Alternative Investment Funds: Registration and Compliance

Alternative Investment Funds (“AIF”) refers to a fund created or incorporated in India by pooling of funds from various investors whether Indian or foreigner by way of private placement for investment in a portfolio of securities in accordance with the defined investment policy for the benefit of its investors. AIF as the name suggests is an alternative mode of investment vis-à-vis the conventional modes like equity, bond etc. and are governed by SEBI (“Board”) vide the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

In the recent years, this sector has attracted more number of investors pursuant to various factors like diversification, higher returns etc. in comparison to the traditional investment modes and as a result more number of AIFs are being registered. Through this article we have tried to answer some frequently asked questions relating to the eligibility and process for registration and compliances of AIF in India.

Q1. What shall be the Structure of the AIF?

The AIFs can be registered in either of the following form:

  • Company
  • LLP
  • Trust
  • Body corporate set up under the laws of the Central or State Legislature

Q2. What is the eligibility criteria to register the AIF?

For the purpose of the grant of certificate to an applicant, the Board considers the following conditions for eligibility, namely-

a. Authorisation – There has to be an authorisation in memorandum of association in case of Company, trust deed in case of trust and limited liability partnership deed in case of limited liability partnership to carry on the activities of AIF.

b. Registered deed – The trust or LLP applying for registration shall have its trust deed and LLP deed registered respectively and in case of Body corporate, it should have been set up or established under the laws of the Central or State Legislature and is permitted to carry on the activities of the AIF;

c. Qualification – At least one key personnel in the investment team of the manager of AIF shall have at least five years’ experience in advising or managing pools of capital or in fund or asset or wealth or portfolio management or in the business of buying, selling and dealing of securities or other financial assets and has relevant professional qualification;

d. Fit and proper person – The applicant, sponsor and manager must be fit and proper persons based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. The Board takes into account any consideration as it deems fit, including but not limited to the following criteria. readmore..

This article is also published in Taxguru: https://taxguru.in/sebi/alternative-investment-funds-registration-compliance.html



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