Alternative Investment Funds Registration

Registration Requirements for Alternative Investment Funds (AIF)

Introduction

Pooled investments funds collected from sophisticated investors and then invested as per predetermined investment policy are termed as Alternative Investment Funds (AIF). These funds are regulated by SEBI Alternative Investment Funds Regulations, 2012. These regulations were introduced with a view to regularizing the pooled funds which were operating unregulated and were not covered under any of the previously SEBI issued regulation.

After the commencement of the above-mentioned regulations, no entity or person shall act as an Alternative Investment Fund unless it has been successfully registered with the Securities and Exchange Board of India.

AIF can be Registered under following Categories

Any applicant seeking registration as an Alternative Investment Fund has an option to apply under any of the following categories:

  1. Category I AIF

This category can be sub-categorized into:

–  Venture capital funds (Including Angel Funds)

–  SME Funds

–  Social Venture Funds

–  Infrastructure funds

  1. Category II AIF
  2. Category III AIF

This category can be sub-categorized into:

–  Venture capital funds (Including Angel Funds)

–  SME Funds

–  Social Venture Funds

–  Infrastructure funds

Application Procedure

Step 1: For registration purpose, the applicant is required to submit an application in Prescribed Form A along with all the attachments required as per regulation. Such an application is for registration in any one particular category of Alternative Investment Fund. The applicant is to be submitted with the application fees as mentioned in Part a of Second Schedule.

Step 2: After an application for registration is received, if after due inspection of it the Board is satisfied that the applicant has complied with all the relevant provisions. Then the Board will grant an in-principle approval to the applicant.

Step 3: Once the approval is received the applicant is required to submit the applicable registration fees.

Step 4: within 6 months of receiving the approval, if the Board is satisfied that the applicant has complied with all the relevant provisions. Then, certificate of registration will be granted to the applicant.

Note: – Any Alternative Investment Fund that has been granted in-principle approval can accept commitments from prospective investors. However, it shall not accept any actual moneyuntilcertificate of registration is granted.

Validity

Once all the registration formalities are completed and the application is reviewed by the authorities and it is satisfied, then Certificate of registration is issued to the AIF.

This registration does not have an expiration period. It will be valid until the AID is wound up.

Conditions precedent for Registration

When applying for registration of Alternative Investment funds, the applicant is required to comply with the following conditions: 

  1. Alternative Investment Fund shall abide by all the provisions of the Securities and Exchange Board of India Act, 1992 and SEBI (Alternative Investment Funds) Regulations, 2012.
  2. Alternative Investment Fund shall not involve in any other activity which is not permitted by the said regulations.
  3. If there is any change in any information or particulars previously submitted to SEBI, or if any material particular has found to be false or misleading then the applicant should inform the board in writing about the same.
  4. The total amount of corpus of every scheme or fund must not be less than 20 Crore and in case of Angel fund, this amount of corpus shall not be less than 10 crores.

Here, Corpus refers to the total amount of funds committed by the investor to the AIF in writing.

Fee Requirement for Registration

While submitting an application for registration with the SEBI as per SEBI (Alternative Investment Funds) Regulations, 2012, the applicant is required to deposit applicable fees with it.

This amount can either be paid through a bank draft or through NEFT/RTGS/IMPS or any other mode allowed by RBI credited in the bank account.

This amount is provided in Part A of the Schedule II of these regulations. Following are the details:

Non-refundable application fee                                                          Rs. 1, 00,000

Registration Fee for Angel Funds                                                      Rs. 2, 00,000

Registration Fee for Funds other than Angel Funds:

  • The registration fee for Category I 5,00,000
  • The registration fee for Category II 10,00,000
  • The registration fee for Category III 15,00,000

Re-Registration Fee                                                                            Rs. 1, 00,000

Scheme Fee for Alternative Investment Funds

Other than Angel Funds                                                                     Rs. 1, 00,000

Change category

As it has been clarified the registration is to be done in any one particular category. However, after successful registration, the applicant can change the category of AIF. However, for this change approval of board is required.

Conditions:

  • In order to change the category, it is required that the AIF has not made any investments under the category the registration was granted in originally.
  • However, if it has already received any commitments or raised any funds from the investors. Then, the applicant is required to send letters/emails to such investors giving them the option to withdraw their commitments/ funds without any penalties/charges. All received funds must be returned.

Only after that, an application for change can be submitted.

Application for such change is to be submitted in Form A with an application fee of Rs. 1, 00,000/-. NO registration fee is required to be paid.

Yes. As per Circular No. CIR/IMD/DF/12/2013 dated 07th August 2013; 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. Such AIFs are required to make an application in Form A along with necessary supporting documents. Application fees of Rs. 1, 00,000/- must be paid along with the application to SEBI. AIFs are not required to pay registration fees for such applications.

On approval of the request from SEBI, the AIF is required to send a copy of the revised placement memorandum and other relevant information to all its investors.

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