Regulatory Alerts2024-12-13
SEBI Circular on Pro-rata and Pari-passu Rights of AIF Investors
The Securities and Exchange Board of India (SEBI) has amended the AIF Regulations to mandate that investors in Alternative Investment Funds hold pro-rata and pari-passu rights, with specific exemptions for carried interest and certain government entities. Existing AIFs using priority distribution models are prohibited from accepting fresh commitments or making new investments unless they qualify for exemptions, while differential rights for select investors must adhere to implementation standards formulated by the Standard Setting Forum for AIFs. Managers of existing schemes must report non-compliant differential rights to SEBI by February 28, 2025, and terminate any rights that adversely affect other investors, with Large Value Funds for Accredited Investors granted specific exemptions subject to disclosure and waiver requirements.