Filing Requirements for Schemes of AIFs Availing Dissolution Period/Additional Liquidation Period & Conditions for In-Specie Distribution of Assets AIFs July 9, 2024
Published in: Investment Funds
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Securities Exchange Board of India (“SEBI”), vide its circular dated July 9, 2024, has laid down framework for the filing requirements by scheme of Alternative Investment Funds (“AIFs”) opting for dissolution period or additional liquidation period as well as conditions for ‘In-Specie Distribution of Assets of AIFs’.
- Filing requirements for schemes of AIFs entering into dissolution period: SEBI, vide its notification dated April 25, 2024, provided flexibility to schemes of AIFs to opt for dissolution period to deal with their unliquidated investments that were not sold due to lack of liquidity. Further, SEBI, vide its circular dated April 26, 2024, specified the modalities for schemes of AIFs entering into dissolution period. In terms of AIF Regulations, scheme of AIFs entering into dissolution shall file an Information Memorandum (“IM”) with SEBI through a merchant banker. Through this circular dated July 9, 2024, SEBI has specified the manner in which the IM shall be filed. In this circular SEBI specified that the IM for the scheme of AIF entering into dissolution period shall be submitted to SEBI before expiry of the liquidation period or additional liquidation period, as applicable. SEBI also provided the format of IM that needs to be submitted by the scheme as well as the format of the due diligence certificate by the merchant banker to be submitted along with the IM.
- Additional liquidation period: Further, if the liquidation period for a scheme of an AIF has expired or will expire within 3 months from the notification of the SEBI (AIFs) (Second Amendment) Regulations, 2024 (e., on or before July 24, 2024), such scheme may be granted an additional liquidation period subject to conditions specified by SEBI. In this regard, schemes of AIFs shall submit information to SEBI as per the format given at Annexure III of the circular for grant of the additional liquidation period.
- In specie distribution of investments: For carrying out ‘in specie distributions’ (other than the mandatory ‘in specie distributions’ delineated under the AIF Regulations along with the SEBI circular dated April 26, 2024 and the SEBI Master Circular dated May 7, 2024), approval is required from at least 75% of the investors based on their investment value in the scheme.
To read the circular click here
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