SEBI vide notification dated April 10, 2023 has issued clarification regarding direct plan for schemes of Alternative Investment Funds (AIFs) and trail model for distribution commission in AIFs. Schemes of AIFs shall have an option of ‘Direct Plan’ for investors. Such Direct Plan shall not entail any distribution fee/placement fee.
AIFs shall disclose distribution fee/placement fee, if any, to the investors of AIF/scheme of AIF at the time of on-boarding. Category III AIFs shall charge distribution fee/placement fee, if any, to investors only on equal trail basis i.e. no upfront distribution fee/ placement fee shall be charged by Category III AIFs directly or indirectly to their investors. Further, any distribution fee/ placement fee paid shall be only from the management fee received by the managers of such Category III AIFs.
Category I AIFs and Category II AIFs may pay up to one-third of the total distribution fee/placement fee to the distributors on upfront basis, and the remaining distribution fee/ placement fee shall be paid to the distributors on equal trail basis over the tenure of the fund.
