Sebi amends rules for AIFs, stock exchanges, other MIIs

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Sebi has amended regulations for alternative investment funds and market infrastructure institutions, including stock exchanges, to facilitate the ease of doing business and simplify compliance requirements. This comes after the board of Sebi approved proposals in this regard earlier this month.

To facilitate ease of doing business in market infrastructure institutions (MIIs), the regulator has done away with the requirement of seeking Sebi’s post-facto approval for acquisitions between 2-5% shareholding for all eligible shareholders.

The ‘fit and proper’ status of persons acquiring less than 2% of its shareholding will also be made applicable to unlisted stock exchanges and depositories, according to two separate notifications dated August 13.

Separately, Sebi has amended the regulations governing alternative investment funds (AIFs) to simplify and rationalise compliance requirements as well as provide investment flexibility and streamline regulatory processes.

AIFs under category I and venture capital funds (VCFs) will have to invest at least 75% of investable funds in unlisted equity shares and equity-linked instruments of venture capital undertakings or in companies listed or proposed to be listed on an SME exchange or the SME segment of an exchange.

The existing investment restrictions on the residual portion of investable funds of VCFs have been done away with.

“Uninvested portion of the investable funds and divestment proceeds pending distribution to investors may be invested in liquid mutual funds or bank deposits or other liquid assets of higher quality… till the deployment of funds as per the investment objective or the distribution of the funds to investors as per the terms of the fund documents,” Sebi said.