AIF Registration is hassle free process in India for setting up Angle fund, VC .e.t.c
Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 refers to a set of regulations which were introduced by Securities and Exchange Board of India (SEBI) in 2012, for the purpose of regulating pooled investment funds in India, such as real estate, private equity, and hedge funds. These regulations were introduced to bring unregistered funds under the ambit of law.
Under this, Alternative Investment Funds refers to a fund established in the form of trust, company, limited liability partnership or body corporate.
These type of funds invest in startups and receive incentives from the SEBI, government or other regulating agencies. This consist social venture funds, infrastructure funds, venture capital funds and SME funds.
These type of funds are allowed to invest in any combination anywhere but they are not allowed to undertake borrowings except for the purpose of day-to-day operations. This includes funds such as private equity funds and debt funds.
It also includes funds which make short-term investments and then sell such as hedge funds.
As per Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 for Alternative Investment Fund registration, an applicant will make application with SEBI as per the regulations in the Form A along with the cover letter and with the other necessary documents.
On the receipt of the application, SEBI will reply within 21 working days to the applicant. However for the purpose of registration time depends upon the requirements complied by the applicant.
For expedite the registration process, an applicant should go through the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Here are the following details must be mentioned by the applicant in the cover letter:
In case of an Authorized signatory, there is a requirement of submission of an authorization letter from the Directors/Trustees/Designated Partners of the Fund.
For registration, an online application shall be filed according to the guidelines prescribed by SEBI. An applicant will submit form A, which has to be properly filled, numbered, duly signed and stamped with the application fee of Rs.1,00,000/- by way of bank draft in favor of “The Securities and Exchange Board of India”, payable at Mumbai.
Category III AIFs also have to additionally comply with norms pertaining to risk management, compliance, redemption and leverage as specified in the circular. The leverage for a Category III AIF is specified not to exceed 2 times i.e. the gross exposure after offsetting for hedging and portfolio rebalancing transactions should not exceed 2 times the NAV of the fund.
According to SEBI (Alternative Investment Funds) Regulations, 2012 AIFs can be established or incorporated in the form of a trust or a company or a limited liability partnership or a body corporate. Generally most of the AIFs registered with SEBI as trust.
“Corpus’’ is the total amount of funds which is committed by investors as on a particular date to the AIF by way of a written contract or any such document.
(Provided that the provisions of the Companies Act shall apply to the AIF if it is formed as a company).
‘’Sponsor’’ is a person who set up AIF and includes promoter in case of a company and designated partner in case of a limited liability partnership.
The certificate of registration of an AIF shall be valid till the AIF is wound up.
SEBI has a web based centralized grievance redress system “SEBI Complaint Redress System (SCORES)” where investors can lodge their complaints against AIFs.
For dispute resolution, it is required for AIF or through Manager or Sponsor to lay down procedure for resolution of disputes between the investors, AIF, Manager or Sponsor through arbitration or any such mechanism as mutually decided between the investors and the AIF.