With the objective of streamlining compliance costs for Alternative Investment Funds (AIFs) and in response to the feedback received from the market participants, Securities and Exchange Board of India (SEBI) has relaxed its requirement regarding notification of changes to the terms set forth in Private Placement Memorandums (PPMs) through merchant bankers.
Key highlights:
In terms of SEBI’s circular dated April 29, 2024, changes in the terms of a PPM, inter-alia including change of the auditor, registrar and transfer agent, tax and legal advisors, changes in the contact details of the sponsor, manager and trustee of the AIF, changes in the track record of the investment manager and key investment team and personnel of the AIF manager are not required to be notified through a merchant banker and instead may directly be filed with SEBI. This relaxation is applicable to large value funds (LVFs) as well, however, in case of LVFs the filing made with SEBI is required to be duly signed and stamped by the chief executive officer or compliance officer of the AIF manager.
Conclusion
SEBI appears to be receptive to feedback from market participants and this step should help reduce compliance costs incurred by AIFs in respect of merchant bankers.