SEBI has issued a Consultation paper on proposal to enhance trust in the Alternative Investment Funds (‘AIF’) ecosystem to facilitate Ease of Doing Business measures. The consultation paper provides that Every Alternative Investment Fund, Manager of the Alternative Investment Fund and Key Management Personnel of the Manager and the Alternative Investment Fund, shall carry out specific due diligence, as may be specified by SEBI from time to time, with respect to their investors and investments, before each investment, to prevent facilitation of circumvention of extant regulations administered by any financial sector regulator.
Provided that, if participation of an investor of an AIF in an investment opportunity has been ascertained to result in facilitation of circumvention of any extant regulation, the manager of the AIF shall –(a)not make the investment; or(b) exclude the particular investor from the investment.
Explanation: “extant regulations” shall mean laws, acts, rules, regulations, guidelines/circulars framed thereunder that are administered by any financial sector regulator including SEBI.
