SEBI Standardizes Private Placement Memorandum (PPM) Audit Reporting For AIFS: Streamlining Compliance

Posted On - 29 May, 2024 • By - King Stubb & Kasiva

Alternative Investment Funds (AIFs) are mandated to conduct annual audits of their compliance with Private Placement Memorandum (PPM) terms as per Regulation 28 of SEBI (AIF) Regulations, 2012[1] and Clause 2.4 of SEBI Master Circular dated July 31, 2023.[2] These annual PPM audit reports are to be submitted to AIF’s trustee, directors, designated partners, manager’s directors or designated partners, and SEBI within 6 months after the end of the financial year. However, the lack of a uniform reporting format created inconsistencies that could hinder effective analysis by SEBI and other stakeholders.

SEBI recently, on 18th April 2024, issued a circular introducing a standardized format for PPM audit reports applicable to all AIFs.[3] This move aims to streamline compliance procedures and enhance transparency within the AIF industry.

Understanding the Circular

  • Standard Reporting Format: A standard reporting format for the PPM Audit Report has been developed in consultation with the pilot Standard Setting Forum for AIFs (SFA).
  • Availability and Assistance:
    The standard reporting format has been made available on the website of AIF Associations that are part of SFA within 2 working days of the issuance of this circular.These associations will assist all AIFs in understanding the reporting requirements.

    They will also help to clarify or resolve any issues related to reporting to ensure accuracy and timeliness.

  • Submission to SEBI: PPM audit reports must be submitted to SEBI online via the SEBI Intermediary Portal per the specified format.
  • Optional Audit Sections:
    According to Clause 2.4.1 of the Master Circular, auditing the sections of PPM related to the following are optional:

    Risk Factors
    Legal, Regulatory, and Tax Considerations
    Track Record of First-Time Managers

  • Unchanged Provisions: All other provisions related to the filing of the PPM audit report as specified in the Master Circular stay the same.
  • Applicability: The reporting requirement in paragraph 3 applies to PPM audit reports for the Financial Year ending March 31, 2024, and onwards.
  • Periodic Review:
    To adapt to the changing AIF industry landscape and for policy and supervision purposes, the reporting format will be periodically reviewed by the pilot SFA in consultation with SEBI.

    Any revisions to the reporting format will be made available on the websites of the AIF Associations part of SFA.
    Furthermore, the ‘Illustration of Fees and Expenses’ and ‘Glossary and Terms’ sections are also optional.


SEBI’s new standardized format for AIF PPM audit reports is a game-changer for compliance. This uniform system simplifies the process for AIFs of all categories, ensuring clear and consistent reporting to SEBI. Collaboration with the pilot SFA and AIF Associations guarantees user-friendly guidelines and widespread understanding. Optional sections on specific PPM areas reduce reporting burdens while maintaining focus on critical information.

In essence, this simplifies compliance while prioritizing investor protection, a key aim of SEBI. Periodic reviews of the format, conducted with industry input, ensure adaptability to the ever-evolving AIF landscape. SEBI’s approach strikes a balance between oversight and flexibility, ultimately fostering a more robust and investor-confident financial ecosystem.