SEBI specifies the timeline for declaration of First Close of schemes of AIFs

Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/155, Dated 17.11.2022

SEBI has amended SEBI (Alternative Investment Funds) Regulations, 2012 on 15.11.2022. Now, the SEBI has issued guidelines for AIFs for declaration of first close, calculation of tenure and change of sponsor/manager or change in control of sponsor/manager.

With regard to the Timelines for first close of the schemes of AIF, the SEBI has prescribed that:

(a) The First Close of a scheme shall be declared not later than 12 months from the date of SEBI communication for taking the private placement memoranda (PPM) of the scheme on record.

(b) Further, Corpus of the scheme at the time of declaring its First Close shall not be less than the minimum corpus prescribed in AIF Regulations for the respective category/sub-category of the AIF.

(c) The tenure of close ended schemes of AIFs shall be calculated from the date of declaration of the First Close. Also, AIF may modify the tenure of a scheme at any time before declaration of its First Close.

(d) A fee equivalent to the registration fee applicable to the respective category/sub-category of the AIF, shall be levied in case of change in control of manager/sponsor and in case of change in manager/sponsor. Such cost paid towards such fee by manager/sponsor shall not be passed on to the investors.

With regard to the Calculation of tenure of close-ended schemes of AIFs, the SEBI prescribed that:

(a) The tenure of close ended schemes of AIFs shall be calculated from the date of declaration of the First Close.

(b) AIF may modify the tenure of a scheme at any time before declaration of its First Close. Prior to declaration of the First Close, the investor may withdraw or reduce commitment provided to such scheme of an AIF.

With regard to the Fee for change in control of manager/sponsor or change in manager/sponsor of AIFs, the SEBI prescribed that:

(a) A fee equivalent to the registration fee applicable to the respective category/sub-category of the AIF, shall be levied in case of change in control of manager/sponsor and in case of change in manager/sponsor. The cost paid towards such fee by manager/sponsor shall not be passed on to the investors of the AIF in any manner

(b) In case change in control of manager/change of manager and change in control of sponsor/change of sponsor of an AIF is proposed simultaneously, aforesaid fee equivalent to single registration fee shall be levied.

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