MASTER CIRCULAR
HO/19/34/11(6)2025-AFD-POD1/I/12928/2026 Issued on: June 03, 2026
Last updated on: June 16, 2026
To,
All Alternative Investment Funds
All Custodians
All Depositories
All Registrar to an Issue and Share Transfer Agents
Dear Sir/Madam,
Sub: Master Circular for Alternative Investment Funds (AIFs)
1. For effective regulation of Alternative Investment Funds (AIFs), the Securities and Exchange
Board of India (SEBI) has been issuing various circulars from time to time. In order to enable
AIFs and other market stakeholders to have access to all applicable Circulars in the subject
matter at one place, SEBI’s Master Circular No. SEBI/HO/AFD-1/AFD-1-
PoD/P/CIR/2024/39 for AIFs dated May 07, 2024 was issued as a compilation of such
relevant circulars issued under SEBI (Alternative Investment Funds) Regulations, 2012 up
to March 31, 2024.
2. Subsequently, various circulars have been issued by SEBI under SEBI (Alternative
Investment Funds) Regulations, 2012. The provisions of such circulars issued till May 31,
2026 have been incorporated in this Master Circular, which supersedes the Master Circular
for AIFs dated May 07, 2024.
3. Further, this Master Circular has been updated to incorporate the provisions of the circular
no. HO/19/34/11(2)2026-AFD-POD1/I/13764/2026 dated June 16, 2026 on the subject
‘Guidelines for winding up of AIFs with respect to retention of proceeds and ‘Inoperative
Fund’ status’.
4. With the issuance of this Master Circular, all directions/instructions contained in the circulars
listed out in Annexure 24 to this Master Circular shall stand rescinded to the extent they
relate to AIFs.
5. Notwithstanding such rescission:
a) anything done or any action taken or purported to have been done or taken under the
rescinded circulars, prior to such rescission, shall be deemed to have been done or taken
under the corresponding provisions of this Master Circular;
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b) any application made to SEBI under the rescinded circulars prior to such rescission, and
pending before it, shall be deemed to have been made under the corresponding provisions
of this Master Circular; and
c) the previous operation of the rescinded circulars or anything duly done or suffered
thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under
the rescinded circulars, any penalty, incurred in respect of any violation committed
against the rescinded circulars, or any investigation, legal proceeding or remedy in
respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall not be
affected by such rescission and shall be enforceable as if the rescinded circulars had
continued to be in force.
6. The trustee / sponsor / manager of AIF, as the case may be, shall ensure that the ‘Compliance
Test Report’ prepared by the manager of the AIF, in terms of para 21.2 of this Master
Circular, includes compliance with the provisions of all chapters of this Master Circular.
7. This Master Circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 to protect the interests of investors in
securities and to promote the development of, and to regulate, the securities market.
8. This Master Circular is available on SEBI website at www.sebi.gov.in in the path "Legal 
Master Circulars" and "Info for  Alternative Investment Funds”.
Yours sincerely,
Anshul Goyal
Deputy General Manager
Tel no.: +91-22-2644 9389
anshulg@sebi.gov.in
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INDEX
LIST OF ABBREVIATIONS ................................................................................................................. 6
A. REGISTRATION AND LAUNCH OF AIF SCHEMES
Chapter 1 - Requirements and clarifications pertaining to registration of AIFs ........................... 7
Chapter 2 - Filing of PPM for launch of AIF scheme ..................................................................... 10
B. FUND RAISING BY AIFs
Chapter 3 - On-boarding of investors by AIFs ................................................................................ 16
C. INVESTMENTS BY AIFs
Chapter 4 - Investment instrument/security specific conditions for AIFs .................................... 19
Chapter 5 - Guidelines for overseas investments by AIFs and related reporting ......................... 23
Chapter 6 - Framework for AIFs to make co-investment within the AIF structure ................... 26
D. INVESTMENT CONDITIONS AND OTHER NORMS FOR SPECIFIC CATEGORIES /
SUB-CATEGORIES OF AIFs
Chapter 7 - Operational and prudential norms for Category III AIFs ......................................... 28
Chapter 8 - Operational and prudential norms for Angel Funds .................................................. 33
Chapter 9 - Norms for Special Situation Funds ............................................................................... 37
E. ACCREDITATION OF INVESTORS
Chapter 10 - Framework for Accreditation of Investors .............................................................. 38
F. OPERATIONAL MODALITIES
Chapter 11 - Dematerialisation of units and investments of AIFs and collection of stamp duty
on units of AIFs ...................................................................................................................................... 43
Chapter 12 - Timeline for first close and calculation of tenure of AIFs ...................................... 48
Chapter 13 - Material change and change in Sponsor or Manager of AIFs ............................... 50
Chapter 14 - Guidelines for Category I and II AIFs on borrowing and creation of
encumbrance on equity of investee companies .................................................................................... 53
Chapter 15 - Guidelines with respect to excusing or excluding an investor from an investment
of AIF ...................................................................................................................................... 56
Chapter 16 - Direct plan for schemes of AIFs and trail model for distribution commission in
AIFs ...................................................................................................................................... 57
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G. GOVERNANCE NORMS AND OBLIGATIONS
Chapter 17 - Obligations of manager, sponsor, investment committee and trustee of AIFs ..... 58
Chapter 18 - Standardised approach to valuation of investment portfolio of AIFs ................... 61
Chapter 19 - Pro-rata and pari-passu rights of investors of AIFs ............................................... 64
Chapter 20 - Specific due diligence of investors and investments of AIFs .................................. 68
H. REPORTING AND DISCLOSURE REQUIREMENTS FOR AIFs
Chapter 21 - Periodic reporting requirements for AIFs ............................................................... 72
Chapter 22 - Performance Benchmarking of AIFs ....................................................................... 76
I. WINDING UP OF SCHEMES AND FACILITIES FOR DEALING WITH
UNLIQUIDATED INVESTMENTS
Chapter 23 - Flexibility to AIFs and their investors to deal with unliquidated investments of
their schemes ...................................................................................................................................... 80
Chapter 24 - Modalities for migration of Venture Capital Funds to AIF Regulations .............. 88
Chapter 25 - Guidelines for winding up of AIFs with respect to retention of proceeds
