Regulation 2 - Definitions - Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012

Definitions. 2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions and variations shall be construed accordingly,- (a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992); 14 [ (aa) accreditation agency means a subsidiary of a recognized stock exchange or a subsidiary of a depository or any other entity as may be specified by the Board from time to time. Explanation: For the purpose of this clause, the Board may recognize an accreditation agency subject to such conditions as may be specified; (ab) accredited investor means any person who is granted a certificate of accreditation by an accreditation agency who, (i) in case of an individual, Hindu Undivided Family, family trust or sole proprietorship has: (A) annual income of at least two crore rupees; or (B) net worth of at least seven crore fifty lakh rupees, out of which not less than three crores seventy-five lakh rupees is in the form of financial assets; or (C) annual income of at least one crore rupees and minimum net worth of five crore rupees, out of which not less than two crore fifty lakh rupees is in the form of financial assets. (ii) in case of a body corporate, has net worth of at least fifty crore rupees; (iii) in case of a trust other than family trust, has net worth of at least fifty crore rupees; (iv) in case of a partnership firm set up under the Indian Partnership Act, 1932, each partner independently meets the eligibility criteria for accreditation: Provided that the Central Government and the State Governments, developmental agencies set up under the aegis of the Central Government or the State Governments, funds set up by the Central Government or the State Governments, qualified institutional buyers as defined under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Category I foreign portfolio investors, sovereign wealth funds and multilateral agencies and any other entity as may be specified by the Board from time to time, shall deemed to be an accredited investor and may not be required to obtain a certificate of accreditation; ] (b) Alternative Investment Fund means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which,- (i) is a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors; and (ii) is not covered under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities: Provided that the following shall not be considered as Alternative Investment Fund for the purpose of these regulations,- (i) family trusts set up for the benefit of relatives as defined under 1 [Companies Act, 2013 ] ; (ii) 2 [ESOP Trusts set up under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 or as permitted under Companies Act, 2013; ] (iii) employee welfare trusts or gratuity trusts set up for the benefit of employees; (iv) 3 [ holding companies as defined under sub-section 46 of section 2 of Companies Act, 2013; ] (v) other special purpose vehicles not established by fund managers, including securitization trusts, regulated under a specific regulatory framework; (vi) funds managed by securitisation company or reconstruction company which is registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; and (vii) any such pool of funds which is directly regulated by any other regulator in India; (c) associate means a company or a limited liability partnership or a body corporate in which a director or trustee or partner or Sponsor or Manager of the Alternative Investment Fund or a director or partner of the Manager or Sponsor holds, either individually or collectively, more than fifteen percent of its paid-up equity share capital or partnership interest, as the case may be; (d) Board means the Securities and Exchange Board of India established under Section 3 of the Act; (e) certificate means a certificate of registration granted by the Board under regulation 6; 27 [ (f) Change in control (i) in case of a body corporate (A) if its shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulations framed under clause (h) of sub-section (2) of section 11 of the Act; (B) if its shares are not listed on any recognised stock exchange, shall be construed with reference to the definition of control as provided in sub-section (27) of Section 2 of the Companies Act, 2013 (18 of 2013); (ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership or change in controlling interest. Explanation For the purpose of sub-clause (ii), the expression controlling interest means an interest, direct or indirect, to the extent of not less than fifty percent of voting rights or interest; ] 19 [ (fa) Co-investment means investment made by a Manager or Sponsor or investor of Category I and II Alternative Investment Fund(s) in investee companies where such Category I or Category II Alternative Investment Fund(s) make investment: Provided that Co-investment by investors of Alternative Investment Fund shall be through a Coinvestment Portfolio Manager as specified under the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020; ] (g) company means a company incorporated under the 4 [Companies Act, 2013]; 28 [ (ga) Corporate Debt Market Development Fund means an Alternative Investment Fund set up and making investments in terms of Chapter III-C of these regulations. ] (h) corpus means the total amount of funds committed by investors to the Alternative Investment Fund by way of a written contract or any such document as on a particular date; 25 [ (ha) credit default swaps shall have the same meaning as assigned to it in the Master Direction Reserve Bank of India (Credit Derivatives) Directions, 2022. ] 9 [ 26 [ (hb) ] custodian means a person who has been granted a certificate of registration to carry on the business of custodian under the Securities and Exchange Board of India (Custodian) Regulations, 