n NISM Certifications
X NISM Series X
Medium

The incorrect statement regarding Side Letters is that, as per SEBI rules, Side Letters are mandatory for Category II AIFs. In reality, Side Letters are private arrangements between investors and the fund, and they are not mandatory under SEBI regulations. They create differential rights but are discretionary.

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The purpose of Side Letters is to create differential rights between investors

  2. B

    Side Letters are basically private arrangements with a few investors

  3. C

    Some part of documentation between investors and managers are also known as Side Letters

  4. As per SEBI rules, Side Letters are mandatory for Category II AIFs

    Correct answer

A full explanation for this question is being written. In the meantime, the correct answer is highlighted above.

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NISM Series XIX A- Alternative Investmen…