Private Equity

Fund News

Stricter regulatory framework for AIFs soon

PTI  

Capital markets regulator Sebi has approved measures to strengthen the framework for Alternative Investment Funds (AIFs), including having an independent valuation of their investments, dematerialisation of units and introducing a comprehensive certification requirement for key investment teams of AIF managers. To improve governance and transparency to investors with respect to transactions involving conflict of interest, the regulator also approved that there should be a mandate for obtaining approval of 75% of investors by value for buying or selling of investments potentially involving conflict of interest. The valuation of investment portfolio of Category III AIFs in unlisted securities and listed debt securities should be carried out by an independent valuer. All new schemes going forward and existing schemes of AIFs with corpus more than INR 500 crore should dematerialise their units by October 31, 2023. Existing schemes of AIFs with corpus less than INR 500 crore should dematerialise their units by April 30, 2024. In order to provide flexibility to AIFs to deal with investments which are not sold due to lack of liquidity during the winding up process, Sebi board has cleared a proposal to allow AIFs to either sell such investments to a new scheme of the same AIF.