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NISM Series XIX-D study materials
NISM Series XIX-D study resources

NISM Series XIX-D: Legal and regulatory environment for AIF managers

NISM Series XIX-D · Work through your exam, one topic at a time.

All guide sections

Legal and regulatory environment for AIF managers

Managers work within overlapping regimes. This domain tests who approves what, what the placement memorandum must disclose, and where AIF rules end and company law, FEMA or tax begins.

The core rulebook

  • The SEBI Act, 1992 supplies SEBI's powers; the AIF Regulations, 2012 and circulars govern registration, scheme launch and conduct, with inspection and penalty powers.
  • Registration requires a fit-and-proper applicant, adequate infrastructure, and a principal officer plus key personnel with relevant experience.
  • The manager must be a separate legal entity from the fund; a trust structure also needs a trustee.
  • Private placement memorandum (PPM) must be filed with SEBI at least 30 days before scheme launch, with material changes intimated to investors. It discloses strategy, fees and expenses, risk factors, conflicts, valuation policy, key persons, tenure and investor rights.
  • Private placement only: no public advertisement or solicitation.

Neighbouring laws

  • Companies Act private-placement rules where a company vehicle is used; PMLA/KYC for every investor; SEBI insider-trading norms when dealing in listed securities.
  • FEMA conditions for foreign investment and downstream investment; tax: Category I and II AIFs are investment funds under Section 115UB, with pass-through for income other than business income, which is taxed at fund level.
  • Prior SEBI approval for a change in control of the fund or manager; other material changes need intimation.

Worked example

A manager files its PPM on 1 March and opens the scheme on 20 March. The 30-day window is not met, so the launch must be deferred; a revised filing does not cure it retrospectively. If the manager then advertises the scheme in a newspaper, that is public solicitation even though the minimum ticket is Rs 1 crore.

Traps

Treating the PPM as a Companies Act prospectus; assuming every PPM change needs fresh approval (material changes and specified events do); forgetting FEMA and tax duties sit alongside SEBI registration; believing a side letter can promise returns.