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Vigil on alternative funds

Mumbai, June 20: The Securities and Exchange Board of India (Sebi) today announced stricter disclosure requirements for alternative investment funds (AIF).

Alternative Investment Funds (AIFs) are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors, to be invested based on a pre-decided policy.

On Thursday, the market regulator said, “It has been decided to provide certain clarifications on the AIF regulations, increase transparency to investors and provide reporting norms for AIFs.”

Sebi today asked all AIFs to disclose the “disciplinary history” of the fund, its sponsor, manager, directors, partners, promoters and associates. The details should be included in the AIF’s placement memorandum.

The funds have also been told to provide details of pending and past cases (where the person has been found guilty) of litigations, criminal or civil prosecution, disputes and non-payment of statutory dues, among others.

“In case of administrative warnings/deficiency letters, the same may be grouped together and summarised. However, if the investor seeks details of the summarised portion, the same shall be provided by the AIF,” a circular said.

Sebi has relaxed the reporting requirement for Category III AIFs regarding their daily exposures.

Category-III AIFs are those trading to make short-term returns and it includes hedge funds.

Sebi had earlier said that all Category III AIFs should report to the custodian the amount of leverage (use of financial instruments or borrowed money) at the end of the day (based on closing prices) by the end of the next working day. At present, this category of AIFs is required to give the details on the same day itself.

Debt-oriented mutuals

Concerned over debt-oriented mutual funds schemes having a low asset base, Sebi today said such schemes should collect at least Rs 20 crore at the time of the new fund offer.

 
 
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