The Securities and Exchange Board of India (SEBI) on February 14, 2025, issued the notification regarding the Relaxation in timelines for holding AIFs’ investments in dematerialised form.
The following has been stated namely: -
• The timelines prescribed in the SEBI Circular dated January 12, 2024 regarding “Guidelines for AIFs with respect to holding their investments in dematerialised form and appointment of custodian” has been relaxed. The Para 21 of the Master Circular for AIFs dated May 07, 2024 has been modified namely: -
“21.1. Any investment made by an AIF on or after July 01, 2025 shall be held in dematerialised form only, irrespective of whether the investment is made directly in the investee company or is acquired from another entity.
21.2. The investments made by an AIF prior to July 01, 2025 are exempted from the requirement of being held in dematerialised form, except in the following cases:
21.2.1. Investee company of the AIF has been mandated under applicable law to facilitate dematerialisation of its securities;
21.2.2. The AIF, on its own, or along with other SEBI registered intermediaries/entities which are mandated to hold their investments in dematerialised form, exercises control over the investee company.
For the purpose of the aforesaid clause, the definition of ‘control’ shall be construed with reference to Regulation 2(1)(f) of AIF Regulations.
21.3. The investments made by an AIF prior to July 01, 2025 which are covered under conditions as specified in Para 21.2.1 and Para 21.2.2 above, shall be held in dematerialised form by the AIF on or before October 31, 2025.
21.4. The aforesaid requirement of holding investments in dematerialised form shall not be applicable to:
21.4.1. Scheme of an AIF whose tenure (not including permissible extension of tenure) ends on or before October 31, 2025;
21.4.2. Scheme of an AIF which is in extended tenure as on February 14, 2025.”
This shall come into force on February 14, 2025.
[Notification No. SEBI/HO/AFD/PoD-1/P/CIR/2025/17]
