Indian Regulator Releases New Alternative Investment Funds Regulations, Offshore Funds Unaffected

26 June 2012
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Key takeaways:

  • Offshore funds are not affected by the SEBI (Alternative Investment Funds) Regulations, 2012 (the “AIF Regulations”). The AIF Regulations cover alternative investment funds (“AIFs”), which are defined to include any fund established or incorporated in India that is a privately pooled investment vehicle which collects funds from investors, Indian or foreign, for investment in accordance with a defined strategy.
  • The AIF Regulations will replace the SEBI (Venture Capital Funds) Regulations, 1996 (“VCF Regulations”). However, funds registered as venture capital funds under the VCF Regulations shall continue to be regulated as such until they are wound up. Such funds will not be allowed to launch new funds or increase their total committed funds until they re-register under the AIF Regulations.
  • All AIFs will be required to register with the Securities and Exchange Board of India under one of three categories of AIFs (based on investment strategy) and various restrictions on raising capital and on investments have been imposed, some applying to all categories of AIFs, and some specific to each category.