................................... 42
Chapter 19 – Change in Sponsor and/or Manager or Change in control of
Sponsor and/or Manager of AIF ............................................................................... 43
Annexure 1 ................................................................................................................. 45
Annexure 2 ................................................................................................................. 46
Annexure 3 ................................................................................................................. 47
Annexure 4 ................................................................................................................. 55
Annexure 5 ................................................................................................................. 56
Annexure 6 ................................................................................................................. 57
Annexure 7 ................................................................................................................. 60
Annexure 8 ................................................................................................................. 61
Annexure 9 ................................................................................................................. 68
Annexure 10 ............................................................................................................... 89
Annexure 11 ............................................................................................................... 94
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Annexure 12 ............................................................................................................... 95
Annexure 13 ............................................................................................................... 96
Annexure 14 ............................................................................................................... 97
Annexure 15 ............................................................................................................. 102
Annexure 16 ............................................................................................................. 104
Annexure 17 ............................................................................................................. 106
Annexure 18 ............................................................................................................. 111
Annexure 19 ............................................................................................................. 112
Page 4 of 113
Abbreviations:
Alternative Investment Fund AIF
Compliance Test Report CTR
Financial Action Task Force FATF
Foreign Exchange Management Act FEMA
Hindu Undivided Family HUF
International Organization of Securities IOSCO
Commission
Know Your Client KYC
Multilateral Memorandum of Understanding MMOU
Net Asset Value NAV
Permanent Account Number PAN
Prevention of Money Laundering Act PMLA
Private Placement Memorandum PPM
Reserve Bank of India RBI
Securities and Exchange Board of India SEBI
Securities and Exchange Board of India, 1992 SEBI Act
SEBI Intermediary portal SI portal
Securities and Exchange Board of India AIF Regulations
(Alternative Investment Funds) Regulations, 2012
Page 5 of 113
Chapter 1 – Online Filing System for AIFs1
1.1. All applicants desirous of seeking registration as an Alternative Investment
Fund (‘AIF’) are required to submit their applications only online, through the
SEBI Intermediary Portal at https://siportal.sebi.gov.in. Further, all SEBI
registered AIFs are required to file their compliance reports and submit
applications for any request under the provisions of AIF Regulations and
circulars issued thereunder, only through the SEBI Intermediary Portal.
1.2. In case of any queries and clarifications, users may refer to the manual provided
in the SEBI Intermediary Portal or contact the Portal Helpline as specified in the
manual.
1 SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2017/87 dated July 31, 2017
Page 6 of 113
Chapter 2 – Filing of Private Placement Memorandum (‘PPM’) and related
compliance requirements
2.1. Template(s) for PPM2 and disclosures in PPM3
2.1.1. Private Placement Memorandum (‘PPM’) is a primary document in which all
the necessary information about the AIF is disclosed to prospective
investors. To ensure that a minimum standard of disclosure is made
available in the PPM, a template has been mandated for the PPM, providing
certain minimum level of information in a simple and comparable format.
AIFs are also permitted to provide additional information in their PPM.
2.1.2. Thus, the template for PPM shall have two parts viz.
Part A – section for minimum disclosures, and
Part B – supplementary section to allow full flexibility to the Fund in order to
provide any additional information, which it deems fit.
2.1.3. The template for PPM of AIFs raising funds under Category I and Category
II is provided at Annexure 1. The template for PPM of AIFs raising funds
under Category III is provided at Annexure 2.
2.1.4. Every AIF shall, in its PPM provide a detailed tabular example of how the
fees and charges shall be applicable to the investor including the distribution
waterfall.
2.1.5. Regulation 11(2) of the AIF Regulations requires that an AIF shall include
history of disciplinary actions in its PPM. In this regard, it is clarified that all
AIFs shall include in their PPM, disciplinary history of:
(i) AIF, sponsor, manager and their directors/partners/promoters and
associates;
(ii) If applicant is a trust, trustees or trustee company and its directors.
Such disciplinary history shall, inter alia, include:
a) Details of outstanding/pending and past cases (where the person has
been found guilty) of litigations, criminal or civil prosecution, disputes,
non-payment of statutory dues, overdue to/defaults against banks or
financial institutions, contingent liabilities not provided for,
proceedings initiated for economic offences or civil offences, adverse
findings with respect to compliance with securities laws, penalties
levied, disputed tax liabilities, etc.
2 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020
3 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No.
CIR/IMD/DF/16/2014 dated July 18, 2014
Page 7 of 113
b) Any disciplinary action taken by the Board or any other regulatory
authority.
In case of operational actions such as administrative warnings/deficiency
letters, the same may be grouped together and summarized. However, if the
investor seeks details of the summarized portion, the same shall be provided
by the AIF to the investor.
Any further litigations/cases, etc. as may arise in the course of the activities
of the AIF shall be appropriately incorporated in the PPM and intimated to
the investors.
2.1.6. With respect to disclosure of disciplinary history as per para 2.1.5 above,
the same shall be applicable for the last 5 years and where monetary penalty
is involved, in all cases where such penalty is greater than 5 lakh rupees.
With respect to disputed tax liabilities, the same shall not apply to liabilities
in personal capacity of an individual. Contingent liabilities shall be as
disclosed in books of accounts of the entity.
2.2. Modalities for filing of PPM through a Merchant Banker4
In terms of Regulation 12(2) of the AIF Regulations, AIFs shall launch
scheme(s) subject to filing of PPM with SEBI through a SEBI registered
Merchant Banker. In this context, the following is specified:
2.2.1. The Merchant Banker shall independently exercise due diligence of all the
disclosures in the PPM, satisfy itself with respect to veracity and adequacy
of the disclosures and provide a due diligence certificate. The format of due
diligence certificate is given at Annexure 3.
2.2.2. While filing draft PPM at the time of registration or prior to launch of new
scheme on the SEBI intermediary portal, the due diligence certificate
provided by the Merchant Banker shall also be submitted, along with other
necessary documents.
2.2.3. The details of the Merchant Banker shall be disclosed in the PPM.
2.2.4. The Merchant Banker appointed for filing of PPM shall not be an associate
of the AIF, its sponsor, manager or trustee.
4 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF6/P/CIR/2021/645 dated October 21, 2021
Page 8 of 113
2.3. Validity of PPM - Timeline for declaration of First Close of schemes of
AIFs5
In terms of Regulation 12(4) of AIF Regulations, the first close of the scheme
shall be declared by an AIF in the manner as may be specified by SEBI from
time to time. In this regard, the following is specified:
2.3.1. The First Close of a scheme shall be declared not later than 12 months from
the date of SEBI communication for taking the PPM of the scheme on
record.
2.3.2. In case of open ended schemes of Category III AIFs, the First Close shall
refer to the close of their Initial Offer Period.
2.3.3. Corpus of the scheme at the time of declaring its First Close shall not be
less than the minimum corpus specified in AIF Regulations for the respective
category/sub-category of the AIF.
2.3.4. The commitment provided by sponsor or manager at the time of declaration
of First Close, to the extent to meet the aforesaid minimum corpus
requirement, shall not be reduced or withdrawn or transferred, post First
Close.
2.3.5. Schemes of AIFs, who had not declared their First Close as on November
17, 2022, shall declare their First Close not later than November 16, 2023.
2.3.6. Schemes of AIFs as on November 17, 2022, whose PPMs were taken on
record prior to November 17, 2021, and had not declared their First Close
by November 17, 2022, shall submit updated PPM with SEBI in the format
specified at para 2.1.3 above, through a SEBI registered merchant banker
along with due diligence certificate from the merchant banker as specified
in Annexure 3 as provided in para 2.2.1 above and such updated PPM shall
be circulated to investors before declaration of First Close.
2.3.7. The First Close of Large Value Fund for Accredited Investors (“LVF”)
scheme shall be declared not later than 12 months from the date of grant of
registration of the AIF or date of filing of PPM of scheme with SEBI,
whichever is later.
2.3.8. LVF schemes as on November 17, 2022, shall declare their First Close not
later than November 16, 2023.
5 SEBI circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
Page 9 of 113
2.3.9. In case the First Close of a scheme is not declared within the timeline
specified above, the AIF shall file a fresh application for launch of the said
scheme as per applicable provisions of AIF Regulations by paying requisite
fee to SEBI.
2.4. Audit of terms of PPM6
2.4.1. In order to ensure compliance with the terms of PPM, it is mandatory for
AIFs to carry out an annual audit of such compliance. The audit shall be
carried out either by an internal or external auditor/legal professional.
However, audit of sections of PPM relating to ‘Risk Factors’, ‘Legal,
Regulatory and Tax Considerations’ and ‘Track Record of First Time
Managers’ shall be optional.
2.4.2. Audit of compliance with terms of PPM, shall be conducted at the end of
each Financial Year and the findings of audit along with corrective steps, if
any, shall be communicated to the Trustee or Board of Directors or
Designated Partners of the AIF, Board of directors or Designated Partners
of the Manager and SEBI, within 6 months from the end of the Financial
Year.
2.4.3. The requirement of audit of compliance with terms of PPM shall not apply to
AIFs which have not raised any funds from their investors. However, such
AIFs shall submit a Certificate from a Chartered Accountant to the effect that
no funds have been raised, within 6 months from the end of the Financial
Year.
2.4.4. The requirements as mentioned at para 2.1.1, 2.1.3 and 2.4.1 above shall
not apply to the following:
(i) Angel Funds as defined in AIF Regulations.
(ii) AIFs/Schemes in which each investor commits to a minimum capital
contribution of 70 crore rupees (USD 10 million or equivalent, in case
of capital commitment in non-INR currency) and also provides a waiver
to the fund from the requirement of PPM in the SEBI specified template
and annual audit of terms of PPM, in the manner provided at Annexure
4.
6 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020 and SEBI Circular No.
SEBI/HO/IMD/DF6/CIR/P/2020/99 dated June 12, 2020
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2.5. Changes in PPM7
2.5.1. At the time of submission of final placement memorandum to SEBI, any
changes which have been made vis-à-vis the draft placement memorandum
submitted to SEBI at the time of application shall be listed clearly in the
covering letter. Further, the changes shall also be highlighted in the copy of
the final placement memorandum.
2.5.2. Any changes in terms of PPM and in the documents of the fund/scheme
shall be intimated to investors and SEBI on a consolidated basis, within 1
month of the end of each financial year. Such intimation shall specifically
mention the changes carried-out in the PPM and the documents of the
fund/scheme, along with the relevant pages of revised sections/clauses8.
2.5.3. Such intimation to SEBI for changes in terms of PPM shall be submitted
through a Merchant Banker, along with the due diligence certificate provided
by the Merchant Banker. The format of due diligence certificate for intimating
the changes in the placement memorandum is given at Annexure 5. The
Merchant Banker appointed for filing of PPM shall not be an associate of the
AIF, its sponsor, manager or trustee9.
2.5.4. ‘Material changes’ may be construed as changes in the fundamental
attributes of the fund/scheme. In case of material changes significantly
influencing the decision of the investor to continue to be invested in the AIF,
the process as mentioned hereunder shall be complied with. Such changes
shall include, but not be limited to the following:
(a) Change in sponsor/manager (not including an internal restructuring
within the group),
(b) Change in control of sponsor/manager,
(c) Change in fee structure or hurdle rate which may result in higher fees
being charged to the unit holders.
The following process shall be followed by the AIF:
(i) Existing unit holders who do not wish to continue post the change shall
be provided an exit option. The unit holders shall be provided not less
than one month for expressing their dissent.
(ii) In case of open-ended schemes of the AIF, the exit option may be
provided by either of the following:
7 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014, SEBI Circular No. CIR/IMD/DF/16/2014
dated July 18, 2014
8 SEBI circular No. SEBI/HO/IMD/IMD-I/DOF6/CIR/2021/549 dated April 07, 2021
9 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF6/P/CIR/2021/645 dated October 21, 2021
Page 11 of 113
A. Buying out of units of the dissenting investors by the manager/
any other person as may be arranged by the manager, valuation
of which shall be based on market price of underlying assets.
B. Redemption of units of the investors through sale of underlying
assets.
(iii) In case of close-ended schemes of the AIF, the exit option may be
provided as under:
A. The exit option shall be provided by buying out of units of the
dissenting investors by the manager/ any other person as may
be arranged by the manager.
B. Prior to buying out of such units, valuation of the units shall be
undertaken by two independent valuers and the exit shall be at
value not less than average of the two valuations.
(iv) The responsibility to provide exit to the dissenting investors shall be
on the manager. The expenses for the entire process shall be borne
by the manager/sponsor/proposed new manager or sponsor and shall
not be charged to the unit holders.
(v) The entire process of exit to dissenting investors shall be completed
within 3 months from the date of expiry of last date of the offer for
dissent.
(vi) The trustee of AIF (in case AIF is a trust)/ sponsor (in case of any other
AIF) shall be responsible for overseeing the process, ensuring
compliance and regularly updating SEBI on the developments.
2.5.5. With respect to para 2.5.4 above, the process for exit under the clause shall
not apply in cases where the AIF has approval of not less than 75% of unit
holders by value of their investment in the AIF with respect to sub-clauses
(a) and (b).
Page 12 of 113
Chapter 3 – Registration related clarifications
3.1. In-principle approval10
With respect to an in-principle approval granted to an applicant, in case the
registered trust deed or duly filed partnership deed is not submitted within the
specified time period, the applicant shall file a fresh application for registration
under the AIF Regulations.
3.2. Change in category of AIF11
Regulation 7(2) of AIF Regulations specifies as under:
"An Alternative Investment Fund which has been granted registration under a
particular category cannot change its category subsequent to registration,
except with the approval of the Board." In this regard, it is specified as under:
3.2.1. Only AIFs who have not made any investments under the category in which
they were registered earlier shall be allowed to make application for change
in category.
3.2.2. Any AIF proposing to change its category shall make an application to SEBI
for the same along with an application fees of 1 lakh rupees. The application
shall include the updated Form A (Refer First Schedule to the AIF
Regulations), other updated supporting documents, if any and rationale for
the proposed change. Registration fees shall not apply for such applications.
3.2.3. If the AIF has received commitments/ raised funds prior to application for
change in category, the AIF shall be required to send letters/emails to all its
investors providing them the option to withdraw their commitments/ funds
raised without any penalties/charges. Any fees collected from investors
seeking to withdraw commitments/ funds shall be returned to them. Partial
withdrawal may be allowed subject to compliance with the minimum
investment amount required under the AIF Regulations.
3.2.4. The AIF shall not make any investments other than in liquid funds/ banks
deposits until approval for change in category is granted by SEBI.
3.2.5. On approval of the request from SEBI, the AIF shall send a copy of the
revised PPM and other relevant information to all its investors.
10 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
11 SEBI circular No. CIR/IMD/DF/12/2013 dated August 07, 2013
Page 13 of 113
Chapter 4 - Investment in AIFs12
4.1. In terms of Regulation 10(a) of AIF Regulations, AIFs may raise funds from any
investor whether Indian, foreign or non-resident Indians, by way of issue of
units. At the time of on-boarding investors, the manager of an AIF shall ensure
the following13:
4.1.1. Foreign investor of the AIF is a resident of the country whose securities
market regulator is a signatory to the International Organization of Securities
Commission’s Multilateral Memorandum of Understanding (Appendix A
Signatory) or a signatory to the bilateral Memorandum of Understanding with
SEBI.
For the purpose of the aforesaid clause, “Bilateral Memorandum of
Understanding with SEBI” shall mean a bilateral Memorandum of
Understanding between SEBI and any authority outside India that provides
for information sharing arrangement as specified under clause (ib) of sub-
section (2) of Section 11 of the Securities and Exchange Board of India Act,
1992.
AIFs may accept commitment from an investor being Government or
Government related investor, who does not meet the aforesaid condition, if
the investor is a resident in the country as may be approved by the
Government of India.
4.1.2. The investor, or its underlying investors contributing twenty-five percent or
more in the corpus of the investor or identified on the basis of control, is not
the person(s) mentioned in the Sanctions List notified from time to time by
the United Nations Security Council and is not a resident in the country
identified in the public statement of Financial Action Task Force as–
(i) a jurisdiction having a strategic Anti-Money Laundering or Combating
the Financing of Terrorism deficiencies to which counter measures
apply; or
(ii) a jurisdiction that has not made sufficient progress in addressing the
deficiencies or has not committed to an action plan developed with the
Financial Action Task Force to address the deficiencies.
For the purpose of the aforesaid clause, “control” includes the right to
appoint majority of the directors or to control the management or policy
12 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No.
CIR/IMD/DF/16/2014 dated July 18, 2014
13 SEBI circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/171 dated December 09, 2022
Page 14 of 113
decisions exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of shareholding or
management rights or shareholders agreements or voting agreements or in
any other manner.
4.2. In case an investor who has been on-boarded to scheme of an AIF,
subsequently does not meet the conditions specified at para 4.1 above, the
manager of the AIF shall not drawdown any further capital contribution from
such investor for making investment, until the investor again meets the said
conditions.
4.3. All AIFs shall ensure that all marketing documents of the fund/scheme, if any,
are distributed only on a private basis to its proposed investors and are in
accordance with the PPM of the fund/scheme14.
4.4. The terms of contribution or subscription agreement (by any name as it may be
called), shall be aligned with the terms of the PPM and shall not go beyond the
terms of the PPM15.
4.5. With respect to Regulation 10(c) of AIF Regulations, an AIF may accept the
following as joint investors for the purpose of investment of not less than the
minimum investment amount as specified in AIF Regulations for respective
category/sub-category of AIF:
i. An investor and his/her spouse
ii. An investor and his/her parent
iii. An investor and his/her daughter/son
With respect to the above investors, not more than 2 persons shall act as joint-
investors in an AIF. In case of any other investors acting as joint-investors, for
every investor, the minimum investment amount, as specified in AIF
Regulations for respective category/sub-category of AIF, shall apply. Each of
the joint investor shall contribute towards the AIF/scheme of AIF.
4.6. With respect to units of AIF issued to the employees of the manager of the AIF
for profit- sharing, Regulation 10(c) of AIF Regulations shall not be applicable
in cases where such units do not entail any contribution/investment from the
employees.
