The Securities and Exchange Board of India (Sebi) on Monday issued modalities for migration of existing alternative investment fund (AIF) schemes into accredited investor-only (AI-only) schemes or large value funds (LVFs). The regulator will offer relaxations to LVFs for AI to enhance the ease of doing business for AIFs.
This migration is subject to obtaining positive consent from all the investors and meeting respective conditions, Sebi said in its circular.
SEBI’s latest guidelines
Monday’s development came after the regulator in November had amended rules and facilitated the introduction of a separate category of AIF schemes, limited exclusively to AI-only ones, and offered the scheme-specific regulatory flexibilities in terms of less compliance around investor protection. It had extended additional relaxations and operational flexibilities to LVFs for accredited investors.
What did the regulator say?
In its circular, Sebi said any new scheme proposed to be launched as an AI-only scheme or LVF will have the words ‘AI only fund’ or ‘LVF’, respectively, added to the scheme name at the end.
Upon conversion, the manager of the AIF shall ensure that the name of the converted scheme is changed to incorporate ‘AI only fund’ or ‘LVF’. This has to be reported to Sebi and depositories by email within 15 days of the conversion.
If an investor is an AI at the time of onboarding into an AIF scheme, the investor shall be reckoned as an AI through the life of the scheme, even if it loses such status in the interim. The maximum extension permissible for AI-only schemes shall be five years.
Sebi has also decided to exempt LVFs from following the standard template of placement memorandum and annual audit of the memorandum, without specific waivers from investors.
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