SEBI BOARD DECISION...
Another long pending decision with respect to formulation of Regulations for Alternative Investment funds is also taken by the SEBI board. The board has now approved to frame SEBI (Alternative Investment Funds) Regulations, 2012.
a. The proposed regulations would govern investment funds operating as Private Equity Funds, Real Estate Funds, Hedge Funds etc. and would require registration with SEBI.
b. SEBI (Venture Capital Funds) Regulations, 1996 would be repealed and existing VCF would be governed by these new regulations and shall not be allowed to raise any fresh funds or float any new schemes before being registered under these new regulations.
c. The categories of Alterative Investment Funds would be defined and the Regulations would not be applicable to Mutual Funds, CIS schemes, Family Trusts, ESOP funds, Employee Welfare Trust, Holding Companies, funds managed by ARCs, Securitization Trust and such other pools being directly governed by any other regulations in India.
d. The AIF would not be allowed to accept any investment from an investor of value less than Rs. 1 Crore and shall not have any fund or scheme having more than 1000 investors.
e. A minimum corpus of Rs. 20 Crore would be required and the manager or sponsor to continue to have interest in the AIF of not less than 2.5% of the initial corpus or Rs. 5 crore whichever is less.
f. Units of AIF would be allowed to be listed on exchanges subject to minimum tradable lot of Rs. 1 core but AIF shall not be allowed to raise funds through stock exchange mechanism.
g. Maximum permissible investment limit in one investee company would be 25% of the investible fund and shall not be allowed to invest in associate companies.
h. All AIFs would have QIB status as per SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009.
Sent by: Ms Deepika Vijay Sawhney, Partner,
Corporate Professionals Advocates & Solicitors