SEBI updates: Registered AIF and Amendment in Buyback of Securities Regulations

SEBI notifies conditions for registered Alternative lnvestment Funds intending to change their category

On 21st May 2012, SEBI had notified the Alternative Investment Fund (AIF) Regulations thereby bringing all privately pooled investment funds under one roof (except Mutual Funds and Collective Investment Schemes). The said Regulations demarcate AIFs into three categories with all the categories having different investment purposes, type of schemes and benefits.

With respect to these very fresh Regulations, SEBI had recently on 29th July 2013 notified certain operational, prudential and reporting norms with respect to AIFs which answered a lot of questions with respect to the AIF Regulations thus bringing more clarity in regards to a certain aspects. Keeping in line with its efforts to fine tune the AIF Regulations, SEBI has come out with some further clarification vide its circular dated 07th August 2013.
As per the SEBI (AIF) Regulations, a fund once registered under one category can change its category subsequent to the registration only with the approval of SEBI. In this context, SEBI has notified a certain criteria and procedure for the registered AIFs intending to change their category they are originally registered under.
Given below is an account of various questions addressed by SEBI in the aforementioned circular:

    1. Are all the registered AIFs eligible for a change in category? What is the procedure for obtaining SEBI’s approval for such a change?
    Only those AIFs that have not made any investments under the category they were originally registered under shall be eligible to apply for SEBI’s approval for a change in category.
    All the eligible AIFs intending to change their category shall make an application to SEBI, which shall include:
    • An updated Form A given in the First Schedule of the regulations
    • Other updated supporting documents if any
    • Rationale for the proposed change
    • Application fee of Rs. 1 Lakh
    The AIF will not be required to pay the registration fee again.
    2.What if the AIF has already raised funds or received commitments from investors?
    Such an AIF which has raised funds or received commitments from investors prior to applying for a change in the category, will be required to send letters/ emails to the investors communicating:
    • The intention to change the category of AIF
    • An option to withdraw the funds poured in by them and doing so at absolutely no charge or penalty
    • In case any charge or penalty is charged to an investor for withdrawing its investment, it shall have to be refunded.
    An investor will be allowed to withdraw a partial amount invested in the AIF, provided that the minimum investment amount requirement as per the AIF regulations is complied with.
    3. How shall the amount received by investors be utilized while the application for change in category is pending?
    If the AIF is yet to receive the approval of SEBI for change in category, it shall be allowed to make investments for the time being but only in liquid funds or bank deposits. Once SEBI has approved the change in category, the AIF shall send a revised placement memorandum and other relevant information to all its investors

SEBI has brought a vast clarity with respect to a little provision which proved to be of very high importance later i.e. the provision for change in category of AIFs. The regulations allow the AIFs to change their category with SEBI’s approval but the procedure for the same was not given in the regulations. Through this circular, SEBI has not only notified the procedure for a change in category by AIFs but has also by giving option to the Investors to withdraw investment at no charges/ penalty, reaffirmed that the Investor is of prime importance to SEBI.

Comments

Post a Comment

Popular posts from this blog

Leaves & Holidays under Indian Labour & Employment Laws

Image
Holidays and Leaves of workers in India are governed principally by the Factory Act, 1948 and state shops and establishment acts. Weekend Holidays Mr. Pankaj Singla Sr. Associate +919971508320 pankaj@indiacp.com In India, the law prescribes maximum number of hours a week a worker may not be employed beyond. An adult worker shall not be employed for more than 48 (forty eight) hours in a week and not more than 9 (nine) hours in a day. Weekly holiday is compulsory as per the Factories Act. First day of the week i.e. Sunday shall be a weekly holiday. The employer has to make sure that no worker works more than 10 days without a rest day of 24 hours. Therefore, if the worker is asked to work on weekly
Click to read more »

SEBI's Circulars About Enhancing Liquidity And Curbing Manipulation Regarding Illiquid Scrips

Image
SEBI recently has come out with two different circulars in respect to illiquid scrips wherein one circular talks about enhancing liquidity in the illiquid scrips by promoting incentives by stock exchanges on trading in such scrips, another circular aims at curbing manipulations in the illiquid scrips by introducing Periodic Call Auction in illiquid scrips. Ms. Deepika Vijay Sawhney Partner +919818316936 deepika@indiacp.com The definition of illiquid scrips is kept different in both the circulars with the definition being much wider in case of scrips qualifying for Periodic Call Auctions. The provisions of both the circulars are discussed in detail hereunder: 1. Introduction of Liquidity Enhancement Scheme for illiquid scrips in Equity Cash Market by Circular dated February 08, 2013:
Click to read more »

Work Hours and Overtime under the Factory Act, 1948 and Shops & Establishment Act

Image
India has two major laws concerning working hours of workers i.e. the Factory Act, 1948 and Shops & Establishment Act. The regulations related to the working hours can be separated into four broad categories that help demarcate the dimensions of the discussion. Working Hours for Factory Workers; I. Employment of Adults: Mr. Pankaj Singla Sr. Associate +919971508320 pankaj@indiacp.com An adult worker shall not be employed for more than 48 (forty eight) hours in a week and not more than 9 (nine) hours in a day. A compulsory rest of at least half an hour (30 minutes) between each period of work  and such period of work shall not exceed five hours. Total period of work inclusive of rest interval cannot be more than 10.5 hours. The Chief Inspector may by giving a reason in writing  increase the workday time up to twelve hours. According to Minimum Wages Act, 1948 the working day of a worker shall be so arranged that inclusive of the interval of rest it shall n...
Click to read more »