4.7. In case of an open-ended scheme of AIF, the first single lump-sum investment
amount received from the investor should not be less than the minimum
investment amount. Further, in case of request for partial redemption of units
by an investor in an open-ended scheme of AIF, the AIF shall ensure that after
such redemption, the amount of investment retained by the investor in the fund
14 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
15 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020
Page 15 of 113
does not fall below the specified minimum limit as provided under the AIF
Regulations.
Page 16 of 113
Chapter 5 - Operational and prudential norms for Category III AIFs
5.1. Calculation of investment concentration norm for Category III AIFs16
Regulation 15(1)(d) of AIF Regulations provides flexibility to Category III AIFs,
including large value funds for accredited investors of Category III AIFs, to
calculate investment concentration norm based either on investable funds or
net asset value (‘NAV’) of the scheme while investing in listed equity of an
investee company, subject to the conditions specified by SEBI from time to time.
In this regard, the following is specified:
5.1.1. All Category III AIFs shall disclose the basis for calculation of investment
concentration norm in the PPM of their schemes.
5.1.2. The basis for calculating investment concentration norm shall not be
changed during the term of the scheme.
5.1.3. Category III AIFs which choose to calculate investment concentration norm
based on NAV, shall comply with the following17:
(i) The limit for investment in listed equity shall be calculated based on
the NAV of the fund on the business day immediately preceding the
date on which the Category III AIF makes such investment.
(ii) NAV of the AIF shall be the sum of value of all securities adjusted for
mark to market gains/losses (including cash and cash equivalents).
The NAV shall exclude any funds borrowed by the AIF.
(iii) Passive breach of concentration norm, i.e. when the market value of
the investment of Category III AIF in listed equity of an investee
company exceeds the investment limit as specified under Regulation
15(1)(d) of AIF Regulations, shall be rectified within 30 days from the
date of the breach.
5.2. Prudential requirements with respect to leverage18
All Category III AIFs which undertake leverage, whether through investment in
derivatives or by borrowing or by any other means shall comply with the
following prudential requirements:
5.2.1. For the purpose of arriving at leverage undertaken by an AIF, leverage shall
be calculated as the ratio of the exposure to the NAV of the AIF.
16 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF6/P/CIR/2022/0000000037 dated March 28, 2022
17 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF6/P/CIR/2021/663 dated Nov 22, 2021
18 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
Page 17 of 113
5.2.2. Leverage shall be calculated as under:
Total exposure {Longs+Shorts (after offsetting as permitted)}
Leverage=
Net Asset Value (NAV)
5.2.3. The leverage of a Category III AIF shall not exceed 2 times of the NAV of
the fund. i.e. If an AIF’s NAV is 100 crore rupees, its exposure (Longs +
shorts) after offsetting positions as permitted shall not exceed 200 crore
rupees.
5.2.4. Category III AIFs investing in units of other AIFs may undertake leverage
not exceeding two times of the value of portfolio (NAV) after excluding the
value of investment in units of other AIFs19.
Calculation of exposure and NAV
5.2.5. The total exposure of the fund for the purpose of computing leverage shall
be the sum of the market value of all the securities/ contracts held by the
fund. The total exposure at any point of time will be a sum of exposure
through instruments in both the spot market and the derivative market.
5.2.6. Exposure shall be calculated as below:
(i) Futures (long and short) = Futures Price * Lot Size * Number of
Contracts
(ii) Options bought = Option Premium Paid * Lot Size * Number of
Contracts
(iii) Options sold = Market price of underlying * Lot size * Number of
contracts
(iv) In case of any other derivative exposure, the exposure is proposed to
be calculated as the notional market value of the contract.
5.2.7. Idle cash and cash equivalents shall not be included in the calculation of
total exposure. Long put positions shall be considered as short exposure
and short put positions shall be considered as long exposure. Short selling
of a stock through Securities Lending and Borrowing Mechanism (‘SLBM’)
shall be treated as short exposure. Temporary borrowing arrangements
which relate to and are fully covered by capital commitments from investors
need not be included in calculation of leverage.
5.2.8. Offsetting of positions shall be allowed for calculation of leverage for
transactions entered into for hedging and portfolio rebalancing as provided
in para 12.25 of Master Circular No. SEBI/HO/IMD/IMD-PoD-
1/P/CIR/2023/74 for Mutual Funds dated May 19, 2023.
19 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021
Page 18 of 113
5.2.9. Sum of all exposures without offsetting transactions for hedging and portfolio
rebalancing shall be termed as 'gross exposure' and the ratio of such gross
exposure and NAV shall be termed as 'gross leverage'.
5.2.10. NAV of the AIF shall be the sum of value of all securities adjusted for mark
to market gains/losses (including cash and cash equivalents). The NAV shall
exclude any funds borrowed by the AIF.
5.2.11. All the above restrictions/limits shall apply at the scheme-level.
Breach of leverage limits
5.2.12. All Category III AIFs shall have adequate systems in place to monitor their
exposures. It shall be responsibility of the AIFs to ensure that the leverage
shall not exceed the specified limit at all times.
5.2.13. All Category III AIFs shall report to the custodian the amount of leverage at
the end of the day (based on closing prices), by the end of next working
day20.
5.2.14. In case of a breach in limit:
a. Obligation of AIF:
(i) The AIF shall send a report to the custodian in case there has been
any breach of limit during the day, by the end of the same day.
(ii) The AIF shall send a report to all its clients before 10 a.m. on the next
working day stating that there is a breach in the limit along with reasons
for the same.
(iii) The AIF shall square off the excess exposure and bring back the
leverage within the specified limit by end of next working day. This shall
however not prejudice any action that may be taken by SEBI against
the AIF under AIF Regulations or the SEBI Act.
(iv) A confirmation of squaring off of the excess exposure shall be sent to
all the clients by the AIF by end of the day on which the exposure was
squared off.
b. Obligation of custodian:
(i) The custodian shall report to SEBI providing name of the fund, the
extent of breach and reasons for the same before 10 a.m. on the next
working day.
20 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 19 of 113
(ii) A confirmation of squaring off of the excess exposure shall be sent to
SEBI by the custodian by end of the day on which the exposure was
squared off.
5.3. Risk Management and Compliance21
All Category III AIFs which employ leverage shall:
5.3.1. have a comprehensive risk management framework supported by an
independent risk management function, appropriate to the size, complexity
and risk profile of the fund.
5.3.2. have a strong and independent compliance function appropriate to the size,
complexity and risk profile of the fund supported by sound and controlled
operations and infrastructure, adequate resources and checks and balances
in operations.
5.3.3. maintain appropriate records of the trades/transactions performed and such
information should be available to SEBI, whenever sought.
5.3.4. provide full disclosure and transparency about conflicts of interest and how
they manage them from time to time, to investors, in accordance with
Regulation 21 of the AIF Regulations and any other guidelines as may be
specified by SEBI from time to time. Such conflicts shall be disclosed to the
investors in the placement memorandum and by separate correspondences
as and when such conflicts may arise. Such information shall also be
disclosed to SEBI as and when required by SEBI.
5.4. Redemption norms22
5.4.1. These norms shall apply to open ended schemes of Category III AIFs.
5.4.2. The Manager of such AIFs shall ensure adequate and sufficient degree of
liquidity of the scheme/ fund in order to allow it, in general, to meet
redemption obligations and other liabilities.
5.4.3. The Manager shall establish, implement and maintain an appropriate
liquidity management policy and process to ensure that the liquidity of the
various underlying assets is consistent with the overall liquidity profile of the
fund/scheme while making any investment.
5.4.4. The Manager of such AIFs shall clearly disclose the possibility of suspension
of redemptions in exceptional circumstances to investors, in the PPM.
21 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
22 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
Page 20 of 113
5.4.5. Suspension of redemptions by the Manager shall be justified only:
(i) in exceptional circumstances provided that such suspension is
exclusively in the best interest of investors of the AIF, or
(ii) if the suspension is required under the AIF regulations or required by
SEBI.
5.4.6. The Manager of such AIFs shall build the operational capability to suspend
redemptions in an orderly and efficient manner. During the suspension of
the redemptions, the Manager shall not accept new subscriptions.
5.4.7. The decision by the Manager to suspend redemptions, in particular the
reasons for the suspension and the planned actions shall be appropriately
documented and communicated to SEBI and to the investors.
5.4.8. The suspension shall be regularly reviewed by the Manager. The Manager
shall take all necessary steps in order to resume normal operations as soon
as possible having regard to the best interest of investors.
5.4.9. The Manager of such AIFs shall keep SEBI and investors informed about
the actions undertaken by the manager throughout the period of suspension.
The decision to resume normal operations shall also be communicated to
SEBI and the investors as soon as possible.
5.5. Breach in corpus of open ended scheme23
For the purpose of Regulation 10(b) of AIF Regulations, in case the corpus of
an open-ended scheme falls below twenty crore rupees:
5.5.1. The AIF shall intimate to SEBI within 2 days of receiving request for
redemption from the client.
5.5.2. The AIF shall take necessary action to bring back the scheme size to twenty
crore rupees within 3 months from the date of such breach.
5.5.3. In case the AIF fails to bring back the corpus within the specified period, it
shall redeem entire units of all investors and wind up the scheme in terms
of Regulation 29 of AIF Regulations.
5.5.4. In case of repeated violations by the AIF, SEBI may take action against the
AIF, as may be appropriate.
23 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 21 of 113
Chapter 6 – Norms for Special Situation Funds (SSF) 24
6.1. Each scheme of SSF shall have a corpus of at least one hundred crore rupees.
6.2. SSF shall accept an investment of value not less than ten crore rupees from an
investor. In case of an accredited investor, the SSF shall accept an investment
of value not less than five crore rupees. Further, in case of investors who are
employees or directors of the SSF or employees or directors of the manager of
the SSF, the minimum value of investment shall be twenty-five lakh rupees.
6.3. SSF intending to act as a resolution applicant under the Insolvency and
Bankruptcy Code, 2016 shall ensure compliance with the eligibility requirement
provided thereunder.
6.4. Further, in respect of SSF acquiring stressed loan in terms of Clause 58 of the
Master Direction – Reserve Bank of India (Transfer of Loan Exposures)
Directions, 2021 (‘RBI Master Direction’), the following is specified:
6.4.1. SSF may acquire stressed loan in terms of clause 58 of RBI Master Direction
upon inclusion of SSF in the respective Annex of the RBI Master Direction.
6.4.2. Stressed loan acquired by SSF in terms of clause 58 of the RBI Master
Direction shall be subject to a minimum lock-in period of six months. The
lock in period shall not be applicable in case of recovery of the stressed loan
from the borrower.
6.4.3. SSF acquiring stressed loans in terms of the RBI Master Direction shall
comply with the same initial and continuous due diligence requirements for
its investors, as those mandated by RBI for investors in Asset
Reconstruction Companies.
24 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2022/009 dated Jan 27, 2022
Page 22 of 113
Chapter 7 - Guidelines for overseas investments by AIFs and related reporting25
In terms of Regulation 15(1)(a) of AIF Regulations, AIFs may invest in securities of
companies incorporated outside India subject to such conditions or guidelines that may
be stipulated or issued by the RBI and SEBI from time to time. In this regard, the
following is specified:
7.1. Investment conditions
7.1.1. AIFs may invest in equity and equity linked instruments only of off-shore
venture capital undertakings, subject to overall limit of USD 1500 million
(combined limit for AIFs and Venture Capital Funds registered under the
erstwhile Securities and Exchange Board of India (Venture Capital Funds)
Regulations, 1996).
7.1.2. For the purpose of such investment, it is clarified that “Offshore Venture
Capital Undertakings” means a foreign company whose shares are not listed
on any of the recognized stock exchange in India or abroad.
7.1.3. Such investments shall not exceed 25% of the investable funds of the
scheme of the AIF.
7.1.4. AIFs shall invest in an overseas investee company, which is incorporated in
a country whose securities market regulator is a signatory to the
International Organization of Securities Commission’s Multilateral
Memorandum of Understanding (Appendix A Signatories) or a signatory to
the bilateral Memorandum of Understanding with SEBI.
7.1.5. AIFs shall not invest in an overseas investee company, which is
incorporated in a country identified in the public statement of Financial
Action Task Force (FATF) as:
(i) a jurisdiction having a strategic Anti-Money Laundering or
Combating the Financing of Terrorism deficiencies to which counter
measures apply; or
(ii) a jurisdiction that has not made sufficient progress in addressing
the deficiencies or has not committed to an action plan developed
with FATF to address the deficiencies.
7.1.6. These investments would be subject to Foreign Exchange Management
(Overseas Investment) Regulations, 2022, including amendments thereof
and related directions issued by RBI from time to time.
25 SEBI Circular No. SEBI/HO/AFD-1/PoD/CIR/P/2022/108 dated August 17, 2022,
SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2018/103/2018 dated July 03, 2018 and
SEBI Circular No. CIR/IMD/DF/7/2015 dated October 1, 2015
Page 23 of 113
7.1.7. AIFs shall not invest in Joint venture/Wholly Owned Subsidiary while making
overseas investments.
7.1.8. AIFs shall adhere to FEMA, 1999, its Rules, Regulations and Directions
issued by the Government/ RBI from time to time.
7.1.9. AIFs shall comply with all requirements under RBI guidelines on opening of
branches/subsidiaries/Joint Venture /undertaking investment abroad by
NBFCs, where more than 50% of the funds of the AIF has been contributed
by a single NBFC.
7.1.10. AIFs shall transfer/sell the investment in overseas investee company only to
the entities eligible to make overseas investments, as per the extant
guidelines issued under the FEMA, 1999.
7.2. Allocation of overseas investment limit
7.2.1. AIFs shall file an application to SEBI for allocation of overseas investment
limit in the format specified at Annexure 6. The Trustee/Board/Designated
Partners of the AIFs shall submit an undertaking to SEBI as specified at
Annexure 6 with respect to the proposed overseas investment.
It is clarified that no separate permission from RBI is necessary in this
regard.
7.2.2. The allocation of investment limits would be done on ‘first come- first serve’
basis, depending on the availability in the overall limit of USD 1500 million.
7.2.3. In case an AIF who is allocated certain investment limit, wishes to apply for
allocation of further investment limit, the fresh application shall be dealt with
on the basis of the date of its receipt and no preference shall be granted to
it in fresh allocation of investment limit.
7.2.4. The AIF shall have a time limit of 6 months from the date of approval from
SEBI for making allocated investments in offshore venture capital
undertakings. In case the applicant does not utilize the limits allocated within
the stipulated period, SEBI may allocate such unutilized limit to other
applicants.
7.2.5. If an AIF liquidates investment made in an overseas investee company
previously, the sale proceeds received from such liquidation, to the extent
of investment made in the said overseas investee company, shall be
available to all AIFs (including the selling AIF) for reinvestment.
Page 24 of 113
7.3. Reporting of overseas investments
7.3.1. AIFs shall report the utilization of the overseas limits within 5 working days
of such utilization on SEBI intermediary portal at https://siportal.sebi.gov.in.
7.3.2. AIFs shall also report the following through SEBI intermediary portal:
(i) In case an AIF has not utilized the overseas limit granted to them
within a period of 6 months from the date of SEBI approval (hereinafter
referred to as ‘validity period’), the same shall be reported within 2
working days after expiry of the validity period;
(ii) In case an AIF has not utilized a part of the overseas limit within the
validity period, the same shall be reported within 2 working days after
expiry of the validity period;
(iii) In case an AIF/ VCF wishes to surrender the overseas limit at any
point of time within the validity period, the same shall be reported
within 2 working days from the date of decision to surrender the limit.
7.3.3. AIFs shall furnish the sale/divestment details of the overseas investments to
SEBI in the format given at Annexure 7 within 3 working days of the
divestment, by emailing to aifreporting@sebi.gov.in, for updating the overall
limit available for overseas investment by AIFs.
Page 25 of 113
Chapter 8 – Investment in units of AIFs26
8.1. In terms of Regulation 15(1) (c) and (d) of the AIF Regulations, AIFs may invest
in an investee company up to a specified limit, directly or through investment in
the units of other AIFs. AIFs may invest in units of other AIFs without labelling
themselves as a Fund of AIFs.
8.2. Existing AIFs may also invest simultaneously in securities of investee
companies and in units of other AIFs, subject to appropriate disclosures in the
PPM and with the consent of at least two-thirds of unit holders by value of their
investment in the AIF in terms of Regulation 9(2) of the AIF Regulations.
8.3. AIFs which propose to invest in units of other AIFs shall provide, inter-alia, the
following information in their PPMs:
(i) Proposed allocation of investment in units of other AIFs;
(ii) Out of total fees and expenses charged to investors of the AIF, portion of
fees and expenses which may be attributed to investment in units of other
AIFs;
(iii) Process to be followed by the Manager to ensure compliance with
investment conditions as specified in Regulation 15 and Regulation 16 or17
or 18 (as applicable) of AIF Regulations;
(iv) Whether any investments are proposed to be made in units of other AIFs
managed/ sponsored by the same Manager/ Sponsor or associates of the
Manager/ Sponsor and details thereof, including allocation, fees, expenses,
etc.
8.4. Pooling vehicles shall not be created solely for the purpose of investing in an
AIF unless the pooling vehicles are registered with SEBI as AIFs27.
26 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021
27 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 26 of 113
Chapter 9 – Participation of AIFs in Credit Default Swaps28
Regulations 16(1)(aa),17(da), 18(ab) and 20(11) of AIF Regulations enable AIFs to
participate in CDS in terms of the conditions as may be specified by SEBI from time to
time. In this regard, the following is specified:
9.1. Conditions applicable to Category I, II and III AIFs for buying CDS
9.1.1. Category I AIFs and Category II AIFs may buy CDS on underlying
investment in debt securities, only for the purpose of hedging.
9.1.2. Category III AIFs may buy CDS for the purpose of hedging or otherwise,
within permissible leverage as specified in para 5.2 of this Master Circular.
9.2. Conditions applicable to Category II and III AIFs for selling CDS
9.2.1. Category III AIFs may sell CDS, subject to the condition that effective
leverage undertaken is within the permissible limits as specified in para 5.2
of this Master Circular.
9.2.2. Further, Category II AIFs and Category III AIFs may sell CDS, by earmarking
unencumbered Government bonds/Treasury bills equal to the amount of the
said CDS exposure. Such earmarked securities may also be used for
maintaining applicable margin requirements for the said CDS exposure.
