Draft for discussion purposes

Strictly privileged and confidential

February 13th, 2024

AIF REGULATIONS SUMMARY

RELEVANT INFORMATIVE SECTIONS OF THE LAW AND
IT’S EXPLANATION AS REQUESTED:

Securities and Exchange Board of India Act, 1992

83
[15-EA. Penalty for default in case of alternative investment funds, infrastructure
investment trusts and real estate investment trusts.—Where any person fails to comply
with the regulations made by the Board in respect of alternative investment funds,
infrastructure investment trusts and real estate investment trusts or fails to comply with the
directions issued by the Board, such person shall be liable to penalty which shall not be less
than one lakh rupees but which may extend to one lakh rupees for each day during which
such failure continues subject to a maximum of one crore rupees or three times the amount of
gains made out of such failure, whichever is higher.]

The Securities and Exchange Board of India (Alternative Investment

Funds) Regulations, 2012

2 Definitions.—

(b) “Alternative Investment Fund” means any fund established or incorporated in India in the
form of a trust or a company or a limited liability partnership or a body corporate which,— (i)
is a privately pooled investment vehicle which collects funds from investors, whether Indian
or foreign, for investing it in accordance with a defined investment policy for the benefit of
its investors; and (ii) is not covered under the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996, Securities and Exchange Board of India (Collective

1 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate
fund management activities: Provided that the following shall not be considered as
Alternative Investment Fund for the purpose of these regulations,— (i) family trusts set up
for the benefit of ‘relatives’ as defined under 2 [Companies Act, 2013]; (ii) 3[ESOP Trusts
set up under the Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014 or as permitted under Companies Act, 2013;] (iii) employee welfare trusts
or gratuity trusts set up for the benefit of employees; (iv) 4[‘holding companies’ as defined
under sub-section 46 of Section 2 of Companies Act, 2013;] (v) other special purpose
vehicles not established by fund managers, including securitization trusts, regulated under a
specific regulatory framework; (vi) funds managed by securitisation company or
reconstruction company which is registered with the Reserve Bank of India under Section 3
of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002; and (vii) any such pool of funds which is directly regulated by any other
regulator in India;
EXPLANATION:

1. **Definition:** An Alternative Investment Fund (AIF) is any fund formed in India as a

trust, company, limited liability partnership, or body corporate.

2. **Nature:** AIF is a privately pooled investment vehicle that gathers funds from both
Indian and foreign investors.

3. **Investment Policy:** AIF invests these funds based on a predefined investment policy
for the benefit of its investors.

4. **Regulatory Exclusion:** AIF is not governed by the Securities and Exchange Board of
India (SEBI) regulations for Mutual Funds (1996) or Collective Investment Schemes (1999).

5. **Exclusions from AIF Definition:** The following are not considered AIFs under these
regulations:
- (i) Family trusts for the benefit of 'relatives' under the Companies Act, 2013.
- (ii) ESOP trusts under SEBI (Share Based Employee Benefits) Regulations, 2014, or as
allowed under the Companies Act, 2013.

2 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

- (iii) Employee welfare or gratuity trusts for the benefit of employees.

- (iv) 'Holding companies' as defined in Section 2(46) of the Companies Act, 2013.
- (v) Other special purpose vehicles, not established by fund managers, including
securitization trusts, regulated under specific frameworks.
- (vi) Funds managed by securitization or reconstruction companies registered with the
Reserve Bank of India under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002.
- (vii) Any pool of funds directly regulated by another regulator in India.