and ‘Inoperative Fund’ status ............................................................................................................... 90
ANNEXURES
Annexure 1 - Template for PPM for Category I and Category II AIFs ........................................ 93
Annexure 2 - Template for PPM for Category III AIFs ................................................................. 94
Annexure 3 - Template for waiver of compliance with SEBI prescribed template of PPM and
audit compliance with the terms of PPM ............................................................................................. 95
Annexure 4 - Investor Charter for Alternative Investment Funds ................................................ 96
Annexure 5 - Complaints Data to be displayed by AIFs for each scheme ................................... 101
Annexure 6 - Format for Due Diligence Certificate to be submitted at the time of filing PPM
with SEBI ........................................................................................................................................ 102
Annexure 7 - Format for undertaking to be submitted for filing LVF PPM with SEBI ............ 111
Annexure 8 - Information to be submitted while filing application for allocation of overseas
investment limit .................................................................................................................................... 115
Annexure 9 - Information with respect to sale/divestment of overseas investment ................... 118
Annexure 10 - Template for shelf placement memorandum to be filed for CIV schemes ....... 119
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Annexure 11 - List of Documents to be submitted for accreditation ......................................... 120
Annexure 12 - Format of waiver to be provided by investors in respect of responsibility of
investment committee members ......................................................................................................... 121
Annexure 13 - Stewardship Code .................................................................................................. 122
Annexure 14 - Format of Compliance Test Report (CTR) ......................................................... 126
Annexure 15 - Format for Due Diligence Certificate to be submitted while intimating changes
in terms of PPM to SEBI ..................................................................................................................... 129
Annexure 16 - Terms of PPM for which changes are not required to be filed through Merchant
Banker and may be filed directly with SEBI ..................................................................................... 130
Annexure 17 – Format for filing changes in terms of LVF PPM to SEBI ................................. 131
Annexure 18 - Format for information memorandum to be filed with SEBI for availing
dissolution period ................................................................................................................................. 132
Annexure 19 - Format for Due Diligence Certificate to be submitted along with Information
Memorandum to SEBI for availing dissolution period .................................................................... 133
Annexure 20 - Applicability of chapters and provisions of the Master circular for AIFs to
Migrated VCFs .................................................................................................................................... 136
Annexure 21 - Information to be submitted while filing application for ‘Inoperative Fund’
status .................................................................................................................................... 143
Annexure 22 - Exemption from certain regulatory requirements for Inoperative Fund ......... 146
Annexure 23 - Format for Annual Retention Status Report ...................................................... 148
Annexure 24 – List of Rescinded Circulars .................................................................................. 150
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LIST OF ABBREVIATIONS
Alternative Investment Fund AIF
Accredited Investor AI
Accredited Investors only fund AI only fund
Credit Default Swap CDS
Compliance Test Report CTR
Financial Action Task Force FATF
Foreign Exchange Management Act FEMA
Hindu Undivided Family HUF
International Organization of Securities Commissions IOSCO
Know Your Client KYC
Large Value Fund for Accredited Investors LVF
Multilateral Memorandum of Understanding MMOU
Net Asset Value NAV
Permanent Account Number PAN
Prevention of Money Laundering Act PMLA
Private Placement Memorandum PPM
Qualified Institutional Buyer QIB
Reserve Bank of India RBI
Securities and Exchange Board of India SEBI
Securities and Exchange Board of India Act, 1992 SEBI Act
SEBI Intermediary portal SI portal
Securities and Exchange Board of India (Alternative AIF Regulations
Investment Funds) Regulations, 2012
Standard Setting Forum for AIFs SFA
Special Situation Fund SSF
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A. REGISTRATION AND LAUNCH OF AIF SCHEMES
Chapter 1 - Requirements and clarifications pertaining to registration of AIFs
1.1. Online Filing System for AIFs1 -
1.1.1. All applicants desirous of seeking registration as an Alternative Investment Fund
(‘AIF’) are required to submit their applications only online, through the SEBI
Intermediary Portal at https://siportal.sebi.gov.in. Further, all SEBI registered AIFs
are required to file their compliance reports and submit applications for any request
under the provisions of AIF Regulations and circulars issued thereunder, only
through the SEBI Intermediary Portal.
1.1.2. In case of any queries and clarifications, users may refer to the manual provided in
the SEBI Intermediary Portal or contact the Portal Helpline as specified in the
manual.
1.2. Certification requirement for key investment team of manager of AIF2 -
1.2.1. In terms of Regulation 4(g)(i) of AIF Regulations, the key investment team of the
Manager of an AIF shall have at least one key personnel with relevant certification
as may be specified by SEBI from time to time, as an eligibility criterion for
obtaining certification of registration as an AIF.
1.2.2. In this regard, vide Gazette Notification No. SEBI/LAD-NRO/GN/2025/249 dated
June 25, 2025, the following was, inter-alia, notified under the SEBI (Certification
of Associated Persons in the Securities Markets) Regulations, 2007 –
“In terms of Regulation 3 of the SEBI (Certification of Associated Persons in the
Securities Markets) Regulations, 2007 read with sub-clause (i) of clause (g) of
regulation 4 of the Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, the Board hereby notifies that:
(i) at least one key personnel, amongst the associated persons functioning in
the key investment team of the Manager of Category I Alternative
Investment Fund or Category II Alternative Investment Fund or Category I
and II Alternative Investment Fund, shall obtain certification from the
National Institute of Securities Market by passing either the NISM Series-
XIX-C: Alternative Investment Fund Managers Certification Examination
as mentioned in the communiqué No. NISM/ Certification/ Series-XIX-C:
Alternative Investment Fund Managers/2024/01 dated January 10, 2024 or
the NISM Series-XIX-D: Category I and II Alternative Investment Fund
Managers Certification Examination as mentioned in the communiqué No.
