SEBI Directions w.r.t. Alternate Investment Funds
SEBI as on 21st May 2012 had notified SEBI (Alternate Investment Funds) Regulations 2012, wherein any privately pooled investment vehicle collecting fund from Investors are needed to get registered as Alternate Investment Funds under any one of three Categories that is Category I, II or III. Out of the prescribed categories, Category III Alternative Investment Funds are allowed to employ diverse and complex trading strategies and to engage in leverage or borrow funds subject to consent from the investors in the fund and a limit as specified by SEBI. Also, as per the regulations, the Category III AIFs shall are to be regulated by directions issued by the Board from time to time regarding aspects like operational standards, business rules, prudential requirements, restrictions on redemption and conflict of interests.
Keeping in line with this and in continuance of its efforts to protect the interest of investors in the Indian Securities Markets, SEBI vide its circular dated 29th July 2013 has notified certain operational, prudential and reporting norms for the AIFs registered or to be registered under the said regulations.
The major highlights of the new directions are as follows:
Risk Management and Compliance
Category III AIFs that employ leverage