SEBI was constituted under the SEBI Act, 1992, in order to protect the investor’s interests in securities and to develop and regulate the securities market. In 2008, SEBI took a decision to consolidate the basic regulatory provisions which will be applied to all the securities market intermediaries regulated by SEBI like registration, general obligations, code of conduct etc., into a single framework under the SEBI Regulations, 2008. AIF applicants, their proposed sponsors and managers need to comply with certain criteria as per the Intermediaries Regulations i.e. SEBI regulations to register as AIFs.
· AIFs are required by the SEBI to disclose the proposed fees to be paid to the sponsor or manager with the detailed tabular examples of how fee and other charges has been calculated, structure of distribution waterfall and how certain identified ‘key man’ events has been handled
· Marketing of AIFs need to be on a private placement basis and public marketing is not allowed.
· The sponsor or manager of an AIF under the AIF Regulations must appoint a custodian who will be registered with SEBI for keeping its securities safely if the AIF is a Category III AIF or if the corpus of the AIF is more than Rs. 5 billion
· Category III AIFs are specifically required to provide quarterly reports to investors within 60 days of end of the quarter containing financial information of the portfolio
· AIFs need to provide reports to investors at least on an annual basis, within 180 days from the year end, containing financial information of the portfolio companies, material risks etc.
· Any significant change in control of the manager, sponsor or any portfolio company must be announced to the investors within appropriate time.
· A Compliance Test Report (CTR) has to be submitted to the Sponsor within 30 days of the end of the Financial Year.