The Securities and Exchange Board of India (SEBI) has extended again the time allowed to private equity and venture capital funds to meet their regulatory disclosure obligations because of the ongoing coronavirus crisis.
The alternative investment funds (AIFs) can now submit the regulatory filings for the months ending March, April, May and June 2020 by August 7, the capital markets regulator said in a circular on Thursday.
This is the second time SEBI has given more time to AIFs to file their disclosures. It had, on March 30, extended by two months the deadline to make regulatory filings for AIFs for the periods ended March 31 and April 30.
The extension is applicable to all AIFs, including private equity and venture capital funds.
SEBI has taken several measures over the past couple of months to ease the compliance burden on publicly listed AIFs, companies, ratings firms and foreign portfolio investors. These steps come in the wake of the coronavirus pandemic that prompted the government to impose a nationwide lockdown from March 25 to May 31. While the government is now reopening the economy, large parts of the country continue to face several restrictions.
SEBI had put into place its AIF regulations in 2012. Most alternative investment funds are now registered under this AIF regime. Before the AIF regime came into place, venture capital funds were governed under the VCF regime.
The AIF regulations divide funds into three categories. Category-I covers venture capital funds while Category-II covers private equity and debt funds. Category-III covers hedge funds and PIPE funds, or which make private investment in public equities.
According to existing SEBI guidelines, Category I and II funds are required to submit reports on a quarterly basis. These reports would have been due on March 31, but these funds now have a window till August 7.
These reports include information such as the available dry powder with the AIFs and the amount of capital raised and invested each month or each quarter.
Category-III funds have to submit monthly reports, according to SEBI guidelines. All AIFs have to submit reports irrespective of whether or not the fund has started activity, SEBI guidelines say.
Further, AIFs are also required to submit a Compliance Test Report to the sponsor or a trustee within 30 days from the end of the financial year. The sponsor—a limited partner in an AIF—has a right to complain to SEBI if there is a violation of these disclosure norms.
On June 2020, SEBI further delayed the timeline for making available the first industry benchmark and AIF level performance versus Benchmark Reports, by extending till October 01, 2020.
It also mandated that the association representing the AIF needs at least 33% of the number of AIFs for carrying out the benchmarking process.
SEBI first introduced mandatory benchmarking of the performance of alternative investment funds to help investors assess the industry’s performance and improve disclosure standards in February this year.
It also clarified that the requirement of audit of compliance with terms of private placement memorandum (PPM) does not apply to AIFs which have not raised any funds from their investors.
TAGS: Securities and Exchange Board of India, alternative investment fund, coronavirus