SEBI Update: Direct plan for schemes of Alternative Investment Funds (AIFs) and trail model for distribution commission in AIFs.

SEBI vide its Circular dated 11^th April, 2023 issued for All Alternative Investment Funds (AIFs)

The circular states:

SEBI asked Alternative Investment Funds (AIFs) to provide the option of direct plan for their investors. Such plan, investors can participate in an AIF without having to pay any distribution fee or placement fee. SEBI has also asked the AIFs to disclose distribution fees to the investors while boarding them.

SEBI also added Category III AIFs shall charge distribution fee/placement fee, if any, to investors only on equal trail basis i.e. no upfront distribution fee/ placement fee shall be charged by Category III AIFs directly or indirectly to their investors.

In case of category I and II AIFs up to one third of the total distribution fee may be paid to distribution upfront basis while remaining shall be paid on trial basis.

These measures have been brought in to enhance the transparency and curb misselling.

This circular shall come into force with effect from 01^st May, 2023.

Link of the circular: 

https://www.sebi.gov.in/legal/circulars/apr-2023/direct-plan-for-schemes-of-alternative-investment-funds-aifs-and-trail-model-for-distribution-commission-in-aifs_69996.html