Sebi Proposes New Guidelines on Investor Rights in AIFs

Sebi introduced a draft circular detailing how pro-rata and pari-passu rights should be maintained in alternative investment funds. The guidelines aim to ensure fair investor treatment by requiring AIFs to clearly disclose how these rights are calculated. Public comments are invited until November 28.

The Securities and Exchange Board of India (Sebi) has proposed new guidelines to ensure clarity and fairness in the allocation of investors' rights within alternative investment funds (AIFs). The draft circular, released on Friday, specifically addresses the operational aspects of maintaining pro-rata and pari-passu rights.

According to the guidelines, closed-ended AIF schemes should distribute investment proceeds either based on investors' total commitment or their undrawn commitment. This means investors should receive returns proportionate to their investment or on a time-weighted basis, as disclosed in the scheme document.

Public feedback is sought until November 28 on these proposed changes, which also specify that existing AIFs must align with the new rules for future investments while maintaining adequate records to exhibit compliance.