Approval process for change in control of sponsor/manager of AIFs

Notification No. SEBI/HO/IMD-1/ DF9/CIR/2022/032 dated 23rd March 2022

The Securities and Exchange Board of India vide its above quoted notification, has streamlined the process of providing approval to the proposed change in control of the Sponsor and/or Manager of the AIF involving scheme of arrangement.

Alternative investment funds (AIF) are basically pooled investment funds that are invested in a wide range of assets such as venture capital, private equity, hedge funds, managed futures etc by professional fund managers in a strategic way to make profits.

The Manager / Sponsor can be a person or an entity. The “Sponsor” sets up AIFs and the “Manager” manages the same.

The application seeking approval for the proposed change in control of the Sponsor and/or Manager of the AIF under Regulation 20(13) of AIF Regulations shall be filed with SEBI prior to filing with the NCLT. Upon being satisfied with compliance of the applicable regulatory requirements, in-principle approval will be granted by SEBI.

The validity of such in-principle approval shall be three months from the date of issuance, within which the relevant application shall be made to NCLT. Within 15 days from the date of order of NCLT, applicant shall submit the following documents to SEBI for final approval:

• Application for the final approval;
• Copy of the NCLT Order approving the scheme;
• Copy of the approved scheme;
• Statement explaining modifications, if any, in the approved scheme vis-à-vis the draft scheme and the reasons for the same; and
• Details of compliance with the conditions/ observations mentioned in the in-principle approval provided by SEBI.

The provisions of this notification shall be applicable to all the applications for change in control of Sponsor and/or Manager of the AIF for which the scheme(s)of arrangement is filed with NCLT on or after April 01, 2022.

Varsha Laur, Audit Associate, SW India