INDIA Law and Practice Contributed by: Tejesh Chitlangi, Sushreet Pattanayak, Pooja Mehta and Anita Jain, IC Universal Legal
corpus or INR50 lakhs, whichever is lower; for any other Category I or II Domestic AIFs: 2.5% of the corpus or INR5 crore, whichever is lower; for Category III Domestic AIFs: 5% of the corpus or INR10 crore, whichever is lower). • A private placement memorandum (PPM), along with a merchant banker’s certificate and the Domestic AIF’s constitutive documents; • KYC documents, financial documents, fulfil - ment of fit and proper criteria for a Domestic AIF, manager, sponsor, trustee, and their respective directors/partners, key investment team members and disclosure of any prior regulatory actions and such other related declarations as mandated under the AIF Regulations. The approval process generally takes two to three months, and, after authorisation, the fund must pay the fee applicable to its Domestic AIF category. The SEBI takes a record of the PPM for the first scheme under the Domestic AIF at the time of registration itself, and the Domestic AIF can launch further schemes by filing a PPM and requisite information along with the required fees. GIFT Funds The Fund Management Entity or FME must identify office space with adequate infrastruc - ture at GIFT City for the purposes of incorpora - tion. Thereafter, an application may be made to IFSCA via the Single Window IT System (SWITS) for registration. Based on the type of funds to be managed, the FME may decide to apply as an Authorised FME, Registered FME (Non-Retail) or Registered FME (Retail). Key requirements for all FMEs include the fol - lowing.
• The appointment of key management person - nel with experience required, based on the category of the FME. Key management per - sonnel must be physically based out of GIFT City in order to demonstrate substance. • Compliance with minimum net worth require - ments of the FME: • Authorised FME: USD75,000; • Registered FME (Non-Retail): USD500,000; and • Registered FME (Retail): USD1 million. • Disclosures of any prior regulatory actions and declarations as mandated under the FM Regulations, etc. The approval process generally takes two to two and a half months, and, after it has been approved, the FME can launch schemes based on the category of FME registration obtained. Also, an annual fee for renewal of FME registra - tion is payable by the FME to the IFSCA. Based on the FME category, Venture Capi - tal Schemes, Restricted Schemes and Retail Schemes can all be launched in accordance with For companies and LLPs, there are statutory limits on the liability of shareholders and part - ners, respectively. For trusts, there is no statu - tory liability. Irrespective of the structure, fund managers ensure that the liability of investors is contractually limited for Domestic AIFs and GIFT Funds. 2.1.4 Disclosure Requirements Domestic AIFs The following disclosures must be made to investors. the FM Regulations. 2.1.3 Limited Liability
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