Investment by AIF in dematerialised format (post Sept. 2024)
AIFs while making an investment in a portfolio company post September, 2024 to ensure that such investment to be held in dematerialised form.
Provided, existing investments made by AIFs have been exempted from this requirement, except in the cases where:
1. Investee company has been mandated under applicable law to facilitate dematerialisation of its securities; and,
2. Investments where the AIF, on its own, or along with other SEBI registered intermediaries/entities which are mandated to hold their investment in dematerialised form, has control in the investee company.
Further, the abovementioned requirement is exempted for:
1. Liquidation Schemes.
2. Schemes of an AIF whose tenure ends within one year from the date of issuance of notification.
3. Schemes of an AIF which are in extended tenure as on the date of issuance.
Appointment of Custodian
The current regulatory requirement of appointing a Custodian, applicable to Category III and Category I and II with a corpus more than 500 Crores shall now extend to all AIFs.
AIFs may appoint a custodian who is an associate of manager or sponsor of the AIF, subject to conditions similar to those prescribed under SEBI (Mutual Funds) regulations, 1996 for permitting related party of sponsor of a Mutual Fund to act as its custodian.
Therefore All AIF’s irrespective of corpus will need to appoint a Custodian
Facilitation of Small & Medium REITs (“SM REITs”)
– Amendments to SEBI (REIT Reg), for creation of new regulatory framework
The Board, inter-alia, approved amendments to SEBI (Real Estate Investment Trusts) Regulations, 2014 in order to create a regulatory framework for facilitation of SM REITs, with an asset value of at least Rs. 50 crore vis-à-vis minimum asset value of Rs. 500 crore for existing REITs.
SM REITs shall have the ability to create separate scheme(s) for owning real estate assets through special purpose vehicle(s) constituted as companies.
The regulatory framework approved by the Board for SM REITs, inter – alia, provides for the structure of SM REITs, migration of existing structures meeting certain specified criteria, obligations of the investment manager including net worth, experience and minimum unitholding requirement, investment conditions, minimum subscription, distribution norms, valuation of assets, etc.