1996; ] 16 [ (i) debt fund means an Alternative Investment Fund which invests primarily in debt securities of listed or unlisted investee companies or in securitized debt instruments as per the stated objectives of the Fund ] ; (j) equity linked instruments includes instruments convertible into equity shares or share warrants, preference shares, debentures compulsorily or optionally convertible into equity; (k) form means any of the forms set out in the First Schedule; 10 [ (ka) goods means the goods notified by the Central Government under clause (bc) of section 2 of the Securities Contracts (Regulation) Act, 1956 and forming the underlying of any commodity derivative; ] (l) hedge fund means an Alternative Investment Fund which employs diverse or complex trading strategies and invests and trades in securities having diverse risks or complex products including listed and unlisted derivatives; (m) infrastructure fund means an Alternative Investment Fund which invests primarily in unlisted securities or partnership interest or listed debt or securitized debt instruments of investee companies or special purpose vehicles engaged in or formed for the purpose of operating, developing or holding infrastructure projects; Explanation.─ Infrastructure shall be as defined by the government of India from time to time. (n) inspecting authority means any one or more person appointed by the Board to exercise powers conferred under regulation 30; (o) investee company means any company, special purpose vehicle or limited liability partnership or body corporate 5 [or real estate investment trust or infrastructure investment trust] in which an Alternative Investment Fund makes an investment; 17 [ (p) investable funds means corpus of the scheme of Alternative Investment Fund net of expenditure for administration and management of the fund estimated for the tenure of the fund. Explanation: For the purpose of this clause, the expression tenure means the duration of scheme from the 23 [ date of first close ] till 24 [ last date ] of the term as specified in the fund documents; ] 15 [ (pa) large value fund for accredited investors means an Alternative Investment Fund or scheme of an Alternative Investment Fund in which each investor (other than the Manager, Sponsor, employees or directors of the Alternative Investment Fund or employees or directors of the Manager) is an accredited investor and invests not less than seventy crore rupees; ] 29 [ (pb) liquidation period means a period of one year following the expiry of tenure or extended tenure of the scheme for fully liquidating the scheme of an Alternative Investment Fund. (pc) Liquidation scheme means a close ended scheme launched by an Alternative Investment Fund only for the purpose of liquidating the unliquidated investments purchased from its scheme, whose tenure has expired. ] (q) manager means any person or entity who is appointed by the Alternative Investment Fund to manage its investments by whatever name called and may also be same as the sponsor of the Fund; 20 [ (qa) not for profit organization shall have the same meaning as assigned to it in clause (e) of regulation 292A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; ] (r) private equity fund means an Alternative Investment Fund which invests primarily in equity or equity linked instruments or partnership interests of investee companies according to the stated objective of the fund; (s) SME means Small and Medium Enterprise and shall have the same meaning as assigned to it under the Micro, Small and Medium Enterprises Development Act 2006 as amended from time to time; (t) SME fund means an Alternative Investment Fund which invests primarily in unlisted securities of investee companies which are SMEs or securities of those SMEs which are listed or proposed to be listed on a SME exchange or SME segment of an exchange; 21 [ (ta) social enterprise shall have the same meaning as assigned to it in clause (h) of regulation 292A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; (tb) social impact fund means an Alternative Investment Fund which invests primarily in securities, units or partnership interest of social ventures or securities of social enterprises and which satisfies the social performance norms laid down by the fund; (tc) social stock exchange shall have the same meaning as assigned to it in clause (i) of regulation 292A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; (td) social units means units issued by a social impact fund or schemes of a social impact fund to investors who have agreed to receive only social returns or benefits and no financial returns against their contribution; ] (u) social venture means a trust, society or company or venture capital undertaking or limited liability partnership formed with the purpose of promoting social welfare or solving social problems or providing social benefits and includes,- (i) public charitable trusts registered with Charity Commissioner; (ii) societies registered for charitable purposes or for promotion of science, literature, or fine arts; (iii) 6 [company registered under section 8 of the Companies Act, 2013; ] (iv) micro finance institutions; 22 [ **** ] (w) sponsor means any person or persons who set up the Alternative Investment Fund and includes promoter in case of a company and designated partner in case of a limited liability partnership; 11 [ (wa) startup means a private limited company or a limited liability partnership which fulfills the criteria for startup as specified by the Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, vide notification No. G.S.R. 127(E) dated February 19, 2019 or such other policy of the Central Government issued in this regard from time to time; ] (x) trust means a trust established under the Indian