Inoperative Fund framework simplifies AIF winding-up by allowing retained cash, restricted deployment, and reduced compliance burdens.
SEBI's winding-up framework for AIF schemes permits retention of residual liquidation proceeds beyond the normal scheme life for crystallised liabilities, anticipated contingencies approved by at least 75% of investors by value, or essential winding-up expenses, subject to a three-year cap for operational expenses. Schemes meeting these conditions, or those needing to remain registered only for pending proceedings after other assets are cleared, may seek designation as an Inoperative Fund and must then follow restricted deployment rules, annual reporting, and exemptions from routine compliance obligations. (AI Summary)