The Securities and Exchange Board of India (SEBI) has announced the Securities and Exchange Board of India (Alternative Investment Funds) (Fourth Amendment) Regulations, 2024, effective from August 5, 2024. These amendments impact various aspects of the Alternative Investment Funds (AIF) regulations.
Key Changes
1. Extension of Tenure for Large Value AIFs
Regulation 13 Amendments: The revised regulation allows large value funds for accredited investors to extend their tenure up to five years. This extension requires approval from two-thirds of unit holders based on their investment value. Existing schemes must adhere to conditions specified by SEBI.
2. Modifications in Borrowing Rules
Category I AIFs: Regulation 16 now limits borrowing to meet temporary operational needs, allowing funds to be borrowed for up to 30 days on no more than four occasions annually. Additionally, Category I AIFs can encumber equity in infrastructure projects under specific conditions.
Category II AIFs: Regulation 17 imposes similar borrowing limits as Category I AIFs, with provisions for encumbrance on equity related to infrastructure projects.
Impact and Compliance
These updates aim to provide greater flexibility for large value AIFs and clarify borrowing limits for both Category I and II AIFs. Fund managers and investors should review these amendments closely to ensure compliance and take advantage of the extended tenure provisions where applicable.
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