Corporate Debt Market Development Fund - Net set of regulations in respect of Alternative Investment Fund set up and making investments, notified - Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2023 - SEBI/LAD-NRO/GN/2023/132 - SEBI

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..... of India (Alternative Investment Funds) Regulations, 2012 , I. In regulation 2, in sub-regulation (1), i) after clause (g), the following new clause shall be inserted, namely, - (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. ii) after clause (pa), the following new clauses shall be inserted, namely, - (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. II. In regulation 3 , in sub-regulation (4), after clause (c), the following new clause shall be inserted, namely, - (d) specified Alternative Investment Fund under Regulation 19 of these regulations. III. In regulation 4 , in clause (g), i) sub-clause (i) shall be substituted with the following, namely, - (i) at least one key personnel with relevant certification as may be specified by .....

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..... er these regulations, unless the context otherwise requires or is repugnant to the provisions of this Chapter, shall apply to the Corporate Debt Market Development Fund, its sponsor, manager, trustee and investors: i. sub regulation (2) of regulation 9; ii. clauses (a), (c), (d), and (f) of regulation 10; iii. sub regulations (2) and (3) of regulation 12; iv. sub regulations (1), (2), (3), (5) and (6) of regulation 13; v. regulations 14, 16, 17, 18, 19, Chapter III-A and III-B, 23; vi. sub regulation (1) of regulation 15; vii. sub regulation (15) of regulation 20; viii. clause (a), (b) and (c) of sub regulation (1) of regulation 29; ix. sub regulations (2),(3), (4) and (8) of regulation 29. Registration of the Corporate Debt Market Development Fund . 19O. (1) The Corporate Debt Market Development Fund shall be constituted in the form of a Trust and the instrument of Trust shall be in the form of a deed duly registered under the provisions of the Indian Registration Act, 1908. (2) The Corporate Debt Market Development Fund shall apply for registration as an Alternative Investment Fund in accordance with the provisions of Chapter II of these regulations. (3) The placement memorandum .....

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..... as may be approved by the Board. (3) The Corporate Debt Market Development Fund shall hold eligible securities as mentioned in sub regulation (1) of this regulation, till maturity or sell the same in the secondary market upon reversal of market dislocation, in the manner as specified by the Board from time to time. (4) Other than market dislocation period, the Corporate Debt Market Development Fund shall invest in liquid and low-risk debt instruments and undertake any other activity related to corporate debt market, as may be specified by the Board from time to time. (5) The Corporate Debt Market Development Fund shall buy corporate debt securities at fair price adjusted for liquidity risk, interest rate risk and credit risk but not at distress prices. (6) The sharing of loss by the sellers of corporate debt securities to the Corporate Debt Market Development Fund during periods of market dislocation may be higher than their pro rata holding in the Alternative Investment Fund vis-vis other unit holders. (7) The Corporate Debt Market Development Fund shall not invest in the securities of companies incorporated outside India. (8) Investment by the Corporate Debt Market Development F .....

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..... arket Development Fund, except with the prior written consent of the Board: Provided that any other activity of the trustee company as permitted by the Board shall not be in conflict with its role as the trustee of the Corporate Debt Market Development Fund. (5) Two-thirds of the members of the board of directors of the trustee company shall be independent directors and shall not be associated with the Sponsor or the Manager in any manner whatsoever. (6) No person shall initially or any time thereafter be appointed as a director of the trustee company of the Corporate Debt Market Development Fund without the prior approval of the Board. (7) An audit committee of the trustee company shall be constituted to review compliance with the provisions of placement memorandum as required under these regulations along with other responsibilities as may be specified by the Board from time to time. (8) The manager of the Corporate Debt Market Development Fund shall appoint a Governance Committee. (9) The Governance Committee shall comprise corporate bond market experts including academicians, fund managers or Chief Investment Officers, risk management professionals and independent market expert .....

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..... following new sub-regulations shall be inserted, namely, - (4) The Manager shall ensure that the Alternative Investment Fund appoints an independent valuer who satisfies the criteria specified by the Board from time to time. (5) The Manager and the key management personnel of the Manager shall ensure that the independent valuer computes and carries out valuation of the investments of the scheme of the Alternative Investment Fund in the manner specified by the Board from time to time. (6) The Manager shall be responsible for true and fair valuation of the investments of the scheme of the Alternative Investment Fund: Provided that in case the established policies and procedures of valuation do not result in fair and appropriate valuation, the Manager shall deviate from the established policies and procedures in order to value the assets or securities at a fair value and document the rationale for such deviation: Provided further that such deviation and its rationale shall be reported to the trustee or the trustee company or the Board of Directors or designated partners of the Alternative Investment Fund and investors of the Alternative Investment Fund. X. In regulation 29 , i) in su .....

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..... 19L(1), Regulation 19L(2), Regulation 19M, Regulation 29 (7) and Regulation 29 (9) shall not apply to a liquidation scheme of the Alternative Investment Fund. (3) The placement memorandum of liquidation scheme of the Alternative Investment Fund shall be filed with the Board through a merchant banker along with the fees as specified in the Second Schedule. (4) The tenure of liquidation scheme of the Alternative Investment Fund shall be determined at the time of filing of placement memorandum with the Board in the manner and subject to conditions as may be specified by the Board. (5) The tenure of liquidation scheme of the Alternative Investment Fund shall not be extended. (6) The liquidation scheme of the Alternative Investment Fund shall not accept any fresh commitment from any investor and shall not make any new investment. (7) The investments of the liquidation scheme of the Alternative Investment Fund which are not sold due to lack of liquidity by the end of its tenure shall be dealt with, in the manner as may be specified by the Board from time to time. XII. In the First Schedule , in Form A, in clause 1, in sub-clause (e), after the words and symbol Category III Alternative In .....

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..... he Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2020 vide No. SEBI/LAD/NRO/GN/2020/37. (k) 8th January, 2021 by the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2021 vide No. SEBI/LAD/NRO/GN/2021/01. (l) 5th May, 2021 by the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/21. (m) 3rd August, 2021 by the (Regulatory Sandbox) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/30. (n) 3rd August, 2021 by the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/33. (o) 13th August, 2021 by the Securities and Exchange Board of India (Alternative Investment Funds) (Fourth Amendment) Regulations, 2021 vide No. SEBI.LAD-NRO/GN/2021/41. (p) 9th November, 2021 by the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/57. (q) 24th January, 2022 by the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) R .....

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