DEPUTY GENERAL MANAGER ALTERNATIVE INVESTMENT FUND AND FOREIGN PORTFOLIO INVESTOR DEPARTMENT DIVISION OF POLICY AND DEVELOPMENT

informal_guidance · 1992 · State unknown

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Parent: THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (7c4c1f5343adab106c3a94cafc08a5ecf5957ae7)

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DEPUTY GENERAL MANAGER ALTERNATIVE INVESTMENT FUND AND FOREIGN PORTFOLIO INVESTOR DEPARTMENT DIVISION OF POLICY AND DEVELOPMENT AFD/PoD/OW/2025/18380 July 09 , 2025 Shri. K. Rajagopal Sundaram Alternate Assets Limited , Sundaram Towers, 1 st and 2nd floor 46, Whites Road, Royapettah, Chennai, 600014 Dear Sir , Sub: Request for Informal Guidance by way of interpretive letter under the provisions of Securities and Exchange Board of India (Informal Guidance) Scheme, 2003 in connection with the provisions of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") Ref: Your letter dated April 23, 2025 In the context of your letter under reference, you have, inter alia, stated that Sundaram Alternate Assets Limited ('the Applicant') is a SEBI registered Portfolio Manager bearing registration no. INP000006271 and also the Investment Manager for Sundaram Alternative Investment Trust, a Category III Alternative Investment Fund ("AIF") having registration no. IN/AIF3/16 -17/0291 and Sundaram Category II AIF having registration no. IN/AIF2/1718/0340 , and have sought an interpretive letter under the Securities and Exchange Board of India (Informal Guidance) Scheme , 2003 ("Informal Guidance Scheme") from SEBI in respect of the following query – Please clarify whether during the extended period, the close-ended Alternative Investment Fund is permitted only to liquidate its existing portfolio investments or allowed to make investments in portfolio companies . 2. Our Comments: The submissions made in your letter have been considered and without necessarily agreeing with your analysis, our views on the issues raised in your letter are as under: 2.1. In terms of Regulation 13(5) of AIF Regulations, extension of the tenure of the close

Rule TOC

2 · Our Comments:

2 · 1. In terms of Regulation 13(5) of AIF Regulations, extension of the tenure of the close ended Alternative Investment Fund may be permitted up to two years subject to approval of two-thirds of the unit holders by value of their investment in the Alternative Investment Fund:

2 · 2. In terms of Regulation 13 (6), in the absence of consent of unit holders under Regulation 13 (5) or upon expiry of the extended tenure, the Alternative Investment Fund or the scheme of the Alternative Investment Fund shall be wound up in accordance with Regulation 29 of these regulations.

2 · 3. Under the section 'Winding up', Regulations 29 (7), 29 (10), and 29B (4) of the AIF Regulations , prescribe the following:

29 · (7)

29B · (4)

2 · 4. In view of the aforesaid provisions under Regulation 29 providing for winding up of a scheme, it is construed that the AIF shall take steps to close down the existing investments, and shall distribute the proceeds to the investors or distribute the investment in -specie to the investors, as the case may be. The liquidation period and dissolution period form part of winding up of the scheme of an AIF. Thus, AIFs / Scheme of an AIF cannot make any fresh investments during liquidation period and dissolution period.

2 · 5. Further, AIF Regulations do not expressly prohibit an AIF from making investments in the extended tenure. As per Regulation 13 (6), the winding of a scheme is triggered upon the expiry of extended tenure. Therefore, the extended period is not part of the winding-up of the scheme of an AIF.

2 · 6. Accordingly, close-ended AIFs may make investments in the extended tenure subject to: