SEBI introduces template for Private Placement Memorandum

Feb 10, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Securities and Exchange Board of India (SEBI) on February 05, 2020, has decided to introduce templates for Private Placement Memorandum (PPM) in order to streamline disclosure standards for Alternative Investment Funds (AIFs).

The PPM is a primary document in which all the necessary information about the AIF is disclosed to prospective investors. SEBI has decided to mandate a template for the PPM providing certain minimum level of information in a simple and comparable format. The AIFs are also permitted to provide additional information in their PPM. The template for PPM have two parts, firstly a section for minimum disclosures, and secondly a supplementary section to allow full flexibility to the Fund in order to provide any additional information, which it deems fit. It is mandatory for AIFs to carry out an annual audit of such compliance in order to ensure compliance with the terms of PPM. The audit shall be carried out by either internal or external auditor/legal professional. However, audit of sections of PPM relating to ‘Risk Factors’, ‘Legal, Regulatory and Tax Considerations’ and ‘Track Record of First Time Managers’ shall be optional. These requirements shall come into effect from March 01, 2020.

SEBI has also decided to introduce mandatory benchmarking of the performance of AIFs (including Venture Capital Funds) and the AIF industry and a framework for facilitating the use of data collected by Benchmarking Agencies to provide customized performance reports. Thus, any association of AIFs representing at least 51% of the number of AIFs, may notify one or more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process.

[SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24]


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