Sebi asks AIF to provide option of direct plans

The regulator has also asked the AIFs to disclose distribution fees to the investors while on-boarding them.

Also, for category III AIFs, which invest in listed securities, the distribution fee needs to be charged on a trail basis. These measures have been brought in to enhance the transparency and curb misselling, Sebi circular added.

“Category III AIFs shall charge distribution fee/ placement fee, if any, to investors only on equal trail basis i.e. no upfront distribution fee/ placement fee shall be charged by Category III AIFs directly or indirectly to their investors,” said the Sebi circular.

In case of category I&II AIFs, Sebi said, up to one third of the total distribution fee may be paid to distributors upfront basis while remaining shall be paid on trail basis.