SEBI Issues Guidelines w.r.t exclusion of Investors from Investing in Schemes of AIFs

  • Blog|News|Company Law|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 12 April, 2023

Schemes of AIFs

Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2023/053, Dated April 10, 2023

Earlier, the SEBI vide. Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020, introduced template(s) for Private Placement Memorandum (PPM) for AIFs, to ensure that a minimum level of information is disclosed in a format that is simple and can be compared across different PPMs.

The disclosed information in PPMs highlighted certain inconsistencies and insufficient disclosures regarding industry practices. As a result, the Alternative Investment Policy Advisory Committee (AIPAC) considered a proposal to examine the information disclosed under the term ‘Excuse and Exclusion,’ which allows investors to be excused or excluded from investing in the AIF.

Accordingly, the SEBI has decided to allow an AIF to exempt its investor from participating in a specific investment based on the recommendations put forth by AIPAC, in the following circumstances:

a) If a legal professional/legal advisor provides an opinion that confirms an investor’s participation in the investment opportunity would be in violation of an applicable law or regulation, the investor should refrain from participating; or

b) The manager must ensure that investors who disclose that their participation in an investment opportunity would violate their internal policy are required to report any changes to the policy to the AIF within 15 days.

Further, AIF can exclude an investor if their participation would break the law or harm the AIF scheme. And If an AIF investor is also an AIF or other investment vehicle, they may be partially excluded from participating in an investment opportunity, up to the amount contributed by excluded underlying investors. The Circular shall come into force with immediate effect.

Click Here To Read The Full Circular

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied