SEBI Changes Alternative Investment Fund Rules

The Securities and Exchange Board of India (SEBI) has amended norms pertaining to alternative investment funds (AIFs), including defining relevant professional qualifications.

The new norms have qualification and experience criteria for the investment team to be fulfilled individually or collectively by personnel of key investment team of the manager.

The move comes after the board of SEBI approved amendments in this regard.

In a notification on Monday, the regulator said key investment team of the manager of AIF needs to have adequate experience, with at least one key personnel having at least five years of experience in advising or managing pools of capital or asset or wealth or in the business of buying, selling and dealing of securities.

Besides, such key investment teams need to have at least one key personnel with professional qualification in finance, accountancy, business management, commerce, economics, capital market or banking from a recognised institution.

"The requirements of experience and professional qualification...may also be fulfilled by the same key personnel," Sebi noted.

Sebi said the manager will be responsible for investment decisions of the AIF, provided that such manager constitutes an investment committee to approve the investment decisions.

This is subject to the members of the investment committee being equally responsible as the manager for investment decisions of the AIF.

The manager and members of the committee will jointly and severally ensure that the investments of the AIF are in compliance with the provisions of these regulations.

Sebi also said external members whose names are not disclosed in the placement memorandum or agreement made with the investor at the time of onboarding will be appointed to the investment committee only with the consent of at least 75 percent of the investors by the value of their investment in the AIF.