New Delhi, Markets regulator Sebi on Thursday introduced a fast-track mechanism for processing placement memorandums (PPMs) of alternative investment funds (AIFs), aimed at reducing timelines and improving ease of doing business.
Under the new framework, AIFs, other than large value funds for accredited investors (LVFs), can launch schemes and circulate their PPMs to investors 30 days after filing the application with Sebi, unless advised otherwise.
For first-time schemes, AIFs can proceed with launches either after receiving registration from Sebi or upon completion of 30 days from filing, whichever is later, the regulator said in a circular.
According to Sebi, any comments issued during the 30-day period must be incorporated by merchant bankers or AIFs before launching the scheme or circulating the PPM.
The move is intended to streamline the existing process, which involved a detailed review of PPMs by Sebi and multiple rounds of revisions, often delaying fund launches.
Under the current framework, Sebi reviews the disclosures made in PPMs, merchant banker due diligence certificate, etc. and provides comments, if any. Thereafter, AIFs carry out necessary changes incorporating the Sebi comments and submit revised PPM and other documents to the regulator for taking the same on record.
“Owing to the time-consuming nature of the extant procedure, review of the current procedure is required to enable efficient deployment of capital by AIFs,” Sebi said. Accordingly, it has been “decided to follow a fast-track mechanism for launch of scheme/fund in respect of the PPMs filed by Angel Funds and AIF schemes other than ‘Large value fund for accredited investors,” the market regulator added. Sebi has also mandated that the first close of a scheme must be declared within 12 months from the date the AIF becomes eligible to launch it.
Further, merchant bankers and AIF managers will be responsible for ensuring the accuracy and completeness of disclosures made in the PPMs and related documents.
As per the revised filing requirements, AIFs will be required to submit documents including due diligence certificates from merchant bankers, fit-and-proper declarations, details of continuing interest commitments and identification documents of key entities and personnel.
Sebi has also prescribed a standard disclaimer to be included in all PPMs, clarifying that submission of documents does not amount to regulatory approval and that responsibility for disclosures lies with the manager and merchant banker.
The circular, issued with immediate effect, will also apply to all pending PPM applications with Sebi, the circular said.
