The Securities and Exchange Board of India (“SEBI”) has, through a Gazette Notification dated 8th January, 2021 issued the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2021 (“Amendment Regulations”) in order to further amend the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“Principal Regulations”).
The Amendment Regulations have gained effect immediately.
| Principal Regulations | Amendment Regulations | Implications |
| Regulation 20- General Obligations
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(6) The Manager shall be responsible for investment decisions of the Alternative Investment Fund: Provided that the Manager may constitute an Investment Committee (by whatever name it may be called), to approve investment decisions of the Alternative Investment Fund, subject to the following:
(i) The members of Investment Committee shall be equally responsible as the Manager for investment decisions of the Alternative Investment Fund.
(ii) The Manager and members of the Investment Committee shall jointly and severally ensure that the investments of the Alternative Investment Fund are in compliance with the provisions of these regulations, the terms of the placement memorandum, agreement made with the investor, any other fund documents and any other applicable law.
(iii) External members whose names are not disclosed in the placement memorandum or agreement made with the investor or any other fund documents at the time of on boarding investors, shall be appointed to the Investment Committee only with the consent of at least seventy five percent of the investors by value of their investment in the Alternative Investment Fund or scheme.
(iv) Any other conditions as specified by the Board from time to time.
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Regulation 20- General Obligations
(…)
(6) The Manager shall be responsible for investment decisions of the Alternative Investment Fund: Provided that the Manager may constitute an Investment Committee (by whatever name it may be called), to approve investment decisions of the Alternative Investment Fund, subject to the following:
(i) The members of Investment Committee shall be equally responsible as the Manager for investment decisions of the Alternative Investment Fund.
(ii) The Manager and members of the Investment Committee shall jointly and severally ensure that the investments of the Alternative Investment Fund are in compliance with the provisions of these regulations, the terms of the placement memorandum, agreement made with the investor, any other fund documents and any other applicable law.
(iii) External members whose names are not disclosed in the placement memorandum or agreement made with the investor or any other fund documents at the time of on boarding investors, shall be appointed to the Investment Committee only with the consent of at least seventy five percent of the investors by value of their investment in the Alternative Investment Fund or scheme.
(iv) Any other conditions as specified by the Board from time to time:
Provided further that clauses (i) and (ii) shall not apply to an Alternative Investment Fund in which each investor other than the Manager, Sponsor, employees or directors of the Alternative Investment Fund or employees or directors of the Manager, has committed to invest not less than seventy crore rupees (or an equivalent amount in currency other than Indian rupee) and has furnished a waiver to the Alternative Investment Fund in respect of compliance with the said clauses, in the manner specified by the Board |
With the present Amendment, a new proviso has been added wherein it is stated that the following will not apply to an Alternative Investment Fund (“AIF”) in which each investor other than the Manager, Sponsor, employees or directors of the AIF or employees or directors of the Manager, has committed to invest not less than Rs. 70 crore (or an equivalent amount in currency other than Indian rupee) and has furnished a waiver to the AIF in respect of compliance with the clauses (mentioned below):
a. The members of Investment Committee must be equally responsible as the Manager for investment decisions of the Alternative Investment Fund
b. The Manager and members of the Investment Committee has to jointly and severally ensure that the investments of the AIF are in compliance with the provisions of these regulations, the terms of the placement memorandum, agreement made with the investor, any other fund documents and any other applicable law |
Source: Securities and Exchange Board of India
