To enhance the efficiency of the liquidation process, the Securities and Exchange Board of India (SEBI) has introduced new regulations that govern Alternative Investment Funds (AIFs) during the dissolution and asset distribution stages.
The updated rules require AIF schemes that are nearing dissolution to submit an information memorandum through a designated merchant banker before the end of their liquidity period or any extended liquidation period.
SEBI has also specified the format of the information memorandum. Additionally, the format for the due diligence certificate by the merchant banker for schemes entering the dissolution period is expected to be submitted along with the information memorandum.
The opportunity for Alternative Investment Funds (AIFs) with expired or soon-to-expire liquidation periods to request an extension, subject to specific conditions set by SEBI, has been further extended. AIFs are now mandated to secure approval from a minimum of 75% of their investors on the management of unliquidated investments during the liquidation period under the new regulations. This adjustment is intended to offer more flexibility to AIFs and their investors. SEBI initially introduced the dissolution period option for unliquidated investments on April 25, followed by outlining the procedures for AIF schemes entering the dissolution period on April 26.