The Securities Exchange Board of India, (SEBI) has issued a notification regarding a Consultation Paper on the direct plan for schemes of Alternative Investment Funds (AIFs) and trail model for distribution commission in AIF. The notification was issued on 3rd February, 2023.
The objective of this consultation paper is to seek comments/ inputs/ suggestions from all stakeholders on the following two proposals:
- direct plan for schemes of Alternative Investment Funds (AIFs) and
- trail model for distribution commission in AIF
The consultation paper proposes that AIFs must be mandated to offer the option of a Direct Plan for investors, entailing no distribution/ placement fee.
AIFs will have to ensure that any investor approaching an AIF through an intermediary, separately charging the investor a fee (such as an advisory or portfolio management fee), invests in the AIF via the direct plan route only.
Investors on-boarded via the direct plan will be provided for an adjusted higher number of units, taking into account the lower distribution charges applicable to them versus other investors. Thereby, all investors would continue to see the same Net Asset Value (NAV) on their unit holdings.
In the case of Category III AIFs, investors may be charged a placement fee/ distribution fee on a trial basis. In the case of Category, I AIFs and Category II AIFs, investors may also be charged on a trial basis, however, a certain higher amount of placement/ distribution fee (viz: one-third of the present value of the total distribution fee) may be paid upfront in the first year.
Comments are invited from the members of the public on the above issues in order to take into consideration the concern of various stakeholders while finalizing the proposals.
Comments may be sent to Shri Sanjay Singh Bhati, Deputy General Manager (ssbhati@sebi.gov.in) and Shri Kunwar Abhay Singh, Assistant Manager(kunwars@sebi.gov.in). These shall be sent latest by 18th February, 2023.
The comments should be sent by email in an MS Excel file in the prescribed format.
