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TMI BlogGuidelines on disclosures, reporting and clarifications under AIF RegulationsX X X X Extracts X X X X X X X X Extracts X X X X ..... a. Circular no. CIR/IMD/DF/10/2013 dated July 29, 2013 requires that all Category III AIFs report to the custodian on a daily basis the amount of leverage at the end of the day (based on closing prices) and whether there has been any breach of limit during the day. b. It has been observed that with respect to reporting of amount of leverage at the end of the day, the AIF is dependent on various parties in order to calculate and submit to the custodian the amount of leverage as at the end of the day. Such various parties provide information at varied time periods due to which the AIFs are finding it difficult to report to the custodian the amount of end-of-day leverage on the same day. c. Therefore, in part modification of the aforesaid circular dated July 29, 2013, 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. 2. Disclosures in placement memorandum a. Disclosure on fees and charges and litigations i. It has been observed that fee structure applicable to the investors in an AIF is generally complex in nature. Therefore, for better understanding, every AIF shall, in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the copy of the final placement memorandum. ii. Further, it has been observed in several cases that changes are being made to the placement memorandum without intimation to or consent from unit holders, which is not in the interest of the investors. iii. 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. Such changes shall also be intimated to SEBI. iv. However, in cases of material changes significantly influencing the decision of the investor to continue to be invested in the AIF, the process as mentioned hereunder shall be complied with. Such changes shall include, but not be limited to the following: a. Change in sponsor/manager (not including an internal restructuring within the group) b. Change in control of sponsor/manager c. Change in fee structure or hurdle rate which may result in higher fees being charged to the unit holders The following process shall be followed by the AIF: a. Existing unit holders who do not wish to continue post the change shall be provided an exit option. The un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees. c. With respect to investment by the sponsor/manager in the AIF, the sharing of loss by the sponsor/manager shall not be less than pro rata to their holding in the AIF vis-à-vis other unit holders. d. With respect to Regulation 10(c), an AIF may accept the following as joint investors for the purpose of investment of not less than one crore rupees: i. an investor and his/her spouse ii. an investor and his/her parent iii. an investor and his/her daughter/son With respect to the above investors, not more than 2 persons shall act as joint-investors in an AIF. In case of any other investors acting as joint-investors, for every investor, the minimum investment amount of one crore rupees shall apply. e. For the purpose of maintaining continuing interest under Regulation 10(d) of the AIF Regulations, such interest may be maintained pro-rata to the amount of funds raised (net) from other investors in the AIF. f. An AIF shall not invest in units of another AIF unless it is fund of AIFs as specified under the Regulations. g. For the purpose of Regulation 15(1)(c), in case the AIF proposes to invest into real estate or infrastructure projects, every such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, the manager shall make necessary changes in the CTR, as may be required, and submit its reply to the trustee/sponsor. d. In case any violation of AIF Regulations or circulars issued thereunder is observed by the trustee/sponsor, the same shall be intimated to SEBI as soon as possible. 5. Submission of information to SEBI under sub-regulation (1) of Regulation (3) of AIF Regulations a. Under fourth proviso to Regulation 3(1) of AIF Regulations, 'such existing funds, which do not propose to accept any fresh commitments after commencement of these regulations shall not be required to obtain registration under these regulations subject to submission of information on their activities to the Board in the manner as may be specified.' b. Funds falling under the purview of the aforesaid proviso shall disclose to SEBI information in the manner as specified hereunder: i. Such funds shall download the excel sheet provided on SEBI website under the Section Info for→Alternative Investment Funds→"Information to be filled by unregistered funds" ii. The fund shall not add any additional rows/columns to the excel sheet or fill any information other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chever is lower, in the form of investment in the AIF and such interest is not through the waiver of management fees. In case of Category III AIF, whether the continuing interest is not less than five percent of the corpus or ten crore rupees, whichever is lower. 6. Regulation 10(e): Whether the Manager and Sponsor have disclosed their investments in the AIF to the investors of the AIF. 7. Regulation 10(f): Whether each scheme of the AIF has not more than one thousand Investors. 8. Regulation 10(g): Whether the AIF has solicited or collected funds only by way of private placement. 9. Regulation 11(2): Whether the placement memorandum contains all information as specified in Regulation 11(2) 10. Regulation 12: Whether the AIF has launched any new scheme during the year and in such case, whether the placement memorandum has been filed with SEBI atleast thirty days prior to launch of scheme along with the scheme fees. 11. Regulation 13(4) & 13(5): Whether there has been any extension of the tenure of the close ended AIF. If yes, whether the same is not more than two years and approved by two-thirds of the unit holders by value of their investment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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