Regulation 18 - Conditions for Category III Alternative Investment Funds - Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012

Conditions for Category III Alternative Investment Funds. 18. The following investment conditions shall apply to Category III Alternative Investment Funds:- 3 [ (a) Category III Alternative Investment Funds may invest in securities of listed or unlisted investee companies, derivatives, units of other Alternative Investment Funds or complex or structured products; ] 2 [ (aa) Category III Alternative Investment Funds may deal in goods received in delivery against physical settlement of commodity derivatives; ] 5 [ (ab) Category III Alternative Investment Funds may buy or sell credit default swaps in terms of the conditions as may be specified by the Board from time to time. ] 4 [ **** ] (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 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. *************** NOTES:- 1 Substituted by the SEBI (Alternative Investment Fund) (Amendment) Regulations, 2013, w.e.f 16-09-2013 for the words and symbol Fund of Category II 2 Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/16 dated 10-05-2019 3. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as, (a) Category III Alternative Investment Funds may invest in securities of listed or unlisted investee companies or derivatives or complex or structured products; 4. Omitted vide Notification No. SEBI/LAD-NRO/GN/2021/21 dated 05-05-2021 before it was read as, (b) 1 [Fund of Category III] 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. 5. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/113 dated 09-01-2023