Alternative Investment Funds (AIFs) in India will now be able to raise money from Foreign Portfolio Iinvestors (FPIs). On Friday, market regulator SEBI issued a framework for the same.
SEBI has said that at the time of onboarding investors, the manager of an AIF will have to ensure that FPIs are residents of a country, the securities market regulator of which is a signatory to the International Organisation of Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding, or a signatory to a bilateral Memorandum of Understanding with SEBI.
SEBI has said that investors contributing 25 per cent or more in the corpus should not be a person mentioned in the Sanctions List notified by the United Nations Security Council, and should not be a resident in a country identified in the public statement of the Financial Action Task Force (FATF). The investor should also not be from a country that has not made sufficient progress in addressing the deficiencies, or has not committed to an action plan developed with FATF to address such deficiencies.
In case an investor, who has been onboarded to a scheme of an AIF subsequently does not meet the specified conditions, the manager of the AIF will not draw down any further capital contribution from such investor for making investment, until the investor again meets the conditions. The same would also apply to investors already on-boarded to existing schemes of AIFs who do not meet specified conditions, said SEBI said.
The new guidelines would come into force with immediate effect.