Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/157, Dated 23.11.2022 … Continue reading “AIFs using a ‘priority distribution model’ for sharing of losses shall not accept fresh investment”
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Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/157, Dated 23.11.2022
SEBI has found that certain schemes of Alternative Investment Funds (AIFs) have adopted a distribution waterfall in such a way that one class of investors (other than sponsor/manager) share loss more than pro rata to their holding in the AIF, since the latter has priority in distribution over former (‘priority distribution model’).
Accordingly, the SEBI has decided that such schemes of AIFs with a priority distribution model shall not accept any fresh commitment or make an investment in a new investee company till a view is taken by the board in this regard. This circular shall come into force with an immediate effect.
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