Registration and Launch of AIF Schemes

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A. REGISTRATION AND LAUNCH OF AIF SCHEMES

Chapter 1 - Requirements and clarifications pertaining to registration of AIFs

1.1. Online Filing System for AIF

1.1.1

  • All applicants seeking registration as an Alternative Investment Fund (AIF) must submit their application only online.

  • The application must be filed through the SEBI Intermediary Portal.

  • The SEBI Intermediary Portal can be accessed at: https://siportal.sebi.gov.in

  • Every SEBI-registered AIF is required to file its compliance reports only through the SEBI Intermediary Portal.

  • Every SEBI-registered AIF must also submit applications for any requests under:

    1. The SEBI (Alternative Investment Funds) Regulations.

    2. The circulars issued thereunder only through the SEBI Intermediary Portal.

1.1.2

  • In case of any queries or clarifications, users may refer to the user manual available on the SEBI Intermediary Portal.

  • Alternatively, users may contact the Portal Helpline using the contact details specified in the user manual.

1.2. Certification requirement for key investment team of manager of AIF

1.2.1

  • The key investment team of the Manager of an AIF must include at least one key personnel holding the relevant certification specified by SEBI from time to time.

    1. Possessing this certification is an eligibility criterion for obtaining registration as an Alternative Investment Fund (AIF).

    2. The certification requirement applies in accordance with Regulation 4(g)(i) of the SEBI (Alternative Investment Funds) Regulations.

  • SEBI may specify or update the required certification from time to time.

1.2.2

Certification Requirement under SEBI Notification

  • Vide Gazette Notification No. SEBI/LAD-NRO/GN/2025/249 dated June 25, 2025, the following requirement was notified:

  • (i). Certification of Key Personnel

    1. At least one key personnel must obtain the prescribed certification.

    2. The person must be an associated person functioning in the key investment team of the Manager.

    3. This requirement applies to the Manager of:

      1. Category I AIF.

      2. Category II AIF.

      3. Category I and II AIF.

    4. The certification must be obtained from the National Institute of Securities Markets (NISM).

    5. The key personnel must pass either of the following examinations:

      1. NISM Series XIX-C: Alternative Investment Fund Managers Certification Examination.

      2. As mentioned in Communiqué No. NISM/Certification/Series-XIX-C: Alternative Investment Fund Managers/2024/01 dated January 10, 2024; OR

      3. NISM Series XIX-D: Category I and II Alternative Investment Fund Managers Certification Examination

      4. As mentioned in Communiqué No. NISM/Certification/Series-XIX-D: Category I and II Alternative Investment Fund Managers/2025/01 dated April 29, 2025.

  • (ii). Certification Requirement for Category III AIF

    1. At least one key personnel must obtain the prescribed certification.

    2. The person must be an associated person functioning in the key investment team of the Manager.

    3. This requirement applies to the Manager of a Category III AIF.

    4. The certification must be obtained from the National Institute of Securities Markets (NISM).

    5. The key personnel must pass either of the following examinations:

      1. 1. NISM Series XIX-C

        1. Alternative Investment Fund Managers Certification Examination

        2. Communiqué No. NISM/Certification/Series-XIX-C: Alternative Investment Fund Managers/2024/01

        3. Dated January 10, 2024

      2. 2. NISM Series XIX-E

        1. Category III Alternative Investment Fund Managers Certification Examination

        2. Communiqué No. NISM/Certification/Series-XIX-E: Category III Alternative Investment Fund Managers/2025/02

        3. Dated April 29, 2025

1.2.3

  • At least one key personnel of the key investment team of the AIF Manager must obtain the prescribed NISM certification.

  • This certification is an eligibility criterion.

  • The requirement applies to:

    1. All applications for registration of an AIF; and

    2. Launch of schemes by AIFs.

1.3. In-principle approval

1.3.1

  • In-principle approval is granted to the applicant for AIF registration.

  • The applicant must submit the required constitutional document within the specified time period:

    1. Registered Trust Deed, where the AIF is a trust or

    2. Duly filed Partnership Deed, where applicable.

  • If the applicant fails to submit the required deed within the specified time, the in-principle approval cannot be proceeded with.

  • The applicant must then file a fresh application for registration under the SEBI AIF Regulations.

In-Principle Approval

  • In-principle approval means a preliminary approval given by SEBI to an applicant seeking registration as an AIF.

    1. It indicates that SEBI has examined the application at a preliminary level and is broadly satisfied with it.

    2. It does not mean that the AIF has received final registration from SEBI.

    3. The approval is generally subject to fulfilment of certain remaining requirements, conditions or formalities.

    4. The applicant must complete these requirements within the specified time period.

  • Example:

    1. The applicant may be required to submit the registered Trust Deed or duly filed Partnership Deed, as applicable.

    2. Once the required documents and conditions are fulfilled, the applicant can proceed towards obtaining final registration.

    3. If the applicant fails to fulfil the required conditions within the specified time, the in-principle approval cannot be relied upon indefinitely.

  • In the specific provision:

  • Failure to submit the required Trust Deed or Partnership Deed within the specified period requires the applicant to file a fresh application for registration under the AIF Regulations.

