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Proposed Regulation of Alternative Investment Funds (AIFs)

The Securities and Exchange Board of India ('SEBI') has recently issued a concept paper on the proposed regulation of Alterative Investment Funds ('AIFs') in India. Taxand India explores the proposals and the impact it could have on the licensing and regulation of investment funds that raise private pools of capital from institutional investors and high net worth investors.

To read the key features of the AIF regulations and the full article from Taxand India click here.

Taxand's Take

The AIF Regulations are a step in the right direction as they bring clarity around the issue of regulation of private pools of capital that are raised locally for deployment by various types of investment funds. The regulator has allowed such types of investment funds to operate within the contours of the regulations and at the same time achieve their investment objectives. The introduction of new requirements around sponsor commitments, hard caps, minimum investor commitments, avoidance of conflict of interest issues etc, should help protect investor interests and at the same time allow the growth of the investment fund industry and help address systemic risk issues.

There are certain anomalies in the AIF Regulations around why for certain categories of investment funds the investment conditions / restrictions ought to work in a more restrictive manner as compared to other categories of investment funds, and some clarity around this would be helpful.

Your Taxand contacts for further queries are:
Russell Gaitonde
T. +91 124 339 5010

Kalpesh Desai
T. +91 124 339 5010

Pooja Thakkar
T. +91 124 339 5010

Taxand's Take Author