Exposure to CDS undertaken in the aforesaid manner shall not tantamount
to leverage.
9.2.3. Total exposure to an investee company, including exposure through CDS,
shall be within the limit of applicable concentration norm as specified in AIF
Regulations.
9.3. Other conditions applicable for transacting in CDS
9.3.1. AIFs shall report details of CDS transaction to the custodian, by the next
working day, in the manner as specified by the custodian.
9.3.2. Custodian shall put in place a mechanism to collect necessary details from
AIFs transacting in CDS, to monitor the compliance with conditions specified
at para 9.1 and para 9.2 above.
9.3.3. The obligation of manager/AIF and custodian in case of breach of leverage
limits due to transactions in CDS by Category III AIFs, shall be as specified
in para 5.2.13 and para 5.2.14 of this Master Circular.
28 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2023/15 dated January 12, 2023
Page 27 of 113
9.3.4. Further, for Category II AIFs and Category III AIFs which sell CDS by
earmarking securities in the manner as mentioned at para 9.2.2 above, in
case the amount of earmarked securities falls below CDS exposure:
a. The AIF shall send a report to custodian on the same day of the breach.
b. The AIF shall bring the amount of earmarked securities equal to CDS
exposure and report details regarding rectification of breach to
custodian, by the end of next trading day.
c. In case the AIF fails to rectify the breach in the manner as specified
above, the custodian shall report details of the breach to SEBI, on the
next working day.
9.3.5. Any unhedged position, which shall result in gross unhedged positions
across all CDS transactions exceeding twenty-five percent of investable
funds of the scheme of an AIF, shall be taken only after intimating to all unit
holders of the scheme.
9.3.6. In terms of Regulations 16(1)(c) and 17(c) of AIF Regulations, Category I
and II AIFs shall not borrow funds directly or indirectly and engage in
leverage except for meeting temporary funding requirements for not more
than thirty days, not more than four occasions in a year and not more than
ten percent of the investable funds. In this regard, Category I and Category
II AIFs which transact in CDS, shall maintain thirty days cooling off period
between the two periods of borrowing or engaging in leverage.
9.3.7. All CDS transactions shall be on a platform regulated by SEBI or RBI, to
enhance transparency and disclosure.
9.3.8. AIFs transacting in CDS, shall also ensure compliance with applicable
provisions of RBI notification on ‘Master Direction - Reserve Bank of India
(Credit Derivatives) Directions, 2022’, dated February 10, 2022 and other
directives issued by RBI in this regard from time to time.
Page 28 of 113
Chapter 10 – Transaction in Corporate Bonds through Request for Quote (RFQ)
platform by AIFs29
10.1. AIFs shall undertake at least 10% of their total secondary market trades in
Corporate Bonds by value in a month by placing/seeking quotes on the RFQ
platform.
10.2. Further, in terms of Chapter XXII of Master Circular for issue and listing of
Non-convertible Securities, Securitised Debt Instruments, Security
Receipts, Municipal Debt Securities and Commercial Paper dated July 07,
2023 quotes on RFQ platform can be placed to an identified counterparty (i.e.
‘one-to-one’ mode) or to all the participants (i.e. ‘one-to-many’ mode). In this
regard, it is clarified that all transactions in Corporate Bonds wherein AIF(s) is
on both sides of the trade shall be executed through RFQ platform in ‘one-to-
one’ mode. However, any transaction entered by an AIF in Corporate Bonds in
‘one-to-many’ mode which gets executed with another AIF, shall be counted in
‘one-to-many’ mode and not in ‘one-to-one’ mode.
10.3. The aforesaid requirement came into force with effect from April 01, 2023.
29 SEBI Circular No. SEBI/HO/AFD/PoD/P/CIR/2023/017 dated February 01, 2023
Page 29 of 113
Chapter 11 - Other prudential and operational norms and related clarifications
11.1. Clarifications related to investments30:
11.1.1. With respect to investment by the sponsor/manager in the AIF, the sharing
of loss by the sponsor/manager shall not be less than pro rata to their
holding in the AIF vis-à-vis other unit holders.
11.1.2. For the purpose of maintaining continuing interest under Regulation 10(d) of
the AIF Regulations, such interest shall be maintained pro-rata to the
amount of funds raised (net) from other investors in the AIF.
11.1.3. For the purpose of Regulation 15(1)(c) of AIF Regulations, in case the AIF
proposes to invest into real estate or infrastructure projects, every such
investee company shall hold or propose to hold not less than one project,
directly or indirectly.
11.1.4. For the purpose of Regulation 15(1)(e) of AIF Regulations, prior to every
investment in an associate or in units of an AIF managed or sponsored by
Manager, Sponsor or associates of Manager or Sponsor, approval of the
investors as specified shall be obtained.
11.1.5. With respect to Regulation 17(a) of the AIF Regulations, it is clarified that
the term 'primarily' is indicative of where the main thrust of Category II AIFs
ought to be. The investment portfolio of a Category II AIF ought to be more
in unlisted securities as against the aggregate of other investments.
11.1.6. The requirement of appointment of custodian, as provided under Regulation
20(11) of AIF Regulations, shall be applicable if the sum of corpus of the AIF
and the value of the Co-investment managed by the Manager of the AIF as
Co-investment Portfolio Manager is more than five hundred crore rupees31.
11.2. Schemes of AIFs which have adopted priority in distribution among
investors32:
11.2.1. As per AIF Regulations, “Alternative Investment Fund” is a privately pooled
investment vehicle, which collects funds from investors, for investing it in
accordance with a defined investment policy for the benefit of its investors.
30 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No.
CIR/IMD/DF/16/2014 dated July 18, 2014
31 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF6/P/CIR/2021/663 dated Nov 22, 2021
32 SEBI Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/157 dated November 23, 2022
Page 30 of 113
11.2.2. As per para 11.1.1 of this Master Circular, with respect to investment by the
sponsor/manager in the AIF, the sharing of loss by the sponsor/manager
shall not be less than pro rata to their holding in the AIF vis-à-vis other unit
holders. While it has not been explicitly restricted in AIF Regulations that the
sharing of loss by a class of investors shall not be less than pro rata to their
holding in the AIF vis-à-vis other classes of investors/unit holders, it was
brought to SEBI’s attention that certain schemes of AIFs have adopted a
distribution waterfall in such a way that one class of investors (other than
sponsor/manager) share loss more than pro rata to their holding in the AIF
vis-à-vis other classes of investors/unit holders, since the latter has priority
in distribution over former (‘priority distribution model’).
11.2.3. The aforesaid matter is being examined by SEBI in consultation with
Alternative Investment Policy Advisory Committee, AIF industry
associations and other stakeholders. Meanwhile, it is decided that schemes
of AIFs which have adopted aforesaid priority distribution model, shall not
accept any fresh commitment or make investment in a new investee
company, till a view is taken by SEBI in this regard.
11.2.4. This provision under para 11.2.3 came into force from November 23, 2022.
11.3. Calculation of tenure of close-ended schemes of AIFs33:
In terms of Regulation 13(4) of AIF Regulations, the manner of calculating the
tenure of a close ended scheme of an AIF, including the manner of modification
of the tenure, may be specified by SEBI from time to time. In this regard, the
following is specified:
11.3.1. The tenure of close ended schemes of AIFs shall be calculated from the
date of declaration of the First Close.
11.3.2. AIF may modify the tenure of a scheme at any time before declaration of its
First Close. Prior to declaration of the First Close, the investor may withdraw
or reduce commitment provided to such scheme of an AIF.
11.3.3. Schemes of AIFs which have declared their First Close as on November 17,
2022, may continue to calculate their tenure from the date of Final Close.
Such existing schemes of AIFs, which are yet to declare Final Close, shall
declare their Final Close as per the timeline provided in the PPM of the
scheme and the AIF/manager shall not have any discretion to extend the
said timeline provided in the PPM.
33 SEBI Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
Page 31 of 113
Chapter 12 – Framework for Accredited Investors34
12.1. Pursuant to public consultation and approval of the SEBI Board, the framework
for “Accredited Investors” (AIs) has been introduced in the securities market.
12.2. Under the aforesaid framework, AIs may avail flexibility in minimum investment
amount (“Lower ticket size”) or concessions from specific regulatory
requirements applicable to investment products, subject to conditions
applicable for specific products/ services under SEBI (Alternative Investment
Funds) Regulations, 2012, SEBI (Portfolio Managers) Regulations, 2020 and
SEBI (Investment Advisers) Regulations, 2013. The modalities of accreditation
are provided in Annexure 8.
Accreditation Agency
12.3. Persons desirous of being reckoned as AIs shall approach an Accreditation
Agency for accreditation. Accreditation Agencies shall be responsible for:
a) Verification of documents submitted by applicants for accreditation,
b) Timely processing of applications for accreditation and issuance of
accreditation certificate,
c) Maintaining data of accredited investors,
d) Verification of accreditation status,
e) Maintaining confidentiality of investor information at all times, and
f) Any other responsibilities as may be specified by SEBI from time to time.
12.4. Accreditation Agencies shall have the requisite infrastructure including systems
and manpower to fulfill their responsibilities as specified under para 12.3 above.
12.5. The following entities are eligible to carry out the accreditation process:
(i) Subsidiaries of recognized Stock Exchanges, provided the Stock Exchange
meets the following criteria:
a) Minimum 20 years presence in Indian securities market,
b) Minimum net worth of 200 crore rupees,
c) Presence of nation-wide terminals,
d) Having Investor grievance redressal mechanisms in place, including
arbitration,
e) Presence of Investor Service Centers (ISCs) in at least 20 cities, and
f) Any other criteria as specified by SEBI from time to time.
(ii) Subsidiaries of Depositories.
12.6. The framework for AIs shall be made available on the websites of accreditation
agencies.
34 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF9/P/CIR/2021/620 dated August 26, 2021
Page 32 of 113
Filing of LVF Schemes with SEBI35
12.7. Pursuant to introduction of framework for “Accredited Investors” in the securities
market, AIF Regulations were amended to provide certain relaxations from
regulatory requirements to ‘Large Value Fund for Accredited Investors’ (LVF).
12.8. In terms of proviso to Regulation 12 of AIF Regulations, LVFs are exempt from
filing their placement memorandum with SEBI through Merchant Banker and
incorporate comments of SEBI, if any, in their placement memorandum i.e.
LVFs can launch their scheme under intimation to SEBI.
12.9. While filing the placement memorandum for LVF schemes with SEBI, a duly
signed and stamped undertaking by Chief Executive Officer of the Manager of
the AIF (or person holding equivalent role or position depending on the legal
structure of Manager) and Compliance Officer of Manager of the AIF shall be
submitted in the format as mentioned at Annexure 9.
Extension of tenure beyond two years36
12.10. Regulation 13(5) of AIF Regulations permits close ended AIFs to extend its
tenure up to two years with the approval of two-third of its unit holders by value
of their investment in the said AIF, while the proviso to Regulation 13 (4) of AIF
Regulations permits LVF to extend its tenure beyond two years, subject to terms
of the contribution agreement, other fund documents and such conditions as
may be specified by the Board from time to time. In this regard, it is specified as
under:
12.10.1. In order to enable the investors to take an informed decision, the placement
memorandum, contribution agreement or other fund documents of LVF shall
lay down terms and conditions for extension of the tenure beyond two years.
12.10.2. LVF shall be required to obtain approval from its Trustee/Board of
Directors/Designated Partners (depending upon the legal structure of the
LVF) for extending the tenure beyond two years, at least one month before
expiration of the fund tenure or extended tenure.
12.10.3. In case requisite conditions specified in the placement memorandum,
contribution agreement or other fund documents of LVF for extension of
tenure beyond two years are not fulfilled, LVF shall liquidate and wind up in
accordance with AIF Regulations and Circulars issued thereunder.
35 SEBI Circular No. SEBI/HO/AFD/RAC/CIR/2022/088 dated June 24, 2022
36 SEBI Circular No. SEBI/HO/AFD/RAC/CIR/2022/088 dated June 24, 2022
Page 33 of 113
Chapter 13 – Obligations of manager, sponsor and trustee of AIFs
13.1. Appointment and designation of personnel of AIF and manager37
13.1.1. AIFs shall ensure that Manager of AIF designates an employee or director
as Compliance Officer who shall be a person other than Chief Executive
Officer of the Manager or such equivalent role or position depending on the
legal structure of Manager. The compliance officer shall be responsible for
monitoring compliance with the provisions of the SEBI Act, AIF Regulations
and circulars issued thereunder.
13.1.2. For the purpose of provisions of AIF Regulations, ‘key management
personnel’ shall mean:
1. members of key investment team of the Manager, as disclosed in the
PPM of the fund;
2. employees who are involved in decision making on behalf of the AIF,
including but not limited to, members of senior management team at the
level of Managing Director, Chief Executive Officer, Chief Investment
Officer, Whole Time Directors, or such equivalent role or position;
3. any other person whom the AIF (through the Trustee, Board of Directors
or Designated Partners, as the case may be) or Manager may declare
as key management personnel.
13.1.3. AIFs shall disclose the names of all the key management personnel of the
AIF and Manager as specified in para 13.1.2 above, in their PPMs. Any
change in key management personnel shall be intimated to the investors
and the Board.
13.2. Code of conduct38
13.2.1. All managers shall:
(i) organise, operate and manage the AIFs and its schemes in the interest
of unitholders of the AIF/scheme.
(ii) carry out all the activities of the AIF in accordance with the placement
memorandum circulated to all unit holders and as amended from time
to time in accordance with AIF Regulations and circulars issued by
SEBI.
37 SEBI Circular No. SEBI/HO/AFD/RAC/CIR/2022/088 dated June 24, 2022 and SEBI Circular No.
SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021
38 SEBI Circular No. CIR/IMD/DF/7/2015 dated October 01, 2015
Page 34 of 113
(iii) ensure that the placement memorandum is provided to the investors
prior to providing commitment or making the investment in the AIF and
ensure that an appropriate acknowledgement is received from the
investor for such receipt.
(iv) ensure scheme-wise segregation of bank accounts and securities
accounts.
(v) not make any exaggerated statement, whether oral or written, either
about their qualifications or capability to render investment
management services or their achievements.
13.2.2. The AIF, manager, trustee and sponsor shall:
(i) act in the interest of unitholders of the AIF/scheme and not take any
action which is prejudicial to the interest of the unitholders and not place
the interest of the sponsor/manager/trustee of the AIF or any of their
associates above the interest of the unitholders of the scheme/AIF.
(ii) maintain high standards of integrity and fairness in all their dealings and
in the conduct of the business and render at all times high standards of
service, exercise due diligence and exercise independent professional
judgment.
(iii) not offer any assured returns to any prospective investors/unitholders.
13.3. Stewardship Code39
All categories of AIFs shall mandatorily follow the Stewardship Code as placed
at Annexure 10, in relation to their investment in listed equities.
13.4. Other obligations40
All circulars/guidelines as may be issued by SEBI with respect to KYC
requirements, Anti-Money Laundering and Outsourcing of activities shall be
applicable to AIFs and the manager of the AIF shall be responsible for
compliance with such circulars/guidelines.
39 SEBI Circular No. CIR/CFD/CMD1/168/2019 dated Dec 24, 2019
40 SEBI circular no. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 35 of 113
Chapter 14 – Constitution of investment committee41
14.1. In terms of Regulation 20(7) of AIF Regulations, Manager may constitute
Investment Committee (by whatever name it may be called) to approve
decisions of the AIF, subject to certain conditions. In terms of proviso to
Regulation 20(8) of AIF Regulations, there is a requirement to furnish a waiver
to AIF in respect of compliance with the said Regulation pertaining to
responsibility of members of Investment Committee. The format for waiver to be
furnished by the investors in this regard is specified in Annexure 11.
14.2. For the purpose of Regulation 20(10) of AIF Regulations, consent of the
investors of the AIF or scheme may not be required for change in ex-officio
external members (who represent the sponsor, sponsor group, manager group
or investors, in their official capacity), in the investment committee set up by the
Manager.
14.3. While processing applications for registration of AIFs and launch of new
schemes, it has been observed that the Manager of AIF often proposes to set
up an Investment Committee with the mandate to provide investment
recommendations or advice to the Manager. In some applications, the
Investment Committee is mandated to approve the investment decisions of the
AIF. Such Investment Committees may consist of internal members
(employees, directors or partners of the Manager) and/ or external members.
In this regard, SEBI has written to Government and RBI seeking clarity on the
applicability of clause (4) of Schedule VIII under Foreign Exchange
Management (Non-debt Instruments) Rules, 2019, to investment made by an
AIF whose Investment Committee approves investment decisions and consists
of external members who are not ‘resident Indian citizens’.
14.4. Pending clarification as mentioned at Para 14.3 above, the applications for
registration of AIFs and launch of new schemes shall be dealt with as under:
(i) The applications wherein Investment Committee proposed to be
constituted to approve investment decisions of AIF includes external
members who are ‘resident Indian citizens', shall be duly processed.
(ii) The applications wherein Investment Committee proposed to be
constituted to approve investment decisions of AIF includes external
members who are not ‘resident Indian citizens’, shall be considered only
after receipt of clarification as stated in Para 14.3 above.
41 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021 and SEBI circular No.
SEBI/HO/IMD/DF6/CIR/P/2020/209 dated October 22, 2020
Page 36 of 113
Chapter 15 – Reporting by AIFs
15.1. Reporting of investment activities by AIFs42
Under Regulation 28 of AIF Regulations, the Board may at any time call upon
the Alternative Investment Fund to file such reports, as the Board may desire,
with respect to the activities carried on by the Alternative Investment Fund. In
this regard, the following reporting requirement is specified:
15.1.1. All AIFs shall submit report on their activity as an AIF to SEBI on quarterly
basis within 10 calendar days from the end of each quarter in the formats as
specified in Annexure 12. Further, Category III AIFs shall also submit report
on leverage undertaken, on quarterly basis in the formats as specified in
Annexure 13.
15.1.2. AIFs shall submit these reports online through SEBI intermediary Portal.
15.2. Compliance Test Report (CTR)43
15.2.1. At end of financial year, the manager of an AIF shall prepare a compliance
test report on compliance with AIF Regulations and circulars issued
thereunder in the format as specified in the Annexure 14.
