Sebi directs alternative investment fund managers to exercise due diligence

Markets watchdog Sebi connected Tuesday directed Alternative Investment Funds and their managers to workout circumstantial owed diligence with respect to investors and investments successful a bid to forestall circumvention of assorted laws and guarantee compliance with regulatory frameworks.

In its circular, Sebi said that AIFs, their managers, and cardinal unit are required to behaviour the owed diligence connected their investors and investments.

Under this, AIFs designated arsenic Qualified Institutional Buyers (QIBs) oregon Qualified Buyers (QBs) indispensable guarantee that investors who are not eligible for QIB oregon QB presumption connected their ain bash not avail of the respective benefits done the AIF.

Additionally AIFs are required to debar facilitating the ever-greening of stressed loans/assets for RBI-regulated entities, adhering to RBI's norms for income recognition, plus classification, provisioning, and restructuring.

Sebi said that owed diligence is required for investments from countries sharing onshore borders with India, successful enactment with the Foreign Exchange Management Rules. If immoderate capitalist oregon radical of investors contributes 50 per cent oregon much to the AIF's scheme, elaborate owed diligence is required, the regulator said.

If the strategy includes RBI-regulated entities, further checks are indispensable to guarantee compliance with norms, it added.

For existing investments, AIFs request to study immoderate that neglect the owed diligence checks oregon corroborate compliance by April 7, 2025.

In case, owed diligence is not passed, the capitalist whitethorn beryllium excluded from the concern oregon the concern volition not proceed. Further, AIF managers indispensable taxable reports connected the presumption of existing investments by April 7, 2025.

This model are aimed astatine ensuring that AIFs are conducting thorough owed diligence to support transparency and compliance with Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), and different applicable regulations.