Analysis: SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2021

CS Tanveer Singh Saluja | Last updated: 02 February 2022

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Quick Summary

The Securities and Exchange Board of India (SEBI) has introduced the SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2021. These new rules, effective from their publication date, introduce definitions for 'accreditation agency' and 'accredited investor', outlining specific income and net worth criteria for individuals, corporate bodies, trusts, and partnership firms. Additionally, a new category, 'large value fund for accredited investors', has been defined, with specific investment thresholds and relaxed regulatory requirements for these funds.

The SEBI has notified a new set of regulations to amend the existing SEBI (Alternative Investment Funds) Regulations, 2012 which shall come into force as on the date of its publication in the Official Gazette. Sr. No. Amendment Effect

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FAQ :

These are new regulations introduced by SEBI to amend the existing SEBI (Alternative Investment Funds) Regulations, 2012, which came into effect upon their publication in the Official Gazette.

The amendment introduces definitions for 'accreditation agency' and 'accredited investor', and also defines 'large value fund for accredited investors'.

For individuals, it includes specific annual income or net worth thresholds, with a portion in financial assets. For corporate bodies and trusts, a net worth of at least fifty crore rupees is required. Partnership firms require each partner to meet the accreditation criteria independently.

This refers to an Alternative Investment Fund or scheme where every investor (excluding fund management and staff) is an accredited investor and invests a minimum of seventy crore rupees.

Yes, these funds are exempt from filing a placement memorandum with SEBI for launched schemes. They may also be permitted to extend their tenure beyond two years, subject to agreement terms and SEBI conditions.

Yes, large value funds of Category I and II can invest up to fifty percent of investable funds in an investee company, and Category III large value funds can invest up to twenty percent, which is higher than the standard limits for other AIFs.