SEBI Consulting papers for the Alternative Investment Funds (‘AIFs’) and Foreign Venture Capital Investors (‘FVCIs’)
June 06, 2023 | 3 comments
The Securities and Exchange Board of India (‘SEBI’) has issued new series of
consulting papers for the alternative investment funds (‘AIFs’) and foreign venture capital
investors (‘FVCIs’) on May 18, 2023 and May 23, 2023.
This alert provides a brief snapshot of the propositions by the SEBI through the consulting papers
Our comments:
These are the second series of consulting papers issued by the SEBI reforming the AIF regulatory
framework in January and
February this year.
The series of the consulting papers and the amendments points towards a comprehensive review and
reform of the AIF
Regulation by SEBI on each of the key aspects the industry has been dealing and discussing over some
of the past years. It
appears that SEBI has been keeping a close eye on the market practices and the disclosures made by
the AIFs as well as
analysing the data / information available at their end for deciding on the future course of reforms
for the AIF industry.\
The proposed suggestions for AIFs in relation to licencing requirements, re-aligning the requirement
of extension of tenure,
mandatory dematerialization, guidelines for borrowings by AIFs provide towards the continuous
monitoring and reforming the
AIFs regulations. The proposed amendment to clarify on the pro-rata economic rights of the investors
to mitigate regulatory
arbitrage and systemic risks points out towards the close eye of the SEBI on the functioning and
needs of the AIF industry.\
The discussion papers also highlight extensive deliberations of the proposals with the APAC as well
as working groups being
set-up for critical aspects for making recommendations as well as intensive research and
deliberations within SEBI before
releasing the proposals for public comments.
The proposed suggestions for the FVCIs are also a welcome move given the long term overdue at the
re-visit to the FVCI
Regulations. We expect more discussions and deliberations on the FVCI regime in the near future
