Clarifications with respect to Circular dated February 05, 2020 on ‘Disclosure Standards for Alternative Investment Funds (AIFs)

Last updated: 13 June 2020

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This circular provides important clarifications regarding the Disclosure Standards for Alternative Investment Funds (AIFs), originally set out in a February 5, 2020 circular. It details the requirements for auditing compliance with the Private Placement Memorandum (PPM), including timelines for reporting findings. Exceptions are provided for AIFs that have not raised funds, though they must submit a Chartered Accountant's certificate. The circular also amends requirements for AIF associations notifying benchmarking agencies and extends the deadline for the first industry benchmark and performance reports due to COVID-19 market events.

Securities and Exchange Board of India

CIRCULAR

SEBI/HO/IMD/DF6/CIR/P/2020/99

June 12, 2020

To,

All Alternative Investment Funds

Dear Sir/ Madam,

Sub: Clarifications with respect to Circular dated February 05, 2020 on ‘Disclosure Standards for Alternative Investment Funds (AIFs)’

1. SEBI has issued a Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 (“Circular”) dated February 05, 2020 on ‘Disclosure Standards for Alternative Investment Funds (AIFs)’.

2. In this regard, it is clarified as under:

(i) Audit of compliance with terms of PPM as provided in Paragraph 5 of the Circular, shall be conducted at the end of each Financial Year and the findings of audit along with corrective steps, if any, shall be communicated to the Trustee or Board or Designated Partners of the AIF, Board of the Manager and SEBI, within 6 months from the end of the Financial Year.

(ii) The requirement of audit of compliance with terms of PPM shall not apply to AIFs which have not raised any funds from their investors. However, such AIFs shall submit a Certificate from a Chartered Accountant to the effect that no funds have been raised, within 6 months from the end of the Financial Year.

(iii) For the Financial Year 2019-20, the above requirements shall be fulfilled on or before December 31, 2020.

3. Paragraph 12 (i) of the Circular is amended as under:

“Any association of AIFs (“Association”), which in terms of membership, represents at least 33% of the number of AIFs, may notify one or more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process.”

4. In light of market events due to the COVID-19 pandemic, the timeline for making available the first industry benchmark and AIF level performance versus Benchmark Reports, is extended till October 01, 2020.

5. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

6. The circular is available on SEBI website at www.sebi.gov.in under the categories “Legal framework – Circulars” and “Info for – Alternative Investment Funds”.

Yours faithfully,

Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in

FAQ :

The findings of the compliance audit must be communicated to the relevant parties and SEBI within 6 months from the end of the Financial Year.

No, the requirement for an audit of compliance with the PPM does not apply to AIFs that have not raised any funds. However, they must submit a Certificate from a Chartered Accountant confirming this.

For the Financial Year 2019-20, the requirements must be fulfilled on or before December 31, 2020.

Yes, due to market events related to the COVID-19 pandemic, the timeline for making available the first industry benchmark and AIF level performance versus Benchmark Reports has been extended to October 01, 2020.

Any association of AIFs, representing at least 33% of the number of AIFs, may notify one or more Benchmarking Agencies.