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Sebi proposes AIF consent rule changes, aligns 'related party' definition

Business Standard  

The Securities and Exchange Board of India (Sebi) has proposed changes to the Alternative Investment Fund (AIF) regulations, including revised investor consent thresholds for key decisions and a shift from the concept of 'associate' to 'related party' across the regulatory framework.Sebi has proposed introducing a more uniform investor consent framework across AIF activities, replacing the current fragmented approach. Sebi has mapped specific decisions to clearly defined approval thresholds, with most material actions requiring the consent of at least 75% of investors by value. The regulator has also proposed changes to the methodologies through which consent is obtained, to provide flexibility and protect investors' interests.Under the proposed changes, AIFs would require investor approval before investing in or transacting with 'related parties' of the manager or sponsor, instead of 'associates' as currently prescribed. This would apply to key provisions such as investments in affiliated entities and transactions involving schemes managed or sponsored by related parties.With the change, any such transaction with a related party will require the consent of 75% of the investors by value.