The Board of the Securities and Exchange Board of India (“Board”) met in Mumbai on September 29, 2020 and took various decisions, one of which pertains to Alternative Investment Funds (“AIFs”). The Board approved an amendment to the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) to insert a new definition for ‘relevant professional qualification’ and provide that the prescribed qualification and experience criteria for the investment team needs to be fulfilled individually or collectively by personnel of the key investment team of each AIF’s investment manager.
Further, the regulatory amendment requires the constitution of an investment committee by the investment manager for approving investment decisions and prescribes the responsibilities of the members of such investment committee and of the investment manager.
The actual amendment to the AIF Regulations, as approved by the Board on September 29, 2020, is awaited.
Currently, the AIF Regulations do not prescribe qualification and experience criteria for the investment team of an AIF. Thought it is common for AIFs to constitute an investment committee to vet and approve investment decisions made by the investment manager, the AIF Regulations currently do not mandate the formation of such an investment committee. The decision taken by the Board on September 29, 2020 now requires AIFs to constitute an investment committee. At present, it is common practice for the investment committee to have a mix of members who are employees of the AIF’s investment manager and external members. It remains to be seen if the new amendment shall restrict the current practice of having external members in the investment committee.
The full minutes of the Board meeting can be accessed here.
This update has been contributed by Vinod Joseph (Partner).
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