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TMI BlogSpecific due diligence of investors and investments of AIFsX X X X Extracts X X X X X X X X Extracts X X X X ..... specified by SEBI from time to time. 2. In this regard, the specific due diligence to be carried out by AIFs, managers of AIFs and their Key Management Personnel, with respect to investors and investments of the AIF, to prevent facilitation of circumvention of the following regulatory frameworks, are being specified in this circular - I. Provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 ( ICDR Regulations ), and other regulations of SEBI wherein benefits or relaxations have been provided to entities designated as Qualified Institutional Buyers (QIBs). II. Provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) wherein benefits are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, are eligible to subscribe to Security Receipts (SRs) issued by an Asset Reconstruction Company (ARC). 4.2. In order to prevent AIFs from facilitating investors who are otherwise ineligible for QB status on their own, in availing benefits designated for QBs the following is specified: 4.2.1. For every scheme of AIFs having an investor, or investors belonging to the same group, who contribute(s) 50 percent or more to the corpus of the scheme, necessary due diligence as per the implementation standards formulated by SFA, shall be carried out prior to making any investments in SRs issued by ARCs or availing benefits designated for QBs under the SARFAESI Act. 5. RBI regulated lenders/entities ever-greening their stressed loans/assets throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is, through investment in a scheme of an AIF), that they are not permitted to acquire or hold directly. 6. Schemes of AIFs falling under the ambit of provisions at paras 3.2.1, 4.2.1 and 5.1.1 above, shall proceed with the proposed investment in accordance with the respective implementation standards as formulated by SFA. If the proposed investment does not satisfy the due diligence checks specified by SFA for making investment: 6.1. either such investor or investors of same group as referred at paras 3.2.1, 4.2.1 and 5.1.1 above shall be excluded from the investment, subject to necessary disclosure in the PPM for exclusion of investors; or, 6.2. the investment shall not be made. 7. For schemes of AIFs falling under the ambit of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed - 8.2.1. For every scheme of AIFs where 50 percent or more of the corpus of the scheme is contributed by investors (a) who are citizens of/are from/are situated in a country which shares land border with India, or, (b) whose beneficial owners, as determined in terms of sub-rule (3) of Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, are citizens of/are from/are situated in a country which shares land border with India, necessary due diligence as per the implementation standards formulated by SFA, shall be carried out prior to making any investment. 8.2.2. Upon carrying out the necessary due diligence, such scheme shall report details of its investment, which would result in the scheme holding 10 percent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CFO Association and Trustee Association of India, within 1 working day of issuance of this circular. 12. The trustee/sponsor of AIF, as the case may be, shall ensure that the Compliance Test Report prepared by the manager in terms of Chapter 15 of Master Circular for AIFs, includes compliance with the provisions of this circular. 13. This circular shall come into force with immediate effect. 14. This circular is issued with the approval of the competent authority. 15. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulations 20(20) and 36 of AIF Regulations, to protect the interests of investors in securities and to promote the development of, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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