Sebi releases framework for entering unliquidated assets of AIFs into dissolution period

Before seeking the consent of the investors to enter the assets into dissolution period, the fund or the manager must disclose the following to the investors.

1.The proposed tenure of the Dissolution Period, details of unliquidated investments, value recognition of the unliquidated investments for reporting to Performance Benchmarking Agencies, etc.

2.An indicative range of bid value, along with the valuation of the unliquidated investments carried out by two independent valuers.

Before the expiry of the liquidation period, the AIF / manager should intimate Sebi about obtaining the investor consent and the investors’ decision to enter into Dissolution Period.

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The circular also gave directions on the options that need to be given to dissenting investors and how performance of the fund's manager should be captured in various scenarios.

If the scheme of the AIF fails to sell the unliquidated investments during the Dissolution Period, such investments shall be mandatorily distributed in specie to the investors. It is clarified that no further extension or Liquidation Period shall be available to these schemes after the expiry of Dissolution Period, said the circular.