SEBI on Wednesday stated schemes of other funding funds, which have adopted precedence in distribution amongst buyers mannequin, is not going to settle for any recent dedication or make an funding in a brand new investee firm until the markets regulator takes a call on this regard.
Beneath the principles, with respect to funding by the sponsor or supervisor within the AIF, the sharing of loss by the sponsor or supervisor wouldn’t be lower than professional rata to their holding within the AIF vis-a-vis different unit holders.
“…it has not been explicitly restricted in AIF Laws that the sharing of loss by a category of buyers shall not be lower than professional rata to their holding within the AIF vis-a-vis different lessons of buyers/unit holders,” SEBI stated in a round.
The regulator famous that sure schemes of AIFs have adopted a distribution waterfall in such a manner that one class of buyers (apart from the sponsor or supervisor) share loss greater than professional rata to their holding within the AIF vis-a-vis different lessons of buyers for the reason that later has precedence in distribution over former. This technique known as the precedence distribution mannequin.
This matter is being examined by the Securities and Trade Board of India in session with the Different Funding Coverage Advisory Committee, AIF business associations and different stakeholders.
“In the meantime, it has been determined that schemes of AIFs which have adopted aforesaid precedence distribution mannequin, shall not settle for any recent dedication or make an funding in a brand new investee firm, until a view is taken by Sebi on this regard,” the regulator famous.
The directive would come into power with quick impact.
An alternate funding fund is a privately pooled funding automobile, which collects funds from buyers, for investing in accordance with an outlined funding coverage for the advantage of its buyers.