Relief for AIFs: SEBI extends reporting deadline for differential rights to March 31

Market regulator SEBI on Monday extended the deadline for Alternative Investment Funds (AIFs) to report the issuance of differential rights by a month.

A one-time reporting requirement was set for AIFs that filed their Private Placement Memorandum (PPM) with SEBI on or after March 1, 2020, and issued differential rights outside the standard guidelines.

The report was initially due by February 28, 2025.

The Securities and Exchange Board of India, in a March 3 circular, said the extension was granted following representations from the AIF industry requesting additional time to meet the reporting requirement.

The deadline has been extended to March 31, 2025.

The extension follows amendments made to the AIF Regulations, 2012, in November 2024 regarding investor rights in AIF schemes.

In December, SEBI laid out guidelines for AIFs offering differential rights to certain investors.

Under these guidelines, SEBI directed AIFs to grant investors' rights in investment and distribution of proceeds in proportion to their commitments in a scheme. This means that both risks and rewards from investments made by an AIF scheme need to be shared in proportion to investors' contributions to the scheme.

The move was aimed at clarifying the regulatory intent of AIFs as pooled investment vehicles and ensuring fair and equal treatment of investors. SEBI stated that differential rights can be offered to select investors of a scheme of an AIF without affecting the interest of other investors in the scheme.

AIFs are privately pooled investment vehicles that collect funds from investors for investing under a defined investment policy for the benefit of their investors.