Alternative Investment Funds or AIF means any fund estab-lished or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for invest-ing it in accordance with a defined investment policy for the benefit of its inves-tors.

Categories of Alternative In-vestment Funds [ AIFs ]
As per Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 Alternative Investment Funds shall seek regis-tration in one of the three categories.

Category I
Mainly in-vests in start- ups, SME's or any other sector which Govt. considers economically and socially viable.

Category II
These in-clude Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other regulator.

Category III
Alterna-tive Investment Funds such as hedge funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specif-ic incentives or concessions are given by the government or any other regula-tor.

Tenure and Listing of Alterna-tive Investment Funds / Schemes
For AIF scheme launched under Category I & II shall be close ended, the tenure shall be determined at the time of application and shall be for minimum three years. Category III Alternative Investment Fund may be open ended or close ended. Extension of the tenure of the close ended Alterna-tive Investment Fund may be permitted up to two years subject to approval of two-thirds of the unit holders by value of their investment in the Alternative Invest-ment Fund. In the absence of consent of unit holders, the Alternative Investment Fund shall fully liquidate within one year following expiration of the fund tenure or extended tenure.

Units of close ended Alternative Investment Fund may be listed on stock exchange subject to a minimum tradable lot of one crore rupees. Such listing shall be permitted only after final close of the fund or scheme. Howev-er, listing on stock Exchanges is purely voluntary.