Regulation 15 - General Investment Conditions - Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012

General Investment Conditions. 15. (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; 14 [ (b) The terms of Co-investment in an investee company by a Manager or Sponsor or coinvestor, shall not be more favourable than the terms of investment of the Alternative Investment Fund: Provided that the terms of exit from the Co-investment in an investee company including the timing of exit shall be identical to the terms applicable to that of exit of the Alternative Investment Fund: Provided further that the above proviso shall be applicable only for co-investment made from the date of coming into force of this regulation; ] 5 [ (c) Category I and II of Alternative Investment Funds shall invest not more than twenty five per cent of the investable funds in an Investee Company directly or through investment in the units of other Alternative Investment Funds 9 [ : ]] 10 [ Provided that large value funds for accredited investors of Category I and II may invest up to fifty percent of the investable funds in an investee company directly or through investment in the units of other Alternative Investment Funds; ] 16 [ (d) Category III Alternative Investment Funds shall invest not more than ten per cent of the investable funds in an Investee Company, directly or through investment in units of other Alternative Investment Funds and the large value funds for accredited investors of Category III Alternative Investment Funds may invest up to twenty per cent of the investable funds in an Investee Company, directly or through investment in units of other Alternative Investment Funds: Provided that for investment in listed equity of an Investee Company, Category III Alternative Investment Funds may calculate the investment limit of ten per cent of either the investable funds or the net asset value of the scheme and large value funds for accredited investors of Category III Alternative Investment Funds may calculate the investment limit of twenty per cent of either the investable funds or the net asset value of the scheme, subject to the conditions specified by the Board from time to time. ] 7 [ (da) Alternative Investment Funds which are authorised under the fund documents to invest in units of Alternative Investment Funds shall not offer their units for subscription to other Alternative Investment Funds; ] 8 [ (e) Alternative Investment Fund shall not invest except with the approval of seventy five percent of investors by value of their investment in the Alternative Investment Fund in - (a) associates; or (b) units of Alternative Investment Funds managed or sponsored by its Manager, Sponsor or associates of its Manager or Sponsor; ] 17 [ (ea) Except with the approval of seventy five percent of the investors by value of their investment in the scheme of Alternative Investment Fund and subject to the conditions specified by the Board, a scheme of an Alternative Investment Fund shall not buy or sell investments, from or to - (a) associates; or (b) schemes of Alternative Investment Funds managed or sponsored by its Manager, Sponsor or associates of its Manager or Sponsor; or (c) an investor who has committed to invest at least fifty percent of the corpus of the scheme of Alternative Investment Fund: Provided that while obtaining approval of the investors, the investor specified under sub-clause (c) who has committed to invest at least fifty percent of the corpus of the scheme of Alternative Investment Fund and is buying or selling the investment, from or to, the Alternative Investment Fund, shall be excluded from the voting process. ] 13 [ (f) Un-invested portion of the investable funds and divestment proceeds pending distribution to investors may be invested in liquid mutual funds or bank deposits or other liquid assets of higher quality such as Treasury bills, Triparty Repo Dealing and Settlement, Commercial Papers, Certificates of Deposits, etc. till the deployment of funds as per the investment objective or the distribution of the funds to investors as per the terms of the fund documents, as applicable;] (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. 4 [(h) Investment by Category I and Category II Alternative Investment Funds in the shares of entities listed on institutional trading platform after the commencement of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2015 shall be deemed to be investment in unlisted securities for the purpose of these regulations.] 18 [ (i) Alternative Investment Funds shall hold their investments in dematerialised form, subject to such conditions as may be specified by the Board from time to time: Provided that the requirement under clause (i) of sub-regulation (1) shall not apply to: (a) investments by Alternative Investment Funds in such type of instruments which are not eligible for dematerialisation, (b) investments held by a liquidation scheme of the Alternative Investment Funds that are not available in the dematerialised form, and (c) such other investments by Alternative Investment Funds and such other schemes of Alternative Investment Funds as may be specified by the Board from time to time. ] (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. ************** NOTES:- 1 Substituted by the SEBI (Alternative Investment Fund) (Amendment) Regulations, 2013, w.e.f 16-09-2013 for the word corpus 2 Ibid 3 Ibid 4 Inserted by SEBI (Alternative Investment Fund) (Amendment) Regulations, 2015, w.e.f 14.08.2015 5. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as, (c) Category I and II Alternative Investment Funds shall invest not more than twenty five percent of the 1 [investable funds] in one Investee Company; 6. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as (d) Category III Alternative Investment Fund shall invest not more than ten percent of the 2 [investable funds] in one Investee Company 7. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 8. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as (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; 9. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 before it was read as ; 10. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 before it was read as ; 12. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/33 dated 03-08-2021 13. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/41 dated 13-08-2021 before it was read as (f) Un-invested portion of the 3 [investable funds] 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; 14. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/57 dated 09-11-2021 w.e.f. 09-12-2021 before it was read as (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; 15. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/57 dated 09-11-2021 w.e.f. 09-11-2021 before it was read as 6 [ (d) Category III of Alternative Investment Funds shall invest not more than ten per cent of the investable funds in an Investee Company directly or through investment in units of other Alternative Investment Funds 11 [ : ]] 12 [ Provided that large value funds for accredited investors of Category III may invest up to twenty percent of the investable funds in an investee company directly or through investment in units of other Alternative Investment Funds; ] 16. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/75 dated 16-03-2022 before it was read as 15 [ (d) Category III Alternative Investment Funds shall invest not more than ten per cent of the net asset value in listed equity of an Investee Company and shall invest not more than ten per cent of the investable funds in securities other than listed equity of an Investee Company, directly or through investment in units of other Alternative Investment Funds: Provided that large value funds for accredited investors of Category III Alternative Investment Funds may invest up to twenty per cent of the net asset value in listed equity of an Investee Company and may invest up to twenty per cent of the investable funds in securities other than listed equity of an Investee Company, directly or through investment in units of other Alternative Investment Funds; ] 17. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/132 dated 15-06-2023 18. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/163 dated 05-01-2024