MANU/SREG/0023/2012

Department/Board : SEBI
Notification No. : LAD-NRO/GN/2012-13/04/11262
Date of Notification : 21.05.2012
Date of Publication : 21.05.2012
Referred IN
Securities and Exchange Board of India (Alternative Investment Funds) Regulations,
2012
No.LAD-NRO/GN/2012-13/04/11262.-- In exercise of the powers conferred by subsection (1) of Section 30 read with sub-section (1) of Section 11, clause (ba) and clause (c)
of subsection (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 Securities and Exchange Board of
India hereby, makes the following regulations, namely, -CHAPTER-I
PRELIMINARY
1. Short title and commencement.-(1) These regulations shall be called the Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012.
(2) These regulations shall come into force on the date of their notification in the
Official Gazette.
2. Definitions.-(1) In these regulations, unless the context otherwise requires, the terms defined
herein shall bear the meanings assigned to them below, and their cognate
expressions and variations shall be construed accordingly,-(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of
1992);
(b) "Alternative Investment Fund" means any fund established or incorporated
in India in the form of a trust or a company or a limited liability partnership or
a body corporate which,(i) is a privately pooled investment vehicle which collects funds from
investors, whether Indian or foreign, for investing it in accordance with
a defined investment policy for the benefit of its investors; and
(ii) is not covered under the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996, Securities and Exchange Board of
India (Collective Investment Schemes) Regulations, 1999 or any other
regulations of the Board to regulate fund management activities:

2016-06-30 (Page 1 of 31 )

www.manupatra.com

Alliance Legal India Partners

Provided that the following shall not be considered as Alternative

Investment Fund for the purpose of these regulations,(i) family trusts set up for the benefit of 'relatives' as
defined under Companies Act, 1956;
(ii) ESOP Trusts set up under the Securities and
Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme), Guidelines, 1999
or as permitted under Companies Act, 1956;
(iii) employee welfare trusts or gratuity trusts set up for
the benefit of employees;
(iv) 'holding companies' within the meaning of Section 4
of the Companies Act, 1956;
(v) other special purpose vehicles not established by fund
managers, including securitization trusts, regulated under
a specific regulatory framework;
(vi)

funds

managed

by

securitisation

company

or

reconstruction company which is registered with the

Reserve

Bank

of

India

under

Section

of

the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002; and
(vii) any such pool of funds which is directly regulated by
any other regulator in India;
(c) "associate" means a company or a limited liability partnership or a body
corporate in which a director or trustee or partner or Sponsor or Manager of
the Alternative Investment Fund or a director or partner of the Manager or
Sponsor holds, either individually or collectively, more than fifteen percent of
its paid-up equity share capital or partnership interest, as the case may be;
(d) "Board" means the Securities and Exchange Board of India established
under Section 3 of the Act;
(e) "certificate" means a certificate of registration granted by the Board under
regulation 6;
(f) "change in control" in relation to a company or a body corporate, means:
(i) if its shares are listed on any recognized stock exchange, change in
control within the meaning of clause (e) of sub-regulation (I) of
regulation 2 of the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
(ii) in any other case, change in the controlling interest or change in
legal form;
Explanation.-- For the purpose of sub-clause (ii), the expression

2016-06-30 (Page 2 of 31 )

www.manupatra.com

Alliance Legal India Partners

"controlling interest" means an interest, whether direct or

indirect, to the extent of more than fifty percent of voting rights
or interest;
(g) "company" means a company incorporated under the Companies Act,
1956;
(h) "corpus" means the total amount of funds committed by investors to the
Alternative Investment Fund by way of a written contract or any such
document as on a particular date;
(i) "debt fund" means an Alternative Investment Fund which invests primarily
in debt or debt securities of listed or unlisted investee companies according to
the stated objectives of the Fund;
(j) "equity linked instruments" includes instruments convertible into equity
shares or share warrants, preference shares, debentures compulsorily or
optionally convertible into equity;
(k) "form" means any of the forms set out in the First Schedule;
(l) "hedge fund" means an Alternative Investment Fund which employs diverse
or complex trading strategies and invests and trades in securities having
diverse risks or complex products including listed and unlisted derivatives;
(m) "infrastructure fund" means an Alternative Investment Fund which invests
primarily in unlisted securities or partnership interest or listed debt or
securitized debt instruments of investee companies or special purpose vehicles
engaged in or formed for the purpose of operating, developing or holding
infrastructure projects;
Explanation.-- 'Infrastructure' shall be as defined by the government of
India from time to time.
(n) "inspecting authority" means any one or more person appointed by the
Board to exercise powers conferred under regulation 30;
(o) "investee company" means any company, special purpose vehicle or
limited liability partnership or body corporate in which an Alternative
Investment Fund makes an investment;
(p) "investible funds" means corpus of the Alternative Investment Fund net of
estimated expenditure for administration and management of the fund;
(q) "manager" means any person or entity who is appointed by the Alternative
Investment Fund to manage its investments by whatever name called and may
also be same as the sponsor of the Fund;
(r) "private equity fund" means an Alternative Investment Fund which invests
primarily in equity or equity linked instruments or partnership interests of
investee companies according to the stated objective of the fund;
(s) "SME" means Small and Medium Enterprise and shall have the same

2016-06-30 (Page 3 of 31 )

www.manupatra.com

Alliance Legal India Partners

meaning as assigned to it under the Micro, Small and Medium Enterprises

Development Act 2006 as amended from time to time;
(t) 'SME fund" means an Alternative Investment Fund which invests primarily
in unlisted securities of investee companies which are SMEs or securities of
those SMEs which are listed or proposed to be listed on a SME exchange or
SME segment of an exchange;
(u) "social venture" means a trust, society or company or venture capital
undertaking or limited liability partnership formed with the purpose of
promoting social welfare or solving social problems or providing social benefits
and includes,(i) public charitable trusts registered with Charity Commissioner;
(ii) societies registered for charitable purposes or for promotion of
science, literature, or fine arts;
(iii) company registered under Section 25 of the Companies Act, 1956;
(iv) micro finance institutions;
(v) "social venture fund" means an Alternative Investment Fund which invests
primarily in securities or units of social ventures and which satisfies, social
performance norms laid down by the fund and whose investors may agree to
receive restricted or muted returns;
(w) "sponsor" means any person or persons who set up the Alternative
investment Fund and includes promoter in case of a company and designated
partner in case of a limited liability partnership;
(x) "trust" means a trust established under the Indian Trusts Act, 1882 or
under an Act of Parliament or State Legislation;
(y) "unit" means beneficial interest of the investors in the Alternative
Investment Fund or a scheme of the Alternative Investment Fund and shall
include shares or partnership interests;
(z) "venture capital fund" means an Alternative Investment Fund which invests
primarily in unlisted securities of start-ups, emerging or early-stage venture
capital

undertakings

mainly

involved

in

new

products,

new

services,

technology or intellectual property right based activities or a new business

model;
(aa) "venture capital undertaking" means a domestic company:
(i) which is not listed on a recognised stock exchange in India at the
time of making investment; and
(ii) which is engaged in the business for providing services, production
or manufacture of article or things and does not include following
activities or sectors:
(1) non-banking financial companies;

2016-06-30 (Page 4 of 31 )

www.manupatra.com

Alliance Legal India Partners

(2) gold financing;

(3)

activities

not

permitted

under

industrial

policy

of

Government of India;
(4) any other activity which may be specified by the Board in
consultation with Government of India from time to time;
(2) All other expressions unless defined herein shall have the same meaning as have
been assigned to them under the Act or the Securities Contracts (Regulation) Act,
1956, (42 of 1956) or the Companies Act, 1956 (1 of 1956), or any statutory
modification or re-enactment thereto, as the case may be.
CHAPTER II
REGISTRATION OF ALTERNATIVE INVESTMENT FUNDS
3. Registration of Alternative Investment Funds.-(1) On and from the commencement of these regulations, no entity or person shall
act as an Alternative Investment Fund unless it has obtained a certificate of
registration from the Board;
Provided that an existing fund falling within the definition of Alternative
Investment Fund which is not registered with the Board may continue to
operate for a period of six months from commencement of these regulations or
if it has made an application for registration under sub-regulation (5) within
the said period of six months, till the disposal of such application:
Provided further that the Board may, in special cases, extend the said period
up to a maximum of twelve months from the date of such commencement:
Provided further that existing schemes will be allowed to complete their agreed
tenure, such funds shall not raise any fresh monies other than commitments
already made till registration is granted under regulation 6:
Provided further that if such existing funds are not able to comply with
conditions specified under these regulations, they may apply for exemption to
the Board from strict compliance with these regulations and the Board upon
examination may provide such exemptions or issue such instructions as may
be deemed appropriate.
(2) The funds registered as venture capital fund under Securities and Exchange Board
of India (Venture Capital Funds) Regulations, 1996 shall continue to be regulated by
the said regulations till the existing fund or scheme managed by the fund is wound up
and such funds shall not launch any new scheme after notification of these
regulations:
Provided that the existing fund or scheme shall not increase the targeted
corpus of the fund or scheme after notification of these regulations.
Provided further that venture capital funds may seek re-registration under
these regulations subject to approval of two-thirds of their investors by value

2016-06-30 (Page 5 of 31 )

www.manupatra.com

Alliance Legal India Partners

of their investment.
(3) Any entity referred to in sub-regulation (1) who fails to make an application for
grant of a certificate within the period specified therein shall cease to carry on any
activity as an Alternative Investment Fund.
(4) Alternative Investment Funds shall seek registration in one of the categories
mentioned hereunder and in case of Category I Alternative Investment Fund, in one
of the subcategories thereof:
(a) "Category I Alternative Investment Fund" which invests in start-up or early
stage ventures or social ventures or SMEs or infrastructure or other sectors or
areas which the government or regulators consider as socially or economically
desirable and shall include venture capital funds, SME Funds, social venture
funds, infrastructure funds and such other Alternative Investment Funds as
may be specified;
Explanation.-- For the purpose of this clause, Alternative Investment
Funds which are generally perceived to have positive spillover effects
on economy and for which the Board or Government of India or other
regulators in India might consider providing incentives or concessions
shall be included and such funds which are formed as trusts or
companies shall be construed as "venture capital company" or "venture
capital fund" as specified under sub-section (23FB) of Section 10 of the
Income Tax Act, 1961.
(b) "Category II Alternative Investment Fund" which does not fall in Category I
and III and which does not undertake leverage or borrowing other than to
meet

day-today

operational

requirements

and

as

permitted

in

these

regulations;
Explanation.-- For the purpose of this clause, Alternative Investment
Funds such as private equity funds or debt funds for which no specific
incentives or concessions are given by the government or any other
Regulator shall be included.
(c) "Category III Alternative Investment Fund" which employs diverse or
complex trading strategies and may employ leverage including through
investment in listed or unlisted derivatives.
Explanation.-- For the purpose of this clause, Alternative Investment
Funds such as hedge funds or funds which trade with a view to make
short term returns or such other funds which are open ended and for
which

no

specific

incentives

or

concessions

are

given

by

the

government or any other Regulator shall be included.

(5) An application for grant of certificate shall be made for any of the categories as
specified in sub-regulation (4) in Form A as specified in the First Schedule to these
regulations and shall be accompanied by a non-refundable application fee as specified
in Part A of the Second Schedule to these regulations to be paid in the manner
specified in Part B thereof.

2016-06-30 (Page 6 of 31 )

www.manupatra.com

Alliance Legal India Partners

(6) The Board shall take into account requirements as specified in these regulations
for the purpose of considering grant of registration.
(7) Without prejudice to the powers of the Board to take any action under the Act or
regulations made there under, the certificate of registration shall be valid till the
Alternative Investment Fund is wound up.
(8) The Board may, in the interest of the investors, issue directions with regard to the
transfer of records, documents or securities or disposal of investments relating to its
activities as an Alternative Investment Fund.
(9) The Board may, in order to protect the interests of investors, appoint any person
to take charge of records, documents, securities and for this purpose, also determine
the terms and conditions of such an appointment.
4. Eligibility Criteria.-For the purpose of the grant of certificate to an applicant, the Board shall consider the
following conditions for eligibility, namely, -(a) the memorandum of association in case of a company; or the Trust Deed
in case of a Trust; or the Partnership deed in case of a limited liability
partnership permits it to carry on the activity of an Alternative Investment
Fund;
(b) the applicant is prohibited by its memorandum and articles of association
or trust deed or partnership deed from making an invitation to the public to
subscribe to its securities;
(c) in case the applicant is a Trust, the instrument of trust is in the form of a
deed and has been duly registered under the provisions of the Registration
Act, 1908;
(d) in case the applicant is a limited liability partnership, the partnership is
duly incorporated and the partnership deed has been duly filed with the
Registrar under the provisions of the Limited Liability Partnership Act. 2008;
(e) in case the applicant is a body corporate, it is set up or established under
the laws of the Central or State Legislature and is permitted to carry on the
activities of an Alternative Investment Fund;
(f) the applicant, Sponsor and Manager are fit and proper persons based on
the criteria specified in Schedule II of the Securities and Exchange Board of
India (Intermediaries) Regulations, 2008;
(g) the key investment team of the Manager of Alternative Investment Fund
has adequate experience, with at least one key personnel having not less than
five years experience in advising or managing pools of capital or in fund or
asset or wealth or portfolio management or in the business of buying, selling
and dealing of securities or other financial assets and has relevant professional
qualification;

2016-06-30 (Page 7 of 31 )

www.manupatra.com

Alliance Legal India Partners

(h) the Manager or Sponsor has the necessary infrastructure and manpower to
effectively discharge its activities;
(i) the applicant has clearly described at the time of registration the
investment objective, the targeted investors, proposed corpus, investment
style or strategy and proposed tenure of the fund or scheme;
(j) whether the applicant or any entity established by the Sponsor or Manager
has earlier been refused registration by the Board.
5. Furnishing of Information.-(1) The Board may require the applicant to furnish any such further information or
clarification regarding the Sponsor or Manager or nature of the fund or fund
management activities or any such matter connected thereto to consider the
application for grant of a certificate or after registration thereon.
(2) If required by the Board, the applicant or Sponsor or Manager shall appear before
the Board for personal representation.
6. Procedure for grant of Certificate.-(1) The Board may grant certificate under any specific category of Alternative
Investment Fund, if it is satisfied that the applicant fulfills the requirements as
specified in these regulations.
(2) The Board shall, on receipt of the registration fee as specified in the Second
Schedule, grant a certificate of registration in Form B.
(3) The registration may be granted with such conditions as may be deemed
appropriate by the Board.
7. Conditions of certificate.-(1) The certificate granted under regulation 6 shall, inter-alia, be subject to the
following conditions: (a) the Alternative Investment Fund shall abide by the provisions of the Act
and these regulations;
(b) the Alternative Investment Fund shall not carry on any other activity other
than permitted activities;
(c) the Alternative Investment Fund shall forthwith inform the Board in writing,
if any information or particulars previously submitted to the Board are found to
be false or misleading in any material particular or if there is any material
change in the information already submitted.
(2) An Alternative Investment Fund which has been granted registration under a
particular category cannot change its category subsequent to registration, except with
the approval of the Board.
8. Procedure where registration is refused.--

