Alternative Investment Fund Registration (AIF)
An AIF is an Alternative Investment Fund which makes investments into various types of organizations and new businesses. A candidate needs to get registered with the Securities and Exchange Board of India (SEBI) prior to beginning an AIF.
Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 alludes to a bunch of guidelines which were presented in 2012 by Securities and Exchange Board of India (SEBI), to direct and regulate pooled investment funds in Indian Securities market, like, private equity, hedge funds and real estates. These guidelines were introduced to bring unregistered funds under the purview of law.
Under this, Alternative Investment Funds alludes to a fund set up as a trust, organization, body corporate or limited liability partnership. The accompanying entities would be administered by the registration clauses of Alternative Investment Fund
- A privately pooled investment vehicle which gathers funds from finance investors as per a characterized and elaborated investment policy to assist and profit investors, regardless of their placement, may be foreign or Indian.
- Neither covered under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, nor covered under the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 or any sort of other regulations of the Board to direct or manage fund management exercises.
Kinds of AIF (Alternative Investment Fund Registration)
The accompanying sorts of AIF are available:
- Class I- These sorts of funds are invested into new companies and get impetuses from the SEBI, government or other regulating offices. This comprises social venture funds, venture capital funds, SME funds, infrastructure funds.
- Class II- These kinds of funds are permitted to be invested into any amalgamation at any anyplace however they are not permitted to attempt borrowings with the exception of the reason for everyday tasks. This incorporates private equity and debt funds.
- Class III- It likewise incorporates funds involving short term investments and afterward sell, for example, hedge funds.
Qualification Criteria for Alternative Investment Fund Registration
The accompanying qualification standards should be fulfilled by the candidate for Alternative Investment Fund Registration:
<ul class="bullet"Which Organizations will not be considered suitable for Alternative Investment Fund Registration?
While understanding the regulations and clauses connected with SEBI, the accompanying sorts of trusts won't be considered as an AIF:
- Family trusts established to serve 'family members' as mentioned under Companies Act, 1956;
- ESOP Trusts established under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 or as allowed under Companies Act, 1956;
- Gratuity Trusts or Employee Welfare Trusts to serve employees;
- 'Holding companies' within the definition of Section 4 of the Companies Act, 1956;
- other unique purpose vehicles not set up by fund managers inclusive of securitization trusts, regulated under a particular regulatory structure;
- Funds oversaw by securitisation organization or reconstruction organization which is under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, registered with RBI;
- Any such pool of funds which is directly under the control of some other regulation in India.
Procedure of Elective Investment Fund Registration with SEBI
The accompanying steps must be considered by the candidate for Alternative Investment Fund Registration-
Application in Form A
According to Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 for Alternative Investment Fund registration, a candidate will make an application with SEBI according to the guidelines in the Form A alongside the cover letter and with the other important documents.
Assessing Application by SEBI
On the receipt of the application, SEBI will respond within 21 working days to the candidate. Anyway the course of registration thoroughly relies upon the candidate. If the compliances are adhered and documented by the candidate within the right time frame, the procedure would be smooth.
Ensure Adherence to SEBI Regulations
For speeding up the registration cycle, a candidate ought to comply with the
Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Cover Letter
Here are the accompanying subtleties which should be mentioned by the candidate in the cover letter:
- Regardless of whether it is enlisted with SEBI as a Venture Capital Fund or not and in the event that indeed, gives
- Provide details prior to applying, regardless of whether it has been an undertaking practice of an AIF.
- Apply for registration in case of a new fund.
Authorization Letter
When an Authorized signatory is in picture, there is a prerequisite of submitting an authorization letter by the Trustees/Board of Directors/Designated Partners of the Fund.
Registration Fee should be made to SEBI
An online application will be filed as per the rules recommended by SEBI, for registration. A candidate will have to submit Form A, which must be appropriately filled, correctly numbered, properly signed, and stepped with the application charge of Rs.1,00,000/ - via bank draft for "The Securities and Exchange Board of India", payable at Mumbai.
Registration Certificate
- For giving registration certificate SEBI will confirm the compliance of prerequisites determined in guidelines. After fulfillment, application will be accepted by the SEBI and the same will be conveyed to the candidate.
