Sebi issues framework for processing AIF registration applications

New Delhi: Markets regulator Sebi on Thursday came out with a framework for processing of applications for registrations of Alternative Investment Funds (AIFs). While processing the applications and launching of new schemes, it has been observed that the manager of an AIF often proposes to set up an investment committee with the mandate to provide investment recommendations to the manager, according to Sebi.

In some applications, the investment committee is mandated to approve the investment decisions of the AIF. Such committees may consist of internal members -- employees, directors or partners of the manager-- and/ or external member.

Earlier this week, the regulator amended AIF rules to provide that the manager may constitute an investment committee to approve investment decisions of the AIF subject to certain conditions.

"The applications wherein investment committee proposed to be constituted to approve investment decisions of AIF includes external members who are 'resident Indian citizens', shall be duly processed," Sebi said in a circular.

According to the regulator, applications wherein investment committee proposed to be constituted to approve investment decisions of AIF includes external members who are not 'resident Indian citizens', then those will be considered only after receiving clarification from the government and the Reserve Bank of India (RBI).

Sebi also said that it has written to the government and the RBI seeking clarity on the applicability of rules to investment made by an AIF whose investment committee approves investment decisions and consists of external members who are not 'resident Indian citizens'.

In a separate circular, Sebi has issued certain clarifications on the usage of the word "promoter" in its framework issued in August pertaining to handling investor complaints by exchanges as well as standard operating procedure for actions to be taken against listed companies for failure to redress such grievances.