SEBI changes AIF rules

New Delhi New Delhi: Market regulator Sebi has amended Alternative Investment Fund (AIF) regulations directing them to provide investors rights in the distribution of investments and income in proportion to their commitments to the scheme. In simple words, the risk and benefits arising from investments made by an AIF scheme should be shared in proportion to the investors’ contribution to the scheme. This is aimed at clarifying the regulatory intent of AIFs as pooled investment vehicles and ensuring fair and equitable treatment of investors of AIFs. In a notification issued on November 18, the market regulator said, “Investors of a scheme of an AIF shall have rights in the distribution of each investment of the scheme and income of such investment, in proportion to their commitment to the scheme, except as may be specified by the Board (Sebi) from time to time.” “Except the rights specified in sub-regulation (21) of this regulation, the rights of investors of a scheme of an AIF shall be equal in all aspects, provided that select investors of a scheme of an AIF may be offered differential rights without affecting the interests of other investors of the scheme in a manner specified by the Board”. Also, the Securities and Exchange Board of India (SEBI) said that select investors of a scheme of an AIF may be offered differential rights without affecting the interests of other investors of the scheme. The market regulator has exempted large value funds from ensuring homogenous rights among its investors. This is subject to each investor providing a waiver to this effect. An AIF is a privately pooled investment vehicle that collects money from investors to invest under a defined investment policy for the benefit of its investors.