1 SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2017/87 dated July 31, 2017
2 SEBI Circular No. SEBI/HO/AFD-1/AFD-1-PoD/P/CIR/2024/42 dated May 13, 2024 and SEBI Circular No.
SEBI/HO/AFD/AFD-PoD-1/P/CIR/2025/066 dated May 13, 2025
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NISM/ Certification/ Series-XIX-D: Category I and II Alternative
Investment Fund Managers/2025/01 dated April 29, 2025, issued by the
National Institute of Securities Market.
(ii) at least one key personnel, amongst the associated persons functioning in
the key investment team of the Manager of Category III Alternative
Investment Fund, shall obtain certification from the National Institute of
Securities Market by passing either the NISM Series-XIX-C: Alternative
Investment Fund Managers Certification Examination as mentioned in the
communiqué No. NISM/ Certification/ Series-XIX-C: Alternative
Investment Fund Managers/ 2024/01 dated January 10, 2024 or the NISM
Series-XIX-E: Category III Alternative Investment Fund Managers
Certification Examination as mentioned in the communiqué No. NISM/
Certification/ Series-XIX-E: Category III Alternative Investment Fund
Managers/2025/02 dated April 29, 2025, issued by the National Institute of
Securities Market.”
1.2.3. The requirement for at least one key personnel of the key investment team of
manager of AIF to obtain the aforesaid certification, shall be applicable as an
eligibility criterion to all the applications for registration of AIFs and launch of
schemes by AIFs.
1.3. In-principle approval3
1.3.1. With respect to an in-principle approval granted to an applicant, in case the
registered trust deed or duly filed partnership deed is not submitted within the
specified time period, the applicant shall file a fresh application for registration
under the AIF Regulations.
1.4. Change in category of AIF4
Regulation 7(2) of AIF Regulations specifies as under:
"An Alternative Investment Fund which has been granted registration under a
particular category cannot change its category subsequent to registration, except with
the approval of the Board."
In this regard, it is specified as under:
1.4.1. Only AIFs who have not made any investments under the category in which they
were registered earlier shall be allowed to make application for change in category.
3 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
4 SEBI circular No. CIR/IMD/DF/12/2013 dated August 07, 2013
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1.4.2. Any AIF proposing to change its category shall make an application to SEBI for
the same along with an application fees of INR 1 lakh. The application shall include
the updated Form A (Refer First Schedule to the AIF Regulations), other updated
supporting documents, if any and rationale for the proposed change. Registration
fees shall not apply for such applications.
1.4.3. If the AIF has received commitments/ raised funds prior to application for change
in category, the AIF shall be required to send letters/emails to all its investors
providing them the option to withdraw their commitments/ funds raised without
any penalties/charges. Any fees collected from investors seeking to withdraw
commitments/ funds shall be returned to them. Partial withdrawal may be allowed
subject to compliance with the minimum investment amount required under the
AIF Regulations.
1.4.4. The AIF shall not make any investments other than in liquid funds/ banks deposits
until approval for change in category is granted by SEBI.
1.4.5. On approval of the request from SEBI, the AIF shall send a copy of the revised
PPM and other relevant information to all its investors.
1.5. Classification of Corporate Debt Market Development Fund as Category I AIF5
1.5.1. Corporate Debt Market Development Fund (hereinafter referred to as ‘CDMDF’)
has been set-up under Chapter III-C of AIF Regulations to act as a Backstop Facility
for purchase of investment grade corporate debt securities, to instill confidence
amongst the participants in the Corporate Debt Market during times of stress and
to generally enhance secondary market liquidity by creating a permanent
institutional framework for activation in times of market stress.
1.5.2. While a separate framework has been laid down for CDMDF under chapter III-C
of Regulation 19 of AIF Regulations, the fund has been set-up with the broader
economic objective of development of corporate bond market, inter-alia, to act as
a Backstop facility during times of market stress.
1.5.3. In view of the above, it is clarified that CDMDF falls under Category I AIF in terms
of Regulation 3(4)(a) of AIF Regulations.
5 SEBI circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/174 dated December 13, 2024
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Chapter 2 - Filing of PPM for launch of AIF scheme
2.1. Template(s) for PPM6
2.1.1. Private Placement Memorandum (‘PPM’) is a primary document in which all the
necessary information about the AIF is disclosed to prospective investors. To
ensure that a minimum standard of disclosure is made available in the PPM, a
template has been mandated for the PPM, providing certain minimum level of
information in a simple and comparable format. AIFs are also permitted to provide
additional information in their PPM.
2.1.2. Thus, the template for PPM shall have two parts viz.
Part A – section for minimum disclosures, and
Part B – supplementary section to allow full flexibility to the Fund in order to
provide any additional information, which it deems fit.
2.1.3. The template for PPM of AIFs raising funds under Category I and Category II is
provided at Annexure 1. The template for PPM of AIFs raising funds under
Category III is provided at Annexure 2.
2.1.4. The requirement of following aforesaid template for filing PPM with SEBI shall
not apply to the following:
(i) Angel Funds as defined in AIF Regulations.
(ii) AIFs/Schemes in which each investor commits to a minimum capital
contribution of INR 70 crore (USD 10 million or equivalent, in case of capital
commitment in non-INR currency) and also provides a waiver to the fund from
the requirement of PPM in the SEBI specified template, in the manner provided
at Annexure 3.
(iii) Large Value Funds for Accredited Investors as defined in AIF Regulations,
without the requirement of obtaining specific waiver from investors7.
2.2. Disclosure of distribution waterfall and disciplinary history in PPM8
2.2.1. Every AIF shall, in its PPM provide a detailed tabular example of how the fees and
charges shall be applicable to the investor including the distribution waterfall.
