## Report on the Securities and Exchange Board of India (SEBI) Alternative Investment Funds (AIF) Amendment Regulations, 2021
**1. Executive Summary:**
This report analyzes the Securities and Exchange Board of India (SEBI) Alternative Investment Funds (AIF) Amendment Regulations, 2021, as published in the Gazette of India on January 8, 2021. This amendment modifies the existing SEBI AIF Regulations, 2012, specifically addressing provisions related to investment thresholds. The key change introduces an exemption from certain clauses for AIFs where investors commit to invest a substantial amount (seventy crore rupees or equivalent) and furnish a waiver. This report aims to provide the affected industry with a clear understanding of these changes and their potential implications.
**2. Introduction:**
The purpose of this report is to provide an informative overview of the SEBI Alternative Investment Funds Amendment Regulations, 2021, based solely on the text of the official notification. It aims to clarify the specific changes introduced and their potential impact on AIFs and their investors.
**3. Policy Overview:**
* **Original Policy Being Amended:** Securities and Exchange Board of India Alternative Investment Funds Regulations, 2012.
* **Core Objective(s) (Inferred):** While the original policy's objectives aren't explicitly stated in this provided text, it can be inferred that the aim of the amendment, in relation to the original policy, is to refine the regulatory framework for AIFs, potentially to encourage larger investments while maintaining investor protection.
**4. Background and Rationale:**
This amendment likely aims to address a perceived constraint or inefficiency within the original AIF Regulations, 2012. The introduction of an exemption based on a high investment threshold (seventy crore rupees) suggests a desire to streamline regulatory compliance for AIFs managing substantial investments from sophisticated investors. The waiver requirement indicates that SEBI is balancing the need for regulatory flexibility with the need to ensure investor protection. The underlying issue might be that certain provisions of the 2012 Regulations were seen as overly burdensome or unnecessary for very large investments from sophisticated investors, hence the need for the carve-out.
**5. Key Provisions / Changes:**
This amendment specifically modifies Regulation 20 of the SEBI AIF Regulations, 2012.
* **Specific Part of Original Policy Being Changed:** Regulation 20, clause iv of the proviso to subregulation 6 is modified to change the symbol. A new proviso is then added after clause iv.
* **New Rule/Provision:**
* A period is changed to a colon in clause iv.
* A new proviso is inserted after clause iv of the proviso to subregulation 6. This proviso states that clauses i and ii of the existing proviso to subregulation 6 shall *not* apply to an AIF *if* each investor (excluding the Manager, Sponsor, employees or directors of the AIF or its Manager) meets two conditions:
* Commits to invest *not less than* seventy crore rupees (or equivalent in another currency).
* Furnishes a waiver to the AIF regarding compliance with clauses i and ii of the existing proviso, in a manner specified by SEBI.
* **Difference/Effect of Change:**
* The amendment creates an exemption from clauses i and ii of the proviso to subregulation 6 of Regulation 20 for AIFs that attract very large investments (70 crore INR or more) from individual investors meeting the specified criteria (not being directly related to the fund management) and who provide a waiver. This effectively allows these AIFs to operate with greater flexibility, potentially reducing compliance costs and allowing for more efficient investment strategies. The change suggests that SEBI considers large, sophisticated investors capable of assessing and managing risk with less stringent regulatory oversight in certain areas.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders affected by this amendment are:
* **Alternative Investment Funds (AIFs):** Specifically, those managing or seeking to manage funds with substantial investments from individual investors.
* **High-Net-Worth Investors:** Individuals capable of committing investments of seventy crore rupees or more in AIFs.
* **Managers and Sponsors of AIFs:** As they will be responsible for ensuring compliance with the amended regulations.
* **Securities and Exchange Board of India (SEBI):** As the regulator responsible for overseeing the AIF market.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** SEBI is the primary responsible body for implementing and overseeing these regulations.
* **Timelines/Procedures:** The amendment came into force on the date of its publication in the Official Gazette (January 8, 2021). The text also mentions that the manner of furnishing the waiver will be "specified by the Board" (SEBI), implying that SEBI will issue further guidelines or circulars regarding the waiver process.
* **Implementation Aspects Related to Changes:** AIF managers will need to establish procedures for verifying investor commitment amounts and for obtaining and documenting the required waivers. SEBI will likely provide specific guidance on the format and process for the waiver.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this amendment are:
* **Increased Investment in AIFs:** By reducing regulatory burden for AIFs with substantial investments, the amendment may incentivize greater capital allocation to this asset class, particularly from high-net-worth individuals.
* **Greater Operational Flexibility for AIFs:** The exemption from clauses i and ii of the proviso to subregulation 6 provides AIFs with increased flexibility in their investment strategies and operations.
* **Reduced Compliance Costs:** The exemption may lead to lower compliance costs for AIFs managing large investments.
* **Maintaining Investor Protection:** The requirement for a waiver from investors ensures that those benefiting from the exemption are aware of and accept the potential risks.
