Sebi extends deadline for AIFs dematerialisation till January 31

In a bid to ease the compliance burden of alternative investment funds (AIFs), the Securities and Exchange Board of India (Sebi) has given them more time to credit units into the demat account of investors.

Sebi has specified the process to be followed in cases where the investors have yet to provide the demat account details to AIFs.

According to the new circular, AIFs with a corpus of over Rs 500 crore will have to credit units to the existing investors by January 31. The earlier date specified for dematerialisation for such schemes was October 31. However, new units can only be issued in demat form.
 

Meanwhile, schemes with a corpus of less than Rs 500 crore get time until May 10 for the dematerialisation of existing units. For such schemes, units issued after April 30 will have to be in demat form.

“Units already issued by schemes of AIFs to existing investors who have not provided their demat account details shall be credited to a separate demat account named ‘Aggregate Escrow Demat Account’. This account shall be opened by AIFs for the sole purpose of holding demat units of AIFs on behalf of such investors,” said Sebi.

New units to such investors who have not provided the details will also have to go to the same escrow account.

Sebi has directed AIF managers to maintain investor-wise know your customer (KYC) details of units held in the escrow account, including name, permanent account number (PAN), and bank account details, along with an audit trail of the transactions. These details will have to be reported to the depositories and custodians every month.

“Units of AIFs held in the Aggregate Escrow Demat Account can be redeemed and proceeds shall be distributed to respective investors' bank accounts with a full audit trail of the same,” said the Sebi circular.

The market regulator noted that most of the schemes with more than Rs 500 crore corpus have created an International Securities Identification Number (ISIN), a global identification number mandatory for dematerialisation.

These funds have started crediting the units to the investors' accounts. However, AIFs have been asked to continue to reach out to investors to obtain their demat account details. Depositories have also been asked to assist throughout the process.