Alternative Investment Funds (Amendment) Regulations, 2022
SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUNDS) (AMENDMENT) REGULATIONS, 2022
No. SEBI/LAD-NRO/GN/2022/68.—In exercise of the powers conferred by sub-section (1) of Section 30 read with sub-section (1) of Section 11, clause (ba) and clause (c) of sub-section (2) of Section 11 and sub-section (1) and (1B) of Section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, namely, —
- These Regulations may be called the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2022.
- They shall come into force on the date of their publication in the Official Gazette.
- In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, –
I. in clause (a) of sub-regulation (4) of regulation 3, after the words “infrastructure funds” and before the words “and such other”, the words and symbol “, special situation funds” shall be inserted.
II. In regulation 12,
i. in sub-regulation (3), the symbol “.” shall be substituted with the symbol “:”.
ii. after sub-regulation (3), the following proviso shall be inserted, namely,–
“Provided that the requirements under sub-regulation (2) and (3) shall not apply to large value fund for accredited investors.”
III. After Chapter III-A, the following shall be inserted, namely, –
“CHAPTER III -B
SPECIAL SITUATION FUNDS
Definitions.
19I. For the purposes of this Chapter, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below and their cognate expressions and variations shall be construed accordingly,-
(1) “resolution applicant” shall have the same meaning as assigned to it under the Insolvency and Bankruptcy Code, 2016;
(2) “special situation asset” includes,-
(a) stressed loan available for acquisition in terms of Clause 58 of Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 as amended from time to time or as part of a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 or in terms of any other policy of the Reserve Bank of India or Government of India issued in this regard from time to time;
(b) security receipts issued by an Asset Reconstruction Company registered with the Reserve Bank of India;
(c) securities of investee companies,
(i) whose stressed loans are available for acquisition in terms of Clause 58 of the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 as amended from time to time or as part of a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 or in terms of any other policy of the Reserve Bank of India or Government of India issued in this regard from time to time;
(ii) against whose borrowings, security receipts have been issued by an Asset Reconstruction Company registered with the Reserve Bank of India;
(iii) whose borrowings are subject to corporate insolvency resolution process under Chapter II of the Insolvency and Bankruptcy Code, 2016;
(iv) who have disclosed all the defaults relating to the payment of interest/ repayment of principal amount on loans from banks / financial institutions/ Systemically Important Non-Deposit taking Non-Banking Financial Companies/ Deposit taking Non-Banking Financial Companies and /or listed or unlisted debt securities in terms of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and such payment default is continuing for a period of at least ninety calendar days after the occurrence of such default:
Provided that in case of sub-clauses (iii) and (iv), the credit rating of the financial instruments or credit instruments or borrowings of the company has been downgraded to “D” or equivalent;
(d) Any other asset as may be specified by the Board from time to time;
(3) “special situation fund” means a Category 1 Alternative Investment Fund that invests in special situation assets in accordance with its investment objectives and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016.
Applicability.
19J. (1) The provisions of this Chapter shall apply to special situation funds and schemes launched by such special situation funds.
(2) All other provisions of these regulations, except clauses (b) and (c) of regulation 10, clauses (a), (c) and (e) of sub-regulation (1) of regulation 15, clause (a) of sub-regulation (1) of regulation 16 and the guidelines and circulars issued under these regulations, unless the context otherwise requires or is repugnant to the provisions of this Chapter, shall apply to the special situation funds, the schemes of special situation funds and their sponsors and managers.
Registration of special situation funds.
19K. An applicant may apply for registration as a special situation fund in accordance with theprovisions of Chapter II of these Regulations.
Investment in special situation funds.
19L. (1) Each scheme of a special situation fund shall have a corpus as may be specified by the Board.
(2) The special situation fund shall accept from an investor, an investment of such value as may be specified by the Board.
(3) The special situation fund shall not accept investments from any other Alternative Investment Fund other than a special situation fund.
Investment by special situation funds.
19M. (1) Special situation funds shall invest only in special situation assets and may act as a resolution applicant under the Insolvency and Bankruptcy Code, 2016:
Provided that the special situation fund shall not invest in,
i. its associates; or
ii. the units of any other Alternative Investment Fund other than the units of a special situation fund; or
iii. units of special situation funds managed or sponsored by its manager, sponsor or associates of its manager or sponsor.
(2) Any investment by a special situation fund in the stressed loan acquired under clause 58 of the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 as amended from time to time shall be subject to lock-in period as may be specified by the Board.”
IV. sub-clause (e) of clause 1 of Form A of the First Schedule shall be substituted with the following, namely, –
“(e) Category under which the application is made –
Category I Alternative Investment Fund-Venture Capital Fund
Category I Alternative Investment Fund-Social Venture Fund
Category I Alternative Investment Fund-SME Fund
Category I Alternative Investment Fund-Infrastructure Fund
Category I Alternative Investment Fund – Special Situation Fund
Category I Alternative Investment Fund-Other
Category II Alternative Investment Fund
Category III Alternative Investment Fund”
Also Read:
- Framework for operationalizing the Gold Exchange in India
- Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2022.
- Issue of Capital and Disclosure Requirements (Amendment)
- Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2022.
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