Key Points- SEBI's Circular Navigating Compliance: SEBI's Standardization of PPM Audit Reporting for Alternative Investment Funds


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SEBI has issued a circular (SEBI/HO/AFD/SEC-1/P/CIR/2024/22) regarding the standardization of the Private Placement Memorandum (PPM) Audit Report for Alternative Investment Funds (AIFs). This circular aims to ensure uniform compliance standards and ease of reporting for AIFs.


Key Points:

Annual Audit Requirement: AIFs must conduct an annual audit of compliance with the terms of the PPM as per SEBI (AIF) Regulations, 2012 and SEBI Master Circular SEBI/HO/AFD/PoD1/P/CIR/2023/130.


Standard Reporting Format: A standard reporting format for the PPM Audit Report has been developed in consultation with the Standard Setting Forum for AIFs (SFA) to streamline compliance reporting.


Availability of Reporting Format: The reporting format will be available on the websites of AIF Associations within two working days of the circular's issuance. These associations will assist AIFs in understanding reporting requirements and resolving any issues.


Submission of Reports: AIFs must submit PPM Audit Reports to SEBI online through the SEBI Intermediary Portal (SI Portal) using the prescribed format.


Optional Audit Sections: Certain sections of the PPM, such as 'Risk Factors', 'Legal, Regulatory and Tax Considerations', and 'Track Record of First Time Managers', are optional for audit. Additionally, 'Illustration of Fees and Expenses' and 'Glossary and Terms' are also optional.


Unchanged Provisions: All other provisions related to filing the PPM audit report specified in the Master Circular remain unchanged.


Applicability: The reporting requirement specified in the circular applies to PPM audit reports for the financial year ending March 31, 2024, and onwards.


Periodic Review: The reporting format will be periodically reviewed by the pilot SFA in consultation with SEBI to keep up with industry changes. Revised formats will be made available on association websites.


Legal Authority: The circular is issued under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect investors' interests and regulate the securities market.


Availability of Circular: The circular can be accessed on the SEBI website under the categories "Legal Framework" and "Circulars" under "Info for – Alternative Investment Funds".