KEY FEATURES OF AIF CATEGORIES :
| Category I | Category II | Category III |
| • Minimum tenure of 3 year
• Close ended fund
• The tenure may be extended for a further period of 2 years only with the approval of two- third of the the unit holders by value of their investment. |
• No minimum tenure prescribed.
• Open-ended or close ended fund.
• The tenure may be extended for a further period of 2 years in case of close-ended fund subject to approval of two-third of the the unitholders by value of their investment. |
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| Leverage / Hedging | ||
| • Shall not borrow/leverage except for meeting temporary funding requirements, which shall not exceed 30 days.
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• Shall not borrow/leverage except for meeting temporary funding requirements,which shall not exceed 30 days.
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• May leverage or borrow (Subject to consent from investors and maximum |
| •The borrowing cannot be on more than four occasions on in a year and cannot exceed 10% of the investible funds | •The borrowing cannot be on more than four occasions in a year and cannot exceed 10% of the investible funds | |
| • Funds may engage in hedging subject to guidelines as specified by SEBI
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| Investment in one investor company | |
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• Shall not invest more than 25% of its investible funds in one investee compan
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• Maximum 10% of the investible funds in one investee company |
| Tax “Pass Through” | |
| • Category I AIFs will be considered as venture capital funds/companies for the purpose of Section 10(23FB) of the Income Tax Act, 1961 | • The income from Category II and III funds will not be exempt under section 10(23FB) of the Income Tax Act, 1961
• Taxation of such hands would depend on the legal status of the fund i.e. company limited liability partnership or trust. |
| Valuation | |
| • AIF must disclose to the investors the valuation procedure and the methodology for valuing assets | • AIF must disclose to the investors the valuation procedure and the methodology for valuing assets |
| • Valuation should be carried out by an independent valuers once in every 6 months. This period can be extended to one year with the approval of 75% of the investors by value. | • AIF to ensure that calculation of net asset value is independent from the fund management function of the AIF; NAV to be disclosed to investors as per theregulations. |
| Reporting | |
| • Within 180 days from the end of the year, an annual report is required to be presented to the investor | • Within 180 days from the end of the year an annual report is required to be presented to the investors
• Within 60 days from the end of the quarter, AIF is also required to provide a quarterly report to the investors. |