New Delhi, Sebi on Thursday issued the modalities for Alternative Investment Funds (AIFs) with respect to filing of placement memorandum, including that merchant bankers have to independently exercise due diligence regarding the disclosures. Under Sebi norms, AIFs can launch schemes subject to filing of placement memorandum with the regulator through a registered merchant banker.
AIFs are funds established or incorporated in India to pool capital from Indian and foreign investors for investing as per a pre-decided policy.
In a circular, Sebi said a merchant banker will have to independently exercise due diligence of all the disclosures in the placement memorandum, satisfy itself with respect to veracity and adequacy of the disclosures and provide a due diligence certificate.
While filing draft placement memorandum at the time of registration or prior to launch of new scheme on the Sebi intermediary portal, the due diligence certificate provided by the merchant banker will also be submitted along with other necessary documents, as per the circular.
The details of the merchant banker will have to be disclosed in the placement memorandum.
Further, Sebi said that a merchant banker appointed for filing of placement memorandum will not be an associate of the AIF, its sponsor, manager or trustee.
The new framework will come into effect from November 11, 2021.
AIFs are required to intimate the regulator regarding any changes in terms of placement memorandum on a consolidated basis, within one month of the end of each financial year.
Such an intimation will also be submitted through a merchant banker along with the due diligence certificate provided by such merchant banker, the regulator said.
In August, Sebi amended the regulations governing AIFs to simplify and rationalise compliance requirements as well as provide investment flexibility and streamline regulatory processes.