INDIA Law and Practice Contributed by: Tejesh Chitlangi, Sushreet Pattanayak, Pooja Mehta and Anita Jain, IC Universal Legal
• SEBI-mandated disclosures based on a detailed PPM template. • An annual report including the financial details of investee companies, and other material information to be provided from time to time. • Reports on changes to the PPM, fees and expenses, disciplinary history, contractual or regulatory breaches, etc. The following disclosures must be made to the SEBI. • Quarterly and annual compliance reports. • Annual audit requirement of compliance with the PPM. • Any material change in the information previ - ously submitted. On receipt of any foreign investment, or when the investments of the Domestic AIF are to be treated as indirect foreign investments due to the ownership of the manager or sponsor, additional reporting under the Foreign Exchange Manage - ment (Non-Debt Instruments) Rules, 2019 (“NDI Rules”) may be applicable. GIFT Funds While the IFSCA does not prescribe a template for PPMs, it mandates minimum disclosures similar to the template PPM for Domestic AIFs. Finally, FM Regulations prescribe certain report - ing requirements to the IFSCA and investors that are less stringent than those prescribed for Domestic AIFs. 2.2 Fund Investment 2.2.1 Types of Investors in Alternative Funds For the quarter ending 30 September 2024, total funds raised from domestic investors in Domestic AIFs in India amounted to around Rs. 3,37,526 crore and 2,21,353 crore from for -
eign investors as per the statistics published by SEBI. Similar statistics released by the IFSCA as of 30 June 2024 suggest that commitments to the tune of USD11,693,910,000 have been raised by GIFT Funds. A diverse set of investors have shown interest in Domestic AIFs and GIFT Funds including high-net-worth individuals, family offices and institutional investors, as well as overseas development financial institutions, sovereign wealth funds and pension funds. 2.2.2 Legal Structures Used by Fund Managers Please see 2.1.1. Fund Structures. 2.2.3 Restrictions on Investors Domestic AIFs Domestic investors Most investors can freely invest in Domestic AIFs, with certain specific limitations: • Insurance companies Insurers are permit - ted to invest in Category I and Category II Domestic AIFs that make investments in specified sectors. The insurers must not invest in Domestic AIFs that invest in securi - ties of companies outside India. • RBI regulated entities Indian banks are limited to investing a maximum of 10% in the paid- up or unit capital of Category I or Category II Domestic AIFs. Banks are prohibited from investing in Category III Domestic AIFs. Indian banks, non-banking financial companies (NBFCs) and other entities regulated by the RBI are barred from investing in Domestic AIFs that have downstream investments in debtor companies (excluding equity invest - ments). Foreign investors Foreign entities from Financial Action Task Force (FATF)-compliant jurisdictions are gener -
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