SEBI eases timeline for AIFs to hold investments in demat form

The Securities and Exchange Board of India (SEBI) on Friday said it has relaxed the timeline for alternative investment funds to hold their investments in dematerialised (demat) form.

According to a circular, any investment made by an AIF on or after July 1, shall be held in dematerialised form only, irrespective of whether the investment is made directly in the investee company or is acquired from another entity.

However, any investments made prior to July 1, are exempted from the requirement of being held in dematerialised form, except in specific cases, it added.

Under the revised framework, the regulator stated that investments made before July 1, must be converted into dematerialised form before October 31.

If, the investee company of the AIF has been mandated to facilitate dematerialisation or if the AIF exercises control over the company along with other SEBI-registered entities required to hold investments in demat form, the circular said.

The markets watchdog has also granted exemptions to schemes of AIFs whose tenure, excluding permitted extensions, ends on or before October 31, as well as schemes already in an extended tenure as of February 14.\

Further, the trustee/sponsor of AIF, will ensure compliance with these revised provisions through the 'Compliance Test Report' prepared by the manager.