A new form of investment, the Alternative Investment Fund (AIF) is an investment vehicle that does not fit into any of the categories in the recent regulations on AIFs. This article introduces you to what an AIF is and how it works, also offering legal guidance on how to register your own AIF.
When do I need to register an Alternative Investment Fund?
An Alternative Investment Fund is a type of investment that falls outside the traditional and conventional scope of an investment portfolio. There are many reasons why someone might want to set up an Alternative Investment Fund. Alternative investments have been increasing in popularity, with the most common being hedge funds, private equity funds, and venture capital funds.
In order to invest in alternative investments, it is important to be familiar with the structures that these investments take on. You will then need to choose an investment manager who is registered to manage your investment. Lastly, you will need to set up a custodian for your investment.
How to register an Alternative Investment Fund
Here is a simple guide on how to register an AIF in India with some tips on what you will need, and what you need to know about the process.
If you are starting up an Alternative Investment Fund, the first thing you need to do is register it. You will need to have a name for your fund, ensure it complies with the required legal framework of the jurisdiction in which you are registered, and comply with all relevant tax requirements.
The following is a step-by-step guide to registering an Alternative Investment Fund:
- Submit an application to the SEBI
- In accordance with the SEBI (Alternative Investment Funds) Regulations, 2012, an applicant must submit an application in Form A.
- Any director/promoter/or such official to function as an authorized signatory, together with necessary documents and business plan and Authorization Letter.
- To determine whether an applicant is eligible or ineligible, read SEBI Compliances.
- If the applicant is a venture capital fund registered with SEBI, it must provide details in the cover letter as well as report in a covering letter.
- On this basis, an online application is filed in accordance with SEBI standards. Form A, duly filled, numbered, signed, and stamped, along with all required papers and an application fee of INR 100000 in the form of a draft written in favor of The Securities and Exchange Board of India. ,
Where can I find a list of alternative investment funds?
You can visit the SEC website to find a list of alternative investment funds. Once on the SEC's website, select "Investor Information -> Investing in Funds -> Alternative Investment Funds" from the left-hand side menu. The website will provide a searchable database of all Registered Alternative Investment Funds for which the SEC has information.
What are the main risks with an Alternative Investment Fund?
The main risks of an Alternative Investment Fund are the volatility of the investments and the high risk of fraud.
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