- In the wake of acquiring SEBI approval, a candidate needs to pay registration charge of Rs.5, 00,000/ if the candidate isn't registered with SEBI as a Venture Capital Fund and in case the candidate is registered with SEBI as a Venture Capital Fund then re-registration fee of Rs. 1,00,000 to SEBI via bank draft for "The Securities and Exchange Board of India", payable at Mumbai.
- Once SEBI receives the registration or re-registration charges, the candidate will be granted registration certificate as an Alternative Investment Fund.
Adherences for Alternative Investment Fund Registration
- Once the registration is made, alternative investment funds must fulfil the reporting requirements, at required intervals as directed by SEBI.
- An AIF must visit SEBI website on ordinary spans, to be updated on any guidelines or circulars issued by SEBI, with regard to the Alternative Investment Fund activity.
- AIF should within a reasonable timeframe inform SEBI of any minor change if required in the details already submitted to SEBI.
AIFs- Limited investments and Fund raising
- AIFs raise funds through private placements but are not permitted to acknowledge investment from an investor, worth less than Rs. 1 Cr. Permitted number of investors is 1000 and each scheme ought to have a corpus of Rs. 20 Crore.
- Another necessity is that the director or promoter/sponsor of the AIF ought to have a prevailing continued interest of at the very least 2.5% of the underlying corpus or Rs.5 crore whichever is lower in the AIF.
- Class I and II of AIFs are not allowed to contribute over 25% and class III over 10% of the investible funds in one Investee Company.
- Close ended AIFs are permitted to be recorded on a stock exchange but only at a minimum tradable part of 1 Crore rupees however solely after conclusive closure of the fund or plan.
- Quarterly complying with the reporting standards of SEBI (for Class I, II AIFs and for those Class III AIFs which don't utilize leverage) or complying on a monthly basis (for Class III AIFs which utilize leverage) is needed by all AIFs.
- Class III AIFs likewise need to also conform to standards relating to risk management, reclamation, compliance, and leverage as determined in the circular. Class III AIF’s leverage is indicated not to surpass twice; for example, the gross exposure subsequent to balancing for hedging and portfolio rebalancing transactions ought not to surpass twice the fund’s NAV.
What legal entities one can approach for Alternative Investment Fund Registration
As per SEBI (Alternative Investment Funds) Regulations, 2012 AIFs can be set up or fused as a trust, organization, body corporate or a limited liability partnership. By and large majority of the AIFs are registered with SEBI as trust.
Points connected with Alternative Investment Fund Registration
Corpus of the AIF- Corpus is the aggregate sum of funds which is submitted by investors on a specific date to the AIF via a composed written agreement or any other similar document.
Limited number of investors under AIF guidelines- No plan of an AIF will have above 1000 investors except, angel fund. Provided that if formation of AIF is as a company, the Companies Act provisions will apply. In case of an angel fund, no scheme will consist of more than 49 investors.
In any case, an AIF can raise funds only through private placement from polished investors and can't invite the public on the loose to buy its units.
AIF Sponsor- Sponsor is an individual who establishes AIF and incorporates a promoter if it is a company and in case of a limited liability partnership it is a designated partner.
An AIF’s registration certificate is valid till the wounding up. Though, the registration certificate of AIF would be valid for the remaining life.
Redressal of Complaints- SEBI has an online incorporated complaint redress framework "SEBI Complaint Redressal System (SCORES)" where investors can file their grievances against AIFs.
It is needed for AIF through Manager or Sponsor to frame methods for disputes resolution to resolve clashes between AIF, sponsor, investors, managers through mainly arbitration or any such similar complaint redressal board to decide between investors and the AIF fairly and mutually.
Documents required for Alternative Investment Fund Registration
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The Certificate of Incorporation of the Entity
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Partnership deed is required when Alternative Investment Fund Registration is processed by a Partnership which is registered under Limited Liability Partnership Act, 2008.
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Original Deed of Trust when the Alternative Investment Fund Registration is processed by a trust or it is carried out by a society and registered under the Trusts Act.
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Investors and Directors Information regarding the AIF
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Duplicate of Placement Memorandum of the organization
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Candidate’s contact details and other required information
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Some other business data connected with the growth plans of the organization
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Registered Office’s particulars and address details
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Organization’s Memorandum of Association and Article of Association
The Certificate of Incorporation of the Entity
How to contact Estabizz for Alternative Investment Fund Registration
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