15.2.2. The CTR shall be submitted within 30 days from the end of the financial
year, to
(i) the trustee and sponsor, in case the AIF is a trust;
(ii) the sponsor, in case of AIF set up in the form other than a trust.
15.2.3. In case of any observations/comments on the CTR, the trustee/sponsor
shall intimate the same to the manager within 30 days from the receipt of
the CTR. Within 15 days from the date of receipt of such
observations/comments, the manager shall make necessary changes in the
CTR, as may be required, and submit its reply to the trustee/sponsor.
15.2.4. In case any violation of AIF Regulations or circulars issued thereunder is
observed by the trustee/sponsor, the same shall be intimated to SEBI as
soon as possible.
42 SEBI circular No. SEBI/HO/IMD/IMD-I/DOF6/CIR/2021/549 dated April 07, 2021.
43 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 37 of 113
15.3. Term Sheet - Angel Funds44
15.3.1. Angel funds may launch schemes subject to filing of a Term Sheet in the
format as specified in Annexure 15.
15.3.2. Such Term Sheet shall contain material information regarding the scheme.
15.3.3. Such Term Sheet shall be filed with the Board within ten days of launching
the scheme.
44 SEBI Circular No. CIR/IMD/DF1/102/2018 dated June 29, 2018
Page 38 of 113
Chapter 16 – Performance Benchmarking of AIFs45
16.1. Based on the request of the industry, it was considered appropriate that an
industry benchmark be developed to compare the performance of AIF industry
against other investment avenues, as well as global investment opportunities.
16.2. As the industry needs the flexibility to showcase its performance based on
different criteria and benchmarking of performance of AIFs will help investors in
assessing the performance of the AIF industry, it was decided to introduce:
a) Mandatory benchmarking of the performance of AIFs (including Venture
Capital Funds) and the AIF industry.
b) A framework for facilitating the use of data collected by Benchmarking
Agencies to provide customized performance reports.
16.3. In this regard, the following is mandated:
16.3.1. Any association of AIFs (“Association”), which in terms of membership,
represents at least 33% of the number of AIFs, may notify one or more
Benchmarking Agencies, with whom each AIF shall enter into an agreement
for carrying out the benchmarking process.46 Association will appoint
Benchmarking Agencies and thereafter will set timeline for reporting of
requisite data to Benchmarking Agencies by all the registered AIFs.
16.3.2. The agreement between the Benchmarking Agencies and AIFs shall cover
the mode and manner of data reporting, specific data that needs to be
reported, terms including confidentiality in the manner in which the data
received by the Benchmarking Agencies may be used, etc.
16.3.3. AIFs, for all their schemes which have completed at least one year from the
date of ‘First Close’, shall report all the necessary information including
scheme-wise valuation and cash flow data to the Benchmarking Agencies
in a timely manner.
16.3.4. The form and format of reporting shall be mutually decided by the
Association and the Benchmarking Agencies.
16.3.5. If an applicant claims a track-record on the basis of India performance of
funds incorporated overseas, it shall also provide the data of the
investments of the said funds in Indian companies to the Benchmarking
Agencies, when they seek registration as AIF.
16.3.6. In the PPM, as well as in any marketing or promotional or other material,
where past performance of the AIF is mentioned, the performance versus
45 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated Feb 05, 2020
46 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/99 dated June 12, 2020
Page 39 of 113
benchmark report provided by the benchmarking agencies for such
AIF/Scheme shall also be provided.
16.3.7. In any reporting to the existing investors, if performance of the AIF/Scheme
is compared to any benchmark, a copy of the performance versus
benchmark report provided by the Benchmarking Agency shall also be
provided for such AIF/scheme.
16.4. The operational guidelines for performance benchmarking are provided at
Annexure 16.
16.5. In addition to the standard benchmark report prepared by the Benchmarking
Agencies, if any, AIF seeks customized performance reports in a particular
manner, the same may be generated by the Benchmarking Agencies, subject
to:
(i) Consent of the AIFs, whose data needs to be considered for generation of
the customized performance report.
(ii) Terms and conditions, including fees, decided mutually between the
Benchmarking Agencies and the AIF.
16.6. The requirements as mentioned at para no.16.2 to 16.5 above shall not apply
to Angel Funds registered under sub-category of Venture Capital Fund under
Category I - AIF.
Page 40 of 113
Chapter 17 – Investor Charter and Disclosure of complaints by AIFs47
With a view to providing relevant information to investors about the various activities
pertaining to AIFs, an Investor Charter has been prepared by SEBI. In this regard, it is
specified as under:
17.1. The Investor Charter is a brief document containing details of services provided
to investors, details of grievance redressal mechanism, responsibilities of the
investors etc., at one single place, in lucid language for ease of reference.
17.2. In this regard, all AIFs shall take necessary steps to bring the Investor Charter,
as per Annexure 17, to the notice of their investors by disclosing Investor
Charter in the Private Placement Memorandum (PPM).
17.3. Additionally, in order to bring about further transparency in the Investor
Grievance Redressal Mechanism, data on investor complaints received against
AIFs and each of their schemes and redressal status thereof shall be disclosed
by all AIFs as per format at Annexure 18, as a separate chapter in the PPM.
17.4. For effective monitoring, AIFs shall maintain data on investor complaints as per
Annexure 18, which shall be compiled latest within 7 days from the end of
quarter.
17.5. These disclosure requirements are in addition to the existing requirements
pertaining to the investor grievance handling mechanism under various
Regulations, circulars and directions, issued by SEBI.
47 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF9/P/CIR/2021/682 dated December 10, 2021
Page 41 of 113
Chapter 18 - Collection of stamp duty on issue, transfer
and sale of units of AIFs48
18.1. Government vide Gazette notification S.O.116(E) dated January 08, 2020 has
notified the “Registrars to an Issue and/or Share Transfer Agents” (RTA)
registered under the Securities and Exchange Board of India (Registrars to an
Issue and Share Transfer Agents) Regulations, 1993 as a “depository” for the
limited purposes of acting as a “collecting agent” under the Indian Stamp Act,
1899 and the Rules made thereunder, only in case of instruments of transaction
otherwise than through a recognized stock exchange or depository.
18.2. In this regard, AIFs have been mandated to comply with the applicable
provisions of the Indian Stamp Act, 1899 and the Rules made thereunder
regarding collection of stamp duty on sale, transfer and issue of units of AIFs
with effect from July 01, 2020.
18.3. RTA appointed by AIFs shall collect the stamp duty on issue, transfer and sale
of units of AIFs as stated in para 18.1 and 18.2 above, in compliance with the
applicable provisions of the Indian Stamp Act, 1899 and the Rules made
thereunder.
18.4. As regards transactions (issue, transfer and sale of units of AIFs in demat mode)
through recognized Stock Exchange or Depository as defined under Securities
Contract (Regulation) Act, 1956 and Depositories Act, 1996 respectively, the
respective Stock Exchange/authorized Clearing Corporation or a Depository is
empowered to collect stamp duty as per the amended Indian Stamp Act, 1899
and the Rules made thereunder.
48 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/113 dated June 30, 2020
Page 42 of 113
Chapter 19 – Change in Sponsor and/or Manager or Change in control of
Sponsor and/or Manager of AIF
19.1. Fee for change in control of manager/sponsor or change in
manager/sponsor of AIFs49:
In terms of Regulation 20(13) of AIF Regulations, in case of change of Sponsor
or Manager, or change in control of the AIF, Sponsor or Manager, prior approval
from the Board shall be taken by the AIF, subject to levy of fees and any other
conditions as may be specified by SEBI from time to time. In this regard, the
following is specified:
19.1.1. A fee equivalent to the registration fee applicable to the respective category
/ sub-category of the AIF, shall be levied in case of change in control of
manager/sponsor and in case of change in manager/sponsor. The cost paid
towards such fee by manager/sponsor shall not be passed on to the
investors of the AIF in any manner.
19.1.2. In case change in control of manager/change of manager and change in
control of sponsor/change of sponsor of an AIF is proposed simultaneously,
aforesaid fee equivalent to single registration fee shall be levied.
19.1.3. The aforesaid fee shall not be levied in the following cases for change in
sponsor or change in control of sponsor:
(i) The manager is acquiring control in or replacing the sponsor and
(ii) Exit of sponsor(s) in case of AIF having multiple sponsors.
19.1.4. The aforesaid fee shall be paid within 15 days of effecting the proposed
change in manager/sponsor or change in control of manager/sponsor.
19.1.5. In case of the applications pending with SEBI as on November 17, 2022, for
change in control of manager/sponsor or change in manager/sponsor, the
requirement of fee shall be applicable only in those applications where none
of the schemes of AIFs managed/sponsored by manager/sponsor had
declared their First Close.
19.1.6. The prior approval granted by SEBI in this regard shall be valid for a period
of 6 months from the date of SEBI communication for the approval.
19.1.7. Any change in control of manager/sponsor or change in manager/sponsor
shall be carried out in compliance with provisions specified at para 2.5.4 and
2.5.5 above.
49 SEBI circular no. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
Page 43 of 113
19.2. Change in control of Sponsor and/or Manager of AIF involving scheme of
arrangement under Companies Act, 201350
To streamline the process of providing approval to the proposed change in
control of the Sponsor and/or Manager of the AIF involving scheme of
arrangement which needs sanction of National Company Law Tribunal (“NCLT”)
in terms of the provisions of the Companies Act, 2013, following is specified:
19.2.1. The application seeking approval for the proposed change in control of the
Sponsor and/or Manager of the AIF under Regulation 20(13) of AIF
Regulations shall be filed with SEBI prior to filing the application with the
NCLT;
19.2.2. Upon being satisfied with compliance of the applicable regulatory
requirements, in-principle approval will be granted by SEBI;
19.2.3. The validity of such in-principle approval shall be three months from the date
of issuance, within which the relevant application shall be made to NCLT;
19.2.4. Within 15 days from the date of order of NCLT, applicant shall submit the
following documents to SEBI for final approval:
(i) Application for the final approval;
(ii) Copy of the NCLT Order approving the scheme;
(iii) Copy of the approved scheme;
(iv) Statement explaining modifications, if any, in the approved scheme
vis-à-vis the draft scheme and the reasons for the same; and
(v) Details of compliance with the conditions/ observations mentioned in
the in-principle approval provided by SEBI.
50 SEBI Circular No. SEBI/HO/IMD-1/DF9/CIR/2022/032 dated March 23, 2022
Page 44 of 113
Annexure 1
Template for PPM of AIFs raising funds under Category I and Category II
The template for PPM of AIFs raising funds under Category I and Category II is
provided at Annexure 1 here.
Page 45 of 113
Annexure 2
Template for PPM of AIFs raising funds under Category III
The template for PPM of AIFs raising funds under Category III is provided at
Annexure 2 here.
Page 46 of 113
Annexure 3
Format for Due Diligence Certificate to be submitted at the time of filing
Placement Memorandum with SEBI
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sir / Madam,
Sub.: Filing of draft placement memorandum of (name of scheme), scheme
of (name of AIF/proposed AIF)
On the basis of examination of draft placement memorandum and supporting
documents submitted by AIF/proposed AIF, discussion with AIF/proposed AIF,
its manager, sponsor, trustee, etc., we confirm that:
1. We have independently exercised due-diligence regarding information
given in the placement memorandum, including the veracity and
adequacy of disclosure made therein.
2. The AIF, its sponsor and manager are fit and proper persons based on
the criteria specified in Schedule II of the Securities and Exchange Board
of India (Intermediaries) Regulations, 2008. None of the intermediaries
named in the placement memorandum have been debarred from
functioning by any regulatory authority.
3. All the material disclosures in respect of the fund raising, investment by
the scheme and management thereof have been made in the placement
memorandum and are based on latest available information.
4. We have satisfied ourselves that the proposed activities of the scheme
are bona fide, fall within the objectives of the fund as specified in the
Articles of Association or Trust Deed or Partnership Deed of the AIF and
are to meet the stated investment objective.
5. The disclosures made in the placement memorandum are true, fair and
necessary to enable the investors to make an informed decision with
respect to the investment in the proposed scheme and such disclosures
are in accordance with the requirements of Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012,
Page 47 of 113
circulars, guidelines issued thereunder and other applicable legal
requirements.
6. We have satisfied ourselves about the capability of the sponsor or
manager to fulfil the requirement of maintaining continuing interest in the
scheme as per Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012.
PLACE:
DATE:
Signature of authorised signatory of Merchant Banker
Name/designation of the authorised signatory, Name of Merchant Banker
Enclosed:
1. Annexure A - Details of disclosures in the placement memorandum with
respect to compliance with provisions of Securities and Exchange Board of
India (Alternative Investment Funds) Regulations, 2012, applicable to the
proposed scheme
2. Annexure B - Information with respect to disclosures in the placement
memorandum, to be submitted along with the due diligence certificate
Page 48 of 113
Annexure A - Details of disclosures in the placement memorandum with respect
to compliance with provisions of Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012, applicable to the proposed
scheme
S. Regulation Contents of Section/subsection (along with page
No. Number the Regulation number) of the placement memorandum
where the Regulation has been complied
with.
1. ---
2. ----
Note:
Regulations which are not applicable to a particular category of AIF may not be
included.
Page 49 of 113
Annexure B - Information with respect to disclosures in the placement
memorandum, to be submitted along with the due diligence certificate
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of placement
memorandum
wherever applicable)
1. Whether the information submitted in the
placement memorandum is consistent with the
information submitted in Form A as specified
under First schedule of AIF Regulations
2. Whether adequate disclosures are made in all
sections and subsections of the placement
memorandum in line with template placement
memorandum provided in para 2.1.3 of SEBI
Master Circular for AIFs
3. Whether the scheme seeks waiver (as per para If yes, confirm whether it
2.4.4 of SEBI Master Circular for AIFs) from is disclosed that each
requirement of placement memorandum as per investor shall commit a
template prescribed in para 2.1.3 of SEBI minimum capital
Master Circular for AIFs contribution of 70 crore
rupees and provide a
waiver from the
requirement of
placement
memorandum in
prescribed template.
4. Whether it is verified that information provided
for a particular term is consistent across
different sections of the placement
memorandum
5. Whether there are any clauses in the If yes, also highlight such
placement memorandum which affect the pro- clauses
rata rights of each investor in each investment
of the scheme
6. Whether the investor(s) has/have any role in
approving investment decisions of the scheme
7. Whether it is provided that the scheme does not
propose to engage in lending activity, or
extending guarantee for investee company
Page 50 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of placement
memorandum
wherever applicable)
8. Whether the sections ‘Investment objective,
strategy and process’, ‘Governance structure’
and ‘principal terms of the fund/scheme’
contain all material information
9. Whether it is provided in the placement
memorandum that terms of contribution/
subscription agreement shall be in line with the
terms of the placement memorandum
10. Whether type of instruments proposed for If yes, provide the list of
temporary deployment of funds is in line with instruments proposed
applicable provision of AIF Regulations for temporary
deployment of funds
Whether the scheme proposes to invest in such
instruments as part of primary investment
objective of the scheme also
In case of Category III AIFs, whether the
scheme proposes to invest in such instruments
also to provide applicable margin to recognized
stock exchanges
11. Whether maximum duration for such temporary If yes, mention the
deployment of funds is disclosed duration
12. Whether the scheme intends to invest in units If yes, confirm whether
of AIFs necessary disclosures
have been made in line
with Chapter 8 of SEBI
Master Circular for AIFs
13. Whether names of key management personnel
are disclosed in the placement memorandum in
line with para 13.1.2 and 13.1.3 of SEBI Master
Circular for AIFs
14. Whether it is verified that all members of key
investment team are employees or partners or
directors (as applicable) of the manager
Page 51 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of placement
memorandum
wherever applicable)
15. Whether it is verified that the key investment Name(s) of qualifying
team satisfies the experience and professional member(s) to be
qualification criteria provided under AIF provided
Regulations
16. Whether the manager has constituted or If no, also inform
proposes to constitute an investment whether any committee
committee (by whatever name called) to has been set up to
approve decisions of the scheme provide non- binding
recommendations on
investment proposals
17. If the investment committee (as specified in
Regulation 20(7) of AIF Regulations) is
approving authority, whether:
(a) it is stated that the functioning of the
investment committee shall be in
compliance with applicable provisions of AIF
Regulations.
(b) the terms of reference of the investment
committee are disclosed in the placement
memorandum
18. Whether it is disclosed that
delegation/outsourcing of any activity of the AIF
to a third party will be in compliance with SEBI
circular no. CIR/MIRSD/24/2011 dated Dec 15,
2011
19. Under section ‘Track Record of Manager’,
whether there is provision for disclosure of
performance benchmark disseminated by a
benchmarking agency in terms of Chapter 16 of
SEBI Master Circular for AIFs
20. Whether the eligibility criteria for each class of
unit is clearly specified and differentiated
21. Whether specific instances are disclosed,
under which an investor may be excluded or
excused from a particular investment
Page 52 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of placement
memorandum
wherever applicable)
22. Whether the list of commercial and non- If yes, provide the list of
commercial terms, on which differential rights terms
may be offered through side letter arrangement
or issuance of additional class of units, is
disclosed
23. Whether it is disclosed that the differential
rights, if any, attached to any classes of units or
given through side letters, shall not have any
adverse impact on the economic or any other
rights of other investors
24. Whether timelines for making warehoused If yes, state the
investment and transferring such investment timelines for
are disclosed warehousing and
transferring of the
warehoused investment
25. Whether timelines for intimation regarding If yes, state the timelines
warehoused investments to existing and for such intimation
prospective investors, are disclosed
26. Whether it is provided that a defaulter, i.e.,
investor who defaults in bringing drawdown
amount within the timeline specified, can no
longer participate in subsequent investments of
the scheme till the default is cured and that
there are clauses providing steps to be taken
against the defaulting investor
27. Whether specific instances are disclosed under
which in-specie distribution / distribution in kind
may be made
28. Whether it is disclosed that co-investment by
investors of AIF shall be made in compliance
with applicable provisions of AIF Regulations
and PMS Regulations
29. Whether it is disclosed that the manager will
establish written down conflict management
policy and whether timeline for adopting such
policy has been provided
Page 53 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of placement
memorandum
wherever applicable)
30. Whether the distribution waterfall illustrations If yes, whether it is
have been provided for different scenarios verified that the
illustrations are accurate
and complete
31. Whether necessary disclosure has been made Specify pending
regarding the disciplinary history in terms of enforcement
para 2.1.5 and 2.1.6 of SEBI Master Circular for proceedings initiated by
AIFs SEBI, if any
Note:
(i) If any of the points above is not applicable to the proposed scheme, it may be
mentioned as “not applicable”.
