FAQs
Frequently Asked Questions Items
What is an Alternative Investment Fund (AIF) and how is it different from traditional investments?
“Alternative Investment Fund” means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which is a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors;
What are the categories of AIF?
| Category - I | Category - II | Category - III |
|---|---|---|
“Category I Alternative Investment Fund” means which invests in:
AIFs which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions. | “Category II Alternative Investment Fund” means:
for which no specific incentives or concessions are given by the government or any other Regulator shall be included. It covers AIF which does not fall in Category I and III and which does not undertake leverage or borrowing other than as permitted in the SEBI regulations; | “Category III Alternative Investment Fund” means which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Alternative Investment Funds such as:
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What is the minimum investment required in an AIF?
The minimum investment amount in an AIF is ₹1 crore as prescribed under SEBI (Alternative Investment Funds) Regulations. However, accredited investors, as recognized by SEBI, are permitted to invest below ₹1 crore, subject to the terms of the fund documents and applicable regulatory conditions.
Who can invest?
- High net worth individuals
- Corporates
- Financial Institutions
- Institutional Investors
- Banks
- Insurance Companies
- Hindu Undivided Family
- Partnerships
- Limited Liability Partnerships
- Private Trust
- or any other eligible resident Indian investors who are eligible to invest in the Fund
- The Fund may accept investments from foreign investors (including Non-Resident Indians ['NRIs']) and other permissible investors under Applicable Laws.
Who is an Accredited Investor and what are the benefits?
“Accredited Investor” (AI) means a person who has obtained an Accreditation Certificate from a SEBI-recognized accreditation agency as per SEBI (AIF) Regulations, 2012.
Accredited Investors are eligible to avail certain benefits, which typically include: Flexibility in Minimum Investment Amount: AIs may be offered a lower minimum investment amount for specific investment products compared to the standard thresholds applicable to non-accredited investors.
Can NRIs invest with Finavenue Growth Fund?
Yes, NRIs may invest with the Fund.
Who can act as Joint Contributors?
The following can act as joint Contributors (maximum up to 2 (two)) wherein each such Contributor contributes, and the aggregate sum invested by joint Contributor collectively is at least INR 1,00,00,000 (Indian Rupees One Crore):
- a Contributor and his/her spouse who is also an Eligible Person,
- a Contributor and his/her parent who is also an Eligible Person,
- a Contributor and his/her daughter/son who is also an Eligible Person.
Without prejudice to the above, in case of any other Contributors acting as joint Contributors, for every Contributor, the minimum investment of INR 1,00,00,000 (Indian Rupees One Crore) or any other minimum amount as provided in the Regulations, shall apply.
Who regulates AIFs?
AIFs are regulated by Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as amended/modified and reinstated from time to time and including the circulars/notifications issued pursuant thereto.
What is Finavenue Capital Trust?
'Finavenue Capital Trust' ("Trust") is organised as a contributory determinate trust, settled in India by the Settlor under the provisions of the Indian Trusts Act, 1882, pursuant to an Indenture entered into between the Settlor and the Trustee and registered under the provisions of Registration Act, 1908.
The Trust is registered with SEBI as a Category III AIF bearing registration no. IN/AIF3/23-24/1293.
What are the schemes of Finavenue Capital Trust?
'Finavenue Growth Fund', is an open-ended scheme of Finavenue Capital Trust which is registered with SEBI as a Category III AIF under the Regulations. The investment objective of the Fund is to generate long term capital appreciation by investing inter alia in a portfolio of listed equity and equity related securities and other permissible securities/products in accordance with the Regulations and the Fund Documents.
What are Fund Documents?
Fund Documents means the Private Placement Memorandum, the Indenture of Trust, the Investment Management Agreement between the Trustee and the Investment Manager, the Contribution Agreement and any other document that may be declared as Fund Document by the Investment Manager, as originally executed and amended, modified, supplemented or restated from time to time, together with the respective annexure, schedules and exhibits, if any.
How the Investments will be allocated?
The Fund shall be sector agnostic with investments diversified across sectors as permitted under the Regulations and the Fund Documents.
What would be the term of the fund?
The Fund is open-ended with no definite tenure and shall terminate in accordance with the terms of the Fund Documents.
What are the different types of Classes of Units issued by an Finavenue Growth Fund’?
Detailed information on all classes is provided in the Private Placement Memorandum (PPM).
What is a Private Placement Memorandum (PPM)?
Means the document and all supplements thereto inviting offers for Capital Commitments from prospective Investors on a private placement basis in accordance with the Regulations and containing the requisite details as required under the Regulations.
What is a Contribution Agreement (CA)?
A CA means the contribution agreement executed by and between the Trustee, the Investment Manager, and each Contributor primarily to regulate the acceptance and disbursal of Capital Contributions and the distribution of income, gains and proceeds thereon.
Contributor/Investor/Beneficiary:
Means the Eligible Persons signatory to the Contribution Agreements who make contributions to the Fund in accordance with the Fund Documents.
General KYC Information/clarities for Investor.
- CML – Client Master List
- The CML contains the Demat account details and is required to credit the units to the same Demat account.
- Units credit
- The units will be credited after the allotment is completed, and the corporate action process will take around 8–9 days.
- updated KRA
- KRA is mandatory for every investor because the RTA verifies all details through KRA, and investor information is directly fetched from it. We prefer to proceed with updated KRA, as all details are fetched and verified through it.
- Time to update
KRA - Updating the KRA will take around 7–8 days after submitting the CERSAI application, provided all information is correct.
- Signature copy
- A signature copy is required to upload on the portal and for the RTA to verify the documents to complete the process.
- form 10F for (NRI)
- Form 10F is collected during the onboarding of NRI investors as it is required by the RTA at the time of redemption.
- TIN for document proof (NRI)
- TIN is required for NRO accounts to verify tax status.
What is the fee structure?
Detailed information on all fees and expenses applicable to each class is fully disclosed in the Private Placement Memorandum (PPM).
What is a Drawdown Notice?
A Drawdown Notice is a formal issuance of notice to contributors to make Capital Contributions.
Tax implications of investor invested in Category III AIF.
With respect to the tax implications, Finavenue Growth Fund is registered with SEBI as a Category III Alternative Investment Fund. As per the provisions of the Income-tax Act, 1961, Category III AIFs do not enjoy pass-through status. Accordingly, the Fund is assessed as a taxable entity, and all income earned by the Fund is subject to tax at the Fund (trust) level.
Consequently, taxes are paid by the Fund prior to distribution, and only post-tax income is distributed to the contributors. Contributors are not required to separately discharge tax on such income, nor is tax deducted at source on the distributions made by the Fund.
What are the key risks associated with investing in a Category III AIF?
Prospective investors are advised to carefully review the detailed risk factors set out in the Private Placement Memorandum (PPM) and to read all disclosures in the PPM in their entirety before making any investment decision. An investment in the Fund involves certain significant investment risks, including loss of a prospective investor's entire investment.