The Securities and Exchange Board of India (SEBI) on Thursday introduced a fast-track mechanism for processing private placement memoranda (PPMs) filed by alternative investment funds (AIFs), allowing quicker launch of schemes and faster capital deployment.
As part of an ease-of-doing-business measure, the regulator said AIFs, excluding large value funds for accredited investors (LVFs), can proceed with the “launch of their new schemes and circulate the PPM to their investors for soliciting funds after 30 days of filing of application with SEBI, unless otherwise advised.”
For first-time schemes, AIFs can launch either from the date of registration or after 30 days from filing, whichever is later, the circular said.
Process shift
This marks a shift from the earlier process where SEBI reviewed PPM disclosures and issued comments before funds could proceed, often leading to delays. The regulator said the change was necessitated due to the “time-consuming nature of the extant procedure” and the need to enable “efficient deployment of capital by AIFs.”
However, SEBI clarified that any comments issued during the 30-day window must be incorporated before launch. The first close of a scheme must be declared within 12 months from the date the AIF becomes eligible to launch.
SEBI has placed greater onus on intermediaries. “The Merchant Banker and the Manager of the AIF shall be responsible for ensuring the accuracy and completeness of all disclosures made in the PPMs,” it said.
The filing process will continue via SEBI’s intermediary portal, along with documents such as due diligence certificates, fit-and-proper declarations and PAN details of key entities.
The regulator has also mandated a detailed disclaimer in PPMs, emphasising that while merchant bankers certify disclosures as “true, fair and adequate,” submission of documents “should not in any way be deemed or construed that the same has been approved by SEBI.”
“SEBI does not assume any responsibility for the accuracy and correctness of disclosures, facts and claims made in the PPM,” it said.
Srini Sriniwasan, Managing Director, Kotak Alternate Asset Managers & Chairperson, Indian Venture and Alternate Capital Association, said, “IVCA welcomes SEBI’s notification of fast track mechanism for launch of AIFs. This important step in ease of doing business will accelerate capital formation and at the same time casts greater responsibility on the Managers which the industry welcomes.”
The circular comes into force with immediate effect and will also apply to all pending PPM filings for non-LVF schemes.
SEBI said any irregularity or lapse in disclosures would attract regulatory action, while all other provisions under the existing AIF master circular remain unchanged.