MUMBAI, April 29 (Reuters) – India’s capital markets
regulator imposed rules on alternative investment funds in May
2012.
The Securities Exchange Board of India organises alternative
investment funds – such as venture capital, social venture
funds, small and medium enterprise funds and hedge funds – under
three categories.
Hedge funds fall under a category that allows them to
undertake leverage and employ complex trading strategies.
Below are some of the rules set for this category:
* Such a fund must manage assets with a total value of at
least 200 million rupees ($3.69 million).
* An individual investor must contribute at least 10 million
rupees to the fund.
* The manager/sponsor must own a stake of 5 percent of the
assets under management, or 100 million rupees, whichever is
lower.
* No fund can have more than 1,000 investors.
* Funds may be open-ended or close-ended.
* Funds cannot invest more than 10 percent of assets in one
company.
* Funds must disclose information regarding the overall
level of leverage.
* Foreign funds can apply for licenses, provided they
establish or incorporate a fund locally.
* Funds can raise money from all investors, including
foreign investors.
($1 = 54.1900 Indian rupees)
(Reporting by Subhadip Sircar; Editing by Ryan Woo)
