Excluding or Excusing an AIF Investor from an Investment 

PUBLISHED ON: 25-04-2023

SEBI has specified certain guidelines for excusing or excluding an investor in an Alternative Investment Fund (“AIF”), from participating in a particular investment made by the AIF:

Reasons for Exclusion / Excusal	Conditions
The investor confirms that it’s participation would breach any law.	Opinion of a legal advisor is required.
Participation would contravene the internal policy of the investor.	Disclosure to be made in the Contribution Agreement or other document executed with AIF. Further, the Investor should be required to report changes in the internal policy, within 15 days.
Investment manager believes that participation by the investor would breach any law or result in a material adverse effect on the scheme.	Investment manager to record the rationale for exclusion, along with relevant documents.
Investors who are AIFs/ investment vehicles  may be excluded/ excused from participation in an investment to the extent their underlying investors are excluded or excused.	Investment manager to record the rationale for excuse or exclusion, along with relevant documents.

The aforementioned guidelines were issued by SEBI vide a circular on April 10, 2023 (available here) and would come into force with immediate effect.