In a Circular dated 12th June, 2020 the Securities and Exchange Board of India (“SEBI”) has issued clarifications regarding a previous Circular dated February 05, 2020 on “Disclosure Standards for Alternative Investment Funds (AIFs)” (“Previous Circular”) which is detailed in the trail mail.
Key Takeaways:
- Clarification regarding Audit of compliance with terms of Private Placement Memorandum (“PPM”) (As per paragraph 5 of the Previous Circular)-
- The audit of compliance with terms of PPM must be conducted at the end of each Financial Year and the findings of audit along with corrective steps (if any) must be communicated to the Trustee or Board or Designated Partners of the Alternative Investment Fund (“AIF”), Board of the Manager and SEBI, within 6 months from the end of the Financial Year.
- The requirement of audit of compliance with terms of PPM will not apply to AIFs which have not raised any funds from their investors. However, such AIFs have to submit a Certificate from a Chartered Accountant to the effect that no funds have been raised, within 6 months from the end of the Financial Year.
- For the Financial Year 2019-20, the above-mentioned requirements need to be fulfilled on or before December 31, 2020.
- In light of market events due to the COVID-19 pandemic, the timeline for making available the first industry benchmark and AIF level performance versus Benchmark Reports, has been extended till October 01, 2020.
- Amendment to Paragraph 12(i) of the Previous Circular:
| Previous Circular | Amendment | Implication |
| Any association of AIFs (“Association”), which in terms of membership, represent at least 51% of the number of AIFs, may notify one or more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process. | Any association of AIFs (“Association”), which in terms of membership, represents at least 33% of the number of AIFs, may notify one or more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process | As mandatory benchmarking of AIFs have been introduced, now, any association of AIF representing at least 33% of the number of AIFs can notify one or more Benchmarking Agencies with whom the AIFs have to enter into agreement for carrying out the benchmarking process.
Earlier, for notifying the benchmarking agencies, the association of AIF had to represent at least 51% of the number of AIFs. Now, that been reduced to 33% through the present amendment.
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Source: Securities and Exchange Board of India
