Finance Ministry amends Investment Pattern of AIF [Read Notification]

The Finance Ministry has amended the Investment Pattern of Alternative Investment Funds  (AIF).

The government seeks to amend Notification No. 11/14/2013-PR, dated the 2nd March, 2015.

In the said notification, in the table, in column 2, under the heading “INVESTMENT PATTERN” against category (v), after clause (d), the clause shall be inserted namely “(e) Units issued by Category I and Category II Alternative Investment Funds (AIF) regulated by the Securities and Exchange Board of India.”

The investments in the above category  is allowed subject to satisfaction of the various conditions.

Firstly, the Permitted funds under Category I are infrastructure funds, SME Funds, Venture Capital Funds and Social Venture Capital Funds as detailed in Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

Secondly, for category II- AIF as per SEBI (Alternative Investment Funds) Regulations, 2012, at least 51% of the funds of such AIF shall be invested in either of the infrastructure entities or SMEs or venture capital or social welfare entities.

Thirdly, funds shall invest only in those AIFs whose corpus is equal to or more than Rs. 100 crores.

Fourthly, the exposure to a single AIF shall not exceed 10% of the AIF Size. However, this limit would not apply to a Government-sponsored AIF.

Fifthly, funds to ensure that investment should not be made directly or indirectly in securities of the companies or Funds incorporated and/or operated outside India.

Sixthly, the Sponsor of Alternative Investment Fund should not be the promoter in the Fund or the promoter group of the Fund.

Lastly, the AIFs shall not be managed by investment managers, who are directly or indirectly controlled or managed by the Fund or the promoter group of the Fund.”

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