SEBI INTRODUCES THE CONCEPT OF SPECIAL SITUATION FUNDS
UNDER AIF REGULATIONS
The Securities and Exchange Board of India
(“SEBI') has under its notification
dated 24 January 2022 (“Amendment
Regulations”) amended the SEBI (Alternative
Investment Funds) Regulations, 2012. (“AIF
Regulations”). Under the Amendment
Regulations, SEBI introduced the concept of Special Situation Funds
(“SSF”). Subsequently, SEBI issued the
circular dated 27 January 2022
(“Circular”) in order to provide
clarity to the SSF framework. The move comes against the backdrop
of increased government efforts to provide alternatives methods to
rescue businesses under financial stress.
Under the Amendment Regulations, SSF have been categorized as
Category - I Alternative Investment Fund
(“AIF”). SSFs will invest only in
special situation assets in accordance with its investment
objectives and may act as a resolution applicant under the
Insolvency and Bankruptcy Code, 2016 (“Insolvency
Law”). The
