Deciphering SEBI’s Recent Amendments To The AIF Regulations Amid Second Wave Of Covid-19: A Detailed Inspection To The SEBI (Alternate Investment Funds) Second Amendment Regulations, 2021

Amid second wave of Covid-19 surge, capital markets regulator Securities Exchange Board of India (“SEBI”) vide notification dated May 5, 20211 brought in major amendments to the SEBI (Alternate Investment Funds) Regulations, 2012 (“AIF Regulations/Principal AIF Regulations”) aimed at providing regulatory flexibility, improving clarity and accountability with respect to alternate investment funds (“AIFs”) and their functioning via the SEBI (Alternate Investment Funds) (Second Amendment) Regulations, 2021 (“ said Amendment”). SEBI made the following amendments to the AIF Regulations – • Approving the insertion of definition of Startup and removal of the list of 'restricted activities or sectors from the definition of 'Venture Capital Undertaking'. • AIFs, including Fund of AIFs, permitted to simultaneously invest in units of other AIFs and directly in securities of investee companies. • AIF manager is required to ensure compliances with investment conditions, fund documents and applicable laws under all circumstances. • prescribe a Code of Conduct for AIFs, key management personnel of AIFs, trustee, trustee company, directors of the trustee company, designated partners or directors of AIFs, as the case may be, Managers of AIFs and their key management personnel and members of Investment Committees and bring clarity in the responsibilities cast on members of Investment Committees. Thereafter, on May 21, 2021 (“May 21 Circular”), SEBI issued a Circular enhancing the overseas investment limit for AIFs and VCFs from USD 750 million to USD 1500 million. Further, on May 31, 2021 (“May 31 Circular”), after receiving the representation from the AIF industry thereby requesting the extension of timelines for various regulatory filings and compliances for VCFs and AIFs, SEBI issued a Circular3 extended the due date for various regulatory filings till September-end