New Delhi,mar 23
The Securities and Exchange Board of India on Monday approved a series of regulatory amendments designed to provide Alternative Investment Funds (AIFs) with greater flexibility during the winding-up process and to reduce the compliance burden on funds that are no longer actively managed. The proposed solutions include permitting the retention of liquidation proceeds under specific conditions, such as pending litigation or tax demands, and introducing a framework to tag certain entities as inoperative funds to exempt them from standard reporting requirements.The decisions were detailed by SEBI Chairperson Tuhin Kanta Pandey during an address following the 213th board meeting held in Mumbai on Monday. Under the new framework, AIFs can retain proceeds beyond their permissible fund life if they can show “demonstrable receipt of a litigation notice or tax/regulatory demand” or if they secure “consent of at least 75% of investors by value” to satisfy anticipated liabilities.For operational expenses, retention is permitted for up to three years, provided the amounts are substantiated by prior-year comparables or invoices.The Chairperson noted that funds intending to surrender their registration while holding such residual proceeds will be categorized as “inoperative funds.” This classification allows for the “discontinuation of periodic filings, PPM updation, and performance benchmarking,” significantly easing the administrative weight on entities that are effectively in a terminal phase.The board emphasized that these measures are expected to “reduce the compliance burden on AIFs with no active fund management activity while retaining necessary regulatory oversight.”
