SEBI/HO/AFD/AFD - POD - 1/P/CIR/2024/135

6 · of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules) for investment from countries sharing land border with India (read with Press Note 3 dated April 17, 2020 of FDI Policy 2020) .

3 · Investors availing benefits designated for QIBs through AIFs:

3 · 1. AIFs have been designated as QIBs in terms of Regulation 2(1)(ss) of ICDR Regulations. There are certain benefits available to QIBs under ICDR Regulations and other SEBI Regulations.

3 · 2. In order to prevent AIFs from facilitating investors who are otherwise ineligible for QIB status on their own, in availing benefits designated for QIBs, the following is specified –

3 · 2.1. For every scheme of AIFs having an investor , or investors belonging to the same group , who contribute(s) 50 percent or more to the corpus of the scheme , necessary due diligence as per the implementation standards formulated by Standard Setting Forum for AIFs ( ' SFA ' ) , shall be carried out prior to availing benefits available to QIBs under ICDR Regulations and other SEBI Regulations .

4 · Investors availing benefits designated for Qualified Buyers (QBs) through AIFs:

4 · 1. AIFs have been notified as QBs in terms of clause (u) of sub-section (1) of section 2 of SARFAESI Act, and therefore, are eligible to subscribe to Security Receipts (SRs) issued by an Asset Reconstruction Company (ARC).

4 · 2. In order to prevent AIFs from facilitating investors who are otherwise ineligible for QB status on their own, in availing benefits designated for QBs the following is specified:

4 · 2.1. For every scheme of AIFs having an investor , or investors belonging to the same group, who contribute(s) 50 percent or more to the corpus of the scheme, necessary due diligence as per the implementation standards formulated by SFA , shall be carried out prior to making any investments in SRs issued by ARCs or availing benefits designated for QBs under the SARFAESI Act .

5 · RBI regulated lenders/entities ever-greening their stressed loans/assets through AIFs:

5 · 1. To address the issue of ever -greening of stressed loans/assets of RBI regulated lenders/entities through AIFs and to prevent circumvention of norms with respect to Income Recognition, Asset Classification , Provisioning and Restructuring of stressed loans/assets specified by RBI for its regulated lenders , the following is specified –

5 · 1.1. For every scheme of an AIF:

5 · 1.2. For schemes falling under the ambit of provision at para 5.1.1 above, the manager shall ensure that the scheme does not make any investment that would lead to the RBI regulated lender/entity acquiring or holding an interest/exposure in the investee company indirectly (that is, through investment in a scheme of an AIF) , that they are not permitted to acquire or hold directly.

6 · 1. either such investor or investors of same group as referred at paras 3.2.1, 4.2.1 and 5.1.1 above shall be excluded from the investment , subject to necessary disclosure in the PPM for exclusion of investors; or ,

6 · 2. the investment shall not be made .

7 · 1. If any of the existing investments of such schemes does not satisfy the due diligence checks for making investment , details of such investments shall be reported to the custodian of the AIF on or before April 07, 2025, in the format as specified at Annexure I .

7 · 2. If all the existing investments of such schemes satisfy the respective due diligence checks for making investment, then manager of the AIF shall submit an undertaking to this effect to the custodian, on or before April 07, 2025 .

8 · Investment from countries sharing land border with India through AIFs:

8 · 1. In terms of Rule 6(a) of NDI Rules, a person resident outside India may subscribe, purchase or sell equity instruments of an Indian company in the manner and subject to the terms and conditions specified in Schedule I of NDI

8 · 2. To ascertain whether investors from countries sharing land border with India are investing in Indian companies through AIFs, the following is specified -

8 · 2.1. For every scheme of AIFs where 50 percent or more of the corpus of the scheme is contributed by investors –

8 · 2.2. Upon carrying out the necessary due diligence, such scheme shall report details of its investment , which would result in the scheme holding 10 percent or more of equity/equity-linked securities issued by an investee company (on a fully-diluted basis), to its custodian within 30 days of investment, in the format as may be specified by SFA. Custodians shall compile such information received from AIFs on a monthly basis and report to SEBI within 10 working days from the end of the month.

8 · 2.3. For schemes of AIFs falling under the ambit of provisions at para 8 . 2.1 . above, details of their existing investments where the scheme holds 10 percent or more of equity/equity-linked securities issued by an investee company (on a fully-diluted basis) , shall also be reported to their custodians on or before April 07, 2025, in the format as may be specified by SFA.