The Securities Exchange Board of India (SEBI) has made the manager and key management personnel of the Alternative Investment Fund (AIF) responsible for appointing an ‘independent valuer’ of assets and ascertaining true and fair valuation of the investments of AIF schemes.
Requirements for Independent Valuer:
i.The independent valuer should have at least three years of experience in the valuation of unlisted securities and should not be associated with the manager, sponsor or trustee of the AIF.
ii.The independent valuer should be registered with the Insolvency and Bankruptcy Board of India and have membership of the Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India or CFA Institute.
iii.It should be a holding company or subsidiary of a Credit Rating Agency registered with SEBI.
iv.AIFs are directed to report valuation based on audited data of investee companies (as on March 31) to performance benchmarking agencies in six months.
Directions for AIF under Valuation:
i.If the established policies and procedures of valuation of AIF portfolio assets do not result in fair and appropriate valuation, the manager is directed to value the assets or securities at a fair value and document the rationale for such deviation.
ii.The manager should inform the investors the reasons, in case of a deviation of over 20% between two consecutive valuations or a deviation of over 33% in a financial year.
iii.Valuation of securities not covered by SEBI norms should be carried out as per valuation guidelines endorsed by any AIF industry association, which has a membership of at least 33 % of SEBI-registered AIFs.
iv.The eligible AIF industry association are directed to endorse appropriate valuation guidelines after taking into account the recommendations of the Alternative Investment Policy Advisory Committee of SEBI.
Conditions for Liquidation Scheme:
i.Condition: As per the SEBI’s direction, an AIF has to obtain the consent of 75% of investors by value for launching ‘Liquidation Scheme’ during the liquidation period of one year of the original scheme.
ii.What is Liquidation scheme?
It is a close-ended scheme launched by an AIF only for the purpose of liquidating the unliquidated investments purchased from its scheme, whose tenure has expired.
iii.AIFs are already allowed to deal with investments of their schemes which are not sold due to lack of liquidity during the winding-up process, by either selling such investments to a new scheme of the same AIF or distributing such unliquidated investments.
-SEBI barred Eros, promoters & CEO from the securities market
In June 22, 2023, the SEBI has barred Eros International Media Limited, its promoters and chief executive officer (CEO) Pradeep Kumar Dwivedi from the securities market until further notice over alleged breach of trade practice regulations.
- The Vice Chairman and Managing Director Sunil Arjan Lulla was also barred by SEBI from holding any directorial position in any listed company, including Eros International or its subsidiaries.
Background:
i.In fiscal 2019-20, Eros International Media made a provision towards impairment on ‘content advances’, ‘film rights’, and certain goodwill amounting to Rs 1553.52 crore.
ii.In FY20 the company also wrote off trade receivables amounting to Rs 519.98 crore. The National Stock Exchange (NSE) examined the statements and forwarded a preliminary investigation report (PER) to SEBI.
iii.Thus SEBI initiated a detailed investigation into the affairs of the Company and the investigation is currently in progress and a forensic auditor has also been appointed to conduct an examination into the books of accounts of the Company.
About Securities Exchange Board of India(SEBI)
Headquarters -Mumbai, Maharastra
Establishment – 12 April 1992
Chairperson -Madhabi Puri Buch