2.2.2. Regulation 11(2) of the AIF Regulations requires that an AIF shall include history
of disciplinary actions in its PPM. In this regard, it is clarified that all AIFs shall
include in their PPM, disciplinary history of:
6 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020
7 SEBI Circular No. HO/19/34/11(5)2025-AFD-POD1/I/188/2025 dated December 08, 2025
8 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No. CIR/IMD/DF/16/2014
dated July 18, 2014
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(i) AIF, sponsor, manager and their directors/partners/promoters and associates;
(ii) If applicant is a trust, trustees or trustee company and its directors.
Such disciplinary history shall, inter alia, include:
a) Details of outstanding/pending and past cases (where the person has been
found guilty) of litigations, criminal or civil prosecution, disputes, non-
payment 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.
b) Any disciplinary action taken by SEBI or any other regulatory authority.
In 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 PPM and intimated to the investors.
2.2.3. With respect to disclosure of disciplinary history as per para 2.2.2 above, the same
shall be applicable for the last 5 years and where monetary penalty is involved, in
all cases where such penalty is greater than INR 5 lakh. With respect to disputed
tax liabilities, the same shall not apply to liabilities in personal capacity of an
individual. Contingent liabilities shall be as disclosed in books of accounts of the
entity.
2.3. Disclosure of Investor Charter and Investor complaints in PPM9
With a view to providing relevant information to investors about the various activities
pertaining to AIFs, an Investor Charter has been prepared by SEBI. In this regard, it is
specified as under:
2.3.1. The Investor Charter is a brief document containing details of services provided to
investors, details of grievance redressal mechanism, responsibilities of the investors
etc., at one single place, in lucid language for ease of reference.
2.3.2. In this regard, all AIFs shall take necessary steps to bring the Investor Charter, as
per Annexure 4, to the notice of their investors by disclosing Investor Charter in
the PPM.
9 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF9/P/CIR/2021/682 dated December 10, 2021
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2.3.3. Additionally, in order to bring about further transparency in the Investor Grievance
Redressal Mechanism, data on investor complaints received against AIFs and each
of their schemes and redressal status thereof shall be disclosed by all AIFs as per
format at Annexure 5, as a separate chapter in the PPM.
2.3.4. For effective monitoring, AIFs shall maintain data on investor complaints as per
Annexure 5, which shall be compiled latest within 7 days from the end of quarter.
2.3.5. These disclosure requirements are in addition to the existing requirements
pertaining to the investor grievance handling mechanism under various
Regulations, circulars and directions, issued by SEBI.
2.4. Modalities for filing of PPM and launch of non-LVF schemes10
In terms of Regulation 12(2) of the AIF Regulations, AIFs shall launch scheme(s) subject
to filing of PPM with SEBI through a SEBI registered Merchant Banker. In terms of
Regulation 19D(4) of the AIF Regulations, the PPM of Angel Funds shall be filed with
SEBI in the specified format through a merchant banker while filing the application for
registration as an Angel Fund. In this context, the following is specified:
2.4.1. A fast-track mechanism shall be followed for launch of scheme/fund in respect of
the PPMs filed by Angel Funds and AIF schemes other than LVFs (herein after
collectively referred as ‘non-LVF schemes’). In terms of Regulation 12 and 19 of
AIF Regulations, AIFs can proceed with launch of their new non-LVF schemes and
circulate the PPM to their investors for soliciting funds after 30 days of filing of
application with SEBI, unless otherwise advised.
However, in case of first scheme of AIFs, it is clarified that AIFs can proceed with
launch of such schemes from the date of grant of SEBI registration (or) after 30
days of filing of application with SEBI, whichever is later.
2.4.2. Comments, if any, provided by SEBI during this period of 30 days shall be
complied with by Merchant Banker/ AIF prior to launch of the scheme/ circulation
of PPM.
2.4.3. PPM of non-LVF schemes shall be filed, at the time of registration or prior to
launch of new scheme, on SEBI Intermediary portal along with the following
documents in addition to payment of applicable (scheme) fee:
(i) Duly signed Merchant Banker Due Diligence Certificate in the format as
given at Annexure 6.
10 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF6/P/CIR/2021/645 dated October 21, 2021 and SEBI Circular no.
HO/19/19/11(2)2026-AFD-RAC2 I/10624/2026 dated April 30, 2026
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(ii) Duly signed Fit and Proper declarations with respect to the AIF, Sponsor,
Manager of the AIF as specified in Schedule II of SEBI (Intermediaries)
Regulations, 2008;
(iii) Sponsor / Manager declarations with respect to minimum continuing
interest commitment in AIF/scheme;
(iv) Copies of PANs of AIF, its scheme (if available), Sponsor, Manager,
Trustee, directors/ partners of Sponsor, Manager & Trustee, key investment
team members.
2.4.4. The Merchant Banker shall independently exercise due diligence of all the
disclosures in the PPM, satisfy itself with respect to veracity and adequacy of the
disclosures and provide the due diligence certificate. The Merchant Banker
appointed for filing of PPM shall not be an associate of the AIF, its sponsor,
manager or trustee.
2.4.5. The details of the Merchant Banker shall be disclosed in the PPM. The following
disclaimer clause shall be included in the PPMs of all non-LVF schemes:
“1. Merchant Banker viz., <Name of Merchant Banker> has independently
exercised due-diligence regarding the information given in the placement
memorandum, including the veracity and adequacy of disclosures made therein.
Merchant Banker has certified in its Due-Diligence Certificate dated ______
submitted to SEBI that the disclosures made in the placement memorandum are
true, fair and adequate to enable the investors to make an informed decision with
respect to the investment in the proposed Scheme/Fund and such disclosures
are in accordance with the requirements of Securities and Exchange Board of
India (Alternative Investment Funds) Regulations, 2012, circulars, guidelines
issued thereunder and other applicable legal requirements.
2. It is to be distinctly understood that submission of the PPM to SEBI should not
in any way be deemed or construed that the same has been approved by SEBI.
SEBI does not assume any responsibility for the accuracy and correctness of
disclosures, facts and claims made in the PPM and for the capability and
performance of the Manager.
