Prerequisites of setting up an AIF In India

1. Allowed in MOA or Trust Deed of legal entity
   The entity’s foundational legal documents must explicitly authorize it to operate as an AIF.
2. Restriction on Public Offer
   The documents must clearly state that the entity is not permitted to invite the public to subscribe to its securities.
3. Qualified Fund Management
   At least one key member from the founding or management team, who will be actively managing the fund, is required to have cleared the NISM Series XIX C.
4. Infrastructure and Human Resources
   Adequate infrastructure and staffing is the basic requirement to run the fund professionally.
5. Defined Investment Plan
   AIF’s objectives, strategy, targeted asset classes must be listed in the application.
6. Minimum Fund Size Requirement
   To qualify for registration, the AIF must have a committed corpus of at least ₹20 crore.
7. Investor Contribution Threshold
   ₹1 crore is the minimum investment amount in any AIF.
8. Minimum Contribution by Fund Operators
   Fund managers or employees associated with the AIF(employees of the company running the fund) must invest at least ₹25 lakh into the fund from their own resources.
9. Cap on Number of Investors
   Maximum 1,000 investors are allowed at any point in time.
10. Post-Closure Listing Conditions
    AIF units can be listed on a recognized stock exchange with the smallest trading unit being ₹1 crore, but only after the fund has been closed to new investments.

Guide to setting up an AIF in India

Submit Form A to SEBI, accompanied by a Cover Letter

• Form A must be completed and submitted to SEBI exactly as per SEBI Guidelines.
• Attach a concise cover letter along with Form A explaining whether:
    • The vehicle is already registered as a Venture Capital entity (if so, furnish those registration details).
    • You have commenced AIFtype activities prior to registration (if yes, describe what’s been done to date).
• SEBI typically takes around 21 days to process a correctly filed application.

• Arrange the Application Fee
  Prepare a bank draft for ₹1,00,000 drawn in favour of “SEBI.” This draft should be submitted along with your completed Form A.
• Undergo SEBI’s Review Process
  SEBI will screen your submission for completeness and regulatory compliance.
  Only once the regulator is satisfied that all requirements are met will they grant approval to proceed.

• Pay the Category Specific Registration Fee
  After receiving SEBI’s approval letter, you must remit the registration fee corresponding to your chosen AIF category. If you’re converting from an existing Venture Capital registration, only a reduced fee of ₹1,00,000 applies instead of the full amount.
  Upon receipt of payment, SEBI issues your Certificate of Enrolment.

• Continuous SEBI Compliance
  The applicant must adhere strictly to SEBI’s AIF regulations. SEBI circulates updates and amendments via official circulars ensure you implement changes promptly. Any alterations to the original fund documentation or key data must be formally notified to SEBI within the stipulated timeframe.

Other Requirements specific to each type of AIF are listed below (all fig in INR)