[(i) “debt fund” means an Alternative Investment Fund which invests primarily in
debt securities of listed or unlisted investee companies or in securitized debt
instruments as per the stated objectives of the Fund;]

w) “sponsor” means any person or persons who set up the Alternative Investment Fund and includes
promoter in case of a company and designated partner in case of a limited liability partnership;

h) “corpus” means the total amount of funds committed by investors to the Alternative Investment
Fund by way of a written contract or any such document as on a particular date;

3. Registration of Alternative Investment Funds.—

(4) Alternative Investment Funds shall seek registration in one of the categories
mentioned hereunder and in case of Category I Alternative Investment Fund, in one of the
sub-categories thereof:
(a) “Category I Alternative Investment Fund” which invests in start-up or early stage
ventures or social ventures or SMEs or infrastructure or other sectors or areas which
the government or regulators consider as socially or economically desirable and
shall include venture capital funds, SME Funds, 31[social impact funds],
infrastructure funds 32[, special situation funds] and such other Alternative
Investment Funds as may be specified;
Explanation. Certainly! Here's a summary of the information related to "Category I
Alternative Investment Fund":

1. **Definition:** Category I Alternative Investment Fund (AIF) refers to a specific

classification of AIFs based on their investment focus.

3 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

2. **Investment Targets:** Category I AIFs are designed to invest in various sectors,

including:
- Start-up or early-stage ventures.
- Social ventures.
- Small and Medium Enterprises (SMEs).
- Infrastructure projects.

3. **Government Considerations:** These funds focus on sectors or areas that the

government or regulators deem socially or economically desirable.

4. **Inclusions:** Category I AIF encompasses various types of funds, namely:

- Venture capital funds.
- SME Funds.
- Social impact funds (as indicated in the brackets).
- Infrastructure funds.
- Special situation funds.

5. **Flexible Inclusions:** The category is open to the inclusion of other AIFs specified by
relevant authorities.

In essence, Category I AIFs are tailored to support and invest in ventures and sectors aligned
with social and economic goals, ranging from start-ups to infrastructure projects.
(b) “Category II Alternative Investment Fund” which does not fall in Category I and
III and which does not undertake leverage or borrowing other than to meet day-to
day operational requirements and as permitted in these regulations;
Explanation. For the purpose of this clause, Alternative Investment Funds such
as private equity funds or debt funds for which no specific incentives or concessions
are given by the government or any other Regulator shall be included.

Explanation: Certainly! Here's a summary of the information related to "Category II

Alternative Investment Fund":

4 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

1. **Definition:** Category II Alternative Investment Fund (AIF) represents a specific

classification of AIFs distinct from Category I and III.

2. **Exclusions from Categories I and III:** Category II AIFs do not fall within the scope of
Category I or Category III AIFs.

3. **Leverage/Borrowing Restriction:** Category II AIFs refrain from undertaking leverage

or borrowing, except for meeting day-to-day operational requirements and as permitted by
the regulations.

4. **Explanation:** The clause provides an explanation that Category II AIFs include funds
such as private equity funds or debt funds. These funds do not receive specific incentives or
concessions from the government or any other regulator.

In summary, Category II AIFs are characterized by their exclusion from Categories I and III,
limitations on leverage or borrowing, and the inclusion of funds like private equity or debt
funds without specific government or regulatory incentives.

(c) “Category III Alternative Investment Fund” which employs diverse or complex
trading strategies and may employ leverage including through investment in listed
or unlisted derivatives.
Explanation. For the purpose of this clause, Alternative Investment Funds such
as hedge funds or funds which trade with a view to make short term returns or such
other funds which are open ended and for which no specific incentives or
concessions are given by the government or any other Regulator shall be included.
33[(d) specified Alternative Investment Fund under Regulation 19 of these
regulations.]
expl: Certainly! Here's a summary of the information related to "Category III Alternative
Investment Fund":

1. **Definition:** Category III Alternative Investment Fund (AIF) is a specific classification

of AIFs distinguished by the use of diverse or complex trading strategies.

5 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

2. **Trading Strategies:** Category III AIFs are designed to employ diverse trading
strategies, indicating a broad range of approaches in their investment activities.

3. **Leverage Inclusion:** Category III AIFs have the flexibility to employ leverage in their
operations. This includes the option to utilize leverage through investments in both listed and
unlisted derivatives.

