Sebi moves to standardise consent rules for AIFs

The regulator has proposed replacing the existing mix of two-thirds and 75% investor approval requirements with a single threshold of 75% consent by value of unit holders across AIF regulations wherever investor approval is mandated.

At present, rules mandate that certain material decisions relating to the governance and operations of an AIF, should be done only after obtaining requisite investor consent, with varying thresholds for different requirements.

They prescribe different approval thresholds for different matters.

However, they do not provide guidance on the manner or methodology for obtaining such consent.

Live Events

“Over time, based on supervisory experience and stakeholder interactions, it has been observed that while the existing framework provides flexibility and operational ease, certain conflict-prone transactions may not be uniformly captured for investor consideration due to the limited scope of entities covered under the current definition of ‘associate’. This may lead to situations where transactions involving comparable levels of conflict are treated differently, resulting in interpretational uncertainty,” Sebi said in a discussion paper on Tuesday.
Further, diverse market practices have emerged with respect to solicitation, voting methodologies, and treatment of non-responses.