AIF Regulations for Startup Investments in India |
Posted: November 23, 2017 |
Alternative investment funds (AIFs) are growing at afast pace in India over the past 3-4 years. That said, in India, there are AIF regulations that startup investments need to follow. As a startup investment, it’s very important for you to know the following AIF regulations in India to set up an AIF efficiently: Make Form A application to SEBI An application through Form A must be made to SEBI. This application is for granting a registration certificate under the SEBI (Alternative Funds) Regulations, 2012. SEBI responds to the application within 21 working days. However, your compliance speed as a startup investment also matters in determining the speed of SEBI’s revert to your AIF application. Therefore, it’s vital to read the eligibility criteria for AIFs under the SEBI (Alternative Funds) Regulations, 2012very carefully before making the application under Form A. Prepare covering letter Form A must be accompanied with a covering letter to the SEBI. This is a very important part of AIF regulations.This letter must clearly state whether the startup investment is already registered with SEBI as a VC fund.In case you are already registered, you need to provide SEBI with the relevant registration details in the covering letter. Moreover, the letter must inform SEBI whether you have already begun undertaking and executing activities that are performed by an AIF well before making the application.In case you have done so, you must provide SEBI with allthe relevant details.Please note that you must clearly mention in the covering letter that you are applying for a new fund. Make a bank draft At this stage, as a startup investment, you must prepare a bank draft for Rs. 100,000 for application fees. This must be made payable to SEBI. You will have to include the bank draft along with the completed Form A and your covering letter. Document evaluation by SEBI Your application will be closely evaluated by SEBI to see whetheryou have satisfiedall the eligibility criteria specified under the SEBI Regulations.Once it is satisfied,SEBI will approve yourAIF application and inform youregarding the same. Payment of registration fees As a startup investment creating an AIF,you must get ready to pay a registration fee of Rs. 500,000. This needs to be paidthe moment you receive the approval from SEBI.That said, in case you are already registered as an AIF with SEBI, you will have to pay only the re-registration fees of Rs. 100,000. Upon receipt of registration/re-registration fees, SEBI will grant the certificate of registration as to the startup investment as an Alternative Investment Fund in India. The most important thing that you must remember as a startup investor in AIF is to ensure that you complywith all the crucialreporting needs of SEBI. You will have stay updated on SEBI’sguidelines and requirements.You can refer to them on SEBI’s website and circulars regularly.You must notify SEBI in case of any material change within reasonable time along with all the relevant details.
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