SEBI has been steadily streamlining governance, reporting and compliance vis-à-vis the AIFs over a period of time starting with standardization of the PPMs, PPM audits and the standardization of performance benchmarking for AIFs etc. The eligibility criteria for investment managers will further ensure that the investment management team of the AIF has a relevant, diverse skillset for investment as well as asset management.
The roles and responsibilities of investment committees varied from one AIF to another. These amendments will ensure that the member of the investment committee if appointed, will have equal skin in the game while evaluating recommendations of the investment manager providing clarity on their role and responsibilities. Further, in cases where investment committee has non-residents as members, the role played by the investment committee would also require an evaluation from the perspective of Indian exchange control regulations in terms of the ‘control’ status for the investment manager. These provisions could also entail a few conflict of interest situations wherein representatives of large/anchor investors can influence investment decision making. The composition of the investment committee would require proper evaluation of the above aspects.