The Securities and Exchange Board of India (SEBI) on June 21, 2023, issued a Circular on the issuance of units of AIFs in dematerialized form
This Circular aims to protect the interests of investors in securities and to promote the development of regulating the securities market.
This circular shall come into force with immediate effect
The following has been stated namely: -
• The SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), have been amended and notified on June 15, 2023. A copy of the notification is available at the link
• It states that All schemes of AIFs shall dematerialize their units in the specified time frame as attached.
• The requirement of dematerialization of units of AIFs as specified, shall not be applicable for schemes whose tenure (excluding permissible extensions tenure) ends on or before April 30, 2024
• The terms of transfer of units of AIF held by an investor in the dematerialized form shall continue to be governed by the terms of private placement memorandum (‘PPM’), agreements entered between the AIF and the investors, and any other fund documents.
• The Depositories are directed to perform the following functions namely: -
(i) Make necessary amendments to the relevant Bye-laws, Rules, and Regulations for the implementation of the above provisions.
(ii) put in place a system to facilitate any transfer units of AIF held in dematerialized form, which requires approval of the AIF/manager of AIF in terms of PPM or agreements entered between the AIF and the investor or any other fund documents, is carried out accordingly i.e. only after approval of AIF/manager of the AIF.
(iii) Bring the provisions of this circular to the notice of their members/participants and also disseminate the same on their websites.
• The manager of AIF shall submit a report on compliance with the provisions of this circular on the SEBI Intermediary Portal (www.siportal.sebi.gov.in) in the format specified therein.
• The trustee/sponsor of AIF, as the case may be, shall ensure that the ‘Compliance Test Report’ prepared by the manager in terms of SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014, includes compliance with the provisions of this circular
• This circular is available on the SEBI website at www.sebi.gov.in under the categories “Legal framework -Circulars" and "Info for-Alternative Investment Funds”.
[Circular No. SEBI/HO/AFD/PoD1/CIR/2023/96]
