SEBI has specified certain guidelines for excusing or excluding an investor in an Alternative Investment Fund ("AIF"), from participating in a particular investment made by the AIF:
| Reasons for Exclusion / Excusal | Conditions |
| The investor confirms that it's participation would breach any law. | Opinion of a legal advisor is required. |
| Participation would contravene the internal policy of the investor. | Disclosure to be made in the Contribution Agreement or other document executed with AIF. Further, the Investor should be required to report changes in the internal policy, within 15 days. |
| Investment manager believes that participation by the investor would breach any law or result in a material adverse effect on the scheme. | Investment manager to record the rationale for exclusion, along with relevant documents. |
| Investors who are AIFs/ investment vehicles may be excluded/ excused from participation in an investment to the extent their underlying investors are excluded or excused. | Investment manager to record the rationale for excuse or exclusion, along with relevant documents. |
The aforementioned guidelines were issued by SEBI vide a circular on April 10, 2023 (available here) and would come into force with immediate effect.
PUBLISHED ON: 25-04-2023
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