Regulatory Update: Certification requirement for key investment team of manager of AIF

In 2023, the Securities and Exchange Board of India (SEBI) published its consultation paper discussing its intention to do away with the requirement of having at least one key personnel of the key investment team of every Alternative Investment Fund (“AIF”) to have at least five years of experience in advising or managing pools of capital or in fund or asset or wealth or portfolio management or in the business of buying, selling or dealing of securities or financial assets.

Following the consultation paper, SEBI approved the proposal to replace the existing minimum experience requirement as an eligibility criteria with a certification requirement.

In view of the above, regulation 4(g)(i) of the Alternative Investment Funds Regulations, 2012 (“AIF Regulations”) was amended in 2023, and subsequently, notified on 10 May 2024. Through the amendment, the experience requirements were done away with, and replaced with certification requirements.

As per the amended regulation 4(g)(i) of the AIF Regulations, the key investment team must have ‘at least one key personnel with relevant certification as may be specified by the board from time to time’. On 10 May 2024, this provision came into force, and the relevant certification was specified as certification from the National Institute of Securities Market (“NISM”) by passing the “NISM Series-XIX-C: Alternative Investment Fund Managers Certification Examination”. This NISM certification will be valid for a period of three years and has to be renewed before its expiry to ensure continuity in compliance with the certification requirement.

Separately, vide circular dated 13 May 2024, SEBI stated that the new certification requirement applied to all the applications for registration of AIFs and launch of schemes of AIFs filed after 10 May 2024. When it comes to existing schemes or schemes whose applications for launch are pending, a year’s time i.e., on or before 09 May 2025 has been given to ensure compliance. Further, the trustee / sponsor must ensure that compliance with the provisions of the circular is included in the compliance test report prepared by the manager at the end of the financial year.

Click here to the read the notification, and the circular here. 

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