TaxTMI 
TaxTMI 
Pro-rata and pari-passu rights of investors of AIFs
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....1) of AIF Regulations states as under - "The investors of a scheme of an Alternative Investment Fund shall have rights, pro-rata to their commitment to the scheme, in each investment of the scheme and in the distribution of proceeds of such investment, except as may be specified by the Board from time to time: Provided that the rights of the investors of a scheme of Alternative Investment Fund issued prior to the notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024, which are not pro-rata to their commitment to the scheme and not exempted by the Board, shall be dealt with in the manner specified by the Board." 3. In this regard, it is specified tha....
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....ding Central Banks and Sovereign Wealth Funds. 6. In case manager or sponsor of an AIF subscribes to junior / subordinate class(es) of units of the AIF/scheme of the AIF, it shall be ensured that the amount invested by the AIF/scheme of the AIF is not utilized by an investee company, directly or indirectly, to repay any of its obligations or liabilities towards the manager or sponsor of the AIF or their associates. Applicability on existing AIFs/schemes of AIFs - 7. Vide SEBI circular dated November 23, 2022, schemes of AIFs that had adopted priority distribution model (i.e., schemes that issued senior and junior / subordinate classes of units) were directed to neither accept any fresh commitment nor make investment in a new invest....
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....und, other than that specified in sub-regulation (21) of this regulation, shall be pari-passu in all aspects: Provided that differential rights may be offered to select investors of a scheme of an Alternative Investment Fund, in the manner as may be specified by the Board, without affecting the interest of other investors of the scheme: Provided further that the requirement under sub-regulation (22) of this regulation shall not apply to Large Value Fund for Accredited Investors: Provided further that any differential right already issued by an Alternative Investment Fund prior to the notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024, not f....
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.... 14. The implementation standards formulated by SFA shall be published on the websites of the industry associations which are part of SFA, i.e., Indian Venture and Alternate Capital Association (IVCA), PE VC CFO Association and Trustee Association of India, on or before January 15, 2025. 15. AIFs, Managers of AIFs and their Key Management Personnel shall ensure the following while issuing differential rights to select investors - 15.1. The differential rights shall be provided only in accordance with the implementation standards formulated by SFA. 15.2. The following shall be disclosed in the PPM - (a) Eligibility criteria for an investor to avail each differential right; and, (b) Any investor meeting the specif....
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....heme; and, 18.2. Obtaining undertaking from accredited investor at the time of on-boarding to LVF in terms of para 4.1 of Annexure 8 of SEBI Master Circular for AIFs dated May 07, 2024, with the following clause inserted for waiver to this effect - "The prospective investor is aware that LVFs may avail exemption from the requirement of maintaining pari-passu rights among investors and therefore, may offer differential rights to select investors which might affect interest of others investors of the LVF." 19. Existing LVFs may avail exemption from the requirement of maintaining pari-passu rights among investors, subject to each investor of the scheme specifically providing the waiver to this effect as mentioned in para 18.2 ab....