SEBI relaxes compliance requirement for performance benchmarking of AIFs

Markets regulator SEBI on Friday eased compliance requirements related to disclosure and compulsory performance benchmarking of alternative investment funds (AIFs).

As part of efforts to streamline disclosure standards, the regulator in February put in place mandatory performance benchmarking of AIFs.

"In light of market events due to the COVID-19 pandemic, the timeline for making available the first industry benchmark and AIF level performance versus benchmark reports, is extended till October 1, 2020," SEBI said in a circular.

Earlier, association of AIFs and benchmarking agencies were required to ensure that first industry benchmark and AIF level performance versus benchmark reports are to be available latest by July 1, 2020, for the performance up to September 30, 2019.

Under the framework, performance benchmarking needs to be done on a half-yearly basis based on the data as on September 30 and March 31 of each year.

Further, SEBI said any association of AIFs that represents at least 33 percent of the number of such funds have to notify one or more benchmarking agencies, with whom each AIF need to enter into an agreement for carrying out the benchmarking process.

Earlier, this requirement was for association of AIFs that represents at least 51 percent of the number of such funds.

In addition, SEBI has relaxed framework with regard to requirement of annual audit compliance in terms of private placement memorandum (PPM).

Under the guidelines, audit of compliance with terms of PPM needs to be conducted at the end of each financial year and the findings of audit along with corrective steps, if any, should be communicated to the trustee of board or designated partners of the AIF, board of the manager and SEBI within six months from the end of the financial year.

Further, the requirement of audit of compliance with terms of PPM would not apply to AIFs that have not raised any funds from their investors. However, such AIFs should submit a certificate from a chartered accountant to the effect that no funds have been raised, within six months from the end of the financial year.

For the financial year 2019-20, SEBI said these audit requirements will be fulfilled on or before December 31, 2020.