Market regulator SEBI clarified on Tuesday that employees of alternative investment funds (AIF) can invest in the schemes of AIFs.

In a clarification to SBI Funds Management Pvt Ltd, which sought an informal guidance whether its employees can invest in its AIF schemes, the Securities and Exchange Board of India said: “Employees of AIF schemes can invest in the units of AIF subject to requirements specified in the AIF Regulations.”

According to the regulation, the AIF should not accept from an investor, an investment value of less than ₹1 crore. However, in the case of investors who are employees or directors of the AIF or employees or directors of the manager, the minimum investment should be ₹25 lakh, it further said.

To another query whether the code of conduct under the PIT Regulations should be applicable to employees of the SBIFM for investments in AIF schemes, SEBI said in the affirmative.

Trustees, AMCs

Insider trading regulation will be applicable in case of investment by employees of AIF or asset management companies in units of AIF schemes, which invest in listed as well as unlisted securities, SEBI said.

Trustees, AMCs, their employees and directors are required to follow the PIT Regulations, especially for the purpose of dealing/trading in securities, as AIF schemes can invest in both the listed and unlisted securities and such securities are amenable for insider trading, SEBI’s clarification added.

However, this clarification is based on the information furnished, said the market regulator and added “different facts or conditions might lead to a different result.”