The Securities and Exchange Board of India (SEBI) on June 21, 2023, issued a circular regarding the Modalities for launching the Liquidation Scheme and for distributing the investments of the Alternative Investment Funds (AIFs) in-specie.
The following new regulations have been inserted in AIF Regulations-
• Regulation 2(1)(pb): “‘liquidation period’ means a period of one year following the expiry of tenure or extended tenure of the scheme for fully liquidating the scheme of an Alternative Investment Fund.”
• Regulation 2(1)(pc): “‘Liquidation scheme’ means a close-ended scheme launched by an Alternative Investment Fund only for the purpose of liquidating the unliquidated investments purchased from its scheme, whose tenure has expired.”
• Regulation 29(9): “Notwithstanding anything contained in sub-regulation (7), during the liquidation period of a scheme, an Alternative Investment Fund may distribute investments of a scheme which are not sold due to lack of liquidity, in-specie to the investors or sell such investments to a liquidation scheme, after obtaining approval of at least seventy-five percent of the investors by the value of their investment in the scheme of the Alternative Investment Fund, in the manner and subject to conditions specified by the Board from time to time.
Provided that in the absence of consent of unit holders for exercising the options under sub-regulation (9) during the liquidation period, such investments of the scheme of the Alternative Investment Fund shall be dealt with in the manner as may be specified by the Board from time to time.”
This circular shall come into force with immediate effect.
[Circular No. SEBI/HO/AFD/PoD-I/P/CIR/2023/098]