(ii) Merchant banker may also provide, in similar format, additional material
information which is not covered in the above table and any other information which
is necessary to be highlighted or requires specific attention.
Page 54 of 113
Annexure 4
Template for waiver of compliance with SEBI prescribed template of PPM and
audit compliance with the terms of PPM
To
(Name of Manager)
Manager of (Name of AIF/ Scheme)
Sub: Waiver of compliance with SEBI template for PPM and waiver of audit of
compliance with the terms of PPM
We are considering to invest in (Name of the AIF/Scheme) managed by (Name of the
Manager). We understand that (Name of the AIF) is registered with Securities and
Exchange Board of India (SEBI) and as such is required to provide a Private Placement
Memorandum in the template prescribed by SEBI, which has two parts viz.:
Part A – Standard section for minimum disclosure
Part B – Supplementary section to allow flexibility to the Fund in order to provide
any additional information
Further, SEBI also prescribes an audit of compliance of the AIF with the terms of PPM,
as specified by SEBI from time to time.
We confirm that we have the independent ability and mechanism to carry out due
diligence of our investments, as well as to monitor the operations and compliance with
the terms of PPM of the Funds in which we invest; including (Name of the AIF/ Scheme),
to the extent required by us.
Accordingly, in terms of para 2.4.4 of the Master Circular for AIFs, we hereby grant
waiver to (name of the AIF) from the requirement of providing PPM in the template
format as prescribed by SEBI and also grant waiver to (Name of the AIF/ Scheme) from
the requirement of conducting an annual audit of compliance with the terms of the PPM
furnished to us.
Notwithstanding the waiver granted herein, we understand that (name of the
AIF/Scheme) is not permitted, under SEBI Regulations, to sign a Contribution
agreement/ Subscription agreement (by any name as it may be called) that is, in any
way, in contradiction with the terms of the PPM or goes beyond the terms of the PPM
furnished to us.
(Signed by two authorized signatories of the investor)
****
Page 55 of 113
Annexure 5
Format for Due Diligence Certificate to be submitted while intimating changes
in terms of Placement Memorandum to SEBI
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sir / Madam,
Sub.: Intimating changes in terms of placement memorandum of (name of
scheme), scheme of (name of AIF) for FY 20_-_
On the basis of examination of updated placement memorandum and supporting
documents submitted by AIF, discussion with AIF, its manager, sponsor and trustee
etc., we confirm that:
1. We have independently exercised due-diligence regarding changes carried out in
the placement memorandum during the FY 20_-_, including the veracity and
adequacy of disclosure in the respective sections of the placement memorandum
wherein the changes have been carried out.
2. All changes carried out in the placement memorandum are based on latest
available information and are in compliance with Securities and Exchange Board
of India (Alternative Investment Funds) Regulations, 2012 and circulars issued
thereunder.
3. We confirm that, with respect to the changes made in the placement
memorandum, wherever applicable, the fund has complied with provisions of
Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012 and circulars issued thereunder.
4. The disclosures in the respective sections of the placement memorandum wherein
the changes have been carried out are true, fair and adequate and such
disclosures are in accordance with the requirements of Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012, circulars,
guidelines issued thereunder and other applicable legal requirements.
PLACE:
DATE:
Signature of authorised signatory of Merchant Banker
Name/designation of the authorised signatory, Name of Merchant Banker
Page 56 of 113
Annexure 6
Information to be submitted while filing application
for allocation of overseas investment limit
A. Details of the proposed overseas investment:
Sr. Information
Particulars Details
No. related to
a) Name of the Alternative Investment Fund
(AIF)
b) Category of the AIF
c) Registration number
Applicant and
d) Name of the scheme
1 its
e) Name and Address of the branch of the
scheme
bank through which Foreign Currency
Transaction are proposed to made
f) Date of filing of periodic investment report
on SI Portal for last quarter
a) Name of the overseas investee company
b) Country of the overseas investee
company
c) Date of Incorporation of the overseas
investee company (also enclose copy of
incorporation certificate/document of the
overseas investee company)
Overseas
d) Whether any investor of the AIF is a
2 investee
connected person of the overseas
company
investee company. If yes, provide details
of the investor and also the said
investor’s pro-rata share in the proposed
investment.
e) In case of Angel Fund, the number of
investors participating in the proposed
overseas investment
a) Type of instrument(s) in which the
investment is proposed
b) Nature of investment (Primary
Details of
3 subscription,
investment
secondary
purchase,
etc.)
Page 57 of 113
Sr. Information
Particulars Details
No. related to
c) Amount proposed to be invested (in
USD)
d) Amount invested in previous overseas
investments (in USD)
e) Investable corpus of the scheme of the
AIF (in INR)
B. Details of overseas investments made by the Scheme in the past:
If
yes,
Name Amoun Date of Wheth
Date Amoun Date
of t Amou Date of reportin er the
of t Amo of
overse allocatent Date reportin g of the inves
S. SEBI surren unt Date repo
as d by invest of g of amoun tment
N com d recei of rting
investe SEBI ed investinvestm t is
o. m- ered ved sale/ of
e (in (in ment ent to surrend sold/
unic (in (in dives the
compa USD) USD) SEBI ered to dives
ation USD) USD tment sale/d
ny SEBI ted
) ivest
ment
C. Undertaking to be submitted by the Trustee/Board/Designated Partners of
the AIF (as applicable depending on the form of AIF):
We have carried out independent due diligence with respect to the proposed
investment in [name of the overseas investee company] by [name of the
scheme and the AIF] and we are satisfied that –
(a) the proposed overseas investment transaction is bona fide in nature,
(b) the proposed overseas investment is consistent with the investment
objective of the scheme,
(c) the proposed overseas investment is in compliance with the
regulatory frameworks for overseas investment by AIFs.
D. Undertaking to be submitted by the Manager of the AIF:
1. The manager has exercised due diligence with respect to the investment
decision.
Page 58 of 113
2. The proposed investment is in [name of instrument], which is an
equity/equity linked instrument.
3. [name of the overseas investee company] is an offshore venture capital
undertaking i.e. it is a foreign company whose shares are not listed on any
of the recognized stock exchange in India or abroad.
4. [name of the overseas investee company] is incorporated in a country
whose securities market regulator is a signatory to the International
Organization of Securities Commission’s Multilateral Memorandum of
Understanding (Appendix A Signatories) or a signatory to the bilateral
Memorandum of Understanding with SEBI.
5. [name of the overseas investee company] is not incorporated in a country
identified in the public statement of Financial Action Task Force (FATF) as
–
(a) a jurisdiction having a strategic Anti-Money Laundering or Combating
the Financing of Terrorism deficiencies to which counter measures
apply; or
(b) a jurisdiction that has not made sufficient progress in addressing the
deficiencies or has not committed to an action plan developed with
FATF to address the deficiencies.
6. The AIF shall not invest in Joint venture/Wholly Owned Subsidiary while
making overseas investments.
7. The AIF shall adhere to to FEMA, 1999, its Rules, Regulations and
Directions issued by the Government/ RBI from time to time
8. The AIF shall comply with all requirements under RBI guidelines on
opening of branches/subsidiaries/Joint venture /undertaking investment
abroad by NBFCs, where more than 50% of the funds of the AIF has been
contributed by a single NBFC.
9. In case the AIF transfers/sells the invested stake in [name of the overseas
investee company] to any entity, it shall be ensured that the entity is
eligible to make overseas investments, as per the extant FEMA guidelines.
Page 59 of 113
Annexure 7
Information with respect to sale/divestment of overseas investment
Sr. Information Particulars Details
No. related to
a) Name of the AIF
1 Details of AIF b) Category of the AIF
c) Registration number
a) Date of filing of application with SEBI for
allocation of overseas investment limit for
the said investment
b) Application number provided in SEBI
Details of Intermediary portal
Investment
2 c) Name of the overseas investee company
which has been
and country of incorporation
sold/divested
d) Date of investment
e) Type of securities/instruments purchased
f) Amount invested in the overseas
investee company (in USD Million)
a) Date of receipt of sale/divestment
proceeds
Details of
3 b) Amount received (in USD Million)
sale/divestment
c) Proportionate cost of investment in case
of partial sale/divestment (in USD Million)
Page 60 of 113
Annexure 8
Modalities of Accreditation
1. Eligibility Criteria for Accredited Investors
1.1. The following persons shall be eligible to be considered as Accredited Investors:
(i) Individuals, HUFs, Family Trusts and Sole Proprietorships, which meet the
criteria as under:
(a) Annual Income >= 2 Crore rupees; OR
(b) Net Worth >= 7.5 Crore rupees, out of which at least 3.75 Crore rupees
is in the form of financial assets; OR
(c) Annual Income >= 1 Crore rupees + Net Worth >= 5 Crore rupees, out
of which at least 2.5 Crore rupees is in the form of financial assets;
(ii) Partnership Firms set up under the Indian Partnership Act, 1932 in which
each partner independently meets the criteria for accreditation.
(iii) Trusts (other than family trusts) with net worth greater than or equal to 50
Crore rupees.
(iv) Body Corporates with net worth greater than or equal to 50 Crore rupees.
1.2. For the purpose of accreditation, eligibility criteria shall be reckoned based on
the documents as specified in Annexure A given below.
1.3. In case of accreditation of individual investors, HUFs and Sole Proprietorships,
the value of the primary residence of the individual, Karta of HUF and the Sole
Proprietor respectively, shall not be considered for calculation of net worth.
1.4. In case of investments held jointly by more than one individual, the following
conditions shall apply for eligibility as AI:
(i) Where the joint holders are parent(s) & child(ren), at least one person
should independently fulfill the eligibility criteria for AI.
(ii) Where the joint holders are spouses, their combined income/ net worth
should meet the eligibility criteria for AI.
1.5. For the purpose of reckoning eligibility criteria, net worth of Body Corporates
shall be calculated as under:
Net worth = (Capital + free reserves) - (Accumulated losses + deferred
expenditure not written off)
1.6. For the purpose of reckoning eligibility criteria, net worth of Trusts shall be
calculated as under:
Page 61 of 113
Net worth = (Book value of all assets, other than intangible assets) - (Book value
of total liabilities)
1.7. For Body Corporates and Trusts, eligibility criteria for accreditation shall be
considered on the basis of the following:
(a) Financial information as per statutory audit; or
(b) Financial information as per audit by the statutory auditor as on a date during
the financial year in which application is made (if furnished).
1.8. The eligibility of foreign investors to be accredited shall be determined on the
basis of the rupee equivalent of their income and/ or net worth as applicable.
2. Procedure for Accreditation
2.1. For accreditation, the prospective AI (“Applicant”) shall make an application to
the Accreditation Agency in the manner specified by the Accreditation Agency.
Detailed documentation required for accreditation is provided at Annexure A
given below.
2.2. Accreditation Agency shall verify that, at the time of accreditation, the Applicant
is ‘fit and proper’ to participate in the securities market, including absence of any
convictions or restraint orders, not being a wilful defaulter, etc.
2.3. The Accreditation Agency shall issue a certificate to the Applicant as an AI
(“Accreditation Certificate”). Each Accreditation Certificate shall have a unique
accreditation number, name of the Accreditation Agency, PAN of the Applicant
and validity of accreditation (start date and end date).
3. Validity of Accreditation
3.1. If the Applicant meets the eligibility criteria as under para 1 above for
accreditation for preceding one year, the accreditation shall be valid for a period
of one year from the date of such accreditation.
3.2. If the Applicant consistently meets the said eligibility criteria for accreditation in
each of the preceding three years, the accreditation shall be valid for a period of
two years from the date of such accreditation.
4. Procedure to avail benefits linked to accreditation
4.1. Prospective investors shall, inter-alia, submit a copy of the Accreditation
Certificate and an undertaking to the investment provider (i.e. provider of
securities market product or service) to the effect that:
Page 62 of 113
(a) The prospective investor wishes to avail benefits under the AI framework
(“Consent”).
(b) The prospective investor has the ability to bear the financial risks associated
with the investment.
(c) The prospective investor has the necessary knowledge and means to
understand the features of the Investment Product, including the risks
associated with the investment.
(d) The prospective investor is aware that the investment product is meant for
AIs and may not be subject to the same regulatory oversight as over
investment products meant for investors other than AI.
4.2. The Investment provider shall independently verify the status of accreditation of
the prospective investor from the concerned Accreditation Agency. Further,
investment providers may obtain additional undertakings from prospective
investors, provided they do not dilute or contravene the undertakings in terms of
Para 4.1 above.
4.3. Prior to entering into a client agreement with an AI, the investment provider shall
disclose to the AI, details of regulatory concessions available for the proposed
investment, and the relevant conditions applicable under the AI framework.
4.4. The client agreement shall, inter-alia, provide the following:
(i) details of regulatory concessions agreed upon between the investor and
the investment provider, and the conditions for availing the same, and
(ii) consequences, if any, in the event of the investor becoming ineligible to
be an AI during the tenure of the said agreement.
5. Flexibility to investors to withdraw ‘Consent’
5.1. Investors shall have the flexibility to withdraw their ‘Consent’ and discontinue
benefits of accreditation, subject to the following:
(a) An investor who withdraws ‘Consent’ after availing the benefit of lower ticket
size shall be required to increase the investment to the minimum amount
that is stipulated under the applicable regulatory framework for the
particular investment product, within the timeframe specified in the client
agreement.
(b) If an investor who has availed concessions to the regulatory framework
withdraws the ‘Consent’ furnished to the investment provider before the
expiry of the client agreement, the investments already made shall be
‘grandfathered’ i.e. such investments shall continue to be reckoned as
investments by an AI. With effect from the date of withdrawal of consent,
any further transaction shall be in accordance with the applicable regulatory
framework.
Page 63 of 113
5.2. Investors in pooled investment products which are launched exclusively for AIs,
in which concessions to regulatory framework have been availed, shall not have
the flexibility to withdraw their Consent.
5.3. The client agreement shall, inter-alia, provide the modalities for withdrawal of
‘Consent’ and consequences of the investor withdrawing the ‘Consent’.
Annexure A - List of Documents to be submitted by Applicant for accreditation
The Applicant shall furnish self-certified copies of the following documents:
Information Documents to be submitted
In case of Individual / HUF
Proof of Identity (a) Copy of PAN Card.
(b) Copy of Aadhaar Card or Copy of Valid Passport.
Proof of financial (a) Copies of Income Tax Return(s) of preceding one
information or three financial years, depending on desired
validity of accreditation
(Number of years for (b) Certificate from practicing chartered accountant
which financial stating net worth as on March 31 of one or three
information is financial years preceding the date of application
provided shall (c) Certificate from practicing chartered accountant
determine the validity stating net worth as on the date of application.
of the accreditation) (optional)
(Calculation of Net worth to be given as an
Annexure to the certificate.)
Proof of basis of (a) Proof of ‘ready reckoner rate’ applicable to real
valuation of assets estate assets considered for calculation of net
worth.
(as applicable) (b) Copy of demat account statement
(c) Any other document as required.
Undertakings Declaration from Applicant that:
(a) The Applicant is not a wilful defaulter.
(b) The Applicant is not a fugitive economic offender.
(c) The Applicant is not debarred from the securities
market as on the date of application.
(d) In case of a Non Resident Indian or foreign investor,
confirmation that he or she has not been restricted
Page 64 of 113
Information Documents to be submitted
from accessing securities market by the country of
jurisdiction where he or she resides.
(e) The submissions made to the Accreditation Agency
are true and correct and if found incorrect, the
Accreditation Agency reserves the right to reject the
application or withdraw the accreditation, as
applicable.
Other Documents Any other document as specified by the Accreditation
Agency
In case of Body Corporates
Authorization to (a) Certified copy of Board Resolution to apply for
seek accreditation accreditation
Proof of Identity (a) Copy of PAN card
(b) Document of Incorporation
Proof of financial (a) Copies of Income tax return(s) of one or three
information financial years preceding the date of application.
(b) Copies of audited Financial Statements of one or
(Number of years for three financial years preceding the date of
which financial application.
information is (c) Certificate from practicing chartered accountant
provided shall stating net worth as on March 31 of one or three
determine the validity financial years preceding the date of application.
of the accreditation) (Working of Net worth to be given as Annexure to
the certificate)
(d) Audited financial statements prepared by the
statutory auditor for the current date/ period
(optional)
(e) Certificate from practicing chartered accountant
stating net worth as on the date of application.
(optional)
Undertakings Declaration that:
(To be provided by (a) The Applicant or its promoters/partners or directors
Managing Director/ are not wilful defaulters.
Designated Partner/ (b) The promoters/partners or directors of the
authorized person) Applicant are not fugitive economic offenders.
(c) The Applicant is not debarred from the securities
market as on the date of application.
(d) In case of a foreign investor, confirmation that it has
not been restricted from accessing securities
Page 65 of 113
Information Documents to be submitted
market by the country of jurisdiction where it is
incorporated.
(e) The submissions made to the Accreditation Agency
are true and correct and if found incorrect, the
Accreditation Agency reserves the right to reject the
application or withdraw the accreditation, as
applicable.
Other Documents Any other document as specified by the Accreditation
Agency
In case of Trusts
Proof of Identity (a) Copy of PAN card.
(b) Copy of registered Trust Deed.
Proof of financial (a) Copies of Income tax return(s) of one or three
information financial years, preceding the date of application.
(b) Copies of audited Financial Statements of one or
(Number of years for three financial years preceding the date of
which financial application.
information is provided (c) Certificate from practicing chartered accountant
shall determine the stating net worth as on March 31 of one or three
validity of the financial years preceding the date of application.
accreditation) (Working of Net worth to be given as Annexure to
the certificate)
(d) Audited financial statements prepared by the
statutory auditor for the current date/ period
(optional)
(e) Certificate from practicing chartered accountant
stating net worth as on the date of application.
