To improve the ease of doing business, the Securities and Exchange Board of India (SEBI) has introduced a fast-track mechanism for processing alternative investment funds’ (AIF) private placement memorandums (PPMs) filed by angel funds and non-large value fund AIF schemes.
This move follows consultation with stakeholders and takes into consideration the sophistication of AIF investors, as well as the due diligence and experience of merchant bankers.
AIFs can now circulate the PPMs to their investors 30 days after filing the application with the SEBI. However, when it is an AIF’s first filing, circulation can only be done after registration or after 30 days of filing the application, whichever falls later. Any SEBI comments on the scheme are required to be complied with before circulation.
It has been prescribed that the first close of the scheme cannot be later than 12 months from the date of the AIF becoming eligible to launch the scheme.
The merchant banker and the AIF manager have been made responsible to ensure accurate and complete regulatory disclosures and declarations. These include signed merchant banker due diligence certificates, fit and proper declarations related to the AIF or sponsor orAIF manager, and minimum continuing interest commitment.
A specific disclaimer clause must be included in all PPMs informing investors of the nature of the PPM, its filings with the SEBI and approvals therefrom.
