Information to be filed by schemes of AIFs availing dissolution period/additional liquidation period and conditions for in specia distribution of assets of AIFs
Summary
This circular mandates Alternative Investment Funds (AIFs) to file an information memorandum via a merchant banker when entering a dissolution period for unliquidated investments. It also specifies the procedure for AIFs to apply for an additional liquidation period if their original period expires near the notification date of recent amendments. Furthermore, it clarifies that in-specie distributions require approval from at least seventy-five percent of investors by value and outlines compliance responsibilities for managers and trustees. This section provides Annexure A, a checklist for verifying compliance with Regulation 29 of the AIF Regulations regarding the dissolution period. It details specific disclosures required to investors and conditions for obtaining consent before entering a dissolution period. Additionally, it includes Annexure III, which prescribes the format for submitting information to SEBI when an AIF scheme avails an additional liquidation period.
Text
scheme of an AIF entering into dissolution period shall file an information memorandum with SEBI through a merchant banker in the manner as may be specified by SEBI.
The information memorandum for a scheme of an AIF entering into dissolution period shall be submitted to SEBI before expiry of the liquidation period or additional liquidation period of the scheme, as the case may be.
if the liquidation period for a scheme of an AIF has expired or is expiring within three months from the date of notification... such schemes may be granted an additional liquidation period, subject to conditions and in the manner as may be specified by SEBI.
schemes of AIFs which are intending to avail the additional/fresh liquidation period... shall submit information to SEBI regarding the same as per the format given at Annexure III, for grant of the additional liquidation period.
such in specie distribution (other than the aforesaid mandatory in specie distribution), shall be carried out after obtaining approval of at least seventy-five percent of the investors by value of their investment in the scheme of the AIF.
The manager, trustee and key management personnel of AIF and manager shall be responsible for compliance with the provisions prescribed above.
The trustee/ sponsor, as the case may be, shall ensure that the ‘Compliance Test Report’ prepared by the manager... includes compliance with the provisions of this circular.
Whether the AIF / manager has disclosed the following details to investors prior to seeking their consent for opting of dissolution period by the scheme of AIF – i. Proposed tenure of the Dissolution Period, ii. Details of unliquidated investments, iii. An indicative range of bid value arranged for a minimum of 25% of the value of its unliquidated investments, iv. Valuation of the unliquidated investments carried out by two independent valuers.
After obtaining approval of at least seventy-five percent of the investors by value of their investment in the scheme for entering into dissolution period, in case the manager fails to arrange bid for a minimum of 25% of the value of its unliquidated investments, the scheme can still opt for dissolution period
No further extension or Liquidation Period shall be available to the scheme after the expiry of Dissolution Period
If the scheme of the AIF fails to sell the unliquidated investments during the Dissolution Period, such investments shall be mandatorily distributed in-specie to the investors
The manager of the AIF shall not charge management fee during the Dissolution Period
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Source: SecMarx — Information to be filed by schemes of AIFs availing dissolution period/additional liquidation period and conditions for in specia distribution of assets of AIFs. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.