Alternative Investment Funds (Amendment) Regulations, 2024

SEBI (Alternative Investment Funds) (Amendment) Regulations, 2024

No. SEBI/LAD-NRO/GN/2024/163.—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, –

1. These Regulations may be called the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2024.
   
2. They shall come into force on the date of their publication in the Official Gazette.
   
3. In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, –
   
   I. In regulation 15, in sub-regulation (1), after clause (h), the following new clause shall be inserted, namely, –
   “(i) Alternative Investment Funds shall hold their investments in dematerialised form, subject to such conditions as may be specified by the Board from time to time:
   Provided that the requirement under clause (i) of sub-regulation (1) shall not apply to:
   (a) investments by Alternative Investment Funds in such type of instruments which are not eligible for dematerialisation,
   (b) investments held by a liquidation scheme of the Alternative Investment Funds that are not available in the dematerialised form, and
   (c) such other investments by Alternative Investment Funds and such other schemes of Alternative Investment Funds as may be specified by the Board from time to time.”
   
   II. In regulation 20, sub-regulation (11) shall be substituted with the following, namely,-
   “(11) The Sponsor or Manager of the Alternative Investment Fund shall appoint a Custodian registered with the Board for safekeeping of the securities of the Alternative Investment Fund, in the manner as may be specified by the Board from time to time:
   Provided that the Custodian appointed by the Sponsor or Manager of a Category III Alternative Investment Fund shall keep the custody of the securities and goods received in delivery against the physical settlement of commodity derivative:
   Provided further that the Custodian appointed by the Sponsor or Manager of an Alternative Investment Fund shall report or disclose such information regarding investments of the Alternative Investment Fund in such manner as may be specified by the Board from time to time.”
   
   III. In regulation 20, after sub-regulation (11), the following new sub-regulation shall be inserted, namely, –
   “(11A) A Custodian which is an associate of the Sponsor or Manager of an Alternative Investment Fund may act as a custodian for that Alternative Investment Fund only when all the following conditions are met:
   (a) the Sponsor or Manager has a net worth of at least twenty thousand crore rupees at all points of time;
   (b) fifty per cent or more of the directors of the Custodian do not represent the interest of the Sponsor or Manager or their associates;
   (c) the Custodian and the Sponsor or Manager of the Alternative Investment Fund are not subsidiaries of each other;
   (d) the custodian and the Sponsor or Manager of the Alternative Investment Fund do not have common directors; and
   (e) the Custodian and the Manager of the Alternative Investment Fund sign an undertaking that they shall act independently of each other in their dealings of the schemes of the Alternative Investment Fund.”

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