CIRCULAR
SEBI/HO/AFD/PoD1/CIR/2023/186 December 11, 2023
To,
All Alternative Investment Funds
All Depositories
All Custodians
Sir / Madam,
Sub: Credit of units of AIFs in dematerialised form
1. In terms of para 3.1 of SEBI circular no. SEBI/HO/AFD/PoD1/CIR/2023/96 dated
June 21, 2023 on ‘Issuance of units of AIFs in dematerialised form’, all schemes
of Alternative Investment Funds (‘AIFs’) were mandated to dematerialise their
units as per the following timeline:
Schemes of AIFs with Schemes of AIFs with
Particulars
corpus ≥ INR 500 Crore corpus < INR 500 Crore
Dematerialisation of Latest by October 31, 2023 Latest by April 30, 2024
all the units issued
Issuance of units November 01, 2023 May 01, 2024 onwards
only in onwards
dematerialised form
2. As per the timeline given at para 1 above, schemes of AIFs with corpus ≥ INR
500 Crore have created International Securities Identification Numbers (ISINs)
for their units issued, and have commenced crediting the units to the investors’
demat accounts. Based on feedback received from the stakeholders, it has been
decided to specify the process to be followed for dematerialising/ crediting the
units issued, in cases where investors are yet to provide demat account details
to AIFs.
3. Managers of AIFs shall continue to reach out to existing investors to obtain their
demat account details and credit the units issued to them to their respective
demat accounts. Depositories shall also aid in this process as advised by SEBI.
In this regard, AIF industry and depositories shall adopt implementation
standards as formulated by the pilot Standard Setting Forum for AIFs (‘SFA’),
along with the two depositories, in consultation with SEBI. The standards shall
detail steps to be taken by AIF managers and depositories to reach out to
investors and facilitate conversion and credit of their units in demat form.
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4. Units already issued by schemes of AIFs to existing investors who have not
provided their demat account details, shall be credited to a separate demat
account named "Aggregate Escrow Demat Account”. This account shall be
opened by AIFs for the sole purpose of holding demat units of AIFs on behalf of
such investors. New units to be issued in demat form shall be allotted to such
investors and credited to the Aggregate Escrow Demat Account.
5. As and when such investors provide their demat account details to the AIF, their
units held in Aggregate Escrow Demat Account shall be transferred to the
respective investors’ demat accounts within 5 working days. No transfer of units
of AIFs from/within Aggregate Escrow Demat Account shall be allowed, other
than for the aforesaid purpose.
6. Schemes of AIFs with corpus ≥ INR 500 Crore shall credit units already issued
to existing investors (on-boarded prior to November 01, 2023) who have not
provided their demat account details, into Aggregate Escrow Demat Account
latest by January 31, 2024. Units already issued by such schemes to existing
investors who have provided demat account details shall be credited to
respective investors’ demat accounts at the earliest, but not later than January
31, 2024.
7. Schemes of AIFs with corpus < INR 500 Crore shall credit units issued to their
investors who have not provided their demat account details by April 30, 2024,
into Aggregate Escrow Demat Account latest by May 10, 2024. Units issued by
such schemes as on April 30, 2024, to investors who have provided demat
account details shall be credited to respective investors’ demat accounts at the
earliest, but not later than May 10, 2024.
8. Accordingly, the following is clarified with respect to issuance and credit of units
of AIFs in demat form:
Schemes with corpus < INR
Schemes with corpus ≥ 500 crore as on Oct 31, 2023
Details INR 500 crore as on Oct and schemes launched after
31, 2023 Oct 31, 2023 irrespective of
corpus
Investors who have Units issued after Oct 31, Units issued after Apr 30,
provided their 2023, shall be in demat 2024, shall be in demat form
demat account form and credited only to and credited only to investors
details investors demat accounts. demat accounts.
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Schemes with corpus < INR
Schemes with corpus ≥ 500 crore as on Oct 31, 2023
Details INR 500 crore as on Oct and schemes launched after
31, 2023 Oct 31, 2023 irrespective of
corpus
Investors who have For investors on-boarded For investors on-boarded prior
not provided their prior to Nov 01, 2023, to May 01, 2024, units shall be
demat account units shall be credited in credited in Aggregate Escrow
details Aggregate Escrow Demat Demat Account temporarily,
Account temporarily, till till investors provide their
investors provide their demat account details.
demat account details.
Completion of
credit of demat
units to a) demat
accounts of
investors who have
provided demat
account details and Latest by Jan 31, 2024 Latest by May 10, 2024
b) Aggregate
Escrow Demat
Account, for those
who have not
provided demat
account details
9. Units of AIFs held in Aggregate Escrow Demat Account can be redeemed and
proceeds shall be distributed to respective investors’ bank accounts with full audit
trail of the same.
10. Managers of AIFs shall maintain investor-wise KYC details of units held in
Aggregate Escrow Demat Account, including name, PAN and bank account
details, along with audit trail of the transactions. The same shall also be reported
to Depositories and Custodians on a monthly basis.
11. For this purpose, AIF industry shall adopt implementation standards as
formulated by the SFA and depositories jointly, in consultation with SEBI, for
compliance with the provisions of this circular. Such standards shall, inter-alia,
include formats for information/ records to be maintained by managers of AIFs
with respect to investor-wise holding/ transactions in the Aggregate Escrow
Demat Account and reporting of the same to Depositories and Custodians.
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12. Managers of AIFs shall adhere to such implementation standards formulated by
the SFA, in consultation with SEBI. Such standards shall be published on
websites of Depositories and the industry associations which are part of the SFA,
i.e., Indian Venture and Alternate Capital Association (IVCA), PEVC CFO
Association and Trustee Association of India, within 45 days of issuance of this
circular.
13. Further, Depositories are directed to –
13.1. make necessary amendments to their relevant Bye-laws, Rules and
Regulations for the implementation of the above provisions, including
facilitation of Aggregate Escrow Demat Account for AIFs; and,
13.2. bring the provisions of this circular to the notice of their members /
participants and also disseminate the same on their websites.
14. The circular shall come into force with immediate effect.
15. This circular is issued with the approval of the competent authority.
16. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 10(aa)
of SEBI (Alternative Investment Funds) Regulations, 2012, to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market.
17. The circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal framework - Circulars" and "Info for - Alternative Investment
Funds”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in
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