**9. Conclusion:**
The SEBI Alternative Investment Funds Amendment Regulations, 2021, represents a targeted adjustment to the existing regulatory framework for AIFs. By introducing an exemption for AIFs with substantial investments from sophisticated investors who provide waivers, the amendment aims to promote investment, enhance operational flexibility, and reduce compliance costs, while maintaining a focus on investor protection. The specifics of how the waiver process will operate will be crucial to the amendment's ultimate impact.
Key Entities Referenced
New Delhi: The location where the Gazette of India was published.
Securities and Exchange Board of India: Regulatory body that issued the notification regarding Alternative Investment Funds.
Securities and Exchange Board of India Act, 1992: The act that confers powers to Securities and Exchange Board of India.
Securities and Exchange Board of India Alternative Investment Funds Regulations, 2012: The regulations being amended by this notification.
Securities and Exchange Board of India Alternative Investment Funds Amendment Regulations, 2021: The title of the current amendment regulations.
Mumbai: City where Securities and Exchange Board of India notification was issued.
Securities and Exchange Board of India Payment of Fees Amendment Regulations, 2014: Regulations amended on 23rd May, 2014
Securities and Exchange Board of India Real Estate Investment Trusts Regulations, 2014: Regulations amended on 26th September, 2014
Securities and Exchange Board of India Regulatory Sandbox Amendment Regulations, 2020: Regulations amended on 17th April, 2020
Ajay Tyagi: Chairman of Securities and Exchange Board of India
Indian rupee: Currency mentioned in the context of investment amount by investor
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-एम.एच.-अ.-08012021-224287
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असाधारण
EXTRAORDINARY
भाग III—खण् ड 4
PART III—Section 4
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 05] िई ददपली, िुक्रिार, िििरी 8, 2021/ िौष 18, 1942
No. 05] NEW DELHI, FRIDAY, JANUARY 8, 2021/PAUSA 18, 1942
भारतीय प्रजतभजू त और जिजिमय बोडड
अजधसचू िा
मुम्बई, 8 िििरी, 2021
भारतीय प्रजतभजू त और जिजिमय बोडड
[आिकु जपिक जिजिधाि (जिििे ) जिजधया]ाँ (सिं ोधि) जिजियम, 2021
स.ं सबे ी/एल.ए.डी-.एि.आर.ओ/.िी.एि/2021/01.— बोड,ड भारतीय प्रजतभूजत और जिजिमय बोडड अजधजियम,
1992 (1992 का 15) की धारा 11 की उि-धारा (1), धारा 11 की उि-धारा (2) के खंड (खक) तथा खंड (ग) और धारा
12 की उि-धारा (1) तथा (1ख) के साथ िठित धारा 30 की उि-धारा (1) द्वारा प्रदत्त िजियों का प्रयोग करत े हुए,
एतद्द्वारा भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधयााँ] जिजियम, 2012 का और
संिोधि करि े के जलए जिम्नजलजखत जिजियम बिाता ह,ै अथाडत:् -
1. इि जिजियमों को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधयााँ] (संिोधि)
जिजियम, 2021 कहा िा सकेगा ।
2. ि े रािित्र म ें उिके प्रकािि की तारीख को प्रिृत्त (लाग)ू होंग े।
3. भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधयााँ] जिजियम, 2012 म,ें -
120 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
I. जिजियम 20 में, -
i. उि-जिजियम (6) के िरंतुक के खंड (iv) में, जचह्ि “।”, जचह्ि “:” से प्रजतस्ट्थाजित हो िाएगा ।
ii. उि-जिजियम (6) के िरंतुक के खंड (iv) के िश्चात,् जिम्नजलजखत िरंतुक अंतःस्ट्थाजित दकया
िाएगा, अथाडत,् -
“िरंत ुयह और दक खंड (i) एिं खंड (ii) ऐसी आिुकजपिक जििेि जिजध (ऑपटरिेठटि इन्िेस्ट्टमटें
फंड) िर लाग ूिहीं होंग,े जिसमें आिुकजपिक जििेि जिजध के प्रबंधक, प्रायोिक (स्ट्िॉन्सर),
कमडचाठरयों या जिदेिकों अथिा प्रबंधक के कमडचाठरयों या जिदेिकों से जभन्न प्रत्येक जििेिक िे
कम से कम सत्तर करोड़ रुिय े[या भारतीय रुिय ेसे जभन्न दकसी मुद्रा (करेंसी) में इतिे के
बराबर की रकम] का जििेि करिे का िादा दकया हो और जिसिे आिुकजपिक जििेि जिजध को
उि खंडों के िालि के संबंध म ेंछूट संबंधी दस्ट्तािेि (िेिर) उसी प्रकार प्रस्ट्तुत दकया हो िैसा
बोडड द्वारा बताया िाए ।”
अिय त्यागी, अध्यक्ष
[जिज्ञािि III/4/असा./441/2020-21]
िाद ठटप्िण :
1. भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ जिजियम, 2012, स.ं एल.ए.डी.-
एि.आर.ओ./िी.एि./2012-13/04/11262, 21 मई 2012 को भारत के रािित्र म ेंप्रकाजित हुए थ े।
2. भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधयााँ] जिजियम, 2012 तत्िश्चात्, -
(1) 16 जसतम्बर, 2013 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ
(संिोधि) जिजियम, 2013, सं. एलएडी-एिआरओ/िीएि/2013-14/24/6573, द्वारा
(2) 23 मई, 2014 को भारतीय प्रजतभूजत और जिजिमय बोडड (फीस का संदाय) (संिोधि) जिजियम, 2014,
स.ं एल.ए.डी.-एि.आर.ओ./िी.एि./2014-15/03/1089, द्वारा
(3) 26 जसतम्बर, 2014 को भारतीय प्रजतभूजत और जिजिमय बोडड (ठरयल इस्ट्टेट जििेि न्यास) जिजियम, 2014,
