Sebi introduces flexibility in pro-rata rights for AIF investors
markets regulator Sebi on Friday introduced exemptions to the requirement of maintaining pro-rata rights in investments and distribution of proceeds under the alternative investment funds (AIF) rules. Under this, pro-rata rights will not apply to cases where investors are excused or excluded from specific investments; fail to meet their contribution obligations, or share profits (such as carried interest) with fund managers or sponsors, Sebi said in a circular.
Furthermore, specific entities, including government-backed organisations and development financial institutions, may opt for junior or subordinate units, accepting lower returns or higher risks compared to other investors.
Safeguards have also been introduced to prevent misuse of funds in such scenarios, ensuring robust investor protection.
These measures are aimed at ensuring fairness, transparency, and flexibility in AIF operations, catering to diverse investor needs while protecting their rights.
The regulator, on November 18, amended rules governing AIF to ensure the maintenance of pro-rata and pari-passu rights for investors.
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