Alternative Investment Fund [AIF]
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Alternative Investment Fund [AIF] are governed and regulated by the Securities & Exchange Board of India (SEBI). They are not classified under the Mutual Fund regulations laid down by SEBI. According to Regulation 2(1) (b) of the SEBI (Alternative Investment Funds) Regulation, 2012, AIFs are defined as a privately held and managed pool of investment fund of either domestic or foreign origin, organized in the form of a body corporate, company, LLP (limited liability partnership), or a trust. AIFs can be established in any of the forms mentioned above.
AIF’s are private pooled investment funds and are not available through the forms of public issues (like Initial Public Offerings) which are applicable to Mutual Funds or other collective investment Schemes.
Generally, high net worth individuals and institutions invest in Alternative Investment Funds as it requires a high investment amount, unlike Mutual Funds
As per the AIF Regulation 2012, AIF is a fund established in India whether as a Trust or a Company or a LLP which is ::
A Privately pooled investment vehicle that pools funds from sophisticated investors and invests in accordance with defined investment policy to benefit its investors.
Is not an entity registered under the SEBI (Collective Investment Schemes) Regulations, 1999 OR SEBI (Mutual Funds) Regulations, 1996 OR any other regulations issued by SEBI pertaining to pooling of funds or fund management.
Exemptions from AIF Regulations
Entities which do not fall under the purview of AIF Regulations
The landscape of financial regulations in India is broad and complex, with various entities operating within specific regulatory frameworks. One such entity is the Alternative Investment Fund (AIF), which is defined and regulated under the SEBI (Alternative Investment Funds) Regulations, 2012. As part of these regulations, certain entities are explicitly excluded from being classified as AIFs, and others are granted specific exemptions. Understanding these exceptions is crucial for businesses and individuals who are exploring investment opportunities or considering establishing an AIF. The following discussion provides an elaboration on these entities.
Entities covered under other SEBI regulations: AIFs do not include funds that fall under other specific SEBI regulations, namely:
SEBI (Mutual Funds) Regulations, 1996: Mutual funds are a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which are managed by an
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