Jun 30, 2022

Guidelines for LVFs for Accredited Investors under AIF Regulations and Requirement of Compliance Officer for Managers of AIFs

SEBI, by way of its Circular dated June 24, 2022, introduced certain guidelines for large value funds for accredited investors (‘LVFs’) and requirement of compliance officer for managers of all alternative investment funds (‘AIFs’). The Circular introduced the following guidelines for LVFs for accredited investors:

i.     While filing the placement memorandum for LVF schemes with SEBI, a duly signed and stamped undertaking by chief executive officer (‘CEO’) of the manager to the AIF (or person holding equivalent role or position depending on the legal structure of manager) and compliance officer of manager to the AIF must be submitted in the format as specified in the Circular. In case of LVF schemes already filed with SEBI, similar submission should be made to SEBI on or before July 31, 2022; and

ii.    The proviso to Regulation 13(4) of SEBI (Alternative Investment Funds) Regulations, 2012 (‘AIF Regulations’) permits LVFs to extend its tenure beyond two years, subject to terms of the contribution agreement, other fund documents and such conditions as may be specified by SEBI, from time to time. In this regard, it is specified in the Circular as under:

  • The placement memorandum, contribution agreement or other fund documents of LVF will lay down terms and conditions for extension of the tenure beyond two years;
  • LVF will be required to obtain approval from its trustee / board of directors / designated partners (depending upon the legal structure of the LVF) for extending the tenure beyond two years, at least one month before expiration of the fund tenure or extended tenure; and
  • Where requisite conditions specified in the placement memorandum, contribution agreement or other fund documents of LVF for extension of tenure beyond two years are not fulfilled, LVF will liquidate and wind-up in accordance with AIF Regulations and circulars issued thereunder.

Further, all AIFs are now required to designate an employee or director as their compliance officer (‘Compliance Officer’). The Compliance Officer is required to be a person other than CEO of the manager (or such equivalent role or position depending on the legal structure of the manager). Further, such officer will be responsible for monitoring compliance with the provisions of the SEBI Act, 1992, AIF Regulations and circulars issued thereunder.




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