2016-06-30 (Page 8 of 31 )

www.manupatra.com

Alliance Legal India Partners

(1) After considering an application made under regulation 3, if the Board is of the
opinion that a certificate should not be granted, it may reject the application after
giving the applicant a reasonable opportunity of being heard.
(2) The decision of the Board to reject the application shall be communicated to the
applicant within thirty days.
(3) Where an application for a certificate is rejected by the Board, the applicant shall
cease to carry on any activity as an Alternative Investment Fund:
Provided that nothing contained in these regulations shall affect the liability of
the applicant towards its existing investors under law or agreement
CHAPTER III
INVESTMENT CONDITIONS AND RESTRICTIONS
9. Investment Strategy.-(1) All Alternative Investment Funds shall state investment strategy, investment
purpose and its investment methodology in its placement memorandum to the
investors.
(2) Any material alteration to the fund strategy shall be made with the consent of
atleast two-thirds of unit holders by value of their investment in the Alternative
Investment Fund.
10. Investment in Alternative Investment Fund.-Investment in all categories of Alternative Investment Funds shall be subject to the
following conditions:(a) the Alternative Investment Fund may raise funds from any investor
whether Indian, foreign or non-resident Indians by way of issue of units;
(b) each scheme of the Alternative Investment Fund shall have corpus of
atleast twenty crore rupees;
(c) the Alternative Investment Fund shall not accept from an investor, an
investment of value less than one crore rupees:
Provided that in case of investors who are employees or directors of the
Alternative Investment Fund or employees or directors of the Manager,
the minimum value of investment shall be twenty five lakh rupees.
(d) the Manager or Sponsor shall have a continuing interest in the Alternative
Investment Fund of not less than two and half percent of the corpus or five
crore rupees, whichever is lower, in the form of investment in the Alternative
Investment Fund and such interest shall not be through the waiver of
management fees:
Provided that for Category III Alternative Investment Fund, the
continuing interest shall be not less than five percent of the corpus or

2016-06-30 (Page 9 of 31 )

www.manupatra.com

Alliance Legal India Partners

ten crore rupees, whichever is lower.

(e) the Manager or Sponsor shall disclose their investment in the Alternative
Investment Fund to the investors of the Alternative Investment Fund;
(f) no scheme of the Alternative Investment Fund shall have more than one
thousand investors;
(g) the fund shall not solicit or collect funds except by way of private
placement.
11. Placement Memorandum.-(1) Alternative Investment Fund shall raise funds through private placement by issue
of information memorandum or placement memorandum, by whatever name called.
(2) Such information or placement memorandum as specified in sub-regulation (1)
shall contain all material information about the Alternative Investment Fund and the
Manager, background of key investment team of the Manager, targeted investors,
fees and all other expenses proposed to be charged, tenure of the Alternative
Investment Fund or scheme, conditions or limits on redemption, investment strategy,
risk management tools and parameters employed, key service providers, conflict of
interest and procedures to identify and address them, disciplinary history, the terms
and conditions on which the Manager offers investment services, its affiliations with
other intermediaries, manner of winding up of the Alternative Investment Fund or the
scheme and such other information as may be necessary for the investor to take an
informed decision on whether to invest in the Alternative Investment Fund.
12. Schemes.-(1) The Alternative Investment Fund may launch schemes subject to filing of
placement memorandum with the Board.
(2) Such placement memorandum shall be filed with the Board atleast thirty days
prior to launch of scheme along with the fees as specified in the Second Schedule:
Provided that payment of scheme fees shall not apply in case of launch of first
scheme by the Alternative Investment Fund.
(3) The Board may communicate its comments, if any, to the applicant prior to launch
of the scheme and the applicant shall incorporate the comments in placement
memorandum prior to launch of scheme.
13. Tenure.-(1) Category I Alternative Investment Fund and Category II Alternative Investment
Fund shall be close ended and the tenure of fund or scheme shall be determined at
the time of application subject to sub-regulation (2) of this regulation.
(2) Category I and II Alternative Investment Fund or schemes launched by such funds
shall have a minimum tenure of three years.
(3) Category III Alternative Investment Fund may be open ended or close ended.

2016-06-30 (Page 10 of 31 )

www.manupatra.com

Alliance Legal India Partners

(4) Extension of the tenure of the close ended Alternative Investment Fund may be
permitted up to two years subject to approval of two-thirds of the unit holders by
value of their investment in the Alternative Investment Fund.
(5) In the absence of consent of unit holders, the Alternative Investment Fund shall
fully liquidate within one year following expiration of the fund tenure or extended
tenure.
14. Listing.-(1) Units of close ended Alternative Investment Fund may be listed on stock exchange
subject to a minimum tradable lot of one crore rupees.
(2) Listing of Alternative Investment Fund units shall be permitted only after final
close of the fund or scheme.
15. General Investment Conditions.-(1) Investments by all categories of Alternative Investment Funds shall be subject to
the following conditions:(a) Alternative Investment Fund may invest in securities of companies
incorporated outside India subject to such conditions or guidelines that may be
stipulated or issued by the Reserve Bank of India and the Board from time to
time;
(b) Co-investment in an investee company by a Manager or Sponsor shall not
be on terms more favourable than those offered to the Alternative Investment
Fund;
(c) Category I and II Alternative Investment Funds shall invest not more than
twenty five percent of the corpus in one Investee Company;
(d) Category III Alternative Investment Fund shall invest not more than ten
percent of the corpus in one Investee Company
(e) Alternative Investment Fund shall not invest in associates except with the
approval of seventy five percent of investors by value of their investment in
the Alternative Investment Fund;
(f) Un-invested portion of the corpus may be invested in liquid mutual funds or
bank deposits or other liquid assets of higher quality such as Treasury bills,
CBLOs, Commercial Papers, Certificates of Deposits, etc. till deployment of
funds as per the investment objective;
(g) Alternative Investment Fund may act as Nominated Investor as specified in
clause (b) of sub-regulation (1) of regulation 106N of the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009.
(2) Notwithstanding the conditions as specified in sub-regulation (1), the Board may
specify additional requirements or criteria for Alternative Investment Funds or for a
specific category thereof.

