AIFs Get SEBI's Clarity On Valuation Of Investment Portfolios

The Securities and Exchange Board of India on Thursday announced that the AIF associations will be responsible for setting valuation rules, specifically for securities that are not thinly traded or non-traded.

Although these valuation changes are significant, they will not be considered "material changes." This means that while AIFs must communicate any adjustments to their valuation methodologies to investors, these changes won't require additional approvals.

Furthermore, SEBI has mandated that independent valuers involved in these assessments must be registered with the Insolvency and Bankruptcy Board of India. These valuers must also have relevant qualifications, including membership in professional organisations like the Institute of Chartered Accountants of India or the CFA Institute.

The revisions follow the amendment of SEBI's previous Alternative Investment Funds Regulations in 2023. 

The regulator has said that the changes must be endorsed by industry associations representing at least 33% of SEBI-registered AIFs. Additionally, AIFs have an extended timeline of seven months to report valuations based on audited data from investor companies, up from six months. 

These updates are to take effect immediately and aim to protect investor interests while fostering the orderly growth of India’s securities markets.