In essence, Category III AIFs are characterized by their adoption of diverse and complex
trading strategies, coupled with the ability to leverage, including investments in derivatives,
whether listed or unlisted.

4. Eligibility Criteria.—
For the purpose of the grant of certificate to an applicant, the
Board shall consider the following conditions for eligibility, namely,—
(a) the memorandum of association in case of a company; or the Trust Deed in case of
a Trust; or the Partnership deed in case of a limited liability partnership permits it
to carry on the activity of an Alternative Investment Fund;
(b) the applicant is prohibited by its memorandum and articles of association or trust
deed or partnership deed from making an invitation to the public to subscribe to its
securities;
(c) in case the applicant is a Trust, the instrument of trust is in the form of a deed and
has been duly registered under the provisions of the Registration Act, 1908;
(d) in case the applicant is a limited liability partnership, the partnership is duly
incorporated and the partnership deed has been duly filed with the Registrar under
the provisions of the Limited Liability Partnership Act, 2008;
(e) in case the applicant is a body corporate, it is set up or established under the laws
of the Central or State Legislature and is permitted to carry on the activities of an
Alternative Investment Fund;
(f) the applicant, Sponsor and Manager are fit and proper persons based on the criteria
specified in Schedule II of the Securities and Exchange Board of India
(Intermediaries) Regulations, 2008;
34[(g) The key investment team of the Manager of Alternative Investment Fund has—
35[(i) at least one key personnel with relevant certification as may be specified by

6 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

the Board from time to time; and]

(ii) at least one key personnel with professional qualification in finance,
accountancy, business management, commerce, economics, capital market or
banking from a university or an institution recognized by the Central Government
or any State Government or a foreign university, or a CFA charter from the CFA
institute or any other qualification as may be specified by the Board:
Provided that the requirements 36[* * *] as specified in Regulation 4(g)(i) and 4
(g)(ii) may also be fulfilled by the same key personnel:]
37[Provided further that a fresh certification shall be obtained before expiry of the
validity of the existing certification to ensure continuity in compliance with the
certification requirement.]
(h) the Manager or Sponsor has the necessary infrastructure and manpower to
effectively discharge its activities;
(i) the applicant has clearly described at the time of registration the investment
objective, the targeted investors, proposed corpus, investment style or strategy and
proposed tenure of the fund or scheme;
(j) whether the applicant or any entity established by the Sponsor or Manager has
earlier been refused registration by the Board.

EXPL: Certainly! Here's a comprehensive summary of the conditions for eligibility

concerning the grant of a certificate to an applicant for an Alternative Investment Fund (AIF):

1. **Memorandum or Deed Requirements:**

- For a company, eligibility requires a memorandum of association permitting AIF
activities.
- For a trust, the Trust Deed must permit AIF activities.
- In the case of a limited liability partnership, the partnership deed must allow AIF
activities.

2. **Restrictions on Public Invitations:**

- The applicant must be prohibited by its constitutional documents from making public
invitations for securities subscriptions.

7 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

3. **Registration of Trust Instrument:**

- If the applicant is a trust, the instrument of trust must be in the form of a deed and duly
registered under the Registration Act, 1908.

4. **Incorporation and Filing for Limited Liability Partnerships:**

- For a limited liability partnership, the partnership must be duly incorporated, and the
partnership deed must be filed with the Registrar under the Limited Liability Partnership Act,
2008.

5. **Legal Establishment of Body Corporate:**

- If the applicant is a body corporate, it must be set up or established under the laws of the
Central or State Legislature and permitted to engage in AIF activities.

6. **Fit and Proper Criteria for Applicant, Sponsor, and Manager:**

- The applicant, Sponsor, and Manager must be fit and proper persons based on the criteria
specified in Schedule II of the Securities and Exchange Board of India (Intermediaries)
Regulations, 2008.

7. **Key Investment Team Criteria:**

- The Manager's key investment team must include at least one personnel with relevant
certification and at least one with a professional qualification in specified fields.
- A fresh certification is required before the expiry of the existing one to ensure compliance
continuity.