2016-06-30 (Page 11 of 31 )

www.manupatra.com

Alliance Legal India Partners

16. Conditions for Category I Alternative Investment Funds.-(1) The following investment conditions shall apply to all Category I Alternative
Investment Funds:(a) Category I Alternative Investment Fund shall invest in investee companies
or venture capital undertaking or in special purpose vehicles or in limited
liability partnerships or in units of other Alternative Investment Funds as
specified in these regulations;
(b) Fund of Category I Alternative Investment Funds may invest in units of
Category I Alternative Investment Funds of same sub-category:
Provided that they shall only invest in such units and shall not invest in
units of other Fund of Funds:
Provided further that the investment conditions as specified in subregulations (2), (3), (4) or (5) shall not be applicable to investments by
such funds.
(c) Category I Alternative Investment Funds shall not borrow funds directly or
indirectly or engage in any leverage except for meeting temporary funding
requirements for not more than thirty days, on not more than four occasions in
a year and not more than ten percent of the corpus.
(2) The following investment conditions shall apply to venture capital funds in addition
to conditions laid down in sub-regulation (1):(a) at least two-thirds of the corpus shall be invested in unlisted equity shares
or equity linked instruments of a venture capital undertaking or in companies
listed or proposed to be listed on a SME exchange or SME segment of an
exchange;
(b) not more than one-third of the corpus shall be invested in:
(i) subscription to initial public offer of a venture capital undertaking
whose shares are proposed to be listed;
(ii) debt or debt instrument of a venture capital undertaking in which
the fund has already made an investment by way of equity or
contribution towards partnership interest;
(iii) preferential allotment, including through qualified institutional
placement, of equity shares or equity linked instruments of a listed
company subject to lock in period of one year;
(iv) the equity shares or equity linked instruments of a financially weak
company or a sick industrial company whose shares are listed.
Explanation.- For the purpose of these regulations, "a financially
weak company" means a company, which has at the end of the
previous financial year accumulated losses, which has resulted in
erosion of more than fifty percent but less than hundred percent

2016-06-30 (Page 12 of 31 )

www.manupatra.com

Alliance Legal India Partners

of its net worth as at the beginning of the previous financial

year.
(v) special purpose vehicles which are created by the fund for the
purpose of facilitating or promoting investment in accordance with
these regulations:
Provided

that

the

investment

conditions

and

restrictions

stipulated in clause (a) and clause (b) of sub-regulation (2) shall

be achieved by the fund by the end of its life cycle.
(c) such funds may enter into an agreement with merchant banker to
subscribe to the unsubscribed portion of the issue or to receive or deliver
securities in the process of market making under Chapter XB of the Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 and the provisions of clause (a) and clause (b) of subregulation (2) shall not apply in case of acquisition or sale of securities
pursuant to such subscription or market making.
(d) such funds shall be exempt from regulation 3 and 3A of Securities and
Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 in
respect of investment in companies listed on SME Exchange or SME segment
of an exchange pursuant to due diligence of such companies subject to the
following conditions:
(i) the fund shall disclose any acquisition or dealing in securities
pursuant to such due-diligence, within two working days of such
acquisition or dealing, to the stock exchanges where the investee
company is listed;
(ii) such investment shall be locked in for a period of one year from the
date of investment.
(3) The following conditions shall apply to SME Funds in addition to conditions laid
down in sub-regulation (1):(a) atleast seventy five percent of the corpus shall be invested in unlisted
securities or partnership interest of venture capital undertakings or investee
companies which are SMEs or in companies listed or proposed to be listed on
SME exchange or SME segment of an exchange;
(b) such funds may enter into an agreement with merchant banker to
subscribe to the unsubscribed portion of the issue or to receive or deliver
securities in the process of market making under Chapter XB of the Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;
(c) such funds shall be exempt from regulation 3 and 3A of Securities and
Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 in
respect of investment in companies listed on SME Exchange or SME segment
of an exchange pursuant to due diligence of such companies subject to the
following conditions:

2016-06-30 (Page 13 of 31 )

www.manupatra.com

Alliance Legal India Partners

(i) the fund shall disclose any acquisition or dealing in securities

pursuant to such due-diligence, within two working days of such
acquisition or dealing, to the stock exchanges where the investee
company is listed;
(ii) such investment shall be locked in for a period of one year from the
date of investment.
(4) The following conditions shall apply to social venture funds in addition to the
conditions laid down in sub-regulation (1):(a) at least seventy five percent of the corpus shall be invested in unlisted
securities or partnership interest of social ventures.
(b) such funds may accept grants, provided that such utilization of such grants
shall be restricted to clause (a).
(c) such funds may give grants to social ventures, provided that appropriate
disclosure is made in the placement memorandum.
(d) such funds may accept muted returns for their investors i.e. they may
accept returns on their investments which may be lower than prevailing
returns for similar investments.
(5) The following conditions shall apply to Infrastructure Funds in addition to
conditions laid down in sub-regulation (1):(a) atleast seventy five percent of the corpus shall be invested in unlisted
securities or units or partnership interest of venture capital undertaking or
investee companies or special purpose vehicles, which are engaged in or
formed for the purpose of operating, developing or holding infrastructure
projects;
(b) notwithstanding clause (a) of sub-regulation (5), such funds may also
invest in listed securitized debt instruments or listed debt securities of investee
companies or special purpose vehicles, which are engaged in or formed for the
purpose of operating, developing or holding infrastructure projects.
17. Conditions for Category II Alternative Investment Funds.-The following investment conditions shall apply to Category II Alternative Investment
Funds:(a) Category II Alternative Investment Funds shall invest primarily in unlisted
investee companies or in units of other Alternative Investment Funds as may
be specified in the placement memorandum;
(b) Fund of Category II Alternative Investment Funds may invest in units of
Category I or Category II Alternative Investment Funds:
Provided that they shall only invest in such units and shall not invest in
units of other Fund of Funds.

2016-06-30 (Page 14 of 31 )

www.manupatra.com

Alliance Legal India Partners

(c) Category II Alternative Investment Funds may not borrow funds directly or
indirectly and shall not engage in leverage except for meeting temporary
funding requirements for not more than thirty days, not more than four
occasions in a year and not more than ten percent of the corpus;
(d) Notwithstanding clause (c), Category II Alternative Investment Funds may
engage in hedging, subject to guidelines as specified by the Board from time
to time;
(e) Category II Alternative Investment Funds may enter into an agreement
with merchant banker to subscribe to the unsubscribed portion of the issue or
to receive or deliver securities in the process of market making under Chapter
XB of the Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations. 2009.
(f) Category II Alternative Investment Funds shall be exempt from regulation
3 and 3A of Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992 in respect of investment in companies listed on
SME Exchange or SME segment of an exchange pursuant to due diligence of
such companies subject to the following conditions:
(i) the fund shall disclose any acquisition or dealing in securities
pursuant to such due-diligence, within two working days of such
acquisition or dealing, to the stock exchanges where the investee
company is listed;
(ii) such investment shall be locked in for a period of one year from the
date of investment.
18. Conditions for Category III Alternative Investment Funds.-The following investment conditions shall apply to Category III Alternative Investment
Funds:(a) Category III Alternative Investment Funds may invest in securities of listed
or unlisted investee companies or derivatives or complex or structured
products;
(b) Fund of Category II Alternative Investment Funds may invest in units of
Category I or Category II Alternative Investment Funds:
Provided that they invest solely in such units and shall not invest in
units of other Fund of Funds.
(c) Category III Alternative Investment Funds may engage in leverage or
borrow subject to consent from the investors in the fund and subject to a
maximum limit, as may be specified by the Board:
Provided that such funds shall disclose information regarding the overall
level of leverage employed, the level of leverage arising from borrowing
of cash, the level of leverage arising from position held in derivatives or
in any complex product and the main source of leverage in their fund to

