Markets regulator, SEBI on Friday came out with a draft circular to clarify operational aspects of maintaining pro-rata and pari-passu rights of investors in alternative investment funds (AIFs).

Pro-rata generally means investors share profits or returns in proportion to their investment, while pari-passu means all investors are treated equally, with no one getting special preference.

In its draft, SEBI proposed that for closed-ended AIF schemes, investor rights should be based on either their total commitment or undrawn commitment while distributing investment proceeds.

"The investors of a scheme of an AIF shall have rights in distribution of proceeds of an investment pro-rata to their contribution to such investment; or, pro-rata to their contribution to such investment on a time weig

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