1.4. Change in category of AIF

  • Regulation 7(2) of AIF Regulations specifies as under:

  • "An Alternative Investment Fund which has been granted registration under a particular category cannot change its category subsequent to registration, except with the approval of the Board."

  • An AIF that has been registered under a particular category must continue to operate under that category.

    1. The AIF cannot change its category on its own after registration.

    2. Any change in category requires prior approval of SEBI (the Board).

  • For example:

    1. A Category I AIF cannot simply become a Category II AIF.

    2. A Category II AIF cannot simply become a Category III AIF.

  • The AIF must therefore approach SEBI and obtain its approval before changing its registered category.

  • The requirement applies after the AIF has already obtained registration.

1.4.1

  • Only an AIF that has not made any investments under its existing registered category can apply for a change of category.

    1. So, the AIF must have made zero investments under the category in which it was originally registered.

    2. If the AIF has already made any investment under its existing category, it cannot apply for a change of category.

  • This condition applies before making the application for change of category.

1.4.2

  • An AIF proposing to change its registered category must make an application to SEBI.

    1. The application must be accompanied by an application fee of ₹1 lakh.

    2. The application must include an updated Form A as prescribed in the First Schedule to the AIF Regulations.

    3. The AIF must also submit other updated supporting documents, wherever applicable.

  • The application must contain the rationale/reasons for proposing the change in category.

  • The applicant must therefore explain why it wants to change from its existing category to the proposed category.

  • Registration fee is not payable for an application seeking change of category.

  • Therefore, the fee structure is:

    1. Application fee: ₹1 lakh

    2. Registration fee: Not applicable

1.4.3

  • If the AIF has received commitments or raised funds before applying for a change of category, it must take certain steps to protect its investors.

    1. The AIF must send letters/emails to all its investors informing them about the proposed change in category.

    2. The investors must be given an option to withdraw their commitments or funds.

    3. The withdrawal must be allowed without any penalty or charges.

  • If any fees have already been collected from an investor who chooses to withdraw, such fees must be returned to that investor.

    1. Investors may also be permitted to make a partial withdrawal instead of withdrawing their entire commitment/funds.

    2. However, partial withdrawal is allowed only if the investor continues to satisfy the minimum investment amount prescribed under the AIF Regulations.

Example:

  • An investor has committed ₹1 crore to the AIF. The AIF proposes to change its category.

    1. The investor may withdraw the entire ₹1 crore without penalty.

    2. The investor may also partially withdraw, say ₹50 lakh, provided the remaining investment satisfies the applicable minimum investment requirement.

    3. Any fee collected from the investor for the withdrawn amount must be returned.

1.4.4

  • Once an AIF has applied for a change in its category, it cannot freely make new investments until SEBI approves the change.

  • During this period, the AIF can invest only in:

    1. Liquid funds.

    2. Bank deposits.

  • The AIF cannot make any other investments until SEBI grants approval for the proposed change in category.

  • This restriction continues from the application for change of category until SEBI's approval.

1.4.5

  • Once SEBI approves the request for change in category, the AIF must take further steps to inform its investors.

    1. The AIF must send a copy of the revised Private Placement Memorandum (PPM) to all its investors.

    2. The AIF must also provide other relevant information relating to the approved change.

  • Therefore, investors must be informed of the updated terms and details of the AIF after the category change is approved.

1.5. Classification of Corporate Debt Market Development Fund as Category I AIF

1.5.1

  • Corporate Debt Market Development Fund (CDMDF) has been established under Chapter III-C of the SEBI AIF Regulations.

    1. The CDMDF functions as a Backstop Facility for the corporate debt market.

    2. Its primary purpose is to purchase investment-grade corporate debt securities.

  • The facility is particularly important during periods of market stress.

    1. By purchasing eligible corporate debt securities during such periods, CDMDF aims to provide confidence to participants in the corporate debt market.

    2. It is intended to help prevent a situation where investors are unable to sell otherwise sound corporate debt securities due to temporary market stress.

    3. CDMDF also aims to enhance liquidity in the secondary corporate debt market.

  • It creates a permanent institutional framework that can be activated when market stress occurs.

  • Therefore, CDMDF essentially acts as a standing safety mechanism for the corporate debt market.

  • It can step in during stressed market conditions to provide liquidity by purchasing investment-grade corporate debt securities.

1.5.2

  • A separate regulatory framework has been provided for the Corporate Debt Market Development Fund (CDMDF) under Chapter III-C of the AIF Regulations.

    1. This framework is specifically set out under Regulation 19 for the functioning of CDMDF.

    2. Although CDMDF has its own specific framework, it has been established with a broader economic objective.

    3. The broader objective is the development and strengthening of the corporate bond market.

  • One of its important functions is to act as a Backstop Facility during periods of market stress.

    1. During market stress, liquidity in the corporate bond market may reduce significantly. CDMDF is intended to provide a support mechanism during such situations.

    2. Thus, CDMDF is not merely established as an ordinary investment fund.

    3. It is designed as an institutional mechanism to support the overall corporate bond market.

1.5.3

  • CDMDF is classified as a Category I AIF.

    1. This classification is based on Regulation 3(4)(a) of the AIF Regulations.

    2. The reason for this classification is that CDMDF has been established with the broader objective of developing the corporate bond market.

  • Therefore, for regulatory purposes, CDMDF falls under Category I AIF.

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