SEBI has released a consultation paper to receive public comments on the proposed amendments to the AIF Regulations, 2012 by May 31, 2023 (available here), and an overview of the proposal is set out below:
- Category I and Category II AIFs to be restricted from borrowing funds, directly or indirectly, or engage in leverage, for the purpose of making investments, subject to certain exceptions;
- AIFs to hold the instruments/ securities of their investments only in dematerialized form, for the type of instruments/ securities where dematerialization is available;
- All AIFs, including AIFs having a corpus of less than INR 500 crore, to mandatorily appoint a custodian for safekeeping of securities of the AIFs;
- Large value fund for accredited investors to be permitted to extend its tenure only up to 4 years, subject to approval of two-thirds of the unitholders by value of their investment;
- AIFs to pay renewal fee equal to 50% of its applicable registration fee for a subsequent block of 5 years, as per the applicable timelines for payment.
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