2016-06-30 (Page 15 of 31 )

www.manupatra.com

Alliance Legal India Partners

the investors and to the Board periodically, as may be specified by the

Board.
(d) Category III Alternative Investment Funds shall be regulated through
issuance of directions regarding areas such as operational standards, conduct
of business rules, prudential requirements, restrictions on redemption and
conflict of interest as may be specified by the Board.
19. Other Alternative Investment Fund.-The Board may lay down framework for Alternative Investment Funds other than the
Funds falling in the categories specified in these regulations.
CHAPTER IV
GENERAL OBLIGATIONS AND RESPONSIBILITIES AND TRANSPERANCY
20. General Obligations.-(1) All Alternative Investment Funds shall review policies and procedures, and their
implementation, on a regular basis, or as a result of business developments, to
ensure their continued appropriateness.
(2) The Sponsor or Manager of Alternative Investment Fund shall appoint a custodian
registered with the Board for safekeeping of securities if the corpus of the Alternative
Investment Fund is more than five hundred crore rupees:
Provided that the Sponsor or Manager of a Category III Alternative Investment
Fund shall appoint such custodian irrespective of the size of corpus of the
Alternative Investment Fund.
(3) All Alternative Investment Funds shall inform the Board in case of any change in
the Sponsor. Manager or designated partners or any other material change from the
information provided by the Alternative Investment Fund at the time of application for
registration.
(4) In case of change in control of the Alternative Investment Fund. Sponsor or
Manager, prior approval from the Board shall be taken by the Alternative Investment
Fund.
(5) The books of accounts of the Alternative Investment Fund shall be audited
annually by a qualified auditor.
21. Conflict of Interest.-(1) The Sponsor and Manager of the Alternative Investment Fund shall act in a
fiduciary capacity towards its investors and shall disclose to the investors, all conflicts
of interests as and when they arise or seem likely to arise.
(2) Manager shall establish and implement written policies and procedures to identify,
monitor and appropriately mitigate conflicts of interest throughout the scope of
business.
(3) Managers and Sponsors of Alternative Investment Fund shall abide by high level

2016-06-30 (Page 16 of 31 )

www.manupatra.com

Alliance Legal India Partners

principles on avoidance of conflicts of interest with associated persons, as may be

specified by the Board from time to time.
22. Transparency.-All Alternative Investment Funds shall ensure transparency and disclosure of
information to investors on the following:
(a) financial, risk management, operational, portfolio, and transactional
information regarding fund investments shall be disclosed periodically to the
investors;
(b) any fees ascribed to the Manager or Sponsor; and any fees charged to the
Alternative Investment Fund or any investee company by an associate of the
Manager or Sponsor shall be disclosed periodically to the investors;
(c) any inquiries/legal actions by legal or regulatory bodies in any jurisdiction,
as and when occurred;
(d) any material liability arising during the Alternative Investment Fund's
tenure shall be disclosed, as and when occurred;
(e) any breach of a provision of the placement memorandum or agreement
made with the investor or any other fund documents, if any, as and when
occurred;
(f) change in control of the Sponsor or Manager or Investee Company.
(g) Alternative Investment Fund shall provide at least on an annual basis,
within 180 days from the year end, reports to investors including the following
information, as may be applicable to the Alternative Investment Fund:A. financial information of investee companies.
B. material risks and how they are managed which may include:
(i) concentration risk at fund level;
(ii) foreign exchange risk at fund level;
(iii) leverage risk at fund and investee company levels;
(iv) realization risk (i.e. change in exit environment) at fund and
investee company levels;
(v) strategy risk (i.e. change in or divergence from business
strategy) at investee company level;
(vi) reputation risk at investee company level;
(vii) extra-financial risks, including environmental, social and
corporate governance risks, at fund and investee company level.
(h) Category III Alternative Investment Fund shall provide quarterly reports to
investors in respect of clause (g) within 60 days of end of the quarter;

2016-06-30 (Page 17 of 31 )

www.manupatra.com

Alliance Legal India Partners

(i) any significant change in the key investment team shall be intimated to all
investors;
(j) alternative Investment Funds shall provide, when required by the Board,
information for systemic risk purposes (including the identification, analysis
and mitigation of systemic risks).
23. Valuation.-(1) The Alternative Investment Fund shall provide to its investors, a description of its
valuation procedure and of the methodology for valuing assets.
(2) Category I and Category II Alternative Investment Funds shall undertake
valuation of their investments, atleast once in every six months, by an independent
valuer appointed by the Alternative Investment Fund:
Provided that such period may be enhanced to one year on approval of atleast
seventy-five percent of the investors by value of their investment in the
Alternative Investment Fund.
(3) Category III Alternative Investment Funds shall ensure that calculation of the net
asset value (NAV) is independent from the fund management function of the
Alternative Investment Fund and such NAV shall be disclosed to the investors at
intervals not longer than a quarter for close ended Funds and at intervals not longer
than a month for open ended funds.
24. Obligation of Manager.-The Manager shall be obliged to:
(a) address all investor complaints;
(b) provide to the Board any information sought by Board; (c) maintain all
records as may be specified by the Board;
(d) take all steps to address conflict of interest as specified in these
regulations;
(e) ensure transparency and disclosure as specified in the regulations.
25. Dispute Resolution.-An Alternative Investment Fund, by itself or through the Manager or Sponsor, shall
lay down procedure for resolution of disputes between the investors, Alternative
Investment Fund, Manager or Sponsor through arbitration or any such mechanism as
mutually decided between the investors and the Alternative Investment Fund.
26. Power to call for information.-(1) The Board may at any time call for any information from an Alternative
Investment Fund or its Manager or Sponsor or trustee or investor with respect to any
matter relating to its activity as an Alternative Investment Fund or for the assessment
of systemic risk or prevention of fraud.

2016-06-30 (Page 18 of 31 )

www.manupatra.com

Alliance Legal India Partners

(2) Where any information is called for under sub-regulation (1) it shall be furnished
within the time specified by the Board.
27. Maintenance of Records.-(1) The Manager or Sponsor shall be required to maintain following records
describing:
(a) the assets under the scheme/fund;
(b) valuation policies and practices;
(c) investment strategies;
(d) particulars of investors and their contribution;
(e) rationale for investments made.
(2) The records under sub-regulation (1) shall be maintained for a period of five years
after the winding up of the fund.
28. Submission of reports to the Board.-The Board may at any time call upon the Alternative Investment Fund to file such
reports, as the Board may desire, with respect to the activities carried on by the
Alternative Investment Fund.
29. Winding up.-(1) An Alternative Investment Fund set up as a trust shall be wound up:
(a) when the tenure of the Alternative Investment Fund or all schemes
launched by the Alternative Investment Fund, as mentioned in the placement
memorandum is over; or
(b) if it is the opinion of the trustees or the trustee company, as the case may
be, that the Alternative Investment Fund be wound up in the interests of
investors in the units; or
(c) if seventy five percent of the investors by value of their investment in the
Alternative Investment Fund pass a resolution at a meeting of unitholders that
the Alternative Investment Fund be wound up; or
(d) if the Board so directs in the interests of investors.
(2) An Alternative Investment Fund set up as a limited liability partnership shall be
wound up in accordance with the provisions of The Limited Liability Partnership Act,
2008:
(a) when the tenure of the Alternative Investment Fund or all schemes
launched by the Alternative Investment Fund, as mentioned in the placement
memorandum is over; or
(b) if seventy five percent of the investors by value of their investment in the

