Final notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2021 – SEBI
View PdfFinal notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2021 – SEBI
- This notification has come into effect from 05.05.2021.
- I In sub-regulation (1) of regulation 2, i. after clause (w) and before clause (x), the following clause shall be inserted, namely, “(wa) “start-up” means a private limited company or a limited liability partnership which fulfils the criteria for start-up as specified by the Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, vide notification No. G.S.R. 127(E) dated February 19, 2019 or such other policy of the Central Government issued in this regard from time to time;”ii. Clause (aa) shall be substituted with the following, namely, “(aa) “venture capital undertaking” means a domestic company which is not listed on a recognised stock exchange at the time of making investments;”
- II In sub-regulation (2) of regulation 11, after the words and symbol “key service providers,” and before the words “conflict of interest”, the words and symbol “terms of reference of the committee constituted for approving the decisions of the Alternative Investment Fund,” shall be inserted.
- III In sub-regulation (1) of regulation 15,
- clause (c) shall be substituted with the following, namely, “(c) Category I and II of Alternative Investment Funds shall invest not more than twenty five per cent of the investable funds in an Investee Company directly or through investment in the units of other Alternative Investment Funds;” ii. clause (d) shall be substituted with the following, namely, “(d) Category III of Alternative Investment Funds shall invest not more than ten per cent of the investable funds in an Investee Company directly or through investment in units of other Alternative Investment Funds;” ii. after clause (d) and before clause (e), the following clause shall be inserted, namely, “(da) Alternative Investment Funds which are authorised under the fund documents to invest in units of Alternative Investment Funds shall not offer their units for subscription to other Alternative Investment Funds;” iv. clause (e) shall be substituted with the following, namely, “(e) Alternative Investment Fund shall not invest except with the approval of seventy five percent of investors by value of their investment in the Alternative Investment Fund in -(a) associates; or(b) units of Alternative Investment Funds managed or sponsored by its Manager, Sponsor or associates of its Manager or Sponsor;”
- IV In sub-regulation (1) of regulation 16,i. clause (a) shall be substituted with the following clause, namely, “(a) Category I Alternative Investment Fund shall invest in investee companies, venture capital undertakings, special purpose vehicles, limited liability partnerships or in units of other Category I Alternative Investment Funds of the same sub category;” ii. Clause (b) shall be omitted.
- V In regulation 17,i. clause (a) shall be substituted with the following clause, namely, “(a) Category II Alternative Investment Funds shall invest in investee companies or in the units of Category I or other Category II Alternative Investment Funds as may be disclosed in the placement memorandum; Explanation.– Category II Alternative Investment Fund shall invest primarily in unlisted companies directly or through investment in units of other Alternative Investment Funds;” ii. clause (b) shall be omitted.
- VI In regulation 18,i. clause (a) shall be substituted with the following clause, namely, “(a) Category III Alternative Investment Funds may invest in securities of listed or unlisted investee companies, derivatives, units of other Alternative Investment Funds or complex or structured products; ”ii. Clause (b) shall be omitted.
- VIII Regulation 20 shall be substituted with the following, namely, “20 (1) Alternative Investment Fund, key management personnel of the Alternative Investment Fund, trustee, trustee company, directors of the trustee company, designated partners or directors of the Alternative Investment Fund, as the case may be, managers and key management personnel of managers shall abide by the Code of Conduct as specified in the Fourth Schedule.
