An Alternative Investment Fund (AIF) is a privately pooled investment vehicle – set up as Trust, Company, Limited Liability Partnership (LLP) or a Body Corporate – collecting funds from investors of both, Indian & Foreign origin. In India, AIFs are regulated by SEBI & covered under Securities Exchange Board of India (Alternative Investment Funds) Regulations, 2012. We act as Trustee for AIFs set up as a Trust.
AIFs in India have opened a new avenue for Investors, of Indian & Foreign origin, providing diverse investment options in contrast to conventional modes provided by portfolio management services or mutual funds. In the past decade, more specifically after the release of SEBI Regulations for AIFs in India, AIFs have gained huge popularity amongst investors, the likes of which encompass Indian & Foreign corporates, PIOs, NRIs, OCIs, HNIs, etc., envisaging India as a golden investment opportunity. The fact that registered AIFs in India raised INR 212,979.40 Crores on a net cumulative basis till December 31, 2020, posits the preference avid Investors have for Alternative Investment Funds.
As a Trustee to an AIF Trust, we deliver the following services:
- Drafting & Vetting of Investment Documents as below:
- Trust Deed
- Contribution Agreement.
- Investment Management Agreement
- Private Placement Memorandum
- Start-to-end assistance in applying for registration with SEBI
- Assistance in PAN & TAN Application
- Appointing Auditors for verification & audit of Trust Accounts
- Continuous & effective liaising to & fro the Investment Manager
- Timely disclosures & compliance reporting to SEBI & Tax Authorities.
- Promptly addressing Investor grievances & queries
- Monitoring compliance of AIF & Investment Manager with terms of PPM.
- Opening & Managing:
- Bank Accounts
- Custodian Account
- Depository Account
Benefit to Investment Manager
- Enabling allocation of crucial resources – time, money & manpower, for core business activities.
- Expeditious application for registration with SEBI & Trust’s PAN & TAN.
- Execution & Registration of Trust Deed
- Hassle-free opening & management of accounts with Banks & Depositories
- Reminders for ensuring timely reporting to SEBI & Investors
- Proactive follow-up for adherence with extant regulations & terms as stipulated in Investment Documents.
- Single point of contact for communication to & fro with Investors.
What is a Trust?
A trust is a relationship in which:
A person or entity (the Trustee) holds legal title to certain property (the Trust Property) but is bound by a fiduciary duty to exercise that legal control for the benefit of one or more individuals or organizations (the Beneficiary), who hold ‘beneficial’ title. Such beneficiaries may be limited to the family members under a family trust / private trust. A trust is usually governed by the terms of the executed trust instrument (the Trust Deed) and the applicable law of the land. The entity (one or more individuals, a partnership, or a corporation) that creates a trust is called the Grantor/Settlor.
Private trusts can be classified based on various factors:
- Revocable Trust vs. Irrevocable Trust: Revocable trusts can be altered
or terminated, while irrevocable trusts cannot.
- Discretionary Trust vs. Specific Trust: Discretionary trusts grant the trustee
discretion in distributing income/assets, while specific trusts have fixed
Benefits a Private TrustBenefit to Investment Manager
- In the Event of a Personal Dispute assets of the trusts are not attached
- The Tax Structure of the Trust is most Beneficial as compared to individual
- Succession Planning works well under Tax Structure as Compared to nominating individual as a Nominee.
The key responsibilities of a trustee in a Private trust include-
- Administration: The corporate trustee handles the day-to-day administrative tasks of the trust, such as record-keeping,
asset management, and compliance with legal and regulatory requirements.
- Fiduciary duty: The corporate trustee has a fiduciary duty to act in the best interests of the beneficiaries, ensuring that the
trust’s assets are managed prudently and in accordance with the trust’s terms
- Distribution of income and assets:The corporate trustee is responsible for distributing income and assets from the trust to
the beneficiaries according tothe terms of the trust document. They ensure that distributions are made in a fair and equitable manner.
- Objective decision-making:As a neutral third party, a corporate trustee can make impartial decisions, avoiding conflicts of
interest that may arise when family members serve as trustees.
Role of Corporate Trustee in Private Trust
- The role of a corporate trustee in a private trust is to act as a professional entity responsible for managing and administering the trust on behalf of the beneficiaries. It is advisable to opt for corporate trustee for family trust as it provide benefits of corporate with long term sustainability and corporate governance. When selecting a corporate trustee, consider factors such as their reputation, financial stability, range of services offered, fee structure, and communication and responsiveness.