SEBI eases AIF schemes rules for accredited investors and large value funds

SEBI eases AIF schemes rules for accredited investors and large value funds

The proposals are open for public comments until 29 August

The Securities and Exchange Board of India (SEBI) has proposed new rules to ease regulations for certain Alternative Investment Fund (AIF) schemes. The plan covers schemes for accredited investors and large value funds (LVFs).

For accredited investor schemes, the market regulator suggested a lighter regulatory framework. These plans could be exempted from certain rules, such as maintaining equal rights for all investors, having NISM-certified key team members, and limiting the number of investors to 1,000. Furthermore, they may be allowed to extend the tenure by up to five years with investor approval.

In trust-structured AIFs, managers could take on certain responsibilities currently handled by trustees. It would reflect a shift from using only minimum investment thresholds to focusing on accreditation status as a measure of investor sophistication.

In case of LVFs, SEBI suggested reducing the minimum investment requirement from Rs.70 crores to Rs.25 crores. This would allow domestic institutions, including insurance companies, to participate.

LVFs could also be exempt from using the standard private placement memorandum format, conducting mandatory annual audits of PPM terms, and holding investment committee members liable for fund decisions. The 1,000-investor cap may also be removed, and existing schemes meeting LVF criteria could convert into LVFs with full investor consent.