A Simple Guide to Alternative Investment Funds Registration

 Professional investors manage alternative investment funds, which offer a unique flexibility in investing in any type of asset class, such as shares, bonds, money market instruments, and property. A commission may be charged on the sale of units, which will vary from fund to fund.

What are the types of Alternative Investment Funds in India?

• Category I AIF:
  1. SME Funds
  2. Social Venture Capital Funds
  3. Infrastructure funds
  4. Venture Capital Funds
  5. Angel Funds
• Category II AIF
  1. Private Equity (PE) Funds
  2. Real estate Funds
  3. Funds for distressed assets
  4. Debt Funds
  5. Funds of Funds
• Category III AIF
  1. Hedge Funds
  2. Private Investment in Public Equity Funds (PIPE)

How to Become an Alternative Investment Fund (AIF)

1. The applicant for registration as an Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012, should submit an application to SEBI in Form A, along with other essential documents.
2. Within 21 working days of receiving the application, the applicant will receive a response from SEBI. On the other hand, the length of time it takes to register is determined by how quickly the applicant meets the requirements.
3. The applicant is advised to review the SEBI (Alternative Investment Funds) Regulations, 2012, for qualifying requirements and other information that may help the registration process.
4. In the covering letter, the candidate must mention whether or not:
   1. It is a Venture Capital Fund registered with SEBI. If so, give specifics.
   2. Undertaking the activities of an AIF before such application. If so, give specifics.
   3. It is applying to register a new fund.
5. The applicant will submit the following as part of the registration process:
   1. Form A, duly filled out, numbered, signed, and stamped.
   2. Rs. 1,00,000/- in application fees, payable in Mumbai by bank draft in favor of "The Securities and Exchange Board of India."
6. The applicant must also submit an online application according to SEBI's requirements, which are updated occasionally.
7. Upon successful completion of the registration process, a certificate of Registration is issued, marking a significant milestone in the applicant's journey as an Alternative Investment Management. SEBI will consider the standards established through the Regulations when considering whether or not to issue registration. If SEBI is satisfied that the applicant meets the Regulations' requirements, the application will be approved, and the applicant will be notified.
8. Upon receiving approval from SEBI, the applicant must pay a registration fee of Rs. 5,00,000/- (if the applicant is not a Venture Capital Fund) or a re-registration fee of Rs. 1,00,000/- (if the applicant is a Venture Capital Fund) to SEBI by bank draught in favor of "The Securities and Exchange Board of India," payable at Mumbai.
9. SEBI will issue the applicant a certificate of registration as an Alternative Investment Fund after confirmation of the registration/re-registration fees.