SEBI prescribes a detailed framework for ‘Special Situation Funds’ as a sub-category under Category I AIFs
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- Last Updated on 29 January, 2022
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Circular no. SEBI/HO/IMD-I/DF6/P/CIR/2022/009, Dated: 27.01.2022
The SEBI had introduced the concept of Special Situation Funds on 24/01/2022. Now, SEBI has prescribed a detailed framework for Special Situation Funds (SSFs). Like minimum corpus requirement, Minimum value of investment to be accepted from investors, eligibility requirement to act as resolution applicant under IBC. Further, the detailed framework concerning SSF acquiring a stressed loan in terms of clause 58 of RBI Master Direction has also been prescribed.
Under the framework, each scheme of SSF shall have a corpus of at least one hundred crore rupees.
SSF shall accept an investment of value not less than ten crore rupees from an investor. In the case of an accredited investor, the SSF shall accept an investment of value not less than five crore rupees. Further, in the case of investors who are employees or directors of the SSF or employees or directors of the manager of the SSF, the minimum value of investment shall be twenty-five lakh rupees.
Stressed loans acquired by SSF in terms of clause 58 of the RBI Master Direction shall be subject to a minimum lock-in period of six months. The lock-in period shall not be applicable in case of recovery of the stressed loan from the borrower.
SSF acquiring stressed loans in terms of the RBI Master Direction shall comply with the same initial and continuous due diligence requirements for its investors, as those mandated by the Reserve Bank of India for investors in Asset Reconstruction Companies.
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