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Alt guide to set up aif
1.
2. Introduction
• Over the past decade, Alternative Investment
Funds (AIFs) have become increasingly
popular in India as an alternative investment
option for effective diversification of
investment portfolio.
• Moreover, even smaller investors now have
access to invest in AIFs through the mutual
fund SIProute.
3. Application to SEBI through Form A
along with cover letter
• The process for registering as AIF in India commences with the
application made by the AIF through Form A in the prescribed
format to the SEBI.
• This application is a requisition to SEBI for granting a registration
certificate to the AIF under the SEBI (Alternative Funds)
Regulations,2012.
• SEBI normally reverts to an application requisition for AIF
registration within 21 days of making the application, which could
be longer as well depending on the compliance speed adopted by
the AIF.
• Therefore, it is vital for AIFs to do their homework on the eligibility
criteria for AIF under the SEBI (Alternative Funds) Regulations,
2012well before putting in its Form A application.
4. • The AIF must write a cover letter addressed to SEBI
clearly stating whether it is already registered with SEBI
as a VC fund.
• In case it is already registered, it must provide SEBI
with all the relevant registration details.
• Moreover, in the cover letter, the AIF must mention to
SEBI whether it has already commenced operations as
an AIF well before making the application, in which
case it must provide SEBI with the relevant details.
• In case the AIF is applying for registration of a new
fund, it must clearly clarify this in its cover letter to
SEBI.
5. Preparing a Bank Draft payable to
SEBI
• Once the AIF has filled in Form A and has
prepared its cover letter, it must get a bank
draft made in favour of SEBI for Rs. 100,000
towards payment of application fees, details
of which can be added in the cover letter to
SEBI.
6. Evaluation of application by SEBI
• Once it receives the application, SEBI will
evaluate the application thoroughly to examine
whether the AIF has met all the required
eligibility criteria specified under the SEBI
Regulations.
• This is vital for SEBI to consider granting
registration to the AIF.
• Once SEBI completes its evaluation process and is
satisfied with all the parameters, it will approve
the AIF’s application by expressly informing the
AIF applicant aboutthe same.
7. Payment of registration fee to SEBI
• Once the AIF receives the letter from SEBI notifying
that its application has been successful, it must prepare
for paying a registration fee of Rs. 500,000 for getting
the status of AIF in India.
• However, a key point to note here is that an AIF already
registered as a VC fund in India with the SEBI must only
arrange for paying the re-registration fee of Rs. 100,000
to SEBI.
• Upon the receipt of applicable registration fees, SEBI
will grant ‘Certificate of Registration’ as an Alternative
Investment Fund in India to the applicant.
8. AIF must ensure strict compliance
SEBI’s reporting and other guidelines
• Once the AIF receives its registration certificate, it
marks the completion of the registration process at the
end of SEBI as well as the applicant.
• However, as part of mandatory compliances, the AIF
must ensure that it complies with all the crucial report
requirements specified by SEBI.
• Moreover, the AIF must stay updated on SEBI’s
guidelines communicated by SEBI through its
• website and circulars.
• The AIF must report any material changes in the
original details provided to SEBI by the AIF within
reasonable time.