(optional)
Proof of basis of (a) Statement of assets and liabilities of the Trust for
valuation of assets preceding one year or three years, depending on
desired validity of accreditation
(as applicable) (b) Proof of ‘ready reckoner rate’ applicable to real
estate assets considered for calculation of net
worth.
(c) Copy of demat account statement
(d) Any other document as required.
Undertakings (a) The Applicant/its beneficiaries/Trustee(s) are not
wilful defaulters.
(To be provided by (b) The beneficiaries of the Applicant or its Trustee(s)
Trustee/ Board of are not fugitive economic offenders.
Trustees)
Page 66 of 113
Information Documents to be submitted
(c) The Applicant is not debarred from the securities
market as on the date of application.
(d) In case of a foreign investor, confirmation that it has
not been restricted from accessing securities
market by the country of jurisdiction where it is
incorporated.
(e) The submissions made to the Accreditation Agency
are true and correct and if found incorrect, the
Accreditation Agency reserves the right to reject the
application or withdraw the accreditation, as
applicable.
Other Documents Any other document as specified by the Accreditation
Agency
***********
Page 67 of 113
Annexure 9
Format for undertaking to be submitted by CEO (or equivalent role or
position depending on the legal structure) of the manager of AIF and
compliance officer of manager of AIF
To,
Securities and Exchange Board of India
Dear Sir / Madam,
Sub: Filing of draft placement memorandum of (name of LVF scheme),
scheme of (name of AIF/proposed AIF)
Based on the placement memorandum and supporting documents submitted by
AIF/proposed AIF, we undertake that:
1. We have independently exercised due-diligence regarding information given
in the placement memorandum, including the veracity and adequacy of
disclosure made therein.
2. The AIF, its sponsor and manager are fit and proper persons based on the
criteria specified in Schedule II of the Securities and Exchange Board of India
(Intermediaries) Regulations, 2008. None of the intermediaries named in the
placement memorandum have been debarred from functioning by any
regulatory authority.
3. All the material disclosures in respect of the fund raising, investment by the
scheme and management thereof have been made in the placement
memorandum and are based on latest available information.
4. We have satisfied ourselves that the proposed activities of the scheme are
bonafide, fall within the objectives of the fund as specified in the Articles of
Association or Trust Deed or Partnership Deed of the AIF and are to meet the
stated investment objective.
5. The disclosures made in the placement memorandum are true fair and
necessary to enable the investors to make an informed decision with respect
to the investment in the proposed scheme and such disclosures are in
accordance with the requirements of Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012, circulars, guidelines
issued thereunder and other applicable legal requirements.
Page 68 of 113
6. We have satisfied ourselves about the capability of the sponsor or manager
to fulfil the requirement of maintaining continuing interest in the scheme as
per Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012.
7. We shall obtain copy of the Accreditation Certificate and an undertaking from
the prospective investor to the effect that:
a) The prospective investor wishes to avail benefits under the AI framework.
b) The prospective investor has the ability to bear the financial risks
associated with the investment.
c) The prospective investor has the necessary knowledge and means to
understand the features of the Investment Product, including the risks
associated with the investment.
d) The prospective investor is aware that the investment product is meant
for AIs and would not be subject to the same regulatory oversight as over
investment products meant for investors other than AI.
Place:
Date:
Signature: {to be signed by CEO (or equivalent role or position depending on the
legal structure) of the Manager of AIF and Compliance Officer of Manager of AIF}
Enclosed:
1. Annexure A - Details of disclosures in the placement memorandum with
respect to compliance with provisions of Securities and Exchange Board
of India (Alternative Investment Funds) Regulations, 2012, applicable to
the proposed LVF scheme.
2. Annexure B - Information with respect to disclosures in the placement
memorandum.
Page 69 of 113
Annexure A
Details of disclosures in the placement memorandum with respect to compliance
with provisions of Securities and Exchange Board of India (Alternative Investment
Funds) Regulations, 2012, as applicable, to the proposed LVF Scheme
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
1 Chapter II – Registration of Alternative
Investment Funds
3 Registration of Alternative Investment
Funds
3(1) New Fund registration
3(4)(a) Category I AIF
3(4)(b) Category II AIF
3(4)(c) Category III AIF
4 Eligibility Criteria
4(a) - Legal structure – Company;
- Trust;
- LLP
4(b) Whether prohibited from making an
invitation to public
4(c) Whether Trust Deed is Registered
4(d) Whether partnership in case of
Limited Liability Partnership is duly
incorporated and the deed is filed with
Registrar
4(e) Whether Body Corporate is set up or
established under the laws of the Central
or State Legislature and is permitted to
carry activities on AIF
4(f) AIF, Sponsor, Manager (Fit & Proper
person)
Page 70 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
4(g) (i) Key Investment team of Manager of
AIF – adequate experience
(ii) Professional qualification
4(h) Necessary Infrastructure & Manpower
4(i) - Investment objective
- Targeted investors
- Proposed corpus
- Investment style or strategy
- Tenure of the fund or scheme
4(j) Refusal of registration by the Board, if
any
7 Conditions of Certificate
8(3) Implication when registration is refused
2 Chapter III – Investment Conditions And
Restrictions
9(1) Investment Strategy
9(2) Any material alteration to fund strategy
10 Investment in Alternative Investment
Fund
10(a) Raise funds by way of issue of units
10(b) Minimum corpus
10(c) Minimum investment
Minimum investment of 1 crore to not
apply to an accredited investor
10(d) Continuing Interest
10(e) Disclosure of investment made by
Manager or Sponsor
10(f) Maximum Investors
Page 71 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
10(g) To solicit or collect funds only by way of
Private placement
11 Placement Memorandum
11(1) - Placement Memorandum / Information
Memorandum
11(2) - Information about
a) AIF
b) Manager
c) Background of key investment team of
Manager
d) Targeted investors
e) Fees & all other expenses proposed to
be charged
f) Tenure of AIF/Scheme
g) Condition/Limits on redemption
h) Investment strategy
i) Risk management tool & parameters
employed
j) Key service providers
k) Conflict of interest & procedure to
identify and address them
l) Disciplinary history
m) Terms & conditions on which
manager offers investment service
n) Affiliation of Manager with other
intermediaries
o) Manner of winding up of AIF/Scheme
Page 72 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
p) terms of reference of the committee
constituted for approving the decisions of
the Alternative Investment Fund
q) Other information for investors to take
informed decision
12(1) Filing of PPM for launch of scheme
12(4) Timeline for declaring first close of
scheme
13 Tenure
13(1) - Category I & II AIF/scheme to be close
ended
13(2) - Category I & II AIF/Scheme to have
minimum tenure of 3 years
13(3) - Category III AIF/schemes - Whether
open ended or close ended
13(4) Calculation of tenure
13(5) - Extension of tenure
13(6) - Liquidation of AIF
14 Listing requirements, as and when made
applicable
15 General Investment Conditions
15(1)(a) - For Investment outside India
15(1)(b) - Terms of Co-investment not more
favourable than
Manager /sponsor/co-investor than AIF
15(1)(c) - Category I & II AIF
- Not more than 25% of investable funds
in an Investee
Company
Page 73 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
- Large value fund for Accredited
Investor may invest up to 50% of
investable funds in an Investee
Company
15(1)(d) Category III AIF
- Not more than 10% of investable funds
or NAV in an Investee Company
- Large value fund for Accredited
Investor may invest up to 20% of
investable funds or NAV in an Investee
Company
15 AIF not to offer their units to other AIFs if
(1)(da) they are investing in units of other AIFs
15(1)(e) Approval of 75% of investors by value for
investment in associate or units of AIF
managed by Manager, sponsor or by
Associates
15(1)(f) Investment of un-invested portion of
investable funds and divestment
proceeds pending for distribution to
investors as prescribed in Regulations
15(1)(g) AIF to act as Nominated Investor
15(1)(h) Investment by Category I and Category
II Alternative Investment Funds in the
shares of entities listed on institutional
trading platform
16 Conditions for Category I Alternative
Investment Funds
16(1)(a) Investment by Category I AIF
Page 74 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
16(1)(c) Not borrow funds & shall not engage in
leverage except for meeting temporary
requirements
16(2)(a) Venture Capital Fund to invest at least
75% of the investable funds in un-listed
equity shares or equity linked
instruments of VCU or in companies
listed or proposed to be listed on SME
exchange
16(2)(c) Venture Capital Fund to enter an
Agreement with Merchant Banker for
purpose of market making
16(2)(d) Exemption to Venture Capital funds from
certain provisions of Securities and
Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015
16(3)(a) SME Fund investment – for at least 75%
of investable funds
16(3)(b) SME Fund to enter an Agreement with
Merchant Banker for purpose of market
making
16(3)(c) Exemption to SME Fund from certain
provisions of SEBI (PIT) Regulations,
2015
16(4)(a) Social Venture Fund investment- 75% of
investable funds in un-listed securities or
partnership interest of social ventures or
social enterprises
16(4) May accept grants not less than 25 lakh
(b) rupees
Page 75 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
-Minimum amount of grant to not apply to
accredited investors:
- no profits or gains to accrue to the
provider of such grants
16(4) Grants to social ventures subject to
(c) disclosure
16(5)(a) Infrastructure Funds investment - for at
least 75% of investable funds
16(5)(b) Permissible other investments
17 Conditions for Category II Alternative
Investment Funds
17(a) Category II AIFs to invest primarily in un-
listed Companies or in units of Category
I & II AIFs
17(c) May not borrow funds & shall not
engaged in leverage except for meeting
temporary requirements
17(d) May engage in hedging subject to
guidelines as specified by the Board
17 (da) May buy or sell credit default swaps in
terms of the conditions specified by the
SEBI.
17(e) May enter into agreement with Merchant
Banker for market making
17(f) Exemption to Category II AIFs exemption
from certain provision of Securities and
Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015
18 Conditions for Category III Alternative
Investment Funds
Page 76 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
18(a) May invest in securities of listed or un-
listed Investee Companies, derivatives,
units of other Alternative Investment
Funds or complex or structured products
18(aa) May deal in goods received in delivery
against physical settlement of commodity
derivatives
18(ab) May buy or sell credit default swaps in
terms of the conditions specified by the
SEBI
18(c) May engage in leverage or borrow
subject to consent from the investors in
the fund and subject to a maximum limit,
as may be specified by the Board
3 Chapter III-A – Angel Funds
19B (2) Applicability to Angel Funds
19C Registration of Angel Funds
19D Investment in Angel Funds
19(D)(1) To raise funds by way of issue of units
19(D)(2) Minimum corpus
19(D)(3) Maximum period for accepting funds
from investor for making investment by
Angel funds and Minimum investment by
angel investor
19(D)(4) To raise funds through private placement
19E(1) Launch of scheme
19E(2) Maximum number of investors
19F(1) Investment by Angel Funds in startups
19F(2) Minimum investment by Angel Fund
Page 77 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
19F(3) Investment by Angel Fund to be locked in
for 1 year
19F(4) Angel funds to not invest in associates
19F(5) Angel funds to not invest more than 25%
of the total investments under all its
schemes in one venture capital
undertaking
19F(6) Conditions for Investment outside India
19G(1) The sponsor to ensure that the angel
investor satisfy conditions specified in
sub regulation (2) of regulation 19A
19G(2) Continuing interest
19(G)(3) The manager of the angel fund shall
obtain an undertaking from every Angel
Investor
19H Prohibition of Listing
4 Chapter III-B – Special Situation Funds
19(J) Applicability
19(K) Registration of special situation funds
19(L) Investment in special situation funds.
19(M)(1) Special situation funds shall invest only in
special situation assets and may act as a
resolution applicant under the Insolvency
and Bankruptcy Code, 2016
19(M)(2) Any investment by a special situation
fund in the stressed loan acquired under
clause 58 of the Master Direction –
Reserve Bank of India (Transfer of Loan
Exposures) Directions, 2021 as
amended from time to time shall be
Page 78 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
subject to lock-in period as may be
specified by the Board
5 Chapter IV – General Obligations And
Responsibilities And Transparency
20 General Obligations
20(1) AIF, KMPs of AIF, Trustee, Trustee
company, Directors of Trustee Company,
Designated Partners or directors of AIF,
manager and KMP of manager to abide
by Code of Conduct
20(2) The Manager and either the trustee or
trustee company or the Board of
Directors or the designated partners of
the Alternative Investment Fund to
ensure compliances by AIF with code of
conduct
20(3) AIFs to have detailed policies and
procedure to ensure that all the decisions
of the AIF are in compliance with the
provisions of these regulations, terms of
the PPM, agreements made with
investors, other fund documents and
applicable laws
20(4) AIFs to review policies and procedures
on regular basis
20(5) Manager shall be responsible for every
decision of AIF
Page 79 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
20(6) Manager shall be responsible for
ensuring that every decision of AIF is in
compliance with policies and procedures
laid down by AIF
20(7) Manager may constitute an Investment
Committee (by whatever name called), to
approve the decisions of the Alternative
Investment Fund and such constitution
shall be subject to such conditions as
specified by the Board from time to time
20(8) Investment Committee shall be
responsible for ensuring that decisions
are in compliance with policies &
procedure laid down in terms of sub
regulation 20 (3) of this regulation (Not
applicable in case the commitment to
invest is not less than 70 crore rupees
and has furnished a waiver to the AIF)
20(9) Members of Investment Committee shall
abide by Code of Conduct applicable to
them
20(10) External members of Investment
Committee not disclosed in PPM or in
Agreement shall be appointed to the
Investment Committee only with the
consent of at least 75% of the investors
by value
Page 80 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
20(11) -Sponsor/Manager to appoint registered
custodian if the corpus of AIF is more
than 500 crore rupees –Category III AIF
to appoint custodian irrespective of the
size.
-The custodian appointed by Category III
AIF shall keep the custody of the
securities and goods received in delivery
against the physical settlement of
commodity derivatives
20(12) AIF to inform SEBI in case of any
material change in information provided
at the time of application.
20(13) AIF to obtain prior approval from SEBI in
case of change in control of AIF Sponsor
or Manager or change of Sponsor or
Manager
20(14) The books of accounts of AIF to be
audited annually by a qualified auditor
20(15) Restriction on Manager to provide
advisory services
20(16) Assets and liabilities of each scheme of
an AIF to be segregated and ring-fenced
from other schemes and bank accounts
and securities accounts of each scheme
are segregated and ring-fenced
21 Conflict of Interest
21(1) Sponsor & Manager of the AIF to act in
fiduciary capacity towards its investors
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Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
21(2) Manager to establish & implement
written policies to mitigate conflict of
interest
21(3) Manager & Sponsor of AIF to abide by
high level principles on avoidance of
conflict of interest
22 Transparency: All AIFs to ensure
transparency & disclosure of information
to investors on the following
22(a) financial, risk management, operational,
portfolio, and transactional information
regarding fund investments to be
disclosed periodically to the investors
22(b) any fees ascribed or charged
22(c) Any enquiry /legal action as and when
occurred
22(d) Any material liability during the tenure of
AIF
22(e) Any breach of provisions of Placement
Memorandum or Agreement
22(f) Change in control of the Sponsor or
Manager or Investee Company
22(g) To provide on annual basis (within 180
days from the yearend) report to
investors including following information;
A) Financial information of Investee
Company
B) different Material risk as prescribed in
AIF Regulations & how they are
managed
Page 82 of 113
Wherever applicable,
mention Section/
subsection along with
page number of the
placement
S. Regulat
Contents of the Regulation memorandum where
No. ion
the Regulation has been
complied with.
Otherwise mention ‘not
applicable’ or ‘noted for
compliance’
22(h) Category III AIF to provide quarterly
report in respect of regulation 22(g)
within 60 days of end of the quarter
22(i) Any significant change in key investment
team to be intimated to investors
22(j) AIF to provide SEBI information for
systemic risk purposes
23(1) AIF to provide valuation procedure and
methodology to investors
23(2) Category I & II AIFs to undertake
valuation of investment as prescribed in
the Regulations
23(3) Category III AIFs to ensure calculation of
NAV is independent from fund
management function of AIF and
disclosure of NAV as prescribed in the
Regulations.
24 Obligation of Manager
25 Dispute Resolution- AIFs to lay down
procedure for resolution of dispute
between investors and AIFs
27 Obligation of manager to maintain record
as prescribed in AIF Regulations
28 Timely Submission of Reports to the
Board
29 Compliance to Winding up provisions
Note: This annexure may be modified in line with any amendments notified under SEBI
(AIF) Regulations, 2012 from time to time.
Page 83 of 113
Annexure B
Information with respect to disclosures in the placement memorandum
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of
placement
memorandum
wherever
applicable)
1. Whether it is stated in the placement
memorandum that the LVF scheme shall be
placed only before Accredited Investors having
valid accreditation certificate from SEBI
recognized Accreditation Agency or Deemed AIs
as per SEBI AIF Regulations.
2. Whether the information submitted in the
placement memorandum is consistent with the
information submitted in Form A as specified
under First schedule of AIF Regulations
3. Whether Sponsor and Manager of the scheme is
same as Sponsor and Manager of AIF
4. Whether adequate disclosures are made in all
sections and subsections of the placement
memorandum in line with template placement
memorandum provided in para 2.1.3 of SEBI
Master Circular for AIFs
5. Whether the scheme seeks waiver (as per para If yes, confirm
2.4.4 of SEBI Master Circular for AIFs) from whether it is
requirement of placement memorandum as per disclosed that each
template prescribed in para 2.1.3 of SEBI Master investor shall commit
Circular for AIFs a minimum capital
contribution of 70
crore rupees and
provide a waiver from
the requirement of
placement
memorandum in
prescribed template.