2016-06-30 (Page 19 of 31 )

www.manupatra.com

Alliance Legal India Partners

Alternative Investment Fund pass a resolution at a meeting of unitholders that

the Alternative Investment Fund be wound up; or
(c) if the Board so directs in the interests of investors.
(3) An Alternative Investment Fund set up as a company shall be wound up in
accordance with the provisions of the Companies Act, 1956 (1 of 1956).
(4) An Alternative Investment Fund set up as a body corporate shall be wound up in
accordance with the provisions of the statute under which it is constituted.
(5) The trustees or trustee company or the Board of Directors or designated partners
of the Alternative Investment Fund, as the case maybe, shall intimate the Board and
investors of the circumstances leading to the winding up of the Alternative
Investment Fund.
(6) On and from the date of intimation under sub-regulation (5) of regulation 29, no
further investments shall be made on behalf of the Alternative Investment Fund so
wound up.
(7) Within one year from the date of intimation under sub-regulation (5) of regulation
29, the assets shall be liquidated, and the proceeds accruing to investors in the
Alternative Investment Fund shall be distributed to them after satisfying all liabilities.
(8) Notwithstanding anything contained in sub-regulation (7) and subject to the
conditions, if any, contained in the placement memorandum or contribution
agreement or subscription agreement, as the case may be, in specie distribution of
assets of the Alternative Investment Fund, shall be made by the Alternative
Investment Fund at a" time, including on winding up of the Alternative Investment
Fund, as per the preference of investors, after obtaining approval of at least seventy
five percent of the investors by value of their investment in the Alternative
Investment Fund.
(9) Upon winding up of the Alternative Investment Fund, the certificate of registration
shall be surrendered to the Board.
CHAPTER V
INSPECTION
30. Board's right to inspect.-The Board may suo motu or upon receipt of information or complaint appoint one or
more persons as Inspecting Authority to undertake inspection of the books of
account, records and documents relating to an Alternative Investment Fund for any of
the following reasons, namely, -(a) to ensure that the books of account, records and documents are being
maintained by the Alternative Investment Fund in the manner specified in
these regulations;
(b) to inspect complaints received from investors, clients or any other person,
on any matter having a bearing on the activities of the Alternative Investment

2016-06-30 (Page 20 of 31 )

www.manupatra.com

Alliance Legal India Partners

Fund;
(c) to ascertain whether the provisions of the Act and these regulations are
being complied with by the Alternative Investment Fund;
(d) to inspect suo motu the affairs of an Alternative Investment Fund, in the
interest of the securities market or in the interest of investors.
31. Notice before inspection.-(1) Before ordering an inspection under regulation 30, the Board shall give not less
than ten days notice to the Alternative Investment Fund.
(2) Notwithstanding anything contained in sub-regulation (1) where the Board is
satisfied that in the interest of the investors no such notice should be given, it may by
an order in writing direct that the inspection of the affairs of the Alternative
Investment Fund be taken up without such notice.
(3) During the course of an inspection, the Alternative Investment Fund against
whom the inspection is being carried out shall be bound to discharge its obligations as
provided in regulation 32.
32. Obligation of Alternative Investment Fund on inspection.-(1) It shall be the duty of every officer of the Alternative Investment Fund in respect
of whom an inspection has been ordered under regulation 30 and any other
associated person who is in possession of relevant information pertaining to conduct
and affairs of such Alternative Investment Fund including Manager, if any, to produce
to the Inspecting Authority such books, accounts and other documents in his custody
or control and furnish him with such statements and information as the said Authority
may require for the purposes of the inspection.
(2) It shall be the duty of every officer of the Alternative Investment Fund and any
other associated person who is in possession of relevant information pertaining to
conduct and affairs of the Alternative Investment Fund including the manager to give
to the Inspecting Authority all such assistance and shall extend all such co-operation
as may be required in connection with the inspection and shall furnish such
information as sought by the Inspecting Authority in connection with the inspection.
(3) The Inspecting Authority shall, for the purposes of inspection, have power to
examine on oath and record the statement of any employees, directors or person
responsible for or connected with the activities of Alternative Investment Fund or any
other associated person having relevant information pertaining to such Alternative
Investment Fund.
(4) The Inspecting Authority shall, for the purposes of inspection, have power to
obtain authenticated copies of documents, books, accounts of Alternative Investment
Fund, from any person having control or custody of such documents, books or
accounts.
33. Submission of report to the Board.-The Inspecting Authority shall, as soon as possible, on completion of the inspection

2016-06-30 (Page 21 of 31 )

www.manupatra.com

Alliance Legal India Partners

submit an inspection report to the Board:,

Provided that if directed to do so by the Board, he may submit an interim
report.
34. Communication of findings, etc. to the Alternative Investment Fund.-The Board may after consideration of the inspection report and after giving
reasonable opportunity of hearing to the Alternative Investment Fund or its trustees,
directors or manager issue such direction as it deems fit in the interest of securities
market or the investors including directions in the nature of:-(a) requiring an Alternative Investment Fund not to launch new schemes or
raise money from investors for a particular period;
(b) prohibiting the person concerned from disposing of any of the properties of
the fund or scheme acquired in violation of these regulations;
(c) requiring the person connected to dispose of the assets of the fund or
scheme in a manner as may be specified in the directions;
(d) requiring the person concerned to refund any money or the assets to the
concerned investors along with the requisite interest or otherwise, collected
under the scheme;
(e) prohibiting the person concerned from operating in the capital market or
from accessing the capital market for a specified period.
CHAPTER VI
PROCEDURE FOR ACTION IN CASE OF DEFAULT
35. Liability for action in case of default.-(1) An Alternative Investment Fund which-(a) contravenes any of the provisions of the Act or these regulations;
(b) fails to furnish any information relating to its activity as an Alternative
Investment Fund as required by the Board;
(c) furnishes to the Board information which is false or misleading in any
material particular;
(d) does not submit periodic returns or reports as required by the Board;
(e) does not co-operate in any enquiry, inspection or investigation conducted
by the Board;
(f) fails to resolve the complaints of investors or fails to give a satisfactory
reply to the Board in this behalf, shall be dealt with in the manner provided
under

the

Securities

and

Exchange

Board

of

India

(Intermediaries)

Regulations, 2008.
(2) Sub-regulation (1) shall not prejudice the powers of the Board to issue directions

2016-06-30 (Page 22 of 31 )

www.manupatra.com

Alliance Legal India Partners

or measures under regulation 34 or under sections 11, 11B, 11D, sub-section (3) of
section 12 or section 24 or Chapter VIA of the Act or under any other law for the time
being in force.
CHAPTER VII
MISCELLANEOUS
36. Power of the Board to issue clarifications.-In order to remove any difficulties in the application or interpretation of these
regulations, the Board may issue clarifications and guidelines in the form of circulars
or issue separate circular or guidelines or framework for each category of Alternative
Investment Funds.
37. Delegation of powers.-The powers exercisable by the Board under these regulations shall also be exercisable
by any officer of the Board to whom such powers are delegated by the Board by
means of an order made under section 19 of the Securities and Exchange Board of
India Act, 1992.
38. Amendments to other Regulations.-The regulations specified in the Third Schedule to these regulations shall be amended
in the manner and to the extent stated therein.
39. Repeal and Saving.-(1) The Securities and Exchange Board of India (Venture Capital Funds) Regulations,
1996 hereby shall stand repealed.
(2) Notwithstanding such repeal:
(a) Anything done or any action taken or purported to have been done or
taken, including suspension or cancellation of certificate of registration, any
inquiry or investigation commenced or show cause notice issued under the
repealed regulations, shall be deemed to have been done or taken under the
corresponding provisions of these regulations;
(b) All venture capital funds or schemes launched by such venture capital
funds prior to date of notification of these regulations shall continue to be
governed by provisions of Securities and Exchange Board of India (Venture
Capital Funds) Regulations, 1996 till the fund or Scheme is wound up:
Provided that such funds shall not launch any new Scheme after
notification of these regulations;
(c) Any application made to the Board under the Securities and Exchange
Board of India (Venture Capital Funds) Regulations, 1996 and pending before
it shall be deemed to have been made under the corresponding provisions of
Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012.

