AIF Managers Urged To Comply With SEBI Circular For Demat Credits To Avoid Regulatory Breaches

The Indian Venture and Alternate Capital Association (IVCA) and Private Equity Venture Capital Chief Financial Officer Association (PEVCCFOA) have issued an important advisory to all their esteemed members and AIF Managers regarding compliance with the SEBI Circular No SEBI/HO/AFD/PoD1/CIR/2023/186 titled “Credit of units of AIFs in dematerialized form” dated December 11, 2023.

Commenting on this, Siddarth Pai, co-chair of the Regulatory Affairs Committee at IVCA and secretary of the Private Equity and Venture Capital CFO Association (PEVCCFOA), said, "SEBI has taken into account industry feedback and released a circular in Dec 2023 that gave the industry ample time to comply. This was an unprecedented exercise that involved SEBI, the Depositories, and AIFs to co-create a framework that accommodates all. As we go down to the wire, it is important to remind all AIFs of the timelines and work together to make this novel initiative a success."

The circular, which addresses important timelines and procedures related to the crediting of funds to Demat and Aggregate Escrow Demat accounts, is of utmost significance for all AIF managers. The Credit of Units to the Demat Account of Investors or Aggregate Escrow Demat Account shall be as follows:

●    Schemes with a corpus of Rs 500 Crore or above Latest by Jan 31, 2024
●    Schemes with a corpus of less than Rs 500 Crore: Latest by May 10, 2024

The circular underscores the importance of adhering to specific timelines and procedures, emphasizing the necessity for AIF managers to comply with the regulatory guidelines for the smooth operation of the system. AIFs that do not adhere to the circular's timelines will be in breach of regulatory requirements. 

IVCA and PEVCCFOA claimed that they remain committed to maintaining the integrity of the venture capital and private equity industry. They are eager to ensure that all AIFs are well-informed about regulatory updates and take immediate steps to ensure compliance with the circular's provisions.