SEBI Outlines Procedures for Demat/Crediting of Units by AIFs When Investors Haven’t Provided Demat Account Details

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  • Last Updated on 13 December, 2023

Procedures for Demat/Crediting of Units by AIFs

Circular SEBI/HO/AFD/PoD1/CIR/2023/186, dated 11/12/2023

In June 2023, SEBI mandated AIFs to dematerialize units within a specified timeframe. SEBI has now provided guidelines for dematerializing/crediting units in cases where investors haven’t provided demat account details.

As per the said circular the AIF managers shall continue to reach out to existing investors to obtain their demat account details and credit the units issued to them to their respective demat accounts.

In this regard, AIF industry and depositories shall adopt implementation standards as formulated by the pilot Standard Setting Forum for AIFs (SFA) along with the two depositories, in consultation with SEBI.

Further, the units already issued by schemes of AIFs to existing investors who have not provided their demat account details, shall be credited to a separate demat account named “Aggregate Escrow Demat Account”. This account shall be opened by AIFs for the sole purpose of holding demat units of AIFs on behalf of such investors.

New units to be issued in demat form shall be allotted to such investors and credited to the Aggregate Escrow Demat Account. As and when such investors provide their demat account details to the AIF, their units held in Aggregate Escrow Demat Account shall be transferred to the respective investors’ demat accounts within 5 working days.

Further, the Schemes of AIFs with corpus INR 500 Crore shall credit units already issued to existing investors (on boarded prior to November 01, 2023) who have not provided their demat account details, into Aggregate Escrow Demat Account latest by January 31, 2024.

Whereas, the Schemes of AIFs with corpus INR 500 Crore shall credit units issued to their investors who have not provided their demat account details by April 30, 2024, into Aggregate Escrow Demat Account latest by May 10 2024.

The units of AIFs held in Aggregate Escrow Demat Account can be redeemed and proceeds shall be distributed to respective investors bank accounts with full audit trail of the same.

Also, the managers of AIFs shall maintain investor wise KYC details of units held in Aggregate Escrow Demat Account, including name, PAN and bank account details, along with audit trail of the transactions. The same shall also be reported to Depositories and Custodians on a monthly basis.

Click Here To Read The Full Circular

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