CIRCULAR
HO/19/34/11(5)2025-AFD-POD1/I/188/2025 December 08, 2025
To,
All Alternative Investment Funds (AIFs)
Sir/Madam,
Sub: Modalities for migration to AI only schemes and relaxations to Large
Value Funds for Accredited Investors under SEBI (Alternative Investment
Funds) Regulations, 2012
1. With an objective to enhance ease of doing business for Alternative
Investment Funds (“AIFs”), Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012 (‘AIF Regulations’), have
been amended and notified on November 19, 2025 to:
1.1. facilitate introduction of a separate category of AIF schemes, limited
exclusively to Accredited Investors only (AI-only schemes), and offering
the scheme specific regulatory flexibilities in terms of less compliance
around investor protection.
1.2. extend additional relaxations and operational flexibilities to Large Value
Funds (LVFs) for accredited investors.
2. Any new scheme proposed to be launched as an AI only scheme or LVF shall
have the words ‘AI only fund’ or ‘LVF’ added to the scheme name at the end,
respectively (For example, ‘Xyz AI only fund’ and ‘Abc LVF’).
3. In terms of Regulation 2(1)(ac) & 2(1)(pa) of AIF Regulations, AIF or a
scheme of an AIF, launched prior to the notification of Securities and
Exchange Board of India (Alternative Investment Funds) (Third Amendment)
Regulations, 2025, may be permitted to convert to an AI-only scheme or LVF
scheme, subject to the conditions as may be specified by the Board.
4. In this regard, it is specified that existing eligible AIFs/Schemes of AIFs may
convert/ migrate to AI only schemes/ LVF schemes subject to obtaining
positive consent from all the investors and meeting the respective conditions.
Upon conversion, the manager of the AIF shall ensure that –
4.1. the name of the converted scheme is changed to incorporate ‘AI only
fund’ or ‘LVF’ as the case may be;
4.2. such conversion and change in name of the scheme is reported to SEBI
by emailing to aifreporting@sebi.gov.in within 15 days of the conversion;
and,
4.3. such change in name of the scheme is reported to depositories for
carrying out necessary changes in their system within 15 days of the
conversion.
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5. In respect of the AI status of an investor, if an investor is an AI at the time of
on-boarding into an AIF scheme, he/ she shall be reckoned as an AI through
the life of the scheme, even if he/ she were to lose such status in the interim.
6. In terms of Regulation 13(5) of AIF Regulations, it may be noted that
maximum extension permissible for AI only schemes shall be of five years,
inclusive of tenure extended, if any, prior to conversion to AI-only scheme /
LVF scheme.
7. Further, it has been decided to exempt LVFs from following the standard
template of placement memorandum and annual audit of the terms of
placement memorandum, without requirement of specific waivers from
investors. Accordingly, para 8 of SEBI circular
SEBI/HO/IMD/DF6/CIR/P/2020/24 date February 05, 2020, subsumed in para
2.4.4. in Chapter 2 ("Filing of Private Placement Memorandum and related
compliance requirements") of Master Circular for AIFs dated May 7, 2024,
insert below mentioned text as clause 2.4.4. (iii):
(iii) Large Value Funds as defined in AIF Regulations, without the requirement
of obtaining specific waiver from investors.
8. The trustee/sponsor of AIF, as the case may be, shall ensure that the
‘Compliance Test Report’ prepared by the manager in terms of Chapter 15 of
Master Circular for AIFs, includes compliance with the provisions of this
circular.
9. This circular shall come into force with immediate effect.
10. This circular is issued with the approval of the competent authority.
11. This circular is issued in exercise of powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992, read with Regulations
2(1)(ac), 2(1)(pa) and 36 of AIF Regulations, to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
12. The circular is available on SEBI website at www.sebi.gov.in under the
categories "Legal framework - Circulars" and "Info for - Alternative Investment
Funds”.
Yours faithfully,
Anshul Jagdish Goyal
Deputy General Manager
Tel no.: +91-22-26449389
anshulg@sebi.gov.in
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