Sebi introduces fast-track route for AIF launches to boost capital deployment

In a move aimed at improving ease of doing business, the Securities and Exchange Board of India (Sebi) has streamlined the process for Alternative Investment Funds (AIFs) by introducing a fast-track mechanism for launching schemes. Under the revised framework, AIFs can now proceed with the launch of their non-LVF (Large Value Funds) schemes and circulate placement memorandums to investors just 30 days after filing the application with the regulator, unless advised otherwise.

The change comes after Sebi reviewed the existing procedures around processing placement memorandums and is expected to significantly reduce delays in fund launches. By enabling quicker access to investor capital, the regulator aims to enhance efficiency in capital deployment and support faster execution of investment strategies by AIFs.

The market regulator has been taking steps with a view to promote ease of doing business.

Earlier this year, Sebi simplified the accredited investor framework to ease operational bottlenecks for AIFs while maintaining prudential safeguards.

Under the revised norms, Sebi allowed AIF investment managers to finalise and execute contribution agreements with investors even before the latter receive formal accreditation certificates from recognised agencies. However, any commitment made by such investors will not be counted towards the scheme’s corpus until accreditation is obtained, and funds can be accepted only after the certificate is issued. The regulator said this ensures that key prudential norms linked to corpus size are not compromised.

Sebi also said that schemes of AIFs will receive funds from these investors only after they obtain accreditation certificate from an accreditation agency.

The securities market watchdog has also relaxed documentation requirements for accreditation based on net-worth criteria. The earlier mandate to submit a detailed break-up of net worth as an annexure to the net-worth certificate has been done away with. In addition, it has been clarified that it is optional for a chartered accountant to specify the exact net worth amount, as long as the certificate confirms that the investor meets the prescribed threshold.(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)