6. Whether it is verified that information provided for If no, highlight the
a particular term is consistent across different respective sections/
sections of the placement memorandum clauses
Page 84 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of
placement
memorandum
wherever
applicable)
7. Whether there are any clauses in the placement If yes, also highlight
memorandum which affect the pro-rata rights of such clauses
each investor in each investment of the scheme
8. Whether the investor(s) has/have any role in
approving investment decisions of the scheme
9. Whether it is provided that the scheme proposes
to engage in lending activity, or extending
guarantee for investee company
10. Whether the sections ‘Investment objective,
strategy and process’, ‘Governance structure’ and
‘principal terms of the fund/scheme’ contain all
material information
11. Whether it is provided in the placement
memorandum that terms of contribution/
subscription agreement shall be in line with the
terms of the placement memorandum
12. Whether type of instruments proposed for If yes, provide the list
temporary deployment of funds is in line with of instruments
applicable provision of AIF Regulations proposed for
temporary
Whether the scheme proposes to invest in such deployment of funds
instruments as part of primary investment
objective of the scheme also
In case of Category III AIFs, whether the scheme
proposes to invest in such instruments also to
provide applicable margin to recognized stock
exchanges
13. Whether maximum duration for such temporary If yes, mention the
deployment of funds is disclosed duration
14. Whether the scheme intends to invest in units of If yes, whether
AIFs necessary
disclosures have
been made in line with
Chapter 8 of SEBI
Page 85 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of
placement
memorandum
wherever
applicable)
Master Circular for
AIFs
15. Whether names of key management personnel
are disclosed in the placement memorandum in
line with para 13.1.2 and 13.1.3 of SEBI Master
Circular for AIFs
16. Whether it is verified that all members of key
investment team are employees or partners or
directors (as applicable) of the manager
17. Whether it is verified the key investment team Name(s) of qualifying
satisfies the experience and professional member(s) to be
qualification criteria provided under AIF provided
Regulations
18. Whether the manager has constituted or proposes If no, also inform
to constitute an investment committee (by whether any
whatever name called) to approve decisions of the committee has been
scheme set up to provide non-
binding
recommendations on
investment proposals
19. If the investment committee (as specified in
Regulation 20(7) of AIF Regulations) is approving
authority, whether:
(a) it is stated that the functioning of the
investment committee shall be in compliance
with applicable provisions of AIF Regulations.
(b) the terms of reference of the investment
committee are disclosed in the placement
memorandum
20. Whether it is disclosed that
delegation/outsourcing of any activity of the AIF to
a third party will be in compliance with SEBI
circular no. CIR/MIRSD/24/2011 dated Dec 15,
2011
Page 86 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of
placement
memorandum
wherever
applicable)
21. Under section ‘Track Record of Manager’, whether
there is provision for disclosure of performance
benchmark disseminated by a benchmarking
agency in terms of Chapter 16 of SEBI Master
Circular for AIFs
22. Whether the eligibility criteria for each class of unit
is clearly specified and differentiated
23. Whether specific instances are disclosed, under
which an investor may be excluded or excused
from a particular investment
24. Whether the list of commercial and non- If yes, provide the list
commercial terms, on which differential rights may of terms
be offered through side letter arrangement or
issuance of additional class of units, is disclosed
25. Whether it is disclosed that the differential rights,
if any, attached to any classes of units or given
through side letters, shall not have any adverse
impact on the economic or any other rights of
other investors
26. Whether timelines for making warehoused If yes, state the
investment and transferring such investment are timelines for
disclosed warehousing and
transferring of the
warehoused
investment
27. Whether timelines for intimation regarding If yes, state the
warehoused investments to existing and timelines for such
prospective investors, are disclosed intimation
28. Whether it is provided that a defaulter, i.e.,
investor who defaults in bringing drawdown
amount within the timeline specified, can no longer
participate in subsequent investments of the
scheme till the default is cured and that there are
clauses providing steps to be taken against the
defaulting investor
Page 87 of 113
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page
number of
placement
memorandum
wherever
applicable)
29. Whether specific instances are disclosed under
which in-specie distribution / distribution in kind
may be made
30. Whether it is disclosed that co-investment by
investors of AIF shall be made in compliance with
applicable provisions of AIF Regulations and PMS
Regulations
31. Whether it is disclosed that the manager will
establish written down conflict management policy
and whether timeline for adopting such policy has
been provided
32. Whether the distribution waterfall illustrations If yes, whether it is
have been provided for different scenarios verified that the
illustrations are
accurate and
complete
33. Whether necessary disclosure has been made
regarding the disciplinary history in terms of para
2.1.5 and 2.1.6 of SEBI Master Circular for AIFs
Note:
(i) If any of the points above is not applicable to the proposed scheme, it may
be mentioned as “not applicable”.
(ii) Additional material information, in similar format, may also be provided
which is not covered in the above table and any other information which is
necessary to be highlighted or requires specific attention.
Page 88 of 113
Annexure 10
Stewardship Code
Principle 1
Institutional Investors should formulate a comprehensive policy on the discharge of their
stewardship responsibilities, publicly disclose it, review and update it periodically.
Guidance
Stewardship responsibilities include monitoring and actively engaging with investee
companies on various matters including performance (operational, financial, etc.),
strategy, corporate governance (including board structure, remuneration, etc.), material
environmental, social, and governance (ESG) opportunities or risks, capital structure,
etc. Such engagement may be through detailed discussions with management,
interaction with investee company boards, voting in board or shareholders meetings,
etc.
Every institutional investor should formulate a comprehensive policy on how it intends
to fulfil the aforesaid stewardship responsibilities and disclose it publicly. In case any of
the activities are outsourced, the policy should provide for the mechanism to ensure
that in such cases, stewardship responsibilities are exercised properly and diligently.
The policy should be reviewed and updated periodically and the updated policy should
be publicly disclosed on the entity's website. A training policy for personnel involved on
implementation of the principles is crucial and may form a part of the policy.
Principle 2
Institutional investors should have a clear policy on how they manage conflicts of
interest in fulfilling their stewardship responsibilities and publicly disclose it.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should formulate
a detailed policy for identifying and managing conflicts of interest. The policy shall be
intended to ensure that the interest of the client/beneficiary is placed before the interest
of the entity. The policy should also address how matters are handled when the
interests of clients or beneficiaries diverge from each other.
The conflict of interest policy formulated shall, among other aspects, address the
following:
1. Identifying possible situations where conflict of interest may arise. E.g. in case
of investee companies being associates of the entity.
2. Procedures put in place by the entity in case such conflict of interest situations
arise which may, inter alia, include:
Page 89 of 113
a. Blanket bans on investments in certain cases
b. Having a 'Conflict of Interest' Committee to which such matters may be
referred to.
c. Clear segregation of voting function and client relations/ sales functions.
d. Policy for persons to recuse from decision making in case of the person
having any actual/ potential conflict of interest in the transaction.
e. Maintenance of records of minutes of decisions taken to address such
conflicts.
3. Periodical review and update of such policy and public disclosure.
Principle 3
Institutional investors should monitor their investee companies.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should have a
policy on continuous monitoring of their investee companies in respect of all aspects
they consider important which shall include performance of the companies, corporate
governance, strategy, risks etc.
The investors should identify the levels of monitoring for different investee companies,
areas for monitoring, mechanism for monitoring etc. The investors may also specifically
identify situations where they do not wish to be actively involved with the investee
companies e.g. in case of small investments.
The investors should also keep in mind regulations on insider trading while seeking
information from the investee companies for the purpose of monitoring.
Accordingly, the institutional investors shall formulate a policy on monitoring specifying,
inter-alia, the following:
1. Different levels of monitoring in different investee companies. E.g. companies
where larger investments are made may involve higher levels of monitoring vis-
à-vis companies where amount invested in insignificant from the point of view of
its assets under management.
2. Areas of monitoring which shall, inter-alia, include:
a. Company strategy and performance - operational, financial etc.
b. Industry-level monitoring and possible impact on the investee companies.
c. Quality of company management, board, leadership etc.
d. Corporate governance including remuneration, structure of the board
(including board diversity, independent directors etc.) related party
transactions, etc.
Page 90 of 113
e. Risks, including Environmental, Social and Governance (ESG) risks
f. Shareholder rights, their grievances etc.
3. Identification of situations which may trigger communication of insider
information and the procedures adopted to ensure insider trading regulations are
complied with in such cases.
Principle 4
Institutional investors should have a clear policy on intervention in their investee
companies. Institutional investors should also have a clear policy for collaboration with
other institutional investors where required, to preserve the interests of the ultimate
investors, which should be disclosed.
Guidance
Institutional investors should have a clear policy identifying the circumstances for active
intervention in the investee companies and the manner of such intervention. The policy
should also involve regular assessment of the outcomes of such intervention.
Intervention should be considered even when a passive investment policy is followed
or if the volume of investment is low, if the circumstances so demand.
Circumstances for intervention may, inter alia, include poor financial performance of the
company, corporate governance related practices, remuneration, strategy, ESG risks,
leadership issues, litigation etc.
The mechanisms for intervention may include meetings/discussions with the
management for constructive resolution of the issue and in case of escalation thereof,
meetings with the boards, collaboration with other investors, voting against decisions,
etc. Various levels of intervention and circumstances in which escalation is required
may be identified and disclosed. This may also include interaction with the companies
through institutional investor associations (E.g. AMFI). A committee may also be formed
to consider which mechanism to be opted, escalation of matters, etc. in specific cases.
Principle 5
Institutional investors should have a clear policy on voting and disclosure of voting
activity.
Guidance
To protect and enhance wealth of the clients/ beneficiaries and to improve governance
of the investee companies, it is critical that the institutional investors take their own
voting decisions in the investee company after in-depth analysis rather than blindly
supporting the management decisions.
Page 91 of 113
This requires a comprehensive voting policy to be framed by the institutional investors
including details of mechanisms of voting, circumstances in which voting should be
for/against/abstain, disclosure of voting, etc. The voting policy, voting decisions
(including rationale for decision), use of proxy voting/voting advisory services, etc.
should be publicly disclosed.
The voting policy shall, inter-alia, include the following:
1. Mechanisms to be used for voting (e.g. e-voting, physically attending meetings,
voting through proxy, etc.)
2. Internal mechanisms for voting including:
a. Guidelines on how to assess the proposals and take decision thereon
b. Guidelines on how to vote on certain specific matters/ circumstances
including list of such possible matters/circumstances and factors to be
considered for a decision to vote for/ against/ abstain
c. Formulation of oversight committee as an escalation mechanism in
certain cases
d. Use of proxy advisors
e. Policy for conflict of interest issues in the context of voting
3. Disclosure of voting including:
a. Periodicity of disclosure
b. Details of actual voting for every proposed resolution in investee
companies i.e. For, Against or Abstain
c. Rationale for voting
d. Manner of disclosure — e.g. in annual report to investors, quarterly basis
on website etc.
4. In case of use of proxy voting or other voting advisory services, disclosures on:
a. Scope of such services
b. Details of service providers
c. Extent to which the investors rely upon/use recommendations made by
such services
Principle 6
Institutional investors should report periodically on their stewardship activities.
Guidance
Institutional investors shall report to their clients/ beneficiaries periodically on how they
have fulfilled their stewardship responsibilities as per their policy in an easy-to-
understand format.
Page 92 of 113
However, it may be noted that the compliance with the aforesaid principles does not
constitute an invitation to manage the affairs of a company or preclude a decision of the
institutional investor to sell a holding when it is in the best interest of clients or
beneficiaries.
Institutional investors shall report periodically on their stewardship activities in the
following manner:
1. A report may be placed on website on implementation of every principle. Different
principles may also be disclosed with different periodicities. E.g. Voting may be
disclosed on quarterly basis while implementation of conflict of interest policy
may be disclosed on an annual basis. Any updation of policy may be disclosed
as and when done.
2. The report may also be sent as a part of annual intimation to its clients/
beneficiaries.
Page 93 of 113
Annexure 11
Format of waiver to be provided by the investors
To
(Name of Manager), Manager of (Name of AIF/ Scheme)
Sub: Waiver in respect of compliance with Regulation 20(8) of Securities and
Exchange Board of India (Alternative Investment Funds) Regulations, 2012
1. We are considering to invest/ have invested in (Name of the AIF/Scheme) managed
by (Name of the Manager).
2. We understand that (Name of the AIF) is registered with Securities and Exchange
Board of India (SEBI) and as such is required to comply with Regulation 20(8) of
SEBI (AIF) Regulations, 2012, which defines the responsibilities of members of
investment committee (by whatever name called), constituted by the manager to
approve decisions of the AIF.
3. We understand that (Name of Manager) has constituted/may constitute an
investment committee to approve the decisions of (Name of the AIF/Scheme).
4. In this regard, we confirm that we have the independent ability and mechanism to
carry out due diligence of our investments. Hence, in terms of para 14.1 of SEBI
Master Circular for AIFs, we hereby grant waiver to (name of the AIF) from the
requirement of compliance with Regulation 20(8) of SEBI (AIF) Regulations, 2012.
5. We understand that, by providing this waiver, the members of Investment
Committee shall not be responsible for ensuring that the decisions of the Investment
Committee are in compliance with the policies and procedures laid down in terms of
Regulation 20(3) of SEBI (AIF) Regulations, 2012.
6. We also understand that (Name of Manager), the manager of (name of the
AIF/Scheme) shall be responsible for ensuring that every decision of (Name of the
AIF/Scheme) is in compliance with the policies and procedures laid down for the
(Name of the AIF/Scheme) in terms of Regulation 20(3) of SEBI (AIF) Regulations,
2012, and other internal policies of the (name of the AIF/Scheme), as applicable.
7. Notwithstanding the waiver granted herein, if any contractual responsibility is cast
on the members of investment committee in terms of the provisions of the fund
documents, they shall not be absolved from such responsibilities.
8. Further, we understand that (Name of Manager), the manager of (name of the
AIF/Scheme) shall at all times be responsible for ensuring that the investments of
(name of the AIF/Scheme) are in compliance with the provisions of SEBI (AIF)
Regulations, the terms of the placement memorandum, agreement with the
undersigned, other fund documents and applicable laws.
(Signed by the investor or two authorized signatories of the investor)
Page 94 of 113
Annexure 12
Format for submission of report on AIFs’ activity to SEBI on a quarterly basis
All AIFs shall submit report on their activity as an AIF to SEBI on quarterly basis within
10 calendar days from the end of each quarter in the formats as specified in Annexure
12 here.
Page 95 of 113
Annexure 13
Format for submission of report on leverage undertaken by Category III AIFs to
SEBI on a quarterly basis
Category III AIFs shall submit report on leverage undertaken, on quarterly basis in the
format as specified in Annexure 13 here.
Page 96 of 113
Annexure 14
Format of Compliance Test Reports (CTRs)
Name of the AIF:
Category:
CTR for the Year:
Contact details of the compliance officer:
Sr. No Compliance with respect to Details of Any other
compliance comments
1. Regulation 7(1)(c):
During the year, whether the
AIF has informed the Board in
writing, if any information or
particulars previously
submitted to the Board are
found to be false or
misleading in any material
particular or if there is any
material change in the
information already
submitted.
2. Regulation 9(2):
Whether there has been any
material alteration to the fund
strategy during the year and
in such case, whether
consent of atleast two-thirds
of unit holders by value of
their investment in the AIF
has been obtained.
3. Regulation 10(b):
Whether each scheme of the
AIF has corpus of atleast
twenty crore rupees;
4. Regulation 10(c):
Whether the AIF has added
any new investors during the
year. If yes, whether the AIF
has accepted from an
investor, an investment of
value not less than one crore
rupees.
Page 97 of 113
Sr. No Compliance with respect to Details of Any other
compliance comments
5. Regulation 10(d):
Whether the Manager or
Sponsor has a continuing
interest in the AIF of not less
than two and half percent of
the corpus or five crore
rupees, whichever is lower, in
the form of investment in the
AIF and such interest is not
through the waiver of
management fees.
In case of Category III AIF,
whether the continuing
interest is not less than five
percent of the corpus or ten
crore rupees, whichever is
lower.
6. Regulation 10(e):
Whether the Manager and
Sponsor have disclosed their
investments in the AIF to the
investors of the AIF.
7. Regulation 10(f):
Whether each scheme of the
AIF has not more than one
thousand Investors.
8. Regulation 10(g):
Whether the AIF has solicited
or collected funds only by way
of private placement.
9. Regulation 11(2):
Whether the placement
memorandum contains all
information as specified in
Regulation 11(2)
10. Regulation 12:
Whether the AIF has
launched any new scheme
during the year and in such
case, whether the placement
memorandum has been filed
Page 98 of 113
Sr. No Compliance with respect to Details of Any other
compliance comments
with SEBI atleast thirty days
prior to launch of scheme
along with the scheme fees.
11. Regulation 13(5) & 13(6):
Whether there has been any
extension of the tenure of the
close ended AIF. If yes,
whether the same is not more
than two years and approved
by two-thirds of the unit
holders by value of their
investment in the AIF.
In the absence of consent of
unit holders, whether the AIF
has fully liquidated within one
year following expiration of
the fund tenure or extended
tenure.
12. Regulation 14(1):
In case the units of the AIF are
listed during the year, whether
the listing is after final close of
the fund or scheme.
13. Compliance with every
clause of Regulation 15
(Separate compliance for
every clause shall be
provided)
14. Compliance with every
clause of
Regulation 16/17/18/19, as
applicable
(Separate compliance for
every clause shall be
provided)
15. Compliance with every
clause of Regulation 20
(Separate compliance for
every clause shall be
provided)
Page 99 of 113
Sr. No Compliance with respect to Details of Any other
compliance comments
16. Regulation 21:
In case of any conflict of
interests that have arose
during the year, whether
Regulation 21 has been
complied with.
17. Regulation 22:
Whether the AIFs have
disclosed information
contained in the clauses under
Regulation 22 to the investors.
18. Regulation 23:
(Separate compliance for
every clause shall be
provided)
19. Regulation 25:
Whether the AIF, by itself or
through the Manager or
Sponsor, has laid down
procedure for resolution of
disputes between the
investors, AIF, Manager or
Sponsor through arbitration or
any such mechanism as
mutually decided between the
investors and the AIF.
20. Regulation 28:
Whether reports to be
submitted the SEBI during the
year have been submitted in
the manner as specified by
SEBI.
21. Regulation 29:
In case the AIF has wound up
during the year, whether
Regulation 29 has been
complied with.
22. Compliance with SEBI
circular No.
CIR/IMD/DF/10/2013 dated
July 29, 2013 regarding
Operational, Prudential and
Page 100 of 113
Sr. No Compliance with respect to Details of Any other
compliance comments
Reporting Norms for
Alternative Investment
Funds (AIFs):
Compliance with respect to:
• Risk management
and compliance
• Redemption norms
• Prudential
requirements
23. Compliance with circular
No.
