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SEBI (Alternative Investment Funds) Regulations, 2012 – Procedure For Change Of Control Of Sponsor/Manager

By - Joysurjo Roy on June 30, 2022

SEBI AIF Regulations 2012 Amendment - Change of Control

Securities Exchange Board of India (SEBI) vide circular no. SEBI/HO/IMD-1/ DF9/CIR/2022/032  dated March 23rd 2022 introduced an amendment to the process of approval of a change in control of the Sponsor/Manager of the Alternative Investment Funds (AIFs).

Regulation 20 (13) of the SEBI (AIF) Regulations requires prior approval only of the board in cases of change in control of the sponsor/manager. However, SEBI vide amendment, has mandated that applications of change in control of the sponsor/manager shall be filed with the Board prior to the filing of an application before the NCLT. It is further provided that it is only after the grant of the in-principal approval by the Board that the applicant would be qualified for approaching the NCLT concerning the matter.

This amendment by SEBI has been brought in the SEBI (Alternative Investment Funds) Regulations 2012 with the object of streamlining the process of providing an approval to the proposed change of the control of the Sponsor/ Manager of the AIFs involving the scheme of the arrangement, which requires NCLT sanction as per the Companies Act. According to the regulator, such in-principal approval by the Board shall be valid from the date of issuance for 3 months and the applicant is under an obligation to file an application before the NCLT within the relevant period.

Further, as per the circular, the applicant – within 15 days from the date of order of NCLT for the final approval – shall submit the following documents to SEBI:

(a) Application for the final approval;

(b) Copy of the NCLT Order approving the scheme;

(c) Copy of the approved scheme;

(d) A statement explaining modifications, if any, in the approved scheme vis-à-vis the draft scheme and the reasons for the same; and

(e) Details of compliance with the conditions/ observations mentioned in the in-principal approval provided by SEBI.

It is pertinent to note that the new approval process shall be made applicable to the cases wherein the applications for change in control of Sponsor/Manager of the AIF for which the scheme(s) of arrangement is filed with NCLT on or after April 1st 2022.

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