Alternative Investment Fund includes pooled investment funds that invest in venture capital, hedge funds, managed futures, private equity, etc. We can also say that Alternate Investment Funds is an investment that is unlike the conventional investment possibility such as stocks, debt securities, etc. Alternative Investment Fund Registration is an acknowledgement that supports every investor to take benefit of investing or getting funds.
Alternative Investment Fund Registration- An Overview
Alternative Investment Funds are established in the form of a Limited Liability Partnership (LLP), Company or as a Corporate Structure to collect funds from Foreign or Indian investors as an investment as per the prescribed investment strategy to return a profit to investors in the form of return on investment. AIFs include venture capital, Debt funds, Private equity funds etc.
Alternative Investment Fund includes pooled investment funds that invest in venture capital, hedge funds, managed futures, private equity, etc. We can also say that Alternate Investment Funds is an investment that is unlike the conventional investment possibility such as stocks, debt securities, etc. Alternative Investment Fund Registration is an acknowledgement that supports every investor to take benefit of investing or getting funds.
Different type of Alternative Investment Fund Registration
Following are the types of Alternate Investment Fund registration categories under which an applicant can apply:
Alternative Investment Fund Registration Category- I
This category of AIF invests in early-stage start-ups, ventures, infrastructure funds, social ventures, SMEs, etc. These AIFs are advantageous in improving the overall economy of the country; therefore these Alternate Investment Funds receive incentives from the Government of India and the Security Exchange Board of India (SEBI).
Alternative Investment Fund Registration Category- II
These Alternate Investment Funds are not authorized to borrow for any other purpose other than to perform daily transactions. These Alternate Investment Funds invest in any form of arrangement and include real estate private equity funds, debt funds, equity funds, etc.
Alternative Investment Fund Registration Category- III
This category of Alternate Investment Funds conducted, short-term investments, and later sold as hedge funds to make short-term returns. Various hedge funds, PIPE funds, etc. come under category-III of AIFs.
Procedure for Alternative Investment Fund Registration
Following are the steps that must be followed by an entity to obtain the registration of Alternate Investment Fund:
Apply to SEBI
The applicant entity has to apply in form A of Security Exchange Board of India under the Alternative Investment Fund Regulations, 2012 along with the necessary documents attached with the form. The necessary documents required for AIF registration are as follows:
Address of the registered office
Registration certificate of the company
Contact details of the applicant entity such as mobile number, E-Mail address, residential address.
Partnership Deed is required if the applicant entity is a registered Limited Liability Partnership (LLP).
Trust Deed is required if the applicant is a Trust.
Investment plans and Business Strategies
A draft copy of the placement memorandum
Authorization Letter
In case, if the applicant entity has sanctioned any director, promoter or any other officer to act as a certified signatory. The applicant entity has to provide an authorization letter.
Security Exchange Board of India (SEBI) Compliances
To identify if the applicant entity is eligible or ineligible for AIF registration under the Alternative Investment Fund Regulations, 2012 must study the guidelines provided by the Security Exchange Board of India (SEBI) comprehensively.
Cover Letter
If the applicant is registered with the Security Exchange Board of India as a venture capital fund, the applicant has to provide information regarding the same in the cover letter and in addition to this, the applicant must state that whether it has been conducting any transactions as an Alternative Investment Fund or it is applying for a new fund in the cover letter.
Final Submission of Registration Application
The applicant entity must fill the online application as per the guidelines prescribed by the Security Exchange Board of India (SEBI). The applicant entity also has to give a duly signed, properly filled, numbered and stamped Form A, which will go together with the necessary documents required and application fee of RS. 1 lakh by drawing a draft in the name of the Security Exchange Board of India, which will be payable at Mumbai and it should be submitted by the applicant entity for the issuance of the AIF registration certificate.
Scrutinizing the Registration Application
The Security Exchange Board of India will verify the registration application within 21 days of acceptance of the AIF registration application, and a reply for the same will be sent to the applicant entity. The AIF registration application is scrutinized for its appropriateness by the Security Exchange Board of India, and if the Security Exchange Board of India is pleased with the AIF registration application and submitted documents the SEBI will approve the AIF registration application.
Grant of Registration Certificate
After receiving the approval from the SEBI, the applicant entity must submit the AIF registration fee for the issuance of AIF registration certificate:
If the applicant entity falls under the AIF registration category- I, then the prearranged fee is Rs. 5 lakh.
If the applicant entity falls under the AIF registration category – II, then the prearranged fee is Rs. 1 lakh.
If the applicant entity falls under the AIF registration category- III, then the prearranged fee is Rs. 15 lakh.
Conclusion
Alternative Investment Fund Registration is an acknowledgement that supports every investor to take benefit of investing or getting funds. Alternative Investment Funds are established in the form of a Limited Liability Partnership (LLP), Company or as a Corporate Structure to collect funds from Foreign or Indian investors as an investment as per the prescribed investment strategy to return a profit to investors in the form of return on investment. AIFs include venture capital, Debt funds, Private equity funds etc.
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