NISM Series XIX-D key terms

A privately pooled investment vehicle that collects funds from investors for investing under a defined policy, but is not registered as a mutual fund, collective investment scheme, or other regulated retail vehicle.

AIFs that invest in start-ups, early-stage ventures, SMEs, infrastructure, or other sectors the regulator considers economically or socially desirable, including venture capital, angel, and infrastructure funds.

AIFs that do not fall in Category I or III and do not use leverage other than for operational needs; typically private equity funds and debt funds investing in unlisted securities.

A Category I AIF that invests primarily in unlisted equity of start-ups and early-stage companies, taking high risk in exchange for potential growth and eventual exit gains.

A Category I AIF that pools money to invest in early-stage start-ups, often through angel investor groups, with relaxed minimum investment thresholds for accredited angel investors.

A Category II AIF that invests in unlisted equity or equity-linked securities of companies, often taking significant stakes and seeking control or influence over management before exit.

A Category II AIF that invests primarily in debt and debt-related instruments of unlisted companies, generating returns through interest and structured credit arrangements rather than equity appreciation.

The person or entity that establishes an AIF, appoints its manager, and typically contributes seed capital or provides operational support to the fund.

The entity responsible for the investment decisions, day-to-day operations, and regulatory compliance of an AIF, requiring registration with the regulator for the relevant category.

Where an AIF is set up as a trust, the person holding legal title to fund assets and overseeing the manager to ensure operations comply with the trust deed and regulations.

The constitutive document of a trust-form AIF that sets out the fund's objectives, investment strategy, rights of investors, and duties of the trustee and manager.

The disclosure document describing an AIF scheme's investment objective, strategy, risks, fees, and terms, which must be filed with the regulator before launch.

A private document used to market an AIF to prospective investors, containing details of the fund, its strategy, management, fees, and risk factors without being a public offer.

The sale of AIF units to a limited set of identified investors through direct negotiation rather than a public offering, subject to minimum investment and investor-count limits.

The smallest amount an investor may commit to an AIF, set by regulation to restrict participation to investors able to bear the risks of alternative investments.

An investor meeting specified financial thresholds or sophistication criteria, allowed relaxed rules such as lower minimum commitments or participation in certain schemes.

Initial capital contributed by the sponsor or manager to establish an AIF, aligning their interests with investors and covering early operating costs.

The use of borrowed funds or derivative positions to increase exposure beyond the capital committed, subject to regulatory limits that differ by AIF category.

The return of investor capital by the fund, typically limited or restricted for close-ended Category I and II AIFs until the fund winds up or makes distributions.

An AIF with a fixed tenure and no continuous redemption window, where investors' capital is locked in until the fund exits investments and winds up.

The planned method for a fund to realise returns on an investment, such as an IPO, strategic sale, secondary sale, or promoter buyback.

A capital call requiring investors to pay in a portion of their committed capital when the manager identifies an investment or needs funds for expenses.

The total amount an investor has contractually agreed to contribute to a fund over its life, which is drawn down in stages as investments are made.

A formal notice from the manager to investors requesting payment of part of their committed capital, usually with a specified due date and purpose.

A minimum return threshold the fund must achieve before the manager receives performance fees, protecting investors from paying incentive fees on sub-par returns.

A share of the fund's profits paid to the manager as an incentive, typically calculated after returning capital and meeting a hurdle rate.

A fee charged by the manager based on investment returns, designed to align manager incentives with investor outcomes and usually subject to a hurdle.

The legal obligation of the manager and trustee to act in the best interests of investors, avoid conflicts of interest, and exercise due care and skill.

A situation where the manager's or sponsor's own interests may diverge from those of investors, requiring disclosure, mitigation, or avoidance under governance rules.

A transaction between the AIF and its manager, sponsor, associates, or their affiliates, subject to disclosure and approval requirements to prevent unfair dealing.

The process of identifying and verifying investors' identities and beneficial ownership to prevent money laundering and terrorist financing.

The set of laws, procedures, and controls a fund and manager must maintain to detect, prevent, and report the movement of illicit funds.

The natural person who ultimately owns or controls an investor or a significant interest in a fund, identified through KYC and ownership verification.

The periodic determination of the fair value of a fund's investments, required for reporting to investors and for calculating fees accurately.

The value of the fund's assets minus its liabilities, used to measure investor holdings, compute fees, and report performance.

An entity that safekeeps the fund's securities and cash, settles trades, and provides independent oversight of assets, where required by regulation or fund structure.

The framework of policies, limits, and monitoring processes a manager uses to identify, measure, and control investment, operational, and compliance risks.

The designated person responsible for monitoring the manager's adherence to regulations, internal policies, and reporting obligations to the regulator.

The regulatory process by which an AIF or manager applies for registration, submits required disclosures, and receives approval to operate legally.

An arrangement where investors or the manager invest alongside the AIF in the same asset, often subject to allocation and conflict-of-interest safeguards.