SEBI has released certain conditions for foreign investors in Alternative Investment Funds
PUBLISHED ON: 14-12-2022
SEBI has issued certain conditions in respect of foreign investment in Alternative Investment Funds (“AIFs”), wherein the manager of an AIF is required to ensure the following at the time of and pursuant to onboarding investors to schemes of AIF:
- A foreign investor should be a resident of a country whose securities market regulator is a signatory to the: (i) International Organization of Securities Commission’s Multilateral Memorandum of Understanding; or (ii) Bilateral Memorandum of Understanding with SEBI.
- The investor can be the Government or Government related investor who does not meet the aforesaid requirement, provided that, the resident country of such investor has been approved by the Government of India.
- The investor, or its underlying investors who are contributing 25% or more in the corpus of the investor or have been identified on the basis of control, should not be persons in violation of the Sanction List notified by the UN Security Council and Public Statement of Financial Action Task Force.
- Once an investor has been on-boarded and then subsequently fails to continuously meet the aforesaid conditions, the manager of the AIF cannot drawdown any further capital contribution from such investors, till such investor complies with the conditions again.
The aforementioned conditions were issued by SEBI vide a circular on December 9, 2022 (available here) and would come into force with immediate effect.
