**Summary:**
This SEBI (Securities and Exchange Board of India) circular (SEBI/HO/IMD-I/DF9/CIR/2022/036) dated March 23, 2022, addresses the process for obtaining approval for a change in control of the Sponsor and/or Manager of an Alternative Investment Fund (AIF) when it involves a scheme of arrangement under the Companies Act, 2013.
The circular streamlines the approval process by requiring AIFs to file an application with SEBI for prior approval *before* filing an application with the National Company Law Tribunal (NCLT). Upon satisfactory compliance, SEBI will grant in-principle approval valid for three months, within which the application must be made to the NCLT.
Within 15 days of the NCLT order, the applicant must submit the following to SEBI for final approval: an application for final approval; a copy of the NCLT order; a copy of the approved scheme; a statement explaining any modifications to the scheme and the reasons for those modifications; and details of compliance with any conditions outlined in SEBI's in-principle approval.
The existing provisions outlined in Para 2.b.iv of SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014, read with Para 3 of SEBI Circular No. CIR/IMD/DF/16/2014 dated July 18, 2014, remain unchanged.
This circular applies to all change in control applications involving schemes of arrangement filed with the NCLT on or after April 1, 2022.
The circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect investor interests and regulate the securities market.
For further information, contact Deepti Agrawal, General Manager, at 022-26449616 or deepti.v@sebi.gov.in. The circular is available on the SEBI website (www.sebi.gov.in) under "Legal Framework" and "Info for Alternative Investment Funds."
Key Entities Referenced
Alternative Investment Funds: A type of investment fund that typically invests in less traditional assets.
Companies Act, 2013: An act of the Parliament of India that regulates Indian companies.
SEBI: Securities and Exchange Board of India, the regulator of the securities market in India.
SEBI Alternative Investment Funds Regulations, 2012: Regulations governing Alternative Investment Funds in India.
National Company Law Tribunal (NCLT): A quasi-judicial body in India that adjudicates issues relating to Indian companies.
Securities and Exchange Board of India Act, 1992: An act of the Parliament of India that established the Securities and Exchange Board of India.
Sponsor: Sponsor of Alternative Investment Fund
Manager of Alternative Investment Fund (AIF): Manager of Alternative Investment Fund
CIRCULAR
SEBI/HO/IMD-1/ DF9/CIR/2022/032 March 23, 2022
To,
All Alternative Investment Funds
Sir / Madam,
Sub: Change in control of Sponsor and/or Manager of Alternative Investment
Fund involving scheme of arrangement under Companies Act, 2013
1. Regulation 20(13) of SEBI (Alternative Investment Funds) Regulations, 2012
(“AIF Regulations”), inter-alia, requires that in case of change in control of the
Sponsor and/or Manager of the Alternative Investment Fund (AIF), prior
approval from the Board shall be taken by the AIF. Further, SEBI circular no.
CIR/IMD/DF/14/2014 dated June 19, 2014 read with SEBI circular no.
CIR/IMD/DF/16/2014 dated July18, 2014 inter-alia provides for the process to
be followed in case of change in control of Sponsor / Manager.
2. To streamline the process of providing approval to the proposed change in
control of the Sponsor and/or Manager of the AIF involving scheme of
arrangement which needs sanction of National Company Law Tribunal (“NCLT”)
in terms of the provisions of the Companies Act, 2013, following has been
decided:
i. The application seeking approval for the proposed change in control of
the Sponsor and/or Manager of the AIF under Regulation 20(13) of AIF
Regulations shall be filed with SEBI prior to filing the application with the
NCLT;
ii. Upon being satisfied with compliance of the applicable regulatory
requirements, in-principle approval will be granted by SEBI;
iii. The validity of such in-principle approval shall be three months from the
date of issuance, within which the relevant application shall be made to
NCLT;
Page 1 of 2iv. Within 15 days from the date of order of NCLT, applicant shall submit the
following documents to SEBI for final approval:
a. Application for the final approval;
b. Copy of the NCLT Order approving the scheme;
c. Copy of the approved scheme;
d. Statement explaining modifications, if any, in the approved scheme
vis-à-vis the draft scheme and the reasons for the same; and
e. Details of compliance with the conditions/ observations mentioned in
the in-principle approval provided by SEBI.
3. The provisions mentioned in Para 2.b.iv of SEBI Circular No.
CIR/IMD/DF/14/2014 dated June 19,2014 read with Para 3 of SEBI Circular No.
CIR/IMD/DF/16/2014 dated July18,2014 shall remain unchanged.
4. The provisions of this Circular shall be applicable to all the applications for
change in control of Sponsor and/or Manager of the AIF for which the scheme(s)
of arrangement is filed with NCLT on or after April 01, 2022.
5. This Circular is issued in exercise of powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
6. This Circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework - Circulars” and “Info for - Alternative Investment
Funds”.
Yours faithfully,
Deepti Agrawal
General Manager
Tel no.: 022-26449616
Email: deeptiv@sebi.gov.in
Page 2 of 2