The Securities and Exchange Board of India ("SEBI") has amended the SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") by way of circular dated February 14, 20251 ("Amendment Circular") with respect to the form in which Alternative Investment Funds ("AIFs") are required to hold their investments. The Amendment Circular has, inter alia, relaxed the timelines for AIFs to hold certain investments in dematerialised form and the following changes have been brought by the Amendment Circular.
- Any investment made by an AIF on or after July 1, 2025 must be held in dematerialised form.
- Investments made prior to July 1, 2025 are exempted from the
requirement to be held in dematerialised form, except in the
following situations:
- Where the investee company is legally required to ensure dematerialisation of its securities; or
- Where the AIF, either alone or with any other SEBI-registered intermediaries, exercises 'control' over the investee company.
- Further relaxations have been granted from the requirement of
AIFs to hold investments in dematerialised form. The requirement
shall not apply in the following cases:
- Where the scheme of an AIF ends before October 31, 2025; or
- Where the scheme of an AIF is in extended tenure as on February 14, 2025.
These changes have been brought into force with immediate effect and it is the obligation of the trustee/sponsor of the AIF to ensure that 'Compliance Test Report' prepared is in compliance with the changes brought by this Amendment Circular.
Originally published 24.03.25
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