SEBI New Rules: Big change in AIF rules, launching fund became easier; Know what is new ‘Fast-Track’ Rule

SEBI’s New Rule For AIF PPM: The Securities and Exchange Board of India (SEBI) on Thursday implemented a new fast-track rule for Private Placement Memorandum (PPM) of Alternative Investment Funds (AIFs), with an aim to speed up the approval process and start investments sooner.

Under the new rule, AIFs, except large value funds (LVFs) for recognized investors, can launch their scheme after 30 days of filing the application with SEBI and offer Private Placement Memorandum (PPM) to investors, if SEBI does not raise any objection during this period.

The process became easier than before

Managers launching a fund for the first time will be allowed to proceed either after obtaining registration from SEBI or after completion of 30 days of application (whichever is later). If SEBI gives any suggestion or comment during this period, it will be necessary to implement it, only then the fund can be launched. This change is different from the earlier process, where SEBI used to thoroughly examine the PPM and make multiple changes before approving it, which caused significant delays.

Funding will have to be completed in 12 months

According to the new rules, AIFs will have to complete the first funding within 12 months of launching their scheme. Now the correct and complete responsibility of the information given in PPM will be of the merchant banker and AIF manager. In the new rules, documents required for application like Due Diligence CertificateIt has been made mandatory to submit fit and proper declaration and PAN details. Apart from this, it will be clearly written in the PPM that SEBI neither approves nor guarantees this information.

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What is the benefit of this step of SEBI?

SEBI said that this change has been made keeping in mind the ease of doing business and the increasing understanding of investors. This new rule is effective immediately and will also apply to already pending applications (except LVF). Rest of the old rules will remain the same. market regulator It has warned that if any discrepancy or mistake in the information is found, regulatory action will be taken against the concerned entities.