Guidelines on disclosures, reporting and clarifications under AIF Regulations
Summary
This circular clarifies reporting obligations for Category III AIFs regarding daily leverage submissions to custodians. It mandates specific disclosures in placement memoranda, including fee structures and disciplinary histories of key entities. The document also outlines procedures for handling material changes to placement memoranda and corpus breaches in open-ended schemes. This section clarifies operational requirements for Alternative Investment Funds, including loss sharing, joint investor definitions, and investment restrictions. It mandates the preparation and submission of a Compliance Test Report by fund managers to trustees or sponsors. Additionally, it outlines specific information disclosure procedures for existing unregistered funds transitioning under the new regulations. This section mandates compliance with specific SEBI regulations including Regulations 15, 16/17/18, 20, 21, 22, 23, 25, 28, and 29. It requires adherence to operational norms outlined in SEBI circulars dated July 29, 2013, and June 19, 2014. The document concludes by requiring compliance with any future circulars issued by SEBI.
Text
all Category III AIFs shall report to the custodian the amount of leverage at the end of the day (based on closing prices) by the end of next working day.
every AIF shall, in its placement memorandum, add by way of an annexure, a detailed tabular example of how the fees and charges shall be applicable to the investor including the distribution waterfall.
all AIFs shall include in their placement memorandum, disciplinary history of: (1) AIF, sponsor, manager and their Directors/partners/promoters and associates (2) If applicant is a trust, Trustees or trustee company and its directors
Existing AIFs shall send the annexure as stated in clause (a)(i) above and disciplinary actions, if not already included, to all their investors as an addendum to the existing placement memorandum within 30 days of this circular.
All AIFs shall intimate any change to the placement memorandum to all unit holders (including investors who have provided commitment to the AIF) within 7 days of making such change, specifically indicating the changes made.
Existing unit holders who do not wish to continue post the change shall be provided an exit option. The unit holders shall be provided not less than one month for expressing their dissent.
In case the scheme of the AIF is open-ended, the exit option may be provided by either of the following: (1) Buying out of units of the dissenting investors by the manager/ any other person as may be arranged by manager, valuation of which shall be based on market price of underlying assets. (2) Redemption of units of the investors through sale of underlying assets.
The exit option shall be provided by buying out of units of the dissenting investors by the manager/ any other person as may be arranged by manager. Prior to buying out of such units, valuation of the units shall be undertaken by 2 independent valuers and the exit shall be at value not less than average of the two valuations.
The responsibility to provide exit to the dissenting investors shall be on the manager. The expenses for the entire process shall be borne by the manager/sponsor/proposed new manager or sponsor and shall not be charged to the unit holders.
The trustee of AIF (in case AIF is a trust)/ sponsor (in case of any other AIF) shall be responsible for overseeing the process, ensuring compliance and regularly updating SEBI on the developments.
The AIF shall intimate to SEBI within 2 days of receiving request for redemption from the client.
The AIF shall take necessary action to bring back the scheme size to twenty crores within 3 months from the date of such breach.
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Source: SecMarx — Guidelines on disclosures, reporting and clarifications under AIF Regulations. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.