An Alternative Investment Fund (AIF) proposes to appoint a custodian which is an associate of its sponsor. What are the terms and conditions imposed by the Securities and Exchange Board of India (Alternative Investment F

SEBI vide its SEBI (Alternative Investment Fund) (Amendment) Regulations, 2024 inserted Regulation 20 (11A) which provides that a Custodian which is an associate of the Sponsor or Manager of an Alternative Investment Fund may act as a custodian for that Alternative Investment Fund only when all the following conditions are met: (i) The Sponsor or Manager has a net worth of at least twenty thousand crore rupees at all points of time; (ii) 50% or more of the directors of the Custodian do not represent the interest of the Sponsor or Manager or their associates; (iii) The Custodian and the Sponsor or Manager of the Alternative Investment Fund are not subsidiaries of each other, (iv) The Custodian and the Sponsor or Manager of the Alternative Investment Fund do not have common directors; and (v) The Custodian and the Manager of the Alternative Investment Fund sign an undertaking that they shall act independently of each other in their dealings of the schemes of the Alternative Investment Fund.