CIR/IMD/DF/14/2014 dated
June 19, 2014
Compliance with respect to:
• Disclosures in
placement
memorandum
every clause under point (3)
on 'Clarification on certain
aspects of the AIF
Regulations'.
24. Compliance with any other
circular as issued/ may be
issued by SEBI
Page 101 of 113
Annexure 15
Term Sheet for Angel Funds
A. Investment and Investee Company Related Information
1. Name of the Angel Fund
2. SEBI Registration No.
3. Name of Scheme
4. Name of investee company
5. Investee Company profile and Product details/ services
offered by the investee company
6. Business/ industry details of the Investee company
7. Present Investment size/ Amount of the offering
8. Investment highlights
9. Total Capital Commitment by investors
10. Capital drawn by the fund
11. Type of Securities (Equity Shares / Compulsorily
Convertible Preference Shares / Compulsorily Convertible
Debenture)
12. Number of securities along with description
13. Price per share/ unit of the security
14. Conversion Price and terms, in case convertible securities
15. Details of lock in for share/ unit of fund
16. Co-investment, if any
17. Details of Valuation of investee company
18. Fee and expenses details for the fund
19. Exit strategy for the Angel Fund - Termination of the
investment / exit provisions
20. Distribution waterfall (distribution to the investors)
21. Exit/ transfer rights for investors
B. Compliance with SEBI (Alternative Investment Funds) Regulations, 2012
1. List of investors in the scheme and compliance with AIF
regulations in this regard in detail {Regulation 19D(1)}
2. Whether the fund has a corpus of at least 5 crore rupees
3. Details of compliance of Regulation 19D(3)
4. Whether funds have been raised through private
placement by issue of information memorandum or
placement memorandum.
Page 102 of 113
5. Details of compliance of Regulation 19(F) (1)
6. Investment by an angel fund in any venture capital
undertaking shall not be less than twenty five lakh rupees
and shall not exceed ten crore rupees.
7. Details of compliance of Regulation 19(F) (3)
8. Details of investment made in associates (as % of total
investments), if any. Also provide reasons for such
investments.
9. Whether investment of the Angel fund is more than
twenty-five per cent of the total investments under all its
schemes in one venture capital undertaking. If yes,
provide detailed explanation.
10. Conditions or guidelines stipulated /issued by the RBI and
the Board have been complied with, in case of investment
in the securities of companies incorporated outside India
11. A declaration from sponsor w.r.t. the angel investors
satisfying the conditions specified in sub-regulation (2) of
regulation 19A.
12. A declaration that the manager/ sponsor have a
continuing interest in the angel fund of not less than two
and half percent of the corpus or fifty lakh rupees,
whichever is lesser, and such interest is not through the
waiver of management fees. {Regulation 19G(2)}
13. Whether undertaking received from every angel investor
confirming approval for investment, prior to making such
investment {Regulation 19G(3)}
C. Material changes
Angel Fund shall submit details of material changes from the last PPM/ Term Sheet in
the following tabular format:
Provisions in the Material change Rationale for Date of intimation to
PPM / last Term change SEBI / date of
sheet approval from SEBI
Page 103 of 113
Annexure 16
Operational Guidelines for implementation of Performance Benchmarking
Section A:
a) Performance Benchmarking shall be done on a half yearly basis based on the
data as on September 30 and March 31 of each year.
b) AIFs/ Schemes that have completed at least one year from First Close, shall
provide all the necessary information/data to the Benchmarking Agencies.
c) AIFs shall provide data on cash flows and valuation of their scheme-wise
investments to the Benchmarking Agencies in the form and format required by
each Benchmarking Agency, within 45 days from the end of every half-year
ending on 30th September and within 6 months from the end of every half-year
ending on 31st March. The format of data reporting shall mandatorily include
details of valuation principles and the name of the Valuation Agency appointed
by the AIF.
d) Periodicity of valuation of investments shall be as provided in the AIF
Regulations.
e) Data provided for March 31 of every year shall be audited data and for
September 30 may be unaudited data.
f) Valuation of investments shall be in the manner provided in the specific
Scheme’s PPM or fund documents, as the case may be. Any change to
valuation principle shall be informed to the Benchmarking Agencies in the
immediate next data submission.
g) Assets under Management (AUM) for the purpose of reporting and
benchmarking shall be the value of total capital drawn down under the
Scheme.
h) The performance reporting and benchmarking shall be carried out on pre-tax
Net Asset Value (NAV) of the Scheme.
i) Benchmarking Agencies shall compile the data received from AIFs and create
comparable industry performance benchmarks for the various categories of
AIFs i.e. Category I, II and III, separately for each year since 2012. The industry
performance benchmarks will be disseminated in a manner that is accessible
to the public.
Page 104 of 113
j) Considering the diverse investment strategies and investment avenues that
can be deployed by an AIF within the same category of AIF, additional
performance benchmarks may be created, based on certain other parameters
[besides those covered under (i) above]. Benchmarking Agency shall ensure
that such performance benchmarking shall be based on objectively verifiable
parameters like instrument of investment, tenure/vintage of the fund, focus
sectors, etc.
k) Benchmarking Agencies shall provide a Performance Benchmark Report to the
individual AIFs/ Schemes vis-à-vis the industry benchmarks.
l) Each Benchmarking Agency shall clearly provide the basis of benchmarking of
individual AIFs/ Schemes as well as calculation of the industry benchmark,
along with the Benchmark Report.
m) The performance data and benchmarks shall be reported in both INR and USD
terms.
Section B:
n) Benchmarking Agencies may create customized Performance Reports, at the
specific request of an AIF/ Scheme, in the following manner:
(i) Identification of the set of AIFs that meet the particular criteria on which
customized performance report is to be generated.
(ii) Such identification may be either on the basis of self-attestation by the
relevant AIFs or by independent verification by Benchmarking Agencies.
(iii) Receipt of express consent of the AIFs whose data is needed for creating
such report.
(iv) Preparation of customized performance reports may be a fee-based
service, as decided mutually between the AIFs and the Benchmarking
Agencies.
(v) Customized performance reports thus generated shall be called
“Performance Report” as against the nomenclature “Benchmark Report”,
which shall be used for the standard benchmark reports generated based
on SEBI mandate.
Page 105 of 113
Annexure 17
Investor Charter for Alternative Investment Funds
A. Vision and Mission Statement:
Vision
To develop the Alternative Investment Fund (“AIF”) industry on professional and ethical
lines and maintain high standards of governance and transparency.
Mission
 Maintain high professional and ethical standards within the AIF industry.
 Comply with all applicable regulations and co-operate with the regulators in all
aspects of the AIF activity.
 Act in a fiduciary capacity towards the investors.
B. Details of business transacted by the organization with respect to the
investors:
 To raise capital from domestic and global investors.
 To invest in portfolio companies in accordance with investment strategy stated in
Fund documents, with an objective to generate positive returns for the stakeholders
including investors.
 To distribute returns to the investors as per the fund documents.
C. Details of services provided to investors:
1. On-boarding of investors.
1.1. Sharing of Private Placement Memorandum (PPM).
1.2. Account opening with the AIF:
- Completing KYC of investors and registration of KYC with KRAs.
- Sharing of copies of fund documents with investors.
- Entering into contribution agreement with investor.
2. Obtaining investor consent for material changes to fund structure
2.1. Change in the sponsor or the manager of the AIF.
2.2. Change in control of the sponsor or the manager of the AIF.
2.3. Material changes to terms of PPM
- Term of Fund.
- Investment Strategy.
- Increase in fees and charges.
2.4. Winding up of Fund/ Scheme prior to expiry of tenure.
3. Dissemination of financial information of Fund.
Page 106 of 113
3.1. Net Asset Value of Fund/ Scheme.
3.2. Financial information of investee companies.
3.3. Information on performance of scheme/fund.
4. Disclosures with respect to material risks associated with the fund and its
portfolio investments.
4.1. Any inquiries/ legal actions by legal or regulatory bodies in any jurisdiction.
4.2. Any material liability arising during the tenure of the fund.
4.3. Any breach of a provision of the PPM or any other agreement made with the
investor or any other fund documents.
4.4. Intimation regarding any conflict of interest.
4.5. Risks associated with the portfolio, such as concentration risk, foreign
exchange risk, leverage risk, realization risk, strategy risk, reputation risk,
extra-financial risks such as social and corporate governance risks etc. at fund
and investee company level.
5. Intimation of any non-material changes in the operations of the fund.
5.1. Non-material changes such as
- Bank account details
- Address of AIF or its Manager or Sponsor
- Contact details such as email-id, contact number, etc. of AIF or its Manager
or Sponsor
6. Grievance redressal
6.1. Redressal of investor complaints received directly from investors and/ or from
SEBI / SCORES.
D. Timelines of the activity/services provided to investors:
Sr. Description of activity/services provided Timeline for completion of
No. by Alternative Investment Funds (AIFs) to activity
its investors
1. Valuation related disclosures:
a. Valuation of investment by Category I and II At least once every six months.
Alternative Investment Fund Can be extended to once a
year with approval of 75% of its
investors by value of
investment.
b. Disclosure of NAV of scheme(s) of the Close ended fund - quarterly
Category III Alternative Investment Fund basis
Open ended fund -monthly
basis
Page 107 of 113
2. Transparency related disclosures:
a. Disclosure of financial information of investee Category I and II - within 180
companies days from the year end or
b. Disclosure of Material risks: earlier as per the fund
documents.
concentration risk, foreign exchange risk at
Category III within 60 days
fund level and leverage risk, realization risk,
from the end of the quarter
strategy risk, reputation risk at investee
end or earlier as per the fund
company level, extra-financial risks such as
documents.
social and corporate governance risks etc. at
fund and investee company level
c. Financial, risk management, operational, To be disclosed periodically to
portfolio, and transactional information the investors
regarding fund investments
d. Any fees ascribed to the Manager or Sponsor;
and any fees charged to the Alternative
Investment Fund or any investee company
e. Any inquiries/ legal actions by legal or As and when occurred
regulatory bodies in any jurisdiction
f. Any material liability arising during the
Alternative Investment Fund’s tenure
g. Any breach of a provision of the placement
memorandum or agreement made with the
investor or any other fund documents
h. Intimation regarding conflict of interest in any As and when they arise or
transaction seem likely to arise
i. Any change in terms of Private Placement On consolidated basis within
Memorandum /fund documents one month of end of each
financial year
3. Complaint handling related services:
a. Response to complaint received from Within 30 days from the date of
investors receipt of complaint
b. Redressal of investor complaint received from Within 30 days from the date of
SEBI/ SCORES receipt of complaint
E. Details of grievance redressal mechanism and how to access it.
1. Alternative Investment Funds are required to redress all investor complaints in
timely manner.
Page 108 of 113
2. An Alternative Investment Fund, by itself or through the Manager or Sponsor,
are required to lay down procedure for resolution of disputes between the
investors and AIF or Manager or Sponsor through arbitration or any such
mechanism as mutually decided between the investors and the Alternative
Investment Fund.
3. Investors can also approach SEBI for redressal of their complaints through SEBI
SCORES platform. On receipt of complaints, SEBI takes up the matter with the
concerned AIF.
4. Investors may send their complaints to: Office of Investor Assistance and
Education, Securities and Exchange Board of India, SEBI Bhavan. Plot No. C4-
A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051.
F. Responsibilities of investors
1. Responsibility to inform and educate yourself
1.1. Read thoroughly all fund documents including Private Placement
Memorandum, Contribution Agreement, sales literature, newsletters and
understand the product.
1.2. Carefully consider all investment risks, fees, and/or other factors detailed in
these documents.
1.3. Ensure and make certain that the proposed investment in the Fund meets
your investment objective and is in alignment with your risk appetite.
1.4. Review your portfolio holdings, account statements and transaction
confirmation on regular basis to ensure that you aware of all transactions
and securities where you are invested.
2. Responsibility to timely update your KYC and information with the Intermediary
2.1 Provide complete and accurate information in your KYC documents,
including financial/ income status.
2.2 Timely updation of KYC information.
3. Responsibility to abide by the contribution agreement.
3.1. The investor needs to read carefully and understand the agreement that
he/she is entering into with the Alternative Investment Fund and abide by
the terms thereof.
3.2. The investor should be aware that investment terms are not guarantee of
future performance or returns of the Fund/ Scheme.
4. Responsibility to use right financial intermediaries, consultants and advisors.
4.1. Carefully consider validity and reliability of investment information
obtained from all sources, especially unsolicited information obtained over
the Internet.
Page 109 of 113
5. Responsibility to maintain confidentiality of information.
5.1. Investors shall not disclose any material non-public information that is
received by virtue of being investors of the fund, except as may be guided
by the terms of the fund documents.
Page 110 of 113
Annexure 18
Complaints Data to be displayed by AIFs for each scheme
1. Investor complaints data for the quarter ending March/June/September/December)
S.No. Investor Pending Received Resolved Total Pending Average
Complaints as at the Pending complaints Resolution
received end of at the > 3months time ^
from the last end of (in days )
quarter the
quarter
1 Directly from
Investors
2 SEBI
(SCORES)
3 Other
Sources
(if any)
Total
^ Average Resolution time is the sum total of time taken to resolve each complaint in
days in the current quarter divided by total number of complaints resolved in the current
quarter.
2. Investor complaints data for last three Financial Years (FY)
S.No FY Carried forward Received Resolved Pending at the
from previous FY end of FY
1 2020-21
2 2021-22
3 2022-23
Total
*************
Page 111 of 113
Annexure 19
LIST OF RESCINDED CIRCULARS
S.No Circular No. Date of Subject of circular
. circular
I. CIR/IMD/DF/10/2013 July 29, 2013 Operational, Prudential and
Reporting Norms for
Alternative Investment Funds
(AIFs)
II. CIR/IMD/DF/12/2013 August 07, Application for change in
2013 category of the Alternative
Investment Fund
III. CIR/IMD/DF/14/2014 June 19, 2014 Guidelines on disclosures,
reporting and clarifications
under AIF Regulations
IV. CIR/IMD/DF/16/2014 July 18, 2014 Clarification and extension of
deadline with respect to circular
on 'Guidelines on disclosures,
reporting and clarifications
under AIF Regulations'
V. SEBI/HO/IMD/DF1/CI July 31, 2017 Online Filing System for
R/P/2017/87 Alternative Investment Funds
VI. SEBI/HO/IMD/DF1/CI September 29, Change in reporting norms for
R/P/2017/110 2017 Category III Alternative
Investment Funds ("AIFs")
regarding investment in
commodity derivatives market
VII. CIR/IMD/DF1/102/20 June 29, 2018 Filing of Term Sheet by Angel
18 Funds
VIII. SEBI/HO/IMD/DF6/CI February 05, Disclosure Standards for
R/P/2020/24 2020 Alternative Investment Funds
(AIFs)
IX. SEBI/HO/IMD/DF6/CI June 12, 2020 Clarifications with respect to
R/P/2020/99 Circular dated February 05,
2020 on ‘Disclosure Standards
for Alternative Investment
Funds (AIFs)’
X. SEBI/HO/IMD/DF6/CI June 30, 2020 Collection of stamp duty on
R/P/2020/113 issue, transfer and sale of units
of AIFs
XI. SEBI/HO/IMD/DF6/CI October 22, Processing of applications for
R/P/2020/209 2020 registrations of AIFs and launch
of schemes
XII. SEBI/HO/IMD/DF6/CI January 08, Amendment to Regulation
R/P/2021/004 2021 20(6) of SEBI (AIF)
Regulations, 2012
XIII. SEBI/HO/IMD/IMD- April 07, 2021 Regulatory reporting by AIFs
I/DOF6/CIR/2021/549
XIV. SEBI/HO/IMD- June 25, 2021 Amendment to SEBI
I/DF6/P/CIR/2021/58 (Alternative Investment Funds)
4 Regulations, 2012
Page 112 of 113
S.No Circular No. Date of Subject of circular
. circular
XV. SEBI/HO/IMD/IMD- October 21, Modalities for filing of
I/DF6/P/CIR/2021/64 2021 placement memorandum
5 through a Merchant Banker
XVI. SEBI/HO/IMD/IMD- November 22, Clarifications regarding
I/DOF6/P/CIR/2021/6 2021 amendment to SEBI
63 (Alternative Investment Funds)
Regulations, 2012
XVII. SEBI/HO/IMD/IMD- December 10, Publishing Investor Charter and
I/DOF9/P/CIR/2021/6 2021 Disclosure of complaints by
82 AIFs
XVIII. SEBI/HO/IMD- January 27, Introduction of Special Situation
I/DF6/P/CIR/2022/00 2022 Funds as a sub-category under
9 Category I AIFs
XIX. SEBI/HO/IMD- March 23, Change in control of Sponsor
1/DF9/CIR/2022/032 2022 and/or Manager of Alternative
Investment Fund involving
scheme of arrangement under
Companies Act, 2013
XX. SEBI/HO/IMD/IMD- March 28, Calculation of investment
I/DOF6/P/CIR/2022/0 2022 concentration norm for
37 Category III AIFs
XXI. SEBI/HO/AFD/RAC/C June 24, 2022 Guidelines for Large Value
IR/2022/088 Fund for Accredited Investors
under SEBI (Alternative
Investment Funds)
Regulations, 2012 and
Requirement of Compliance
Officer for Managers of all AIFs
XXII. SEBI/HO/AFD- November 17, Guidelines for AIFs for
1/PoD/P/CIR/2022/15 2022 declaration of first close,
5 calculation of tenure and
change of sponsor/manager or
change in control of
sponsor/manager
XXIII. SEBI/HO/AFD- November 23, Schemes of AIFs which have
1/PoD/P/CIR/2022/15 2022 adopted priority in distribution
7 among investors
XXIV. SEBI/HO/AFD- December 09, Foreign investment in
1/PoD/P/CIR/2022/17 2022 Alternative Investment Funds
1 (AIFs)
XXV. SEBI/HO/AFD/PoD/C January 12, Participation of AIFs in Credit
IR/2023/15 2023 Default Swaps
XXVI. SEBI/HO/AFD/PoD/P February 01, Transaction in Corporate
/CIR/2023/017 2023 Bonds through Request for
Quote (RFQ) platform by
Alternative Investment Funds
(AIFs)
Page 113 of 113