2016-06-30 (Page 23 of 31 )

www.manupatra.com

Alliance Legal India Partners

(3) After the repeal of Securities and Exchange Board of India (Venture Capital Funds)
Regulations, 1996, any reference thereto in any other regulations made, guidelines or
circulars issued thereunder by the Board shall be deemed to be a reference to the
corresponding provisions of these regulations.
FIRST SCHEDULE-FORM
FORM A
Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012 See regulation 3
Application for Grant of Certificate of Registration as Alternative Investment Fund
Securities and Exchange Board of India
SEBI Bhavan, C4-A, G Block, Bandra Kurla Complex, Mumbai 400051 - India
INSTRUCTIONS
1. This form is meant for use by the applicant for grant of certificate of registration as an
Alternative Investment Fund.
2. The applicant should complete this form, and submit it, along with all supporting
documents to the Board at its head office at Mumbai.
3. This application form should be filled in accordance with these regulations.
4. The application shall be considered by the Board provided it is complete in all respects.
5. All answers must be legible and all the pages must be numbered with signature/stamp on
each page of the form.
6. Information which needs to be supplied in more detail may be given on separate sheets
which should be attached to the application form and appropriately numbered.
7. The application must be signed and all signatures must be original.
8. The application must be accompanied by an application fee as specified in the Second
Schedule to these regulations.
1. GENERAL INFORMATION
(a) Name, address of the registered office, address for correspondence and principal
place of business, telephone number(s), fax number(s), e-mail address of the
applicant.
(b) Name, direct line number, mobile number and e-mail of the contact person(s).
(c) Legal structure of applicant - Whether the applicant is a company or trust or
limited liability partnership or a body corporate.
(d) Date and place of incorporation/ establishment.

2016-06-30 (Page 24 of 31 )

www.manupatra.com

Alliance Legal India Partners

(e) Category under which the application is made 1. Category I Alternative Investment Fund- Venture Capital Fund
2. Category I Alternative Investment Fund- Social Venture Fund
3. Category 1 Alternative Investment Fund- SME Fund
4. Category I Alternative Investment Fund- Infrastructure Fund
5. Category I Alternative Investment Fund- Other
6. Category II Alternative Investment Fund
7. Category III Alternative Investment Fund
(f) In case the applicant proposes to register as a Category III Alternative Investment
Fund, whether the fund shall be open ended or close ended.
(g) Whether the applicant or its associates or its sponsor(s) or its manager(s) is/are
registered with the Board, Reserve Bank of India or any other regulatory authority in
any capacity along with the details of its registration.
(h) Details of infrastructure for conducting activities as an Alternative Investment
Fund
(i) Copy of the draft placement memorandum.
2. DETAILS OF APPLICANT
I. In case applicant is a Trust:
1. Write-up on the activities of the applicant
2. Whether the Trust Deed is registered under the provisions of the
Registration Act, 1908. (Enclose relevant extract of the Registered Trust Deed)
3. Whether the Trust Deed permits the carrying on of the activity of an
Alternative Investment Fund
4. Whether the applicant is prohibited by its trust deed from making an
invitation to the public to subscribe to its units;
5. Provide details of Trustees/ Trustee Company as below:
a. Whether Trustee is an individual or a Trustee company.
b. Name, registered office address, telephone number(s) and fax
number(s) of the Trustees/ Trustee Company.
c. Name, direct line number, mobile number and e-mail of the contact
person(s).
d. Identity and Address proof of Trustees/ Directors of the Trustee
Company

2016-06-30 (Page 25 of 31 )

www.manupatra.com

Alliance Legal India Partners

e. Whether the Trustee Company is registered with Board, Reserve

Bank of India or any other regulatory authority in any capacity along
with the details of its registration.
f. Brief write up on the activities of the Trustee Company/ Profile of
Trustees.
II. In case applicant is a Company:
1. Write-up on the activities of the applicant
2. Shareholding pattern and profile of the directors (Enclose Identity proof and
address proof of the directors)
3. Whether the Memorandum of Association permits carrying on of the activity
of

an

Alternative

Investment

Fund

(Enclose

relevant

extract

of

the

Memorandum of Association)
4. Whether the applicant is prohibited by its memorandum and articles of
association from making an invitation to the public to subscribe to its
securities;
III. In case applicant is a limited liability partnership:
1. Write-up on the activities of the applicant
2. Beneficial ownership pattern and profile of the partners (Enclose Identity
proof and address proof of the partners)
3. Whether the partnership deed is duly registered under the provisions of the
Limited Liability Partnership Act, 2008 and permits carrying on of the activity
of an Alternative Investment Fund (Enclose relevant extract of the Partnership
Deed)
4. Whether the applicant is prohibited by its partnership deed from making an
invitation to the public to subscribe to its securities;
IV. In case applicant is a Body Corporate
1. Write-up on the activities of the applicant
2. Shareholding pattern and profile of the directors (Enclose Identity proof and
address proof of the directors)
3. Whether the applicant is set up or established under the laws of the Central
or State Legislature
4. Whether the applicant is permitted carrying on of the activity of an
Alternative Investment Fund (Enclose relevant extract of the relevant
Statute/Act)
5. Whether the applicant is prohibited by its memorandum and articles of
association from making an invitation to the public to subscribe to its
securities;

2016-06-30 (Page 26 of 31 )

www.manupatra.com

Alliance Legal India Partners

3. DETAILS OF SPONSOR(S) (Sponsor shall be as defined in sub-regulation (w) of

regulation 2),
(a) Name, address of registered office, address for correspondence and principal place
of business, telephone number(s), fax number(s), e-mail address of the sponsor.
(b) Name, direct line number, mobile number and e-mail of the contact person(s).
(c) Legal status of the sponsor (whether sponsor(s) is/are individual/company/limited
liability

partnership/body

corporate)

and

date

and

place

of

incorporation/

establishment, wherever applicable.

(d) In case of Sponsor being individuals), provide a brief profile of the Sponsor
including professional qualification. In case of Sponsors) being other than individual,
write

up

on

shareholding

pattern/Partnership

interests

and

profile

(if

sponsor

of

the

directors/partners including their professional qualification.

(e)

Identity

proof

and

address

proof

of

the

Sponsor

is

an

individual)/directors of Sponsors sponsor is a company)/partners of the Sponsor (if

sponsor is an limited liability partnership).
(f) Whether the Sponsor or its directors)/partners) is/are registered with the Board.
(g) Details of past experience of the Sponsor(s) in advising or managing pools of
capital or in fund or asset or wealth or portfolio management or in the business of
buying, selling and dealing of securities or other financial assets.
(h) Copies of the financial statements for the previous financial year
(i) Whether, the Sponsor has floated any Alternative Investment Funds/Venture
Capital Funds previously, which are registered with the Board. If yes, details of the
same,
4. DETAILS OF MANAGER
(a) Name, address of the registered office address for correspondence, telephone
numbers), fax numbers), of the Managers).
(b) Name, direct line number, mobile number and e-mail of the contact person(s).
(c)

Legal

status

of

the

Manager

(whether

Manager(s)

is/are

individual/company/limited liability partnership/body corporate) and date and place of

incorporation/ establishment, wherever applicable.
(d) Write up on the activities of the Manager including past experience in advising or
managing pools of capital or in fund or asset or wealth or portfolio management or in
the business of buying, selling & dealing of securities or other financial assets.
(e)

Identity

proof

and

address

proof

of

the

Manager

(if

manager

is

an

individual)/directors of Manager (if manager is a company)/partners of the Manager

(if manager is an limited liability partnership).
(f) In case of Manager being a company or limited liability partnership, shareholding

