The Securities and Exchange Board of India (SEBI) on Friday released a draft circular seeking public feedback on the operational aspects of maintaining pro-rata and pari-passu rights for investors in Alternative Investment Funds (AIFs). The proposed framework aims to bring clarity and uniformity to how fund proceeds are distributed and how investor rights are calculated within different types of AIF structures. Advertisement

In simple terms, pro-rata means that investors share profits or proceeds in proportion to their investment, while pari-passu implies that all investors are treated equally, with none enjoying preferential treatment. SEBI has proposed that for closed-ended AIF schemes, investor rights during the distribution of proceeds should be determined either based on their total

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