What is the information to be disclosed in placement memorandum in respect of information about litigations/cases?

All AIFs shall include in their placement memorandum, disciplinary history of:

(1) AIF, sponsor, manager and their Directors/partners/promoters and associates

(2) If the applicant is a trust, Trustees or trustee company and its director's Such disciplinary history shall, inter alia, include:

(1) Details of outstanding/pending and past cases (where the person has been found guilty) of litigations, criminal or civil prosecution, disputes, nonpayment of statutory dues, overdue to/defaults against banks or financial institutions, contingent liabilities not provided for, proceedings initiated for economic offences or civil offences, adverse findings with respect to compliance with securities laws, penalties levied, disputed tax liabilities, etc.

(2) any disciplinary action was taken by SEBI or any other regulatory authority. In the case of operational actions such as administrative warnings/deficiency letters, the same may be grouped together and summarized. However, if the investor seeks details of the summarized portion, the same shall be provided by the AIF to the investor.

Any further litigations/cases, etc. as may arise in the course of the activities of the AIF shall be appropriately incorporated in the placement memorandum and intimated to the investors. [Ref. circular no. CIR/IMD/DF/14/2014 dated June 19, 2014]

Vide circular no. CIR/IMD/DF/16/2014 dated July 18, 2014, it is further clarified that, with respect to the disclosure of disciplinary history, the same shall be applicable for the last 5 years and where the monetary penalty is involved, in cases where such penalty is greater than Rs. 5 lakhs.

With respect to disputed tax liabilities, the same shall not apply to liabilities in the personal capacity of an individual. Contingent liabilities shall be as disclosed in the books of accounts of the entity. [Ref. circular no. CIR/IMD/DF/16/2014 dated July 18, 2014]