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This is applicable to AIF schemes, whose liquidation period has expired or will expire within three months from the notification date of the amended regulations on April 25, 2024, the regulator said in the circular.
Markets regulator Sebi on Tuesday issued a circular outlining the filing requirements for alternative investment funds (AIFs) schemes that opt for a dissolution period to deal with their unliquidated investments.
The move aims to provide flexibility to AIFs and their investors in managing such investments that are not sold due to lack of liquidity.
In its circular, Securities and Exchange Board of India (Sebi) said AIF schemes entering into dissolution period must file an information memorandum with it through a merchant banker before expiry of the liquidation period or additional liquidation period of the scheme.
The format for this information memorandum and the due diligence certificate to be submitted by the merchant banker.
As per Sebi’s AIF rules, the information memorandum must include details such as the name of the AIF, registration number, the names of its trustees or directors, the scheme’s name, and financial details related to unliquidated investments.
In addition, for schemes seeking an additional/fresh liquidation period, the markets watchdog requires the submission of relevant information in a prescribed format, Sebi said.
This is applicable to AIF schemes, whose liquidation period has expired or will expire within three months from the notification date of the amended regulations on April 25, 2024, the regulator said in the circular.
The regulator also specified conditions and modalities for carrying out in specie distribution of unliquidated investments of a scheme of an AIF during liquidation period, and for carrying out mandatory in specie distribution of unliquidated investments, respectively.
Further, Sebi has clarified that such distributions, excluding mandatory in-specie distributions, require the approval of at least 75 per cent of the investors by the value of their investment in the scheme.
Managers, trustees, and key personnel of the AIFs will be responsible for ensuring compliance with these provisions, Sebi said.
The trustee/sponsor, will ensure that the ‘Compliance Test Report’ prepared by the manager in terms of Sebi’s master circular issued on dated May 7, 2024 for AIFs, includes compliance with the provisions of this circular, the regulator said.
The requirements mentioned in the circular will come into force with immediate effect, it added.
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First Published: Jul 09 2024 | 11:42 PM IST
