Who is the Sponsor of the AIF?
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.
AIFs which invest in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, social venture funds, infrastructure funds and such other Alternative Investment Funds as may be specified.
AIFs which do not fall in Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations, 2012. Various types of funds such as real estate funds, private equity funds (PE funds), funds for distressed assets, etc. are categorised under Category II AIFs.
AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.
“Corpus’’ is the total amount of funds committed by investors to the AIF by way of a written contract or any such document as on a particular date.
No scheme of an AIF (other than angel fund) shall have more than 1000 investors. In case of an angel fund, no scheme shall have more than forty-nine angel investors. However, an AIF cannot make invitation to the public at large to subscribe its units and can raise funds from the sophisticated investors only through private placement.
‘’Sponsor’’ is any person(s) who set up the AIF and includes promoter in case of a company and designated partner in case of a limited liability partnership.
Yes. An AIF may launch schemes subject to filing of placement memorandum with SEBI.
The certificate of registration of an AIF shall be valid till the AIF is wound up.
No. AIFs are privately pooled investment vehicles. AIFs shall raise funds through private placement by issue of information memorandum or placement memorandum, by whatever name called. As an eligibility criterion for registration as an AIF, the applicant is required to be prohibited by its memorandum and articles of association/ trust deed/ partnership deed from making an invitation or solicitation to the public to subscribe to its securities.
Yes. 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. If the AIF has received commitments/ raised funds prior to application for change in category, the AIF shall be required to send letters/emails to all its investors providing them the option to withdraw their commitments/ funds raised without any penalties/charges. Any fees collected from investors seeking to withdraw commitments/ funds shall be returned to them. Partial withdrawal may be allowed subject to compliance with the minimum investment amount required under the AIF Regulations. The AIF shall not make any investments till deployment of fund as per the scheme other than in liquid funds/ banks deposits until approval for change in category is granted by SEBI. 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.
No. Each scheme of the Alternative Investment Fund (other than angel fund) shall have corpus of atleast two hundred milllion INR. In case of an angel fund, it shall have a corpus of at least 100 million INR.
An AIF may raise funds from any sophisticated investor whether Indian, foreign or non-resident Indians, who inter alia undertake risk of investing in primarily unlisted or illiquid securities. However, AIF (other than angel fund) shall not accept from an investor, an investment of value less than 10 million INR. In case of investors who are employees or directors of the AIF or employees or directors of the Manager, the minimum value of investment shall be twenty five lakh INR.
In order to ensure that the interest of the Manager/Sponsor is aligned with the interest of the investors in the AIF, the AIF Regulations require that the sponsor/manager shall have a certain continuing interest in the AIF which shall not be through the waiver of management fees. For Category III AIFs, the interest must be not less than five percent of the corpus or 100 miliion INR, whichever is lesser.
No. Category I and II AIFs are required to be close ended have a minimum tenure of three years. Category III AIFs may be open ended or close ended.
Yes.The leverage of a Category III AIF shall not exceed 2 times the NAV of the fund.
Chapter IV of the AIF Regulations provides for general obligations, responsibilities and transparency requirements that are required to be complied by all AIFs. Chapter IV provides for specific disclosure obligations on the AIF to the investors including conflict of interest, information on fund investments, fees, various risks, valuation, etc. Further, AIFs, in addition to what is required under the AIF Regulations, may also provide for additional disclosures to investors in the placement memorandum.
An AIF may accept the following as joint investors for the purpose of investment of not less than 10 million INR:
The tenure of any scheme of the AIF shall be calculated from the date of final closing of the scheme.
SEBI has a web based centralized grievance redress system called SEBI Complaint Redress System (SCORES) at http://scores.gov.in where investors can lodge their complaints against AIFs. Further, in terms of the AIF Regulations, for dispute resolution, the AIF by itself or through the Manager or Sponsor, is required to lay down procedure for resolution of disputes between the investors, AIF, Manager or Sponsor through arbitration or any such mechanism as mutually decided between the investors and the AIF.