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SEBI, in its recent circular, has extended the reporting timeline for AIFs in which AIFs cannot give priority to any class of investors from February 28, 2025 to March 31, 2025.
According to SEBI norms, AIFs will have to give rights to AIF investors on the basis of pro-rata and pari-passu rights to their commitment in the scheme.
‘Pro rata’ means in proportion to one's investment. This means that the investors receive distributions, returns, or bear losses based on the percentage of capital they have contributed to the fund.
On the other hand, ‘Pari passu’ means equal treatment among a particular class of investors. This means that the investors within the same category (e.g., senior investors, preferred investors, or common investors) receive equal rights and are treated on the same footing regarding distributions, voting rights, and liquidation preferences.
SEBI took the decision after the industry representatives sought more time to comply with the requirements.
