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Legal Requirement for AIF Registration

valid until: 10 Jan 2023date published: 10 Jan 2022

A. Charter document like MOA or Trust Deed or Partnership Deed shall have clauses pertaining to carrying on the activity as an Alternative Investment Fund

B. In case of a trust or partnership firm, the respective Trust Deed or Partnership Deed shall be registered with the respective registrar in accordance with the applicable laws

C. The charter document shall contain provisions prohibiting an invitation to the public to subscribe to its securities

D. The Applicant, Sponsor and Manager shall be “fit and proper” as prescribed in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008

E. The members of the key investment team of the investment manager of the Alternative Investment Fund shall possess adequate experience and shall comprise of at least 1 (one) key personnel having a minimum of 5 years of relevant experience

F. Manager & Sponsor of an AIF shall possess the necessary infrastructure and manpower to discharge its activities

G. The Applicant shall clearly describe the objectives of investment, the strategy of investment, proposed corpus of the Fund, its tenure and targeted investors.

H. An AIF should have a minimum corpus of at least Rs. 20 crores (For an Angel Fund, the minimum corpus has been placed at INR 5 crores)

I. The minimum amount of investment to be brought in by every investor in an Alternative Investment Fund should be INR 1 crore. However, the minimum investment by an investor is prescribed at INR 25 lakhs for Angel Fund.

G. The minimum investment by an employee or director of the Manager of an Alternative Investment Fund shall be INR 25 lakhs or more.

H. It is not mandatory for an employee of the Manager who is participating in the profits to make any investments in the AIF

I. An AIF scheme cannot have more than 1000 investors whereas an Angel Fund cannot have more than 200 investors

J. Category I and Category II Alternative Investment Funds are close-ended funds, whereas category III Alternative Investment Funds are open-ended Funds

K. The minimum tenure for Category I and Category II AIF is 3 years whereas for ANGEL FUNDS the maximum tenure 5 years. There is however a provision for extension of tenure of an AIF which requires the approval of the Unit Holders comprising of at least 2/3rd in value corpus.

L. AIF Regulations restrict solicitation or collection of funds by category 3 AIF, except by way of private placement in accordance with the provision of the Companies Act, 2013 as there is no specific provision for the same in AIF Regulations

M. Units of an Alternative Investment Fund may be listed on stock exchange only after final closure of the fund or scheme, subject to minimum tradable lots of INR 1 crore.

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