Trusts Act, 1882 or under an Act of Parliament or State Legislation; 18 [ (y) unit means beneficial interest of the investors in the Alternative Investment Fund or a scheme of the Alternative Investment Fund and may be fully or partly paid up. Explanation: For the purpose of this clause, partly paid up units shall represent the portion of committed capital invested by the investor in Alternative Investment Fund or scheme of the Alternative Investment Fund; ] (z) venture capital fund means an Alternative Investment Fund which invests primarily in unlisted securities of start-ups, emerging or early-stage venture capital undertakings mainly involved in new products, new services, technology or intellectual property right based activities or a new business model 7 [and shall include an angel fund as defined under Chapter III-A]; 12 [ 13 [ (za) ] venture capital undertaking means a domestic company which is not listed on a recognised stock exchange at the time of making investments; ] (1) non-banking financial companies; (2) gold financing; (3) activities not permitted under industrial policy of Government of India; (4) any other activity which may be specified by the Board in consultation with Government of India from time to time; (2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956, (42 of 1956) or the 8 [Companies Act, 2013 (18 of 2013)], or any statutory modification or re-enactment thereto, as the case may be. ******* 1 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as Companies Act, 1956 . 2 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as (ii) ESOP Trusts set up under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 or as permitted under Companies Act, 1956; 3 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as holding companies within the meaning of Section 4 of the Companies Act, 1956; . 4 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as Companies Act, 1956 . 5 Inserted by the SEBI (Real Estate Investment Trusts) Regulations, 2014, w.e.f. 26-09-2014. 6 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as company registered under Section 25 of the Companies Act, 1956 . 7 Inserted by the SEBI (Alternative Investment Funds) (Amendment) Regulations, 2013, w.e.f. 16-09-2013 8 Substituted by the SEBI (Alternative Investment Funds)(Amendment) Regulations, 2018, w.e.f. 01-06-2018. Prior to the substitution, it read as Companies Act, 1956 (1 of 1956) . 9 Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/16 dated 10-05-2019 10 Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/16 dated 10-05-2019 11. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 12. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as (aa) venture capital undertaking means a domestic company: (i) which is not listed on a recognised stock exchange in India at the time of making investment; and (ii) which is engaged in the business for providing services, production or manufacture of article or things and does not include following activities or sectors: 13. Re-Numbered vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 before it was read as (aa) 14. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 15. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 16. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/41 dated 13-08-2021 before it was read as: debt fund means an Alternative Investment Fund which invests primarily in debt or debt securities of listed or unlisted investee companies according to the stated objectives of the Fund 17. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/41 dated 13-08-2021 before it was read as: (p) investible funds means corpus of the Alternative Investment Fund net of estimated expenditure for administration and management of the fund; 18. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/41 dated 13-08-2021 before it was read as: (y) unit means beneficial interest of the investors in the Alternative Investment Fund or a scheme of the Alternative Investment Fund and shall include shares or partnership interests; 19. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/57 dated 09-11-2021 w.e.f. 09-12-2021 20. Inserted vide F. No. SEBI/LAD-NRO/GN/2022/89 dated 25-07-2022 21. Inserted vide F. No. SEBI/LAD-NRO/GN/2022/89 dated 25-07-2022 22. Omitted vide F. No. SEBI/LAD-NRO/GN/2022/89 dated 25-07-2022 before it was read as, (v) social venture fund means an Alternative Investment Fund which invests primarily in securities or units of social ventures and which satisfies social performance norms laid down by the fund and whose investors may agree to receive restricted or muted returns; 23. Substituted vide Notification No SEBI/LAD-NRO/GN/2022/105 dated 15-11-2022 before it was read as, day of its launch 24. Substituted vide Notification No SEBI/LAD-NRO/GN/2022/105 dated 15-11-2022 before it was read as, last day 25. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/113 dated 09-01-2023 26. Re-Numbered vide Notification No. SEBI/LAD-NRO/GN/2023/113 dated 09-01-2023 before it was read as, (ha) 27. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/115 dated 17-01-2023 before it was read as, (f) change in control in relation to a company or a body corporate, means: (i) if its shares are listed on any recognized stock exchange, change in control within the meaning of clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (ii) in any other case, change in the controlling interest or change in legal form; Explanation.─ For the purpose of sub-clause (ii), the expression controlling interest means an interest, whether direct or indirect, to the extent of more than fifty percent of voting rights or interest; 28. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/132 dated 15-06-2023 29. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/132 dated 15-06-2023