SEBI Notifies Alternative Investment Funds (Fifth Amendment) Regulations, 2024 [Read Notification]

The Securities and Exchange Board of India (SEBI) has amended the Master Circular governing Credit Rating Agencies (CRAs) through Notification No. SEBI/HO/DDHS/P/CIR/2024/XYZ, dated May 16, 2024.

These Regulations are officially titled the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024. The Regulations shall come into force from the date of their publication in the Official Gazette.

In Regulation 19B, sub-regulation (2), the phrase "sub-regulation (21) of regulation 20" has been inserted after "sub-regulation (2) of regulation 16" and before "and the guidelines and circulars."

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Regulation 20 now includes two additional sub-regulations:

Sub-Regulation (21) states that investors in an Alternative Investment Fund (AIF) scheme will have rights proportional to their investment. These rights apply to each investment within the scheme and the distribution of proceeds from those investments unless otherwise specified by SEBI.

For schemes issued before the notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024, if the investors’ rights are not proportional to their investment and are not exempted by SEBI, they will be addressed as per the Board’s directions.

Sub-Regulation (22) states that the rights of investors in an Alternative Investment Fund (AIF) scheme, other than those covered under Sub-Regulation (21) will generally be equal (pari-passu) in all respects but the AIF may offer different rights to select investors, as allowed by SEBI, provided it does not harm the interests of other investors in the scheme.

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This rule does not apply to Large Value Funds for Accredited Investors. SEBI will specify how they should be managed for any different rights already issued by an AIF before the notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024, and not covered under this rule.

This notification was issued under the authority of SEBI's Executive Director, Babitha Rayudu

To Read the full text of the Notification CLICK HERE

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