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ARTICLE · 12 FEBRUARY 2020

SEBI Introduces New Requirements For AIFs

Argus Partners
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On February 5, 2020, the Securities and Exchange Board of India issued a circular introducing significant changes to the existing legal regime concerning alternative investment funds.

IndiaFinance and Banking
Adity Chaudhury
Adity Chaudhury
Kshitija Naik
Kshitija Naik
Ishita Malhotra
Ishita Malhotra
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INTRODUCTION

On February 5, 2020, the Securities and Exchange Board of India ("SEBI") issued a circular ("Circular") introducing significant changes to the existing legal regime concerning alternative investment funds ("AIFs"). AIFs are privately-pooled investment funds which collect funds from investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of the investors. AIFs are governed by the SEBI (Alternate Investment Fund) Regulations, 2012 ("AIF Regulations").

The Circular, inter alia, introduces the requirement of mandatory performance benchmarking, prescribes standardization of private placement memorandums ("PPMs") and also prescribes annual audits for AIFs. The objective of such measures is to enhance disclosure standards amongst others. Prior to issuing the Circular, SEBI had issued a consultation paper on December 4, 2019 where the above proposals were discussed. In the consultation paper it was

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