2016-06-30 (Page 27 of 31 )

www.manupatra.com

Alliance Legal India Partners

pattern /Partnership interests and profile of the directors/Partners

(g) Brief profile of Key Investment Team including experience and professional
qualification
(h) Copies of the financial statements for the previous financial year
(i) Whether, the Manager has managed/advised any Alternative Investment Funds/
Venture Capital Funds previously, which are registered with the Board. If yes, details
of the same.
5. DETAILS OF BUSINESS PLAN AND INVESTMENT STRATEGY
(a) Investment objective and investment style/ strategy of the fund.
(b) The target investors
(c) The target industries/ sectors, if any
(d) Proposed corpus
(e) Proposed fees to the Sponsor and Manager
(f) Tenure of the fund or scheme
(g) Details of proposed use of leverage in case of Category III Alternative Investment
Fund
6. DETAILS OF REGULATORY ACTION TAKEN IN THE PAST, IF ANY
(a) Whether the applicant or Sponsor or its directors/partners or Manager or its
Directors/ Partners or Trustees/Trustee Company or its directors are/were involved in
any litigation connected with the securities market and any order has/had been
passed against them for violation of securities laws. (If Yes, provide details. If No,
enclose a declaration to that effect).
(b) Whether the applicant/Sponsor/Trustee/Manager or its directors or Partners or
employees are/have been involved in any litigation connected with the securities
market which may have an adverse bearing on the business of the applicant or any
order has/ had been passed against them for violation of securities laws. (If Yes,
provide details. If No, enclose a declaration to that effect).
(c) Whether applicant/Sponsor/Trustee/Manager or its directors or Partners has/have
been refused a certificate by the Board or its/their certificate has been suspended at
any time prior to this application. (If Yes, provide details. If No, enclose a declaration
to that effect).
7. OTHER INFORMATION/DECLARATIONS
(a) Amount contributed/ proposed to be contributed by the Sponsor(s)/Manager(s) as
per clause (d) of regulation 10 along with details of the same. (Provide copies of
commitment letters from the sponsor(s)/manager(s)).
(b) Whether the applicant, Sponsor and Manager are fit and proper persons based on
the criteria specified in the Securities and Exchange Board of India (Intermediaries)

2016-06-30 (Page 28 of 31 )

www.manupatra.com

Alliance Legal India Partners

Regulations, 2008; (Enclose a declaration to that effect).

(c) Declaration that the applicant shall comply with the provisions of regulation 10
with respect to investment in the Alternative Investment Fund.
(d) Declaration that the applicant shall comply with the provisions of regulation 15
and 16 with respect to general investment conditions and conditions for the applicable
category.
DECLARATION STATEMENT (TO BE GIVEN AS BELOW)
We hereby agree and declare that the information supplied in the application, including the
attachment sheets, is complete and true.
AND we further agree that, we Shall notify the Securities and Exchange Board of India
immediately any change in the information provided in the application.
We further agree that we shall comply with, and be bound by the Securities and Exchange
Board of India Act, 1992, and the Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, and Government of India guidelines/instructions as
may be announced by the Securities and Exchange Board of India from time to time.
We further agree that as a condition of registration, we shall abide by such operational
instructions/directives as may be issued by the Securities and Exchange Board of India from
time to time.
For and on behalf of___________________________________________________
(Name of the applicant)
Authorized signatory
(Signature)
FORM B
Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012
See regulation 6
Certificate of registration as Alternative Investment Fund
I. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and
Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made thereunder,
the Board hereby grants a certificate of registration to as an Alternative Investment Fund
subject to the conditions specified in the Act and in the regulations made thereunder.
II. The Category of the Alternative Investment Fund shall be III. The Registration Number of the Alternative Investment Fund is
IN/AIF/Category_/_________
Date :

2016-06-30 (Page 29 of 31 )

www.manupatra.com

Alliance Legal India Partners

Place. MUMBAI
By Order
Sd/For and on behalf of Securities and Exchange Board of India
SECOND SCHEDULE
Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012
See sub-regulations (2) and (5) of regulation 3, sub-regulation (2) of regulation 6 and subregulation (2) of regulation 12
FEES
PART A
AMOUNT TO BE PAID AS FEES
Application fee

: 1,00,000

Registration fee

: 5,00,000

Scheme Fee

'1,00,000

Re-registration Fee

1,00,000

PART B
The fees specified above shall be payable by bank draft in favour of "The Securities and
Exchange Board of India" at Mumbai.
Third Schedule
[see regulation 38]
1. Amendment to Securities and Exchange Board of India (Issue of Capital and Disclosure)
Regulations, 2009.
(i) In regulation 2, in sub-regulation (1), in clause (zd), in sub-clause (i) after the
words "venture capital fund" and before the words "and", the words ", Alternative
investment Fund" shall be inserted;
(ii) In regulation 37, in the proviso, clause (b) shall be substituted with the following
namely, -"(b) equity shares held by a venture capital fund or alternative investment
fund of category I or a foreign venture capital investor:
Provided that such equity shares shall be locked in for a period of at
least one year from the date of purchase by the venture capital fund or
alternative investment fund or foreign venture capital investor."

2016-06-30 (Page 30 of 31 )

www.manupatra.com

Alliance Legal India Partners

2. Amendment to Securities and Exchange Board of India (Foreign Venture Capital Investors)
Regulations, 2000, (i) In regulation 2,
(a) clause (I) shall be substituted with the following namely, -"(1) "Venture Capital Fund" means a fund registered with the Board
under the Securities and Exchange Board of India (Venture Capital
Funds) Regulations, 1996 or under the Securities and Exchange Board
of India (Alternative Investment Funds) Regulations, 2012 in the subcategory of "Venture Capital Fund' under Category I Alternative
Investment Fund."
(b) clause (m) shall be substituted with the following namely. -"(m)

"Venture

Capital

undertaking"

means

venture

capital

undertaking as defined under clause(aa) of sub-regulation (I) of

regulation 2 of the Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012."
(c) In sub-regulation (2), after the words "Securities and Exchange Board of
India (Venture Capital Funds) Regulations, 1996" the words and numbers "or
Securities and Exchange Board of India (Alternative Investment Funds)
Regulation, 2012" shall be inserted.
(ii) In regulation 4. in sub-regulation (1), clause (e) after the words "venture capital
fund" the words "or Alternative Investment Fund" shall be inserted:
(iii) In regulation 11, in clause (b), after the words "venture capital fund", the words
"or alternative investment fund" shall be inserted.
(iv) In regulation 11, in clause (c), the words "venture capital undertaking"' wherever
occurring shall be replaced with the words "venture capital undertaking or invested
company as defined in clause (o) of sub-regulation (1) of regulation 2 of Securities
and Exchange Board of India (Alternative Investment Funds) Regulation, 2012".
3. Amendments to Securities and Exchange Board of India (Substantial Acquisitions of
Shares and Takeover) Regulations, 2011.
(i) In regulation 2, in sub-regulation (1), in clause (q), in sub-clause (2) after item
(viii) the following new item shall be inserted namely:"(viiia) an alternative investment fund and its sponsor, trustees, trustee
company and manager;"
(ii) In regulation 10, in sub-regulation (4), in clause (f) the words "venture capital
fund" wherever occurring shall be replaced with the words "venture capital fund or
Category I Alternative Investment Fund".
U. K. SINHA. Chairman
[ADVT. III/4/Exty./69-ZB/12]

2016-06-30 (Page 31 of 31 )

www.manupatra.com

Alliance Legal India Partners