SEBI proposes streamlining PPM amendment reporting for AIFs in India
The Securities and Exchange Board of India (SEBI) has proposed a new process, for reporting changes in the private placement memorandum (PPM) of alternative investment funds (AIFs). Currently, any modifications in the PPM terms must be communicated to SEBI via a merchant banker. This communication also requires a due diligence certificate from the same entity. The new proposal, however, allows for certain alterations to be reported directly to the regulator, bypassing the need for a merchant banker.
Details of proposed amendments
The proposed amendments by SEBI cover several changes to the PPM of AIFs. These include alterations in fund size, details about affiliates, commitment period, and key investment team of the manager. Changes in key management personnel of AIF, and decrease in expense or fee or cost charged to fund/investors can be reported directly. Updates regarding contact information of AIF, sponsor, manager, trustee or custodian, risk factors, and track records of investment manager are also included in this proposal.
Initiative to reduce compliance costs for AIFs
SEBI's proposed changes aim to promote ease of doing business and reduce compliance costs for AIFs. This initiative is part of SEBI's draft circular, which states that certain PPM modifications do not need to be submitted through merchant bankers and can be reported directly to the regulator. The move is expected to streamline the process and make it more efficient for AIFs.
Exemption for large-value funds
SEBI has further proposed that large-value funds for accredited investors (LVFs), should be exempt from notifying any PPM term changes through a merchant banker. Instead, LVFs should directly submit any PPM term changes to SEBI. This submission must be accompanied by a duly signed and stamped undertaking by the CEO of the manager of the AIF and the compliance officer of the manager of the AIF in a specific format.