8. **Infrastructure and Manpower:**

- The Manager or Sponsor must possess the necessary infrastructure and manpower to
effectively discharge AIF activities.

9. **Clear Description of AIF:**

- The applicant must provide a clear description, at the time of registration, of the
investment objective, targeted investors, proposed corpus, investment style or strategy, and
proposed tenure of the fund or scheme.

8 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

10. **Registration History Check:**

- The Board considers whether the applicant or any entity established by the Sponsor or
Manager has previously been refused registration.

In summary, the eligibility conditions cover legal documentation, restrictions on public

invitations, registration requirements, qualifications of key personnel, infrastructure, and a
clear description of the AIF, along with a check on past registration history.

13. Tenure.—
(1) Category I Alternative Investment Fund and Category II Alternative
Investment Fund shall be close ended and the tenure of fund or scheme shall be determined
at the time of application subject to sub-regulation (2) of this regulation.
(2) Category I and II Alternative Investment Fund or schemes launched by such funds
shall have a minimum tenure of three years.
(3) Category III 58[Schemes of] Alternative Investment Fund may be open ended or
close ended.
59[(4) The manner of calculating the tenure of a close ended scheme of an Alternative
Investment Fund, including the manner of modification of the tenure, may be specified by
the Board from time to time.]
60[(5)] Extension of the tenure of the close ended Alternative Investment Fund may be
permitted up to two years subject to approval of two-thirds of the unit holders by value of
their investment in the Alternative Investment Fund61[:]
62[Provided that large value funds for accredited investors may be permitted to extend its
tenure beyond two years, subject to terms of the contribution agreement, other fund
documents and such conditions as may be specified by the Board from time to time.]
63[(6) In the absence of consent of unit holders under sub-regulation (5) or upon expiry
of the extended tenure, the Alternative Investment Fund or the scheme of the Alternative
Investment Fund shall be wound up in accordance with Regulation 29 of these regulations.]

EXPL: Certainly! Here's a comprehensive summary of the regulations regarding the tenure of
Category I, Category II, and Category III Alternative Investment Funds (AIFs):

1. **Close-Ended Nature of Category I and II AIFs:**

9 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

- Category I and Category II Alternative Investment Funds are close-ended.

- The tenure of the fund or scheme is determined at the time of application, subject to sub-
regulation (2) of this regulation.

2. **Minimum Tenure for Category I and II AIFs:**

- Category I and Category II AIFs, including their schemes, must have a minimum tenure of
three years.

3. **Nature of Category III AIFs:**

- Category III Schemes of Alternative Investment Funds may be either open-ended or close-
ended.

4. **Board Specification for Close-Ended Scheme Tenure:**

- The Board may specify the manner of calculating the tenure of a close-ended scheme of
an Alternative Investment Fund, including modifications to the tenure.

5. **Extension of Close-Ended AIF Tenure:**

- Extension of the tenure of close-ended Alternative Investment Funds is allowed for up to
two years.
- Approval for extension requires two-thirds of unit holders by the value of their investment
in the AIF.
- Large value funds for accredited investors may extend tenure beyond two years, subject to
specified conditions by the Board.

6. **Winding Up in Absence of Consent:**

- In the absence of consent from unit holders for the extension or upon expiry of the
extended tenure, the Alternative Investment Fund or its scheme shall be wound up in
accordance with Regulation 29 of these regulations.

In summary, the regulations detail the close-ended nature of Category I and II AIFs with a
minimum tenure of three years, the flexibility of Category III AIFs to be open-ended or close-
ended, and the conditions and procedures for extending the tenure of close-ended AIFs,
including winding up provisions.