3. The Manager and Merchant Banker are responsible for ensuring that the
information contained in the PPM is true and accurate in all material respects
and in compliance with SEBI (Alternative Investment Funds) Regulations, 2012
and other applicable laws and that there are no material facts, the omission of
which would make any statement in this memorandum, whether of fact or opinion,
misleading.”
2.4.6. The Merchant Banker and the Manager of the AIF shall be responsible for ensuring
the accuracy and completeness of all disclosures made in the PPMs of non-LVF
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schemes, as well as in declarations submitted by them. In case of any irregularity
or lapse in the PPM, concerned entities shall be liable for action.
2.4.7. Any new scheme proposed to be launched as an AI only scheme shall have the
words ‘AI only fund’ or ‘AIOF’ added to the scheme name at the end (For example,
‘Xyz AI only fund’ or ‘Xyz AIOF’)11.
2.5. Modalities for filing of PPM and launch of LVF schemes12
Pursuant to introduction of framework for “Accredited Investors” in the securities market,
AIF Regulations have been amended to provide certain relaxations from regulatory
requirements to – (i) AIF schemes limited exclusively to Accredited Investors only (AI-
only schemes) and (ii) ‘Large Value Fund for Accredited Investors’ (LVF), an AI only
scheme, where each investor invests not less than INR 25 crore. With respect to launch of
LVF schemes, the following is specified -
2.5.1. In terms of proviso to Regulation 12(2) and 12(3) of AIF Regulations, LVFs are
exempt from filing their PPM with SEBI through Merchant Banker and
incorporating comments of SEBI, if any, in their PPM i.e. LVFs can launch their
scheme under intimation to SEBI.
2.5.2. While filing the PPM for LVF schemes with SEBI, a duly signed and stamped
undertaking by Chief Executive Officer of the Manager of the AIF (or person
holding equivalent role or position depending on the legal structure of Manager)
and Compliance Officer of Manager of the AIF shall be submitted in the format as
mentioned at Annexure 7.
2.5.3. Any new scheme proposed to be launched as an LVF shall have the word ‘LVF’
added to the scheme name at the end (For example, ‘Abc LVF’).
2.6. Modalities for conversion into AI only schemes13 -
In terms of Regulation 2(1)(ac) & 2(1)(pa) of AIF Regulations, an AIF or a scheme of an
AIF may be permitted to convert to an AI-only scheme or LVF scheme, subject to the
conditions as may be specified by SEBI. In this regard, the following is specified -
2.6.1. 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 –
11 SEBI Circular No. HO/19/34/11(5)2025-AFD-POD1/I/188/2025 dated December 08, 2025
12 SEBI Circular No. SEBI/HO/AFD/RAC/CIR/2022/088 dated June 24, 2022 and SEBI Circular No.
HO/19/34/11(5)2025-AFD-POD1/I/188/2025 dated December 08, 2025
13 SEBI Circular No. HO/19/34/11(5)2025-AFD-POD1/I/188/2025 dated December 08, 2025
Page 14 of 153 Back to Index
a. the name of the converted scheme is changed to incorporate ‘AI only fund’ or
‘AIOF’ or ‘LVF’ as the case may be;
b. 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,
c. 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.
2.6.2. 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.
2.6.3. 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.
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B. FUND RAISING BY AIFs
Chapter 3 - On-boarding of investors by AIFs
3.1. Eligibility for on-boarding investors to AIFs14
3.1.1. In terms of Regulation 10(a) of AIF Regulations, AIFs may raise funds from any
investor whether Indian, foreign or non-resident Indians, by way of issue of units.
At the time of on-boarding investors, the manager of an AIF shall ensure the
following:
(a) Foreign investor of the AIF is a resident of the country whose securities
market regulator is a signatory to the International Organization of Securities
Commissions Multilateral Memorandum of Understanding (Appendix A
Signatory) or a signatory to the bilateral Memorandum of Understanding with
SEBI.
For the purpose of the aforesaid clause, “Bilateral Memorandum of
Understanding with SEBI” shall mean a bilateral Memorandum of
Understanding between SEBI and any authority outside India that provides
for information sharing arrangement as specified under clause (ib) of sub-
section (2) of Section 11 of the SEBI Act, 1992.
AIFs may accept commitment from an investor being Government or
Government related investor, who does not meet the aforesaid condition, if
the investor is a resident in the country as may be approved by the
Government of India.
(b) The investor, or its beneficial owner as determined in terms of sub-rule (3) of
rule 9 of the Prevention of Money-laundering (Maintenance of Records)
Rules, 2005, is not the person(s) mentioned in the Sanctions List notified
from time to time by the United Nations Security Council and is not a resident
in the country identified in the public statement of Financial Action Task
Force as–
(i) a jurisdiction having a strategic Anti-Money Laundering or
Combating the Financing of Terrorism deficiencies to which counter
measures apply; or
(ii) a jurisdiction that has not made sufficient progress in addressing the
deficiencies or has not committed to an action plan developed with
the Financial Action Task Force to address the deficiencies.
14 SEBI circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/171 dated December 09, 2022 and SEBI circular no.
SEBI/HO/AFD/PoD1/CIR/2024/2 dated January 11, 2024
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(c) The provisions specified at para 3.1.1 (a) and (b) above shall not be
applicable to on-boarding of ‘Single Window Automatic and Generalised
Access for Trusted Foreign Investor’ or ‘SWAGAT-FI’ as defined in
regulation 2(1)(r) of SEBI (Foreign Portfolio Investors) Regulations, 2019.
3.1.2. In case an investor who has been on-boarded to scheme of an AIF, subsequently
does not meet the conditions specified at para 3.1.1 above, the manager of the AIF
shall not drawdown any further capital contribution from such investor for making
investment, until the investor again meets the said conditions.
3.2. Conditions for fund raising by AIFs15
3.2.1. All AIFs shall ensure that all marketing documents of the fund/scheme, if any, are
distributed only on a private basis to its proposed investors and are in accordance
with the PPM of the fund/scheme16.
3.2.2. Managers of AIFs shall ensure that the placement memorandum is provided to the
investors prior to providing commitment or making the investment in the AIF and
ensure that an appropriate acknowledgement is received from the investor for such
receipt17.
