The Securities and Exchange Board of India (“SEBI”) has issued a circular bearing number SEBI/HO/IMD/DF6/CIR/P/2020/209 (“Circular”) which states that SEBI has written to the central government and to the Reserve Bank of India (“RBI”) seeking clarity on the applicability of clause (4) of Schedule VIII under FEM (Non-debt Instruments) Rules, 2019 to an investment made by an Alternative Investment Fund (“AIF”) whose investment committee approves investment decisions and consists of external members who are not ‘resident Indian citizens’.
Until SEBI receives the aforesaid clarification, applications for registration of AIFs wherein the investment committee proposed to be constituted includes external members who are not ‘resident Indian citizens’, shall not be processed.
If the investment committee proposed to be constituted by the applicant AIF includes external members who are ‘resident Indian citizens’, such application shall be processed in the ordinary course.
Please find a copy of the Circular here.
This update has been contributed by Vinod Joseph (Partner).
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