10 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

CHAPTER III
INVESTMENT CONDITIONS AND RESTRICTIONS

10. Investment in Alternative Investment Fund.—

Investment in all categories of
Alternative Investment Funds shall be subject to the following conditions:—
(a) the Alternative Investment Fund may raise funds from any investor whether
Indian, foreign or non-resident Indians by way of issue of units39[:]
40[Provided that a social impact fund or schemes of a social impact fund may also
issue social units;]
41[(aa) The Alternative Investment Fund shall issue units in dematerialised form
subject to the conditions specified by the Board from time to time.]
(b) each scheme of the Alternative Investment Fund shall have corpus of atleast
twenty crore rupees42[:]
43[Provided that each scheme of the social impact fund shall have a corpus of at
least five crore rupees;]
(c) the Alternative Investment Fund shall not accept from an investor, an investment
of value less than one crore rupees:
Provided that in case of investors who are employees or directors of the
Alternative Investment Fund or employees or directors of the Manager, the
minimum value of investment shall be twenty five lakh rupees44[:]
45[Provided further that this clause shall not apply to an accredited investor46[:]]
47[Provided further that in case of a social impact fund which invests only in
securities of not for profit organizations registered or listed on a social stock
exchange, the minimum value of investment by an individual investor shall be two
lakh rupees;]
(d) the Manager or Sponsor shall have a continuing interest in the Alternative
Investment Fund of not less than two and half percent of the corpus or five crore
rupees, whichever is lower, in the form of investment in the Alternative Investment
Fund and such interest shall not be through the waiver of management fees:
Provided that for Category III Alternative Investment Fund, the continuing

11 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

interest shall be not less than five percent of the corpus or ten crore rupees,
whichever is lower.
(e) the Manager or Sponsor shall disclose their investment in the Alternative
Investment Fund to the investors of the Alternative Investment Fund;
(f) no scheme of the Alternative Investment Fund shall have more than one thousand
investors48[:]
49[Provided that the provisions of the 50[Companies Act, 2013] shall apply to
the Alternative Investment Fund, if it is formed as a company.]
(g) the fund shall not solicit or collect funds except by way of private placement.

Explanation: Certainly! Here's a comprehensive summary of the conditions applicable to

investments in all categories of Alternative Investment Funds (AIFs):

1. **Fundraising Conditions:**
- AIFs are allowed to raise funds from any investor, including Indian, foreign, or non-
resident Indians, by issuing units.
- Social impact funds or schemes may issue social units.

2. **Dematerialization of Units:**
- AIFs are required to issue units in dematerialized form, subject to conditions specified by
the Board.

3. **Minimum Corpus Requirement:**

- Each scheme of an AIF must have a minimum corpus of at least twenty crore rupees.
- Social impact funds must have a minimum corpus of at least five crore rupees.

4. **Minimum Investment Amount:**

- The AIF shall not accept an investment of less than one crore rupees from an investor.
- Minimum value for employees or directors of the AIF or Manager is twenty-five lakh
rupees.
- Accredited investors are exempt from the minimum investment clause.
- Social impact funds investing in securities of not-for-profit organizations have a minimum
individual investment of two lakh rupees.

12 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

5. **Continuing Interest of Manager or Sponsor:**

- The Manager or Sponsor must maintain a continuing interest in the AIF of not less than
two and a half percent of the corpus or five crore rupees, whichever is lower.
- For Category III AIFs, the continuing interest must be not less than five percent of the
corpus or ten crore rupees, whichever is lower.

6. **Disclosure Requirements:**
- Managers or Sponsors must disclose their investments in the AIF to the investors.

7. **Limit on Number of Investors:**

- No scheme of the AIF is allowed to have more than one thousand investors.
- Provisions of the Companies Act, 2013, apply if the AIF is formed as a company.

8. **Private Placement Requirement:**

- The fund is restricted from soliciting or collecting funds except through private
placement.

