SEBI issued Schemes of AIFs which have adopted priority in distribution among investors

Nov 23, 2022 | by TeamLease RegTech Legal Research Team

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Secretarial ComplianceThe Securities and Exchange Board of India (SEBI) on November 23, 2022, issued Schemes of AIFs which have adopted priority in distribution among investors.

The following has been stated namely: -

• There is no explicit restriction in AIF Regulations that the sharing of loss by a class of investors shall not be less than pro rata to their holding in the AIF vis-à-vis other classes of investors/unit holders, nevertheless, certain schemes of AIF have adopted a distribution waterfall in such a way that one class of investors (other than sponsor/manager) share loss more than pro rata to their holding in the AIF vis-à-vis other classes of investors/unit holders, since the latter has priority in distribution over former (‘priority distribution model’)

• Schemes of AIFs which have adopted the aforesaid priority distribution model, shall not accept any fresh commitment or make an investment in a new investee company, till the matter is examined and a decision is taken.

This has come into force on November 23, 2022.

 

[Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/157]

 


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