TAILIEUCHUNG - INDIAN REGULATOR RELEASES NEW ALTERNATIVE INVESTMENT FUNDS REGULATIONS; OFFSHORE FUNDS UNAFFECTED

As reported in the financial statements of each AMC, fund expenses can be divided into management fees and administrative fees. Expense ratio is the ratio between total fund expenses to fund’s assets. Administrative or operating expense excluded management fees of AMCs managing large number of funds are considered to be constant. Thus, when management fee is excluded, fund expense ratio is lower. Fund expenses excluded management fees indicate fund operation efficiency. Management fees measures security selection skills of fund manager. In the other words, management fees paid to specialized equity fund manager exhibits superior fund performance observed in the. | Debevoise s Plimpton LLP D p Client Update INDIAN REGULATOR RELEASES NEW ALTERNATIVE INVESTMENT FUNDS REGULATIONS OFFSHORE FUNDS UNAFFECTED June 26 2012 To Our Clients and Friends Following recent trends in the world s advanced economies for increased regulation of alternative investment funds AIFs on May 21 2012 the Securities and Exchange Board of India SEBI issued the SEBI Alternative Investment Funds Regulations 2012 the AIF Regulations to provide a comprehensive framework for the regulation of AIFs in India. SEBI seems to have adopted many of the suggestions and comments it received from stakeholders when it released a draft of the AIF Regulations back in August 2011. The key points to note are as follows Offshore funds are not affected by the AIF Regulations. The AIF Regulations cover AIFs which are defined to include any fund established or incorporated in India that is a privately pooled investment vehicle which collects funds from investors Indian or foreign for investment in accordance with a defined strategy. The AIF Regulations will replace the SEBI Venture Capital Funds Regulations 1996 VCF Regulations . However funds registered as venture capital funds under the VCF Regulations shall continue to be regulated as such until they are wound up. Such funds will not be allowed to launch new funds or increase their total committed funds until they re-register under the AIF Regulations. All AIFs will be required to register with SEBI under one of three categories of AIFs based on investment strategy and various restrictions on raising capital and on investments have been imposed some applying to all categories of AIFs and some specific to each category. 7 The AIF Regulations may be found at http. LLwwws goiLmsLsbi datafattaehdocs TTTT 75247 96pdf New York Washington . London Paris Frankfurt Moscow Hong Kong Shanghai THE AIF REGULATIONS The Scope Do the AIF Regulations apply to you The AIF Regulations will regulate and require registration of all AIFs .

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