Note
SEBI outlines Procedures for
AIF Registration
-Vishal Dhona
-Sikha Bansal
vishal@[Link]
sikha@[Link]
Vinod Kothari & Company
June 14, 2012
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VK & SEBI Outlines Procedure for AIF Registration
Co.
Note
SEBI on 21st May 2012 introduced Alternative Investment Funds (AIF) Regulations,
20121 to monitor funds which are used for making other investment than the
traditional or the common investment such as investment in share, debentures etc2.
Under the Regulations, an AIF has been defined to mean any fund established or
incorporated in India in the form of a trust or a company or a limited liability
partnership or a body corporate- it is essentially a privately pooled investment
vehicle which collects funds from investors, whether Indian or foreign, for investing
it as per specified policy. However, family trusts, ESOP Trusts, Employee Welfare
Trusts, among others, have been excluded from the purview.
Applicability of AIF Regulations: You may like to know whether you
need registration under AIF Regulations
The following diagram depicts the applicability of the AIF Regulations:
1
The Regulations are available at: [Link]
2
See analytical note on SEBI(AIF) Regulations, 2012 by Aditi Jhunjhunwala and Nidhi Ladha here:
[Link] and a Presentation on the Regulations by
Aditi Jhunjhunwala, Nidhi Ladha and Nivedita Shankar at: [Link]
[Link]/Presentation_on_SEBI_AIF_Regulations_2012.pdf
VK & SEBI Outlines Procedure for AIF Registration
Co.
Note
Guide to AIF Registration
Requirements under the Regulations
Certificate of registration from SEBI
An existing fund falling within the definition of Alternative Investment Fund
which is not registered with the Board may continue to operate for a period
of 6 months from commencement of the Regulations
Existing schemes will be allowed to complete their agreed tenure, such funds
shall not raise any fresh monies other than commitments already made till
registration is granted
Registration to be sought in one of the categories:
“Category I Alternative Investment Fund” which invests 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
Category II Alternative Investment Fund” which does not fall in
Category I and III and which does not undertake leverage or
borrowing other than to meet day-today operational requirements
and as permitted in the Regulations
Category III Alternative Investment Fund” which employs diverse or
complex trading strategies and may employ leverage including
through investment in listed or unlisted derivatives.
Eligibility Criteria:
Provision in the memorandum of association in case of a company; or
the Trust Deed in case of a Trust; or the Partnership deed in case of a
limited liability partnership to carry on the activity of AIF
Prohibition from making an invitation to the public to subscribe to its
securities
The Charter instruments to be duly registered under the respective
Acts
The applicant, Sponsor and Manager are fit and proper persons
Manager and sponsor to have adequate infrastructure and manpower
The investment objective, the targeted investors, proposed corpus,
investment style or strategy and proposed tenure of the fund or
scheme to be specified upfront
VK & SEBI Outlines Procedure for AIF Registration
Co.
Note
Recently, SEBI, vide its Press Release dated June 8, 20123 has outlined the
registration procedure as follows:
Registration Procedure:
Submit an application to SEBI in Form A along with necessary
documents
SEBI to reply within 21 working days after the receipt of the
application
An applicant to know the Eligibility criteria and other details
mentioned in the SEBI (Alternative Investment Fund)
Regulations, 2012 to help expedite the registration process
Applicant to mention in the covering letter as to whether:
• Is it registered with SEBi as a Venture Capital Fund, if yes
then details
• Whether or not it has been undertaking activities of an AIF
prior to the apllication, please provide details of such
activities
• It is applying for registration for a new fund.
Applicant to submit Form A numbered , duly signed & stamped
along with a bank draft of Rs. 1,00,000/- as an application fees
in favour of "The Securities and Exchange Board of India";
payable at Mumbai.
Applicant is required to make an online application in terms of the
guidelines by SEBI from time to time.
3
See the press release at [Link]
VK & SEBI Outlines Procedure for AIF Registration
Co.
Note
Grant of Certification of Registration
SEBI shall approve the application only after the
applicant has fulfilled all the requirements as
specified in the Regulations.
If not registered as a Venture
Applicant is required to pay the registration fees Capital Fund with SEBI, then
after the receipt of approval from SEBI by way of Registration Fees of Rs. 5,00,000/-
bank draft in the name of “The Securities Exchange
Board of India”; payable at Mumbai If already registered as a Venture
Capital Fund with SEBI, then
Registration Fees of Rs. 1,00,000/-
After the receipt of the registration of the registration
or re-registration fees SEBI shall grant the Certificate
of registration as an Alternative Investment Fund to
the Entity.
Post-Registration Compliance
An Entity after getting itself registered as an AIF needs to comply with the post
registration compliances. Following are some of them:
1. An AIF needs to comply with all the reporting requirements specified by SEBI
dynamically
2. AIF must stay updated in regard to new circulations, guidelines or updation
issued by SEBI from time to time corresponding to its activity
3. Any material change in the details of AIF should be intimated to SEBI within
reasonable period of time.
Points to remember:
“The applicant” means the entity seeking registration as an Alternative
Investment Fund
Application which is incomplete or without the necessary
documents/information/declarations would not be accepted and would be
VK & SEBI Outlines Procedure for AIF Registration
Co.
Note
treated as not filed. However, intimation to this effect will be provided to the
applicant within a reasonable period of time.
Applications involving policy decisions or other considerations might get
delayed in processing and in getting registration approvals.
Documents/annexure submitted along with the application need to be
numbered and duly signed.
In case of an Authorized signatory, authorization letter to be submitted from
the Directors/Trustees/Designated Partners of the Fund.
The application in Form A, application fees along with all the necessary
information as enumerated above will be addressed to:
The Deputy General Manager,
Division of Funds-1,
Investment Management Department,
Securities and Exchange Board of India (SEBI),
SEBI Bhavan,
Plot No. C4-A, “G’ Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400051