In summary, the conditions cover fundraising, dematerialization of units, minimum corpus

requirements, minimum investment amounts, continuing interest of the Manager or Sponsor,
disclosure obligations, limitations on the number of investors, and the requirement for private
placement in AIFs.
[CHAPTER III-A
ANGEL FUNDS

(1) “angel fund” means a sub-category of Venture Capital Fund under Category
IAlternative Investment Fund that raises funds from angel investors and invests in
accordance with the provisions of this Chapter.
SEE CHAPTER FOR FULL INFO

CHAPTER IV
GENERAL OBLIGATIONS AND RESPONSIBILITIES AND TRANSPERANCY

13 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

29. Winding up.—

(1) An Alternative Investment Fund set up as a trust shall be wound up: (a) when the tenure
of the Alternative Investment Fund or all schemes launched by the Alternative Investment
Fund, as mentioned in the placement memorandum is over; or (b) if it is the opinion of the
trustees or the trustee company, as the case may be, that the Alternative Investment Fund be
wound up in the interests of investors in the units; or (c) if seventy five percent of the
investors by value of their investment in the Alternative Investment Fund pass a resolution at
a meeting of unitholders that the Alternative Investment Fund be wound up; or (d) if the
Board so directs in the interests of investors.

(2) An Alternative Investment Fund set up as a limited liability partnership shall be wound up
in accordance with the provisions of The Limited Liability Partnership Act, 2008: (a) when
the tenure of the Alternative Investment Fund or all schemes launched by the Alternative
Investment Fund, as mentioned in the placement memorandum is over; or (b) if seventy five
percent of the investors by value of their investment in the Alternative Investment Fund pass
a resolution at a meeting of unitholders that the Alternative Investment Fund be wound up; or
(c) if the Board so directs in the interests of investors.

(3) An Alternative Investment Fund set up as a company shall be wound up in accordance

with the provisions of the 150[Companies Act, 2013].

(4) An Alternative Investment Fund set up as a body corporate shall be wound up in

accordance with the provisions of the statute under which it is constituted.

(5) The trustees or trustee company or the Board of Directors or designated partners of the
Alternative Investment Fund, as the case maybe, shall intimate the Board and investors of the
circumstances leading to the winding up of the Alternative Investment Fund.

(6) On and from the date of intimation under sub-regulation (5) of Regulation 29, no further
investments shall be made on behalf of the Alternative Investment Fund so wound up.

(7) Within 151[the liquidation period], the assets shall be liquidated, and the proceeds

14 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

accruing to investors in the Alternative Investment Fund 152[or the scheme of the Alternative
Investment Fund] shall be distributed to them after satisfying all liabilities.

(8) Notwithstanding anything contained in sub-regulation (7) and subject to the conditions, if
any, contained in the placement memorandum or contribution agreement or subscription
agreement, as the case may be, 153[in specie distribution of assets of the scheme of the
Alternative Investment Fund], shall be made by the Alternative Investment Fund at any time,
154[including on winding up of the scheme of the Alternative Investment Fund], as per the
preference of investors, 155[subject to conditions as may be specified by the Board from time
to time]. 156

[(9) Notwithstanding anything contained in sub-regulation (7), during liquidation period of a

scheme, an Alternative Investment Fund may distribute investments of a scheme which are
not sold due to lack of liquidity, in-specie to the investors or sell such investments to a
liquidation scheme, after obtaining approval of at least seventy five percent of the investors
by value of their investment in the scheme of the Alternative Investment Fund, in the manner
and subject to conditions specified by the Board from time to time: Provided that in the
absence of consent of unit holders for exercising the options under sub-regulation (9) during
liquidation period, such investments of the scheme of the Alternative Investment Fund shall
be dealt with in the manner as may be specified by the Board from time to time.] 157

[(10)] Upon winding up of the Alternative Investment Fund, the certificate of registration
shall be surrendered to the Board.

Expl: Certainly! Here's a chronological summary of the regulations related to the winding up
of an Alternative Investment Fund (AIF):

1. **Initiation of Winding Up:**

- A trust-based AIF is wound up when:
- The tenure of the AIF or all schemes mentioned in the placement memorandum
concludes.
- Trustees or trustee company believe it is in the investors' interest.
- Seventy-five percent of investors by value pass a resolution.

