What laws regulate the formation and operation of Alternative Investment Funds?

Registration Of Alternative investment funds ("AIFs") is regulated in India by the Securities and Exchange Board of India ("SEBI"), the country's securities market regulator, in accordance with the provisions of SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") and various notifications issued thereunder from time to time.The AIF Regulations permits the formation of an AIF as a trust, a limited liability partnership (“LLP”), or a corporation. As a result, in addition to the AIF Regulations, the AIF registration will be subject to the following, depending on the type of establishment:a. The provisions of the Indian Trusts Act, 1882 (“Trusts Act”) apply to private trusts;b. The Limited Liability Partnership Act, 2008 (“LLP Act”) applies to LLPs; andc. The Businesses Act, 2013 (“Companies Act”) applies to companies.2. Are Alternative Investment Fund managers or advisers required to be licensed, authorised, or regulated by a regulatory body?Alternative Investment Fund Registration process is governed by SEBI as per the provisions of AIF Regulations as explained in Question 3 below. SEBI regulates investment advisory and portfolio management activities in India under the SEBI (Investment Advisers) Regulations, 2013 (“IA Regulations”) and the SEBI (Portfolio Managers) Regulations, 2020 (“PMS Regulations”); however, the investment manager entity of an AIF is not required to register under these regulations and is instead governed by the AIF's existing provisions.The AIF Regulations require the investment manager entity ("Manager") to have a key investment team with at least one key personnel with at least five years of experience:a. in advising or managing pools of capital; in fund, asset, wealth, or portfolio management; orb. in the business of buying, selling, and dealing in securities or other financial assets, and having a relevant professional qualification (in finance).SEBI has the authority to inspect, request information from, and take disciplinary action against an AIF's Manager Company, among other things. Given the Manager's position in relation to an AIF and the monitoring that SEBI exerts on such a Manager, the Manager is thought to be Even though it is not individually registered/licensed with SEBI, it is controlled by SEBI under the AIF Regulations.3. Is it necessary for Alternative Investment Funds to be licenced, authorised, or regulated by a regulatory body?Yes, under the AIF Regulations, an entity that wishes to carry on the business activities as an AIF must first obtain an AIF Registration Online from SEBI. In general, as the AIF Regulations allow an AIF to be established as a trust, LLP, or corporation, in addition to SEBI, the process for AIF Registration may be subject to extra licencing as follows:

• There is no specific licencing or regulation for private trusts established under the Trust Acts; nonetheless, the document of the Trust Deed must be registered, as explained in question 5 below; and
• Incorporation under the Companies Act and the LLP Act, respectively, and regulation by the applicable Registrar of Companies (“RoC”) in the corresponding place of incorporation for companies and LLPs.

4. Is there a distinction between open-ended and closed-ended Alternative Investment Funds (or any other distinction between different types of funds or strategies (for example, private equity vs. hedge) under the regulatory regime? and, if so, in what way?An AIF can be registered in one of three categories, according to the AIF Regulations:a. Venture capital funds (including angel funds), small and medium enterprise funds, social venture funds, and infrastructure funds are all examples of Category I AIFs.b. AIFs that do not fall under either Category I or Category III, such as private equity funds, debt funds, real estate funds, and other residual funds, are classified as Category II AIFs.c. Hedge funds, public market funds, funds trading with the goal of making short-term returns, and other similar funds fall under this Category III.The AIF's chosen category will establish the investing guidelines, diversification criteria, and other regulations that apply to it. Additionally, Category I and Category II AIFs must be closed-ended and have a minimum term of three years; however, a Category III AIF can be open-ended or closed-ended.5.  What is the authorization procedure/ AIF registration process, and how long does it take on average?STEP1: Prior to applying for Alternate Investment fund registration, the vehicle that will apply for AIF Registration Certificate must be established. Depending on the structure chosen, this may entail the following:a. appointing a trustee for a private trust by entering into an instrument of trust and registering the instrument in accordance with the terms of the Registration Act, 1908; andb. incorporating companies and LLPs in accordance with the provisions of the Companies Act and the LLP Act, respectively.For both businesses and LLPs, this could take three to six weeks.STEP 2: To apply for AIF registration, the applicant must first obtain a Permanent Account Number (for tax purposes) for the entity applying for AIF Registration and submit an application fee for AIF Registration through the SEBI intermediary portal. SEBI would then grant access to the portal upon receipt of the application fee, and the proposed AIF would be required to complete the application there by submitting all of the required information, declarations, and documents as prescribed in the First Schedule to the AIF Regulations, which, among other things, include:a) KYC and financial documentation relating to the AIF, its Manager, its sponsor, and so on;b) the private placement memorandum (“PPM”) and the AIF's constitutive instrument, where applicable; andc) disciplinary history declarations.STEP 3: SEBI examines the information given in the application to see if the proposed AIF and its Manager/Sponsor meet the eligibility criteria and other conditions set forth in the AIF Regulations, and may request more information if necessary.STEP 4: If SEBI is satisfied that the proposed AIF meets the required requirements established under the AIF Regulation, the final approval usually takes two to three months.Following approval, the proposed AIF must pay the registration fee set forth in the Second Schedule of the AIF Regulations, in exchange for a certificate of registration from SEBI.An AIF may create many schemes, each with its own investing objective/strategy, investor base, underlying investments, and so on.  https://www.corpzo.com/alternative-investment-fund-operations-and-legal-regime