PPM template SEBI — what an AIF Private Placement Memorandum must contain

SEBI mandates a standardised Private Placement Memorandum (PPM) template for every registered Alternative Investment Fund. It is the offering document — the definitive record of what an LP is buying into — and any material change to it requires investor consent under prescribed thresholds. Here is what the PPM template must contain, with a practitioner's lens.

Section 1 — Fund overview

• Legal name, structure (Trust / LLP / Company), and SEBI registration category.
• Sponsor, Investment Manager, Trustee identities and their roles.
• Target corpus, greenshoe, minimum ticket size (typically ₹ 1 crore for AIFs).
• Term of the fund, extension options, and commitment period.

Section 2 — Investment strategy

• Investment thesis and target sectors / geographies / stages.
• Investment restrictions — concentration limits, leverage cap, permissible instruments.
• ESG and responsible-investment policy (where applicable).
• Co-investment policy — how the manager will allocate opportunities between the fund and any parallel vehicles.

Section 3 — Fees, expenses & waterfall

• Management fee — rate, base (commitments vs invested capital), and period-of-charge.
• Performance fee — hurdle rate, catch-up, carried interest, and crystallisation rules.
• Fund expenses — capped % of corpus, categories of permissible expenses.
• Distribution waterfall — European vs American, tier-by-tier flow.
• Clawback provisions.

Section 4 — Risk factors

SEBI expects the PPM to disclose material risks with candour. Standard risk sections cover: strategy-specific risks, illiquidity, valuation uncertainty, concentration, key-man dependency, regulatory changes, and forex where relevant. Boilerplate risk language attracts scrutiny — SEBI reviewers look for strategy-specific risk framing.

Section 5 — Governance

• Investment Committee composition and quorum rules.
• Advisory Board (LPAC) composition and rights.
• Conflict-of-interest policy and disclosure regime.
• Independent valuation process for unlisted holdings.
• Reporting frequency to LPs and SEBI.

Section 6 — Investor rights & consent thresholds

The PPM must state clearly the consent thresholds required for material changes — typically two-thirds by value of unit-holders for changes to strategy, fees, term extension, or manager replacement. A fund administrator maintains the version-controlled PPM library and tracks investor consents against each amendment.

Section 7 — Tax

Character of income (pass-through for Cat I/II, fund-level for Cat III), TDS mechanics, DTAA implications for non-resident investors, and the Form 64C / distribution mechanics.

Amendments & investor consent

SEBI's regime for PPM amendments distinguishes between "cosmetic" and "material" changes. Material changes — fees, waterfall, strategy, term — require investor consent at prescribed thresholds and re-filing with SEBI. Cosmetic changes may need only trustee approval and notification to LPs.

Where AIFLedger helps

AIFLedger maintains a version-controlled PPM library, tracks side-letter register, and produces investor-consent audit trails for every amendment cycle — a purpose-built SEBI AIF compliance software module for the PPM lifecycle.