GUIDELINES ON DISCLOSURES, REPORTING AND CLARIFICATIONS UNDER AIF REGULATIONS :
SEBI has provided certain clarifications on the AIF Regulations in order to increase transparency to the investors by issuing guidelines on this behalf.
SEBI has prescribed that Category III AIFs should report to the custodian the amount of leverage at the end of the day (based on closing prices) by the end of next working day.
SEBI has further clarified that AIFs should include in the placement memorandum detailed disclosures of the fees and charges as applicable to the investors and disciplinary history of the AIFs, sponsors, managers, their Directors/partners/ promoters and associates etc.
In case of changes to the placement memorandum which significantly influences the decision of the investor to continue to be invested in the AIF, the following process should be followed by the AIF:
(1) Existing unit holders who do not wish to continue after the change should be provided an exit option.
(2) If the scheme of the AIF is open ended, the exit option can be provided by either of the following:
– Buying out of units of the dissenting investors by the manger/ someone else arranged by the manager, valuation of which should be based on market price of underlying assets.
– Redemption of units of the investors through sale of underlying assets.
(3) If the scheme of the AIF is close ended, the exit option can be provided as follows :
– Buying out of units of the dissenting investors by the manger/ someone else arranged by the manager.
– Prior to buying out of such units, valuation of those units should be undertaken by 2 independent valuers and exit should be at a value at least as large as average of the two valuations.
– The trustee of AIF (in case AIF is a trust) or sponsor (in case of any other AIF) should be responsible for overseeing the process.
Moreover, all guidelines that are issued by SEBI with respect to KYC requirements, Anti-Money Laundering and outsourcing of activities should be applicable to AIFs and the manager of the AIF should be responsible for complying with such guidelines.