New Delhi: Markets regulator Sebi on Tuesday issued a circular outlining the filing requirements for alternative investment fund (AIF) schemes opting for a wind-up period to deal with their unliquidated investments.
The measure aims to provide flexibility to AIFs and their investors in managing those investments that are not sold due to lack of liquidity.
In its circular, the Securities and Exchange Board of India (Sebi) said that AIF schemes entering a winding-up period are required to submit an information memorandum to it through a merchant banker before the winding-up period or the period expires. of additional settlement of the scheme.
The format of this information memorandum and the due diligence certificate that the merchant banker must present.
As per Sebi AIF rules, the information memorandum must include details such as the name of the AIF, registration number, names of its trustees or directors, name of the scheme and financial details related to unliquidated investments.
Further, for schemes seeking additional or new settlement period, the market watchdog requires submission of relevant information in a prescribed format, Sebi said.
This is applicable to AIF schemes, the settlement period of which has expired or will expire within three months from the date of notification of the amended regulations on April 25, 2024, the regulator said in the circular.
The regulator also specified the conditions and modalities for carrying out in-kind distribution of unliquidated investments of an AIF scheme during the liquidation period, and for carrying out mandatory in-kind distribution of unliquidated investments, respectively. .
Further, Sebi has clarified that such distributions, excluding mandatory distributions in kind, require the approval of at least 75 per cent of the investors for the value of their investment in the scheme.
The managers, trustees and key personnel of the AIFs will be responsible for ensuring compliance with these provisions, Sebi said.
The trustee/sponsor shall ensure that the 'Compliance Test Report' prepared by the administrator in terms of the Sebi master circular issued on May 7, 2024 for AIFs, includes compliance with the provisions of this circular, it said the regulator.
The requirements mentioned in the circular will come into force with immediate effect, he added.
The measure aims to provide flexibility to AIFs and their investors in managing those investments that are not sold due to lack of liquidity.
In its circular, the Securities and Exchange Board of India (Sebi) said that AIF schemes entering a winding-up period are required to submit an information memorandum to it through a merchant banker before the winding-up period or the period expires. of additional settlement of the scheme.
The format of this information memorandum and the due diligence certificate that the merchant banker must present.
As per Sebi AIF rules, the information memorandum must include details such as the name of the AIF, registration number, names of its trustees or directors, name of the scheme and financial details related to unliquidated investments.
Further, for schemes seeking additional or new settlement period, the market watchdog requires submission of relevant information in a prescribed format, Sebi said.
This is applicable to AIF schemes, the settlement period of which has expired or will expire within three months from the date of notification of the amended regulations on April 25, 2024, the regulator said in the circular.
The regulator also specified the conditions and modalities for carrying out in-kind distribution of unliquidated investments of an AIF scheme during the liquidation period, and for carrying out mandatory in-kind distribution of unliquidated investments, respectively. .
Further, Sebi has clarified that such distributions, excluding mandatory distributions in kind, require the approval of at least 75 per cent of the investors for the value of their investment in the scheme.
The managers, trustees and key personnel of the AIFs will be responsible for ensuring compliance with these provisions, Sebi said.
The trustee/sponsor shall ensure that the 'Compliance Test Report' prepared by the administrator in terms of the Sebi master circular issued on May 7, 2024 for AIFs, includes compliance with the provisions of this circular, it said the regulator.
The requirements mentioned in the circular will come into force with immediate effect, he added.
