i. SEBI has issued a circular No. CIR/IMD/DF/10/2013 dated July 29, 2013 for Operational, Prudential and Reporting Norms for Alternative Investment Funds (AIFs).
ii. In accordance with the said circular, all AIFs shall be required to comply reporting norms to SEBI on a quarterly basis (for Category I, II AIFs and for those Category III AIFs which do not employ leverage) or on a monthly basis (for Category III AIFs which employ leverage). The reporting formats and the method of reporting is specified in the said circular.
iii. Category III AIFs shall have to additionally comply with norms pertaining to risk management, compliance, redemption and leverage as specified in the circular. The leverage for a Category III AIF shall not exceed 2 times i.e. the gross exposure after offsetting for hedging and portfolio rebalancing transactions shall not exceed 2 times of the NAV of the fund. The method of calculation of leverage and conditions pertaining to breach of limit are provided in detail in the circular.