Description

SEBI mandates AIFs to upload NAV of their units to depository systems through RTAs to enhance transparency and operational efficiency in the demat infrastructure.

Summary

SEBI has introduced mandatory requirements for Alternative Investment Funds (AIFs) to upload Net Asset Value (NAV) of their units to depository systems through their Registrar and Transfer Agents (RTAs). This circular leverages the existing depository infrastructure to enhance transparency and operational efficiency for demat units of AIFs. The circular is effective immediately and requires AIFs to upload latest NAV before May 01, 2026, or within 30 days from valuation date, whichever is later.

Key Points

  • AIFs must upload latest available NAV corresponding to each ISIN of units through their RTAs to the depository system
  • Deadline for initial upload: Before May 01, 2026, or within 30 days from valuation date, whichever is later
  • Category I and II AIFs conduct valuation at least once every six months (or annually with 75% investor approval)
  • Category III AIFs disclose NAV quarterly for close-ended funds and monthly for open-ended funds
  • AIF managers are responsible for ensuring timely and accurate NAV uploading
  • Depositories must build necessary infrastructure and display disclaimer with NAV information
  • Compliance with this circular must be included in the Compliance Test Report prepared by AIF managers

Regulatory Changes

  • New operational requirement for AIFs to report NAV to depositories through RTAs
  • Depositories required to build infrastructure for NAV uploading and display
  • Mandatory disclaimer to be incorporated wherever AIF NAV is displayed: “Net Asset Value (NAV) being shown is on the basis of valuation methodology and accounting practice followed by your respective AIF. Please refer to your fund documents for more details.”
  • Depositories must amend relevant Bye-laws, Rules and Regulations to implement these provisions
  • Compliance Test Report must now include adherence to NAV reporting requirements

Compliance Requirements

For AIFs:

  • Upload latest NAV for each ISIN through RTAs before May 01, 2026, or within 30 days from valuation date
  • Manager responsible for timely and accurate NAV uploading
  • Trustee/sponsor must ensure Compliance Test Report includes compliance with this circular

For RTAs:

  • Upload NAV data to depository system on behalf of AIFs
  • Ensure timely submission within specified deadlines

For Depositories:

  • Build necessary infrastructure for NAV uploading by RTAs
  • Display NAV with mandatory disclaimer
  • Amend Bye-laws, Rules and Regulations
  • Notify members/participants and disseminate circular on websites

Valuation Date Definition:

  • For independent valuers: Date of valuation report
  • For internal valuers: Date of documentation in internal records

Important Dates

  • February 06, 2026: Circular issued, effective immediately
  • May 01, 2026: Deadline for initial NAV upload (or within 30 days from valuation date, whichever is later)
  • Ongoing: Subsequent NAV updates required within 30 days from each valuation date

Impact Assessment

Operational Impact:

  • AIFs and RTAs need to establish processes for regular NAV uploading to depository systems
  • Depositories must develop technical infrastructure to receive, store and display NAV data
  • Enhanced automation and system integration required across AIFs, RTAs and depositories

Transparency Impact:

  • Investors will have better visibility of their AIF unit values through depository systems
  • Centralized NAV information improves market transparency for AIF investments
  • Standardized reporting through depository infrastructure ensures consistency

Compliance Impact:

  • Additional compliance obligation for AIF managers in Compliance Test Reports
  • RTAs assume operational responsibility for NAV data transmission
  • Depositories must ensure regulatory compliance through governance changes

Market Impact:

  • Strengthens demat infrastructure for AIF units (following June 2023 demat mandate)
  • Improves investor confidence through enhanced transparency
  • Facilitates better price discovery and valuation tracking for AIF investors
  • May increase operational costs for smaller AIFs and RTAs due to system requirements

Impact Justification

High importance as it introduces mandatory NAV reporting requirements for all AIFs through depository infrastructure, affecting operational processes of AIFs, RTAs, and depositories with immediate effect and specific deadlines.