15 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

- The Board directs it in the interest of investors.

2. **Winding Up Process for Different Structures:**

- LLP-based AIF is wound up according to the Limited Liability Partnership Act, 2008.
- Company-based AIF follows the provisions of the Companies Act, 2013.
- Body corporate-based AIF follows the rules of the statute under which it is constituted.

3. **Intimation to Board and Investors:**

- The trustees, trustee company, or the Board of Directors must inform the Board and
investors about the circumstances leading to the winding up.

4. **Investment Cessation:**
- From the intimation date, no further investments are made on behalf of the AIF being
wound up.

5. **Liquidation and Distribution:**

- Within the liquidation period, assets are liquidated, and proceeds are distributed to
investors after meeting all liabilities.

6. **In-Specie Distribution:**
- Subject to specified conditions, in-specie distribution of assets may occur during the
winding up, based on investor preferences.

7. **Distribution of Unsold Investments:**

- During the liquidation period, the AIF may distribute unsold investments in-specie or sell
them to a liquidation scheme, subject to investor approval.

8. **Certificate Surrender:**
- Upon winding up, the certificate of registration is surrendered to the Board.

These regulations provide a structured process for the winding up of an AIF, including the
conditions, communication, investment handling, and the eventual surrender of the
registration certificate.

16 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

Certainly! Let's break down points 8 to 10 for a more concise summary:

8. **In-Specie Distribution:**
- The AIF may make in-specie distributions of scheme assets, including
during the winding-up process.
- This distribution is subject to conditions outlined in the placement
memorandum, contribution agreement, or subscription agreement.
- Investors' preferences guide the in-specie distribution.
- The Board may specify conditions for such distributions from time to time.

9. **In-Specie Distribution During Liquidation Period:**

- Despite the general liquidation process, the AIF may distribute unsold
scheme investments in-specie during the liquidation period.
- This includes in-specie distribution to investors or selling the investments to
a liquidation scheme.
- Approval from at least seventy-five percent of investors by value is required,
and the Board specifies the conditions.

10. **Certificate Surrender Upon Winding Up:**

- When the Alternative Investment Fund is wound up, the certificate of
registration must be surrendered to the Board.

In summary, these points elaborate on the flexibility of in-specie distributions

during various stages, subject to investor preferences, specific agreements, and
conditions outlined by the Board. Additionally, the surrender of the certificate
of registration is a final step upon the winding up of the Alternative Investment
Fund.

SECOND SCHEDULE

17 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

Securities and Exchange Board of India

(Alternative Investment Funds) Regulations, 2012
See sub-regulations (2) and (5) of Regulation 3, sub-regulation (2) of Regulation 6 and
sub-regulation (2) of Regulation 12
FEES
166[PART A
AMOUNT TO BE PAID AS FEES

Application fee Rs. 1,00,000

Registration fee for Category I Alternative Rs. 5,00,000
Investment Funds other than Angel Funds
Registration fee for Category II Alternative Rs. 10,00,000
Investment Funds other than Angel Funds
Registration fee for Category III Alternative Rs. 15,00,000
Investment Funds other than Angel Funds
Scheme Fee for Alternative Investment Funds Rs. 1,00,000
other than Angel Funds
Re-registration Fee Rs. 1,00,000
Registration Fee for Angel Funds Rs. 2,00,000
[Registration fee for Corporate Debt Market Rs. 5,00,000]
Development Fund (specified Alternative
Investment Fund as provided under Regulation
19 of these regulations)

[PART B
The fees specified above shall be payable by way of direct credit into the bank account
through NEFT/RTGS/IMPS or online payment using the SEBI Payment Gateway or any
other mode as may be specified by the Board from time to time.]

18 | 19
Draft for discussion purposes
Strictly privileged and confidential
February 13th, 2024

SEE CHAPTER 2 AIF REGULATIONS https://cleartax.in/s/alternative-investment-fund-

registration

19 | 19