Private Funds: SEBI introduces investor diligence requirements for AIFs

  • SEBI has cast new investor diligence obligations on AIF managers, which extends to underlying investors
  • As per the new rule, the manager of an AIF is not permitted to on-board new investors or draw down capital from existing investors unless the diligence conditions have been complied with…

    How to Negotiate Key Person Provisions – A Lawyer’s Guide

    • The occurrence of a key person event should not trigger a domino effect across other funds managed by the sponsor
    • The ‘time and attention’ requirement should be drafted so as to avoid inadvertent foot faults
    • The question of whether or not a key person event has occurred should not be the subject of a long-drawn determination process…

      GP-Led Secondaries in India – Considerations and Challenges

      • GP-led secondaries have become fairly popular globally given that they solve for the liquidity concerns among some LPs whilst allowing the GP to capture more upside from an investment.

      • In a GP- led secondary deal, it is important to find a pricing that works for the exiting investors but keeps the acquisition attractive for the incoming investors…

        Private Funds: Corpus v Investible Funds – Need to reconsider SEBI’s penalty order?

        • SEBI has strictly construed the term ‘investible funds’ leaving no scope for commercial nuances.
        • SEBI rules that estimated expenditure cannot be offset against estimated income streams when calculating investible funds.
        • SEBI appears to be driven by the view that investors should not be over-concentrated in a single asset…

          Denial of tax treaty benefits: Blueprinting defence strategies for PE funds – A tax litigation perspective

          • Revenue has issued reassessment orders to several global PE/VC funds denying
            tax treaty benefits to grandfathered investments alleging treaty shopping through Mauritius and Singapore between AY 2013-14 and 2015-16

          • Substantial tax, interest, and penalty has been levied invoking judicial anti-avoidance principles based on a supposed lack of commercial substance in these jurisdictions…

            Private Funds: Six considerations when negotiating carry clawback provisions

            • Clawback liability must be ascertained with respect to each investor
            • Standalone clawback obligations may not be sufficient
            • The clawback provision should include a true-up mechanism for sponsors…

              Fund Formation: The Beginning of the Fund Lifecycle for India Focussed Funds

              We are delighted to share our most recent and comprehensive research paper discussing at length the legal, tax, regulatory, commercial and strategic issues concerning the setting up of India focussed funds. Over the past few years, the investment funds industry has been the subject of a series of legislative and regulatory interventions designed variously to protect investor interests as well as to enlarge the scope of investment activity. From an Indian fund formation perspective, this is evidenced from the introduction of codes of conduct for various stakeholders,…

              GIFT City – Analysing New Fund Management Regulations and why GIFT City still doesn’t work

              • IFSCA proposes significant shift in regulatory regime for investments funds – shift from investment vehicle towards fund management entity (FME)
              • Replacement of Category I, II and III AIFs under present AIF Framework with investment
                schemes viz. Venture Capital Scheme, Restricted Scheme (Non-Retail) and Retail Schemes…

                SEBI formalises the use of co-investments but leaves some question marks?

                • SEBI introduces a new co-investment framework permitting AIF investors to co-invest alongside the AIF through portfolio managers
                • The new framework provides that co-investments cannot be on more favourable
                  terms than AIF investments

                • Co-investments are not permitted in listed securities…