Regulation 20(13) of SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), inter-alia, requires that in case of change in control of the sponsor and/ or manager of an alternative investment fund (“AIF”), prior approval from Securities and Exchange Board of India (“SEBI”) will be taken by the AIF. Further to which, SEBI vide its circulars dated June 19, 2014 (“June Circular”) and July 18, 2014 (“July Circular”) inter-alia provided for the process to be followed in case of a change in control of sponsor/ manager.

With regard to streamlining the above process of providing approval to the proposed change in control of the sponsor and/ or manager of the AIF involving scheme of arrangement (which needs sanction of National Company Law Tribunal (“NCLT”) in terms of Companies Act, 2013), SEBI has vide its circular dated March 23, 2022 (“Circular”) decided the following:

1. Application seeking approval for the proposed change in control of sponsor and/ or manager of the AIF under Regulation 20(13) of the AIF Regulations will be filed with SEBI prior to filing the application with the NCLT;
2. Upon being satisfied with compliance of the applicable regulatory requirements, in-principle approval will be granted by SEBI;
3. Validity of such in-principle approval will be 3 (three) months from the date of issuance, within which the relevant application will be made to NCLT;
4. Within 15 (fifteen) days from the date of order of NCLT, the applicant will submit the following documents to SEBI for the final approval:

• Application for the final approval;
• Copy of the NCLT Order approving the scheme;
• Copy of the approved scheme;
• Statement explaining modifications, if any, in the approved scheme vis-à-vis the draft scheme and the reasons for the same; and
• Details of compliance with the conditions/ observations mentioned in the in-principle approval provided by SEBI.

5. The provisions mentioned in Para 2.b.iv of the June Circular read with Para 3 of the July Circular will remain unchanged.

The provisions of the Circular will be applicable to all applications for change in control of sponsor and/ or manager of the AIF where the scheme of arrangement is filed with NCLT on or after April 1, 2022.

Please find a copy of the June Circular here, July Circular here and the Circular here.

This update has been contributed by Nidhi Arya (Partner) and Swaraj Narula (Senior Associate).

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