3.2.3. The AIF, manager, trustee and sponsor shall not offer any assured returns to any
prospective investors/unitholders18.
3.2.4. The terms of contribution or subscription agreement (by any name as it may be
called), shall be aligned with the terms of the PPM and shall not go beyond the terms
of the PPM19.
3.2.5. With respect to Regulation 10(c) of AIF Regulations, an AIF may accept the
following as joint investors for the purpose of investment of not less than the
minimum investment amount as specified in AIF Regulations for respective
category/sub-category of AIF:
(i) An investor and his/her spouse
(ii) An investor and his/her parent
(iii) An investor and his/her daughter/son
With respect to the above investors, not more than 2 persons shall act as joint-
investors in an AIF. In case of any other investors acting as joint-investors, for every
15 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No. CIR/IMD/DF/16/2014
dated July 18, 2014
16 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
17 SEBI Circular No. CIR/IMD/DF/7/2015 dated October 01, 2015
18 SEBI Circular No. CIR/IMD/DF/7/2015 dated October 01, 2015
19 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020
Page 17 of 153 Back to Index
investor, the minimum investment amount, as specified in AIF Regulations for
respective category/sub-category of AIF, shall apply. Each of the joint investor shall
contribute towards the AIF/scheme of AIF.
3.2.6. With respect to units of AIF issued to the employees of the manager of the AIF for
profit- sharing, Regulation 10(c) of AIF Regulations shall not be applicable in cases
where such units do not entail any contribution/investment from the employees.
3.2.7. In case of an open-ended scheme of AIF, the first single lump-sum investment
amount received from the investor should not be less than the minimum investment
amount.
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C. INVESTMENTS BY AIFs
Chapter 4 - Investment instrument/security specific conditions for AIFs
4.1. Investment in units of AIFs20
4.1.1. In terms of Regulation 15(1) (c) and (d) of the AIF Regulations, AIFs may invest
in an investee company up to a specified limit, directly or through investment in
the units of other AIFs. AIFs may invest in units of other AIFs without labelling
themselves as a Fund of AIFs.
4.1.2. AIFs, which propose to invest in units of other AIFs, shall provide, inter-alia, the
following information in their PPMs:
(a) Proposed allocation of investment in units of other AIFs;
(b) Out of total fees and expenses charged to investors of the AIF, portion of fees
and expenses which may be attributed to investment in units of other AIFs;
(c) Process to be followed by the Manager to ensure compliance with investment
conditions as specified in Regulation 15 and Regulation 16 or 17 or 18 (as
applicable) of AIF Regulations;
(d) Whether any investments are proposed to be made in units of other AIFs
managed/ sponsored by the same Manager/ Sponsor or associates of the
Manager/ Sponsor and details thereof, including allocation, fees, expenses,
etc.
4.1.3. AIFs, which had not proposed investment in units of AIFs in PPM at the time of
launch of scheme, may also invest simultaneously in securities of investee
companies and in units of other AIFs, subject to appropriate disclosures in the PPM
and with the consent of at least two-thirds of unit holders by value of their
investment in the AIF in terms of Regulation 9(2) of the AIF Regulations.
4.1.4. Pooling vehicles shall not be created solely for the purpose of investing in an AIF
unless the pooling vehicles are registered with SEBI as AIFs21.
4.2. Participation of AIFs in Credit Default Swaps22
Regulations 16(1)(aa),17(da) and 18(ab) of AIF Regulations enable AIFs to participate in
Credit Default Swaps (‘CDS’) in terms of the conditions as may be specified by SEBI from
time to time. In this regard, the following is specified:
20 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021
21 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
22 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2023/15 dated January 12, 2023
Page 19 of 153 Back to Index
Conditions applicable to Category I, II and III AIFs for buying CDS -
4.2.1. Category I AIFs and Category II AIFs may buy CDS on underlying investment in
debt securities, only for the purpose of hedging.
4.2.2. Category III AIFs may buy CDS for the purpose of hedging or otherwise, within
permissible leverage as specified in para 7.2 of this Master Circular.
Conditions applicable to Category II and III AIFs for selling CDS -
4.2.3. Category III AIFs may sell CDS, subject to the condition that effective leverage
undertaken is within the permissible limits as specified in para 7.2 of this Master
Circular.
4.2.4. Further, Category II AIFs and Category III AIFs may sell CDS, by earmarking
unencumbered Government bonds/Treasury bills equal to the amount of the said
CDS exposure. Such earmarked securities may also be used for maintaining
applicable margin requirements for the said CDS exposure. Exposure to CDS
undertaken in the aforesaid manner shall not tantamount to leverage.
4.2.5. Total exposure to an investee company, including exposure through CDS, shall be
within the limit of applicable concentration norm as specified in AIF Regulations.
Other conditions applicable for transacting in CDS -
4.2.6. AIFs shall report details of CDS transaction to the custodian, by the next working
day, in the manner as specified by the custodian.
4.2.7. Custodian shall put in place a mechanism to collect necessary details from AIFs
transacting in CDS, to monitor the compliance with conditions specified at para
4.2.1 to para 4.2.5 above.
4.2.8. The obligation of manager/AIF and custodian in case of breach of leverage limits
due to transactions in CDS by Category III AIFs, shall be as specified in para 7.3.2
and para 7.3.3 of this Master Circular.
4.2.9. Further, for Category II AIFs and Category III AIFs which sell CDS by earmarking
securities in the manner as mentioned at para 4.2.4 above, in case the amount of
earmarked securities falls below CDS exposure:
a. The AIF shall send a report to custodian on the same day of the breach.
b. The AIF shall bring the amount of earmarked securities equal to CDS exposure
and report details regarding rectification of breach to custodian, by the end of
next trading day.
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c. In case the AIF fails to rectify the breach in the manner as specified above, the
custodian shall report details of the breach to SEBI, on the next working day.
