Sebi Proposes Easier Exit Norms for AIFs, Allows Fund Retention Beyond Scheme Life

• Sebi proposes allowing Alternative Investment Funds (AIFs) to retain limited funds beyond their scheme life to streamline the winding-up process and facilitate registration surrender.
• The move aims to address challenges faced by AIFs in achieving a nil bank balance due to residual operational expenses and liabilities that crystallize late.
• AIFs would be permitted to retain liquidation proceeds for operational expenses, which must be substantiated with invoices or consistent with previous year's expenses.
• The proposed duration for fund retention should not exceed three years, and AIFs must demonstrate the necessity of retaining funds.
• Sebi also suggests an 'inoperative' status for AIFs with no active investment activity but potential future inflows, requiring proportionate regulatory compliance and 75% investor consent for contingent liabilities.