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Alternative Investment Fund Registration

Application review before filing to ensure hassle-free procedure.
Profile Creation for Alternative Investment Fund.
Advisory and assistance for Filling of Application before SEBI.
Business plan and investment model for AIF.
Compliance support during and post-registration.

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    Overview of Alternative Investment Fund Company

    An Alternate Investment Fund or AIF invests in different forms of start-ups and companies. An applicant must get registered with SEBI to start an AIF. Under the rules and regulations of SEBI, an Alternative Investment Fund refers to an entity established in form of a company, LLP, or a trust to invest in start-ups or companies. 

    Types of AIFs:

    Category I: This type of AIF invests in various start-ups and receives incentives from the government, SEBI, or other regulatory bodies. These consist of infrastructure funds, social venture funds, and SME funds.
    Category II: These types of funds are can invest anywhere but they cannot undertake borrowings except for conducting their day-to-day operations.
    Category III: This category of AIFs also includes funds that can make short-term investments and then sell them like hedge funds.

    Eligibility for Alternative Investment Fund Company

    Investors must be in a particular number: For registration as an Alternative Investment Fund, there must be a certain minimum no. of investors with the applicant company. However, the maximum number of investors cannot exceed 1000 in the applicant company.
    No Public Investment: Any entity willing to register as an AIF must ensure that their Article of Association (AoA) and Memorandum of Association (MoA) of the company does not invite investment from the public.
    Partnership Deed: If the AIF is formed as a Limited Liability Partnership firm under the LLP Act. 2008, then it has to furnish the original documents related to the partnership deed at the time of registration as an Alternative Investment Fund.
    Trust Deed: If the applicant company is registered as a trust or a society then the original deed of trust must be produced at the time of registration.
    Any resident be it an NRI, a foreigner, or an Indian citizen can invest in an AIF.
    Family trusts set up for benefits f the relatives won’t be eligible for registration as AIF.
    ESOP trusts are barred from AIF registrations.
    Funds managed by scrutinization companies, welfare trusts for employees, holding companies within section 4 of the Companies Act 1956, and funds regulated by other regulators are not eligible for registration as an AIF by SEBI.
    Document Required

    Documents Required For Alternative Investment Fund Registration

    The following documents are required for Alternative Investment Fund Registration:

    The Incorporation Certificate of the Entity
    Partnership Deed just in case the AIF Registration is administered by a Partnership registered under the provisions of the LLP Act, 2008
    Original Deed of Trust just in case the AIF Registration is administered by a trust or a society which is registered under the provisions of the Trusts Act.
    Shareholders and Directors Information with reference to the Alternative Investment Fund.
    Copy of the location Memorandum of the Entity
    Information regarding the contact and other information about the applicant
    Any other sort of business information associated with the expansion plans of the corporate
    Address and Particulars associated with the Registered Office
    Memorandum of Association and Articles of Association of the Entity not inviting any investment from the public.

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      Procedure for Alternative Investment Fund Registration

      An applicant company needs to Apply to SEBI as per its prescribed procedure through FORM A in a cover letter and other essential documents.
      After receiving the application, SEBI will review the application and will reply approximately within 21 days of receipt of the application. The time for review will be quite less if the compliances are met by the applicant company. This is why it is advised to companies that they must hire a legal advisory firm before AIF registrations.
      Mention the following details on the cover letter:
      1. Whether the company is previously registered as a venture capital fund with SEBI. It yes then the details of the registration must be shared.
      2. If the company has been undertaking activities of AIF prior to application for registrations. If yes, then produce details.
      3. Mention if registering for a new fund.
      Submit authorization letter from trustees/directors/promotors/designated partners of the firm
      A properly filled FORM A must be submitted with an application fee of Rs. 100000/- through demand draft in favour of “The Securities and Exchange Board of India”, payable at Mumbai.
      If SEBI finds that the applicant company is eligible for registration then it will grant a Certificate of Registration to the company.

       

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      Frequently Asked Questions on Alternative Investment Fund Registration

      The following fees would be applicable for alternative investment fund registration:

      • Initial Application fee- Rs. 1, 00,000
      • Category I registration fee- Rs. 5, 00,000/-
      • Category II registration fee- Rs. 10, 00,000/-
      • Category III registration fee- Rs. 15, 00,000/-

      Yes, an Angel Fund would be considered as an AIF for the aim of other Investment Fund Registration. However, the utmost number of investors which an angel fund can have is merely 49.

      Not under any circumstances, an AIF can go public. This suggests that the shares and securities can’t be offered to the general public.

      The minimum scheme size of an Alternative Investment Fund is 20 crores.

      Yes, it is possible for the risk capital Fund registered under the provisions of the SEBI (Venture Capital Funds) Regulations, 1996 to re-register under the AIF Regulations. However, the registration of a VCF depends on the approval of the investors. For this, approval of more than 2/3 of the member investors is required.

       

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