Types of AIFs

AIFs are categorized into three main types based on their investment strategies:

1. Category I AIF:
• Invests in socially or economically desirable sectors such as startups, infrastructure, and small and medium enterprises (SMEs).
• Generally enjoys incentives or concessions from the government.
2. Category II AIF:
• Comprises funds that do not fall under Category I or III and do not employ borrowing except for operational needs.
• Includes private equity and real estate funds without specific government incentives.
3. Category III AIF:
• Employs complex trading strategies and may leverage investments in derivatives.
• Typically consists of hedge funds and funds aiming for short-term returns.

Eligibility Criteria for AIF Cat I, II & III Registration

To register as an AIF, the following criteria must be met:

• Fit and Proper Criteria: The applicant, manager, and sponsor must satisfy the SEBI’s fit and proper requirements.
• Experience: Key personnel in the management team must have substantial experience in fund management.
• Investment Strategy: The application must clearly outline the investment objectives, targeted investors, and proposed corpus.
• Legal Structure: The applicant must be structured as a trust, LLP, or corporate body, with appropriate documents allowing AIF activities.

Required Documents for AIF Cat I, II & III Registration

Applicants must provide:

• Certificate of Incorporation
• Partnership Deed or Trust Deed
• Details of directors and shareholders
• Placement Memorandum
• Address and particulars of the registered office
• Memorandum and Articles of Association

Process for AIF Cat I, II & III Registration

The registration application for an AIF can be submitted to SEBI in Form A along with necessary documents and a non-refundable application fee. The SEBI generally responds within 21 working days, depending on the applicant’s adherence to the requirements

Post-Registration Compliance

After receiving the AIF registration certificate, the fund must comply with SEBI’s ongoing reporting requirements and notify any material changes to its information.