Sebi frames guidelines for AIFs for declaring first close of a scheme

Capital markets regulator Sebi on Thursday came out with guidelines for Alternative Investment Funds (AIFs) for declaring the first close of a scheme.

Also, the regulator has specified the manner of calculating the tenure of a close-ended scheme of an AIF and prescribed a fee for change in control of the manager or sponsor.

The new guidelines would come into force with immediate effect, the Securities and Exchange Board of India (Sebi) said in a circular.

With regard to the first close of schemes of AIFs, Sebi said that the first close of a scheme is required to be declared not later than 12 months from the date of the capital markets regulator's communication for taking the Private Placement Memorandum (PPM) of the scheme on record.

In the case of open-ended schemes of Category III AIFs, the first close would refer to the close of their Initial Offer Period.

"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," Sebi said.

In case the first close of a scheme is not declared within the timeline prescribed, the AIF would have to file a fresh application for the launch of the said scheme.

In respect of the calculation of the tenure of close-ended schemes of AIFs, Sebi said the tenure of close-ended schemes of AIFs would be calculated from the date of declaration of the First Close.

AIF may modify the tenure of a scheme at any time before declaration of its first close. Prior to declaration of such close, the investor may withdraw or reduce commitment provided to such a scheme of an AIF.

With respect to fee for change in control of manager/sponsor, Sebi said that a fee equivalent to the registration fee applicable to the respective category of the AIF, would be levied in case of change in control of manager or sponsor and in case of change in manager or sponsor. The cost paid towards such fee by such manager or sponsor would not be passed on to the investors of the AIF in any manner.

"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," Sebi said.

The fee would be paid within 15 days of effecting the proposed change in manager/sponsor or change in control of manager/sponsor. These fees would not be levied in cases for change in sponsor or change in control of sponsor happens due to the manager acquiring control in or replacing the sponsor and exit of sponsor in case of AIF having multiple sponsors. This comes after the board of Sebi notified rules in this regard earlier this week.