4.2.10. Any unhedged position, which shall result in gross unhedged positions across all
CDS transactions exceeding twenty-five percent of investable funds of the scheme
of an AIF, shall be taken only after intimating to all unit holders of the scheme.
4.2.11. All CDS transactions shall be on a platform regulated by SEBI or RBI, to enhance
transparency and disclosure.
4.2.12. AIFs transacting in CDS, shall also ensure compliance with applicable provisions
of RBI notification on ‘Master Direction - Reserve Bank of India (Credit
Derivatives) Directions, 2022’ dated February 10, 2022 and other directives issued
by RBI in this regard from time to time.
4.3. Transaction in Corporate Bonds through Request for Quote (RFQ) platform23
4.3.1. AIFs shall undertake at least 10% of their total secondary market trades in
Corporate Bonds by value in a month by placing/seeking quotes on the RFQ
platform.
4.3.2. Further, in terms of Chapter XXII of Master Circular for issue and listing of Non-
convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal
Debt Securities and Commercial Paper dated October 15, 2025, quotes on RFQ
platform can be placed to an identified counterparty (i.e. ‘one-to-one’ mode) or to
all the participants (i.e. ‘one-to-many’ mode). In this regard, it is clarified that all
transactions in Corporate Bonds wherein AIF(s) is on both sides of the trade shall
be executed through RFQ platform in ‘one-to-one’ mode. However, any transaction
entered by an AIF in Corporate Bonds in ‘one-to-many’ mode which gets executed
with another AIF, shall be counted in ‘one-to-many’ mode and not in ‘one-to-one’
mode.
4.4. Clarifications related to investments by AIFs24
4.4.1. For the purpose of Regulation 15(1)(c) of AIF Regulations, in case the AIF
proposes to invest into real estate or infrastructure projects, every such investee
company shall hold or propose to hold not less than one project, directly or
indirectly.
4.4.2. With respect to Regulation 17(a) of the AIF Regulations, it is clarified that the term
'primarily' is indicative of where the main thrust of Category II AIFs ought to be.
The investment portfolio of a Category II AIF ought to be more in unlisted
23 SEBI Circular No. SEBI/HO/AFD/PoD/P/CIR/2023/017 dated February 01, 2023
24 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 and SEBI Circular No. CIR/IMD/DF/16/2014
dated July 18, 2014
Page 21 of 153 Back to Index
securities and/or listed debt securities (including securitised debt instruments)
which are rated ‘A’ or below by a credit rating agency registered with SEBI, as
against the aggregate of other investments.
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Chapter 5 - Guidelines for overseas investments by AIFs and related reporting25
In terms of Regulation 15(1)(a) of AIF Regulations, AIFs may invest in securities of companies
incorporated outside India subject to such conditions or guidelines that may be stipulated or
issued by the RBI and SEBI from time to time. In this regard, the following is specified:
5.1. Investment conditions
5.1.1. AIFs may invest in equity and equity linked instruments only of off-shore venture
capital undertakings, subject to overall limit of USD 1500 million (combined limit
for AIFs and Venture Capital Funds registered under the erstwhile Securities and
Exchange Board of India (Venture Capital Funds) Regulations, 1996).
5.1.2. For the purpose of such investment, it is clarified that “Offshore Venture Capital
Undertakings” means a foreign company whose shares are not listed on any of the
recognized stock exchange in India or abroad.
5.1.3. Such investments shall not exceed 25% of the investable funds of the scheme of
the AIF.
5.1.4. AIFs shall invest in an overseas investee company, which is incorporated in a
country whose securities market regulator is a signatory to the International
Organization of Securities Commissions Multilateral Memorandum of
Understanding (Appendix A Signatories) or a signatory to the bilateral
Memorandum of Understanding with SEBI.
5.1.5. AIFs shall not invest in an overseas investee company, which is incorporated in a
country identified in the public statement of Financial Action Task Force (FATF)
as:
(a) a jurisdiction having a strategic Anti-Money Laundering or Combating the
Financing of Terrorism deficiencies to which counter measures apply; or
(b) a jurisdiction that has not made sufficient progress in addressing the
deficiencies or has not committed to an action plan developed with FATF to
address the deficiencies.
5.1.6. These investments would be subject to Foreign Exchange Management (Overseas
Investment) Rules, 2022, Foreign Exchange Management (Overseas Investment)
Regulations, 2022 and Master Direction – Overseas Investment’ dated July 24,
2024, including amendments thereof and related directions issued by RBI from time
25 SEBI Circular No. SEBI/HO/AFD-1/PoD/CIR/P/2022/108 dated August 17, 2022,
SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2018/103/2018 dated July 03, 2018 and
SEBI Circular No. CIR/IMD/DF/7/2015 dated October 1, 2015
Page 23 of 153 Back to Index
to time. Further, AIFs shall adhere to FEMA, 1999, its Rules, Regulations and
Directions issued by the Government/ RBI from time to time.
5.1.7. AIFs shall not invest in Joint venture/Wholly Owned Subsidiary while making
overseas investments.
5.1.8. AIFs shall comply with all requirements under RBI guidelines on opening of
branches/subsidiaries/Joint Venture /undertaking investment abroad by NBFCs,
where more than 50% of the funds of the AIF has been contributed by a single
NBFC.
5.1.9. AIFs shall transfer/sell the investment in overseas investee company only to the
entities eligible to make overseas investments, as per the extant guidelines issued
under FEMA, 1999, including under Foreign Exchange Management (Overseas
Investment) Rules, 2022.
5.2. Allocation of overseas investment limit
5.2.1. AIFs shall file an application to SEBI for allocation of overseas investment limit in
the format specified at Annexure 8. The Trustee/Board/Designated Partners of the
AIFs shall submit an undertaking to SEBI as specified at Annexure 8 with respect
to the proposed overseas investment.
It is clarified that no separate permission from RBI is necessary in this regard.
5.2.2. The allocation of investment limits would be done on ‘first come- first serve’ basis,
depending on the availability in the overall limit of USD 1500 million.