स.ं एल.ए.डी./एि.आर.ओ./िी.एि./2014-15/11/1576, द्वारा
(4) 14 अगस्ट्त, 2015 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ (संिोधि)
जिजियम, 2015, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2015-16/011, द्वारा
(5) 4 िििरी, 2017 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ (संिोधि)
जिजियम, 2016, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2016-17/026, द्वारा
(6) 6 माच,ड 2017 को भारतीय प्रजतभूजत और जिजिमय बोडड (फीस का भुगताि और भुगताि का माध्यम) (संिोधि)
जिजियम, 2017, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2016-17/037, द्वारा
(7) 1 िूि, 2018 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ (संिोधि)
जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2018/19, द्वारा[भाग III—खण् ड 4] भारत का रािित्र : असाधारण 3
(8) 10 मई, 2019 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ (संिोधि)
जिजियम, 2019, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2019/16, द्वारा
(9) 17 अप्रलै , 2020 को भारतीय प्रजतभूजत और जिजिमय बोडड (रेग्यूलेटरी सैंडबॉक्स) (संिोधि) जिजियम, 2020,
सं. सेबी/एल.ए.डी.-एिआरओ/िीएि/2020/10, द्वारा
(10) 19 अिूबर, 2020 को भारतीय प्रजतभूजत और जिजिमय बोडड [आिुकजपिक जिजिधाि (जििेि) जिजधया]ाँ
(संिोधि) जिजियम, 2020, सं. सेबी/एल.ए.डी./एि.आर.ओ./िी.एि./2020/37, द्वारा संिोजधत हुए थ े।
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 8th, January, 2021
SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUNDS)
(AMENDMENT) REGULATIONS, 2021
No. SEBI/LAD-NRO/GN/2021/01.─ In exercise of the powers conferred by sub-section (1) of Section 30 read
with sub-section (1) of Section 11, clause (ba) and clause (c) of sub-section (2) of section 11 and sub-section (1) and
(1B) of Section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Board hereby makes the
following regulations to further amend the Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012 namely:—
1. These regulations may be called the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2021.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012-
I In regulation 20,
i. in clause (iv) of the proviso to sub-regulation (6), the symbol “.” shall be substituted with the
symbol “:”.
ii. after clause (iv) of the proviso to sub-regulation (6), the following proviso shall be inserted,
namely, -
“Provided further that clauses (i) and (ii) shall not apply to an Alternative Investment
Fund in which each investor other than the Manager, Sponsor, employees or directors of
the Alternative Investment Fund or employees or directors of the Manager, has committed
to invest not less than seventy crore rupees (or an equivalent amount in currency other
than Indian rupee) and has furnished a waiver to the Alternative Investment Fund in
respect of compliance with the said clauses, in the manner specified by the Board.”
AJAY TYAGI, Chairman
[ADVT. III/4/Exty./441/2020-21]
Footnote:
1. The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 were
published in the Gazette of India on May 21, 2012 vide No. SEBI/LAD-NRO/GN/2012-13/04/11262.
2. The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 were
subsequently amended on, –4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
(1) 16th September, 2013 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2013 vide No. LAD-NRO/GN/2013-14/24/6573.
(2) 23rd May, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment)
Regulations, 2014 vide No. LAD-NRO/GN/2014-15/03/1089.
(3) 26th September, 2014 by the Securities and Exchange Board of India (Real Estate Investment Trusts)
Regulations, 2014 vide No. LAD-NRO/GN/2014-15/11/1576.
(4) 14th August, 2015 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2015 vide No. SEBI/LAD-NRO/GN/2015-16/011.
(5) 4th January, 2017 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2016 vide No. SEBI/LAD/NRO/GN/2016-17/026.
(6) 6th March, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of
Payment) (Amendment) Regulations, 2017 vide No. SEBI/LAD/NRO/GN/2016-17/037.
(7) 1st June, 2018 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2018 vide No. SEBI/LAD/NRO/GN/2018/19.
(8) 10th May, 2019 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2019 vide No. SEBI/LAD/NRO/GN/2019/16.
(9) 17th April, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment)
Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/10.
(10) 19th October, 2020 by the Securities and Exchange Board of India (Alternative Investment Funds)
(Amendment) Regulations, 2020 vide No. SEBI/LAD/NRO/GN/2020/37.
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