The Securities and Exchange Board of India (SEBI) on June 21, 2023, issued the Standardised approach to the valuation of the investment portfolio of Alternative Investment Funds (AIFs).
The following has been specified: -
• At each asset level, in case there is a deviation of more than 20% between two consecutive valuations or a deviation of more than 33% in a financial year, the manager shall inform the investors of the reasons/factors for the same.
• Any change in the methodology and approach for the valuation of investments of the scheme of AIF, shall be construed as material change significantly influencing the decision of the investor to continue to be invested in the scheme of the AIF.
• The manager shall disclose certain prescribed data as part of changes in PPM to be submitted annually to SEBI and investors.
• Eligibility criteria for independent valuer:
1. The independent valuer shall not be an associate of the manager or sponsor or trustee of the AIF.
2. The independent valuer shall have at least three years of experience in the valuation of unlisted securities.
• To ensure timely and appropriate reporting of the valuation of an investment portfolio to performance benchmarking agencies, the Manager of AIF shall ensure that a specific timeframe for providing audited accounts by the investee company to the AIF is included as one of the terms in the subscription agreement/investment agreement with the investee company, so as to enable AIFs to report valuation based on audited data of investee companies as on March 31 to performance benchmarking agencies within the specified timeline of six months
• The manager of AIF shall submit a report on compliance with the provisions of this circular on the SEBI Intermediary Portal in the format as specified therein.
This circular shall come into force on November 01, 2023.
[Notification No. SEBI/HO/AFD/PoD/CIR/2023/97]
