SEBI introduced fast-track route for AIF launch to accelerate capital deployment

In an aim to improve ease of doing business, the Securities and Exchange Board of India (SEBI) has streamlined the process for Alternative Investment Funds (AIFs) by introducing a fast-track mechanism for launching schemes. Under the revised framework, AIFs can now go ahead with the launch of their non-LVF (large value fund) schemes and circulate the placement memorandum to investors 30 days after filing the application with the regulator, unless otherwise advised.

The change comes after SEBI reviewed the existing processes around processing placement memorandums and is expected to significantly reduce delays in fund launches. By enabling faster access to investors’ capital, the regulator aims to increase efficiency in capital deployment and support faster implementation of investment strategies by AIFs.

The market regulator is taking measures aimed at promoting ease of doing business.

Earlier this year, SEBI eased the Accredited Investor Framework to ease operational hurdles for AIFs while retaining prudential safeguards.

Under the revised norms, SEBI allowed AIF investment managers to finalize and execute contribution agreements with investors even before obtaining formal recognition certificates from recognized agencies. However, any commitment made by such investors will not be considered in the scheme funds until the recognition is received, and the funds will be accepted only after the certificate is issued. The regulator said this ensures that key prudential norms linked to corpus size are not compromised.

SEBI also said that the schemes of AIFs will receive funds from these investors only after obtaining recognition certificates from accreditation agencies.

The securities market watchdog has also relaxed the documentation requirements for recognition based on net-worth criteria. The earlier mandate to submit detailed breakdown of net worth as an attachment to the net-worth certificate has been removed. Further, it has been clarified that it is optional for a chartered accountant to specify a specific net worth amount, as long as the certificate confirms that the investor meets the prescribed threshold.

(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times.)