This circular specifies due diligence requirements for ...

Stricter Due Diligence for AIFs: Compliance with Standards and Reporting Requirements for Significant Investments.

October 14, 2024

Circulars     SEBI

This circular specifies due diligence requirements for Alternative Investment Funds (AIFs) to prevent circumvention of regulatory frameworks. Key points include: AIFs designated as Qualified Institutional Buyers (QIBs) must conduct due diligence per Standard Setting Forum (SFA) standards when investor(s) contribute 50% or more to a scheme's corpus, before availing QIB benefits. Similar due diligence is required for AIFs as Qualified Buyers investing in security receipts issued by Asset Reconstruction Companies. For schemes with RBI-regulated investors/sponsors contributing 25% or more, due diligence must ensure indirect exposures comply with RBI norms. Schemes with 50% or more corpus from investors in countries sharing land borders with India require due diligence, and investments over 10% in Indian companies must be reported. Existing investments not meeting due diligence standards must be reported to custodians by specified dates. Custodians must report compiled information to SEBI. Implementation standards by SFA must be adopted.

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