Private Placement Memorandum (PPM) is the primary document in which all the material information about the AIF is disclosed to the prospective investors for the purpose of raising funds through private placement by such AIF’s. Such PPM is also filed with SEBI prior to the launch of the Scheme.

Template for PPM- To ensure minimum standard of disclosure is made available in the PPM, SEBI has also prescribed a template for the PPM, providing certain minimum level of information in a simple and comparable format.

PPM Audit

As per Regulation 28 of SEBI (AIF) Regulations, 2012 read with SEBI’s master circular dated July 31, 2023, it is mandatory for the AIFs to carry out an annual audit of compliance with the terms of PPM (“PPM Audit”)

To ensure uniform compliance standards and for ease of compliance reporting, SEBI vide its circular dated April 18, 2024 has prescribed the standard reporting format for PPM Audit Report applicable to all categories of AIF, which has been prepared in consultation with pilot Standard Setting Forum for AIFs (SFA).

Herein below are the gist of these circulars:

• Annual Audit of PPM- It’s mandatory for AIFs to carry out an annual audit of the compliances of the terms of PPM.
• Who shall carry out this annual audit – It shall be carried out either by an Internal/External auditor/legal professional.
• When this audit shall be carried out – It shall be carried out at the end of each financial year.
• Reporting of audit findings – The audit findings along with corrective steps, if any, shall be communicated to the Trustee or Board of Directors or Designated Partners of the AIF, Board of directors or Designated Partners of the Manager and SEBI, within 6 months from the end of the Financial Year.
• Exemptions – This audit requirement shall not apply to AIFs which have not raised any funds from their investors. Such AIFs shall submit a Certificate from a Chartered Accountant to the effect that no funds have been raised, within 6 months from the end of the Financial Year. It is to be noted that the requirement of annual audit is exempted for angel funds and Fund / Scheme where each investor commits to a minimum capital contribution of INR 700,000,000/- (Rupees Seventy crore).
• Standard Reporting format – The said reporting format will be hosted on the websites of the AIF Associations that are part of the SFA within 2 working days of the issuance of this circular.
• Submission of PPM Audit Report to SEBI – It shall be submitted to SEBI by AIFs, online on the SEBI Intermediary Portal (SI Portal) as per the aforesaid format.
• Effective date – This reporting requirement for PPM audit shall be effective for the reports to be filed for the Financial Year ending March 31,2024 onwards.

Click here to view circular

For any queries feel free to contact Anjali Aggarwal / anjali@indiacp.com / 011 4062 2230