The Securities and Exchange Board of India (SEBI) has amended standards pertaining to alternati...
Alternative investment AIFs included under this category are SME Funds, Venture Capital Funds, Social Venture Funds, and Infrastructure Funds
Alternative Investment fund is a privately pooled investment fund, incorporated in India in the form of Trust, companies or limited liability partnership which is presently not covered, under the framework of any RBI Regulation, SEBI, IRDA etc. for a purpose of collecting funds, from Indian or foreign investors and investing them as per pre-decided policy for their benefits. As they are entirely differentiable, from the traditional forms of investment such as bonds, cash, property, listed stocks, mutual funds, insurance companies etc. They have basically regulated under the framework of SEBI (Alternative Investment Fund) Regulations, 2012. Some of its forms are Hedge Funds, Commodity Funds, Venture Capital Funds, Debt Funds, Private Equities, Infrastructure Funds etc.
AIF is regulated by security exchange board of India. Alternative investment funds, whose main aim is to utilize investment opportunities. As per SEBI has issued guidelines for ALTERNATIVE INVESTMENT FUND, an applicant who is seeking to get registered as AIFs can apply in any of the three prescribed categories:
Category 1: Forms of AIFs included under this category are SME finance, Venture Capital Funds, Social Venture Funds, and Infrastructure Funds etc. These forms of AIFs get incentives from the government because they invest in such early stages ventures or start-ups, SME’s or other areas which are considered socially and economically desirable by the government and other regulators.
Category 2: Forms of AIFs included under this category are Private Equity Funds, Debt Funds etc.This category basically involves AIFs, which doesn’t fall under the other two respective categories. They did not engage in any leverage, other than to meet day to day operational requirements. These forms of the fund don’t receive any kind of special incentives or concessions from the government.
Category 3: AIFs covered under this category employ complex or diverse trading strategies and even include leverage also while investing in listed or unlisted derivatives. AIFs like hedge funds also, included in this category for making an investment in listed or unlisted derivatives.
Moreover, if any scheme of AIFs is launched under category 1& 2, it should be close-ended, means its tenure should be decided at the time of filling application itself and shall be for minimum three years. Its tenure can also be expanded up to two years but, subjected to the approval of two-thirds of the unitholders by the value of their investment in AIFs.But, if no consent is received from their side then AIFsshall be fully liquidated, within one year following the expiration of fund tenure or extended tenure. Whereas, in case of Category 3 it may be open-ended or close-ended. In the Year 2017, SEBI has Amended alternative investment funds regulations 2012.
In case of close-ended AIFs, units of funds can be listed on the stock exchange with a minimum tradable lot of Rupees One crore but, only after the closure of scheme or fund.
After getting registered as AIFs, it’s the duty of AIFs to comply with the entire reporting requirement as specified under regulations. They have to keep themselves updated as per the circulars or guidelines issued by the department from time to time. Moreover, also has to intimate if any material changes occur in respect of information which has been already submitted to the department.
Enterslice is a legal technology Company, involved in providing a service of Alternate Investment Fund Registration. The applicant who is seeking to get registration service may contact us through email firstname.lastname@example.org. Detail procedure described on our website www.enterslice.com