The Securities and Exchange Board of India (Sebi) on Wednesday released circular on creating liquidation schemes for unliquidated assets of Alternative Investment Funds (AIFs). It further provided clarity on requisite investor consents, valuation norms for residuary assets and the process of writing off of residuary investments as a last resort where requisite investor consent is not availabile.
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According to the market regulator, the manager and the key management personnel of manager will ensure that the independent valuer computes and carries out valuation of the investments of the scheme of the AIF in the manner as specified by the board from time to time.
"Manager shall be responsible for true and fair valuation of the investments of the scheme of the AIF. In terms of proviso to aforesaid regulation, in case the established policies and procedures of valuation do not result in fair and appropriate valuation, the manager shall deviate from the established policies and procedures in order to value the assets or securities at a fair value and document the rationale for such deviation," Sebi said.
In this regard, the market regulator specified the following:
According to Vivaik Sharma, Partner at Cyril Amarchand Mangaldas, SEBI's circular has provided clarity on the mechanism of selling assets to the liquidation scheme and issuing units of liquidation scheme to AIF's investors, including for investors of a fund of fund structure.
"Tax and exchange control considerations would apply in addition to the regulatory clarity provided by SEBI. However, there is lack of clarity in whether AIFs which have already exhausted their liquidation period of 1 year after the end of their tenure will be able to benefit from the circular or not," Sharma said.
(Edited by : Anshul)
First Published: Jun 22, 2023 6:03 PM IST
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