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June 19, 2024
PI Global Investments
Alternative Investments

Corporate Fund Governance for Alternative Investments

The progress of a fund management regime can only be validated by the addition of newer sectors and the balancing of the diverse needs of varied stakeholders (Campanella 2018). The Securities and Exchange Board of India (SEBI) has been making concerted efforts to deepen the Indian alternative fund management regime by allowing the setting up of special situations and distressed assets fund as an alternative investment fund (AIF) (SEBI 2022). However, global precedents suggest that robust corporate fund governance controls and effective accountability of managerial liability play a critical role in becoming asset management hubs (Holler 2012).

The Indian fund management regime is cut across diverse investment products like mutual funds, AIFs, collective investment schemes (CIS), real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) with separate regulatory standards applicable to each. The article highlights that such a fragmented fund management regime coupled with a lack of governance standards from the standpoint of fund management and managerial liability acts as a hindrance towards the development of the Indian asset management industry. Structural reforms that can be incor­porated within the SEBI (Alternative Investment Funds) Regulations, 2012 aimed towards increasing accessibility of AIFs to newer investment avenues are suggested while also strengthening fund governance practices.

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