5.2.3. In case an AIF who is allocated certain investment limit, wishes to apply for
allocation of further investment limit, the fresh application shall be dealt with on
the basis of the date of its receipt and no preference shall be granted to it in fresh
allocation of investment limit.
5.2.4. The AIF shall have a time limit of four26 months from the date of approval from
SEBI for making allocated investments in offshore venture capital undertakings. In
case the applicant does not utilize the limits allocated within the stipulated period,
SEBI may allocate such unutilized limit to other applicants.
5.2.5. If an AIF liquidates investment made in an overseas investee company previously,
the sale proceeds received from such liquidation, to the extent of investment made
in the said overseas investee company, shall be available to all AIFs (including the
selling AIF) for reinvestment.
26 SEBI circular no. SEBI/HO/AFD/PoD/CIR/P/2023/137 dated August 04, 2023
Page 24 of 153 Back to Index
5.3. Reporting of overseas investments
5.3.1. AIFs shall report the utilization of the overseas limits within 5 working days of
such utilization on SEBI Intermediary portal.
5.3.2. AIFs shall also report the following through SEBI intermediary portal:
(a) In case an AIF has not utilized the overseas limit granted to them within a
period of four months27 from the date of SEBI approval (hereinafter referred
to as ‘validity period’), the same shall be reported within 2 working days after
expiry of the validity period;
(b) In case an AIF has not utilized a part of the overseas limit within the validity
period, the same shall be reported within 2 working days after expiry of the
validity period;
(c) In case an AIF/ VCF wishes to surrender the overseas limit at any point of
time within the validity period, the same shall be reported within 2 working
days from the date of decision to surrender the limit.
5.3.3. AIFs shall furnish the sale/divestment details of the overseas investments to SEBI
in the format given at Annexure 9 within 3 working days of the divestment, by
emailing to aifreporting@sebi.gov.in, for updating the overall limit available for
overseas investment by AIFs.
27 SEBI circular no. SEBI/HO/AFD/PoD/CIR/P/2023/137 dated August 04, 2023
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Chapter 6 - Framework for AIFs to make co-investment within the AIF structure 28
AIF Regulations permit Category I and Category II AIFs to offer co-investment facility to
Accredited Investors by launching a separate co-investment scheme (“CIV scheme”) within AIF
Regulations. This is in addition to the co-investment facilitated to investors of AIFs through Co-
investment Portfolio Managers under SEBI (Portfolio Managers) Regulations, 2020 (“PMS
route”).
6.1. In terms of sub-regulation 7 of regulation 17A of AIF Regulations, co-investment through
a CIV scheme shall be carried out by manager of Category I or Category II AIFs in the
manner and subject to the conditions as may be specified by SEBI from time to time. In
this regard, below mentioned operational modalities are being specified:
6.1.1. Managers of AIFs shall make co-investment for an investor in an investee company
either through PMS route or CIV scheme route.
6.1.2. In terms of regulation 17A(2), manager of AIF shall file a shelf placement
memorandum (template available at Annexure 10), that inter alia includes,
principal terms relating to co-investments, governance structure, and regulatory
framework for co-investment, etc.
6.1.3. Each CIV scheme shall have separate bank account and demat account and assets
of each CIV scheme shall be ring fenced from assets of the other schemes.
6.1.4. Co-investments of an investor in an investee company across CIV schemes shall
not exceed three times of the contribution made by such investor in the total
investment made in the said investee company through the scheme of the AIF to
which aforesaid CIV schemes are affiliated.
However, the aforesaid restriction shall not apply to the following types of investors
(i.e. these investors may invest any amount in an investee company through CIV
schemes):
(a) Multilateral or Bilateral Development Financial Institutions;
(b) State Industrial Development Corporations;
(c) Entities established or owned or controlled by the Central Government or a
State Government or the Government of a foreign country, including Central
Banks and Sovereign Wealth Funds.
6.1.5. In case an investor of a scheme of an AIF excused / excluded or has defaulted in
contributing to the investment made in an investee company by such scheme of
AIF, such investor shall not be allowed to co-invest in the said investee company.
28 SEBI circular SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/126 dated September 09, 2025
Page 26 of 153 Back to Index
6.1.6. The manager shall ensure that the CIV scheme does not make any investment:
(a) that would lead to its investors acquiring or holding an interest/exposure in
an investee company indirectly, that they cannot acquire or hold directly,
(b) that would necessitate additional regulatory disclosure if they had invested
directly,
(c) where the investee company cannot receive investments from such investor
directly.
6.1.7. CIV Scheme shall not borrow funds directly or indirectly or engage in any kind of
leverage.
6.1.8. Investors of a CIV scheme shall have rights in the investment of the CIV scheme
and in the distribution of proceeds of the investment, pro-rata to their contribution
to the CIV scheme, except to the extent carried interest (or additional return or
whatever name it is called) is shared with the sponsor or manager of the AIF or
employees/directors/partners of the manager of AIF.
6.1.9. Any expenses associated with co-investment, shall be shared proportionately
between the scheme of AIF and CIV scheme in the ratio of their investments.
6.1.10. CIV scheme shall be subject to implementation standards, if any, formulated by
Standard Setting Forum of AIF (‘SFA’), in consultation with SEBI, to ensure that
the investment by CIV scheme are made for bona-fide purposes and that the
flexibility extended in this regard is not misused.
6.2. The implementation standards, if any, formulated by SFA in consultation with SEBI, shall
be adopted by AIFs, Managers of AIFs and their Key Management Personnel for
compliance with the provisions of this chapter. Such implementation standards shall be
published on websites of the industry associations which are part of the SFA, i.e., Indian
Venture and Alternate Capital Association (IVCA), PE VC CFO Association and Trustee
Association of India.
Page 27 of 153 Back to Index
D. INVESTMENT CONDITIONS AND OTHER NORMS FOR SPECIFIC
CATEGORIES / SUB-CATEGORIES OF AIFs
Chapter 7 - Operational and prudential norms for Category III AIFs
7.1. Calculation of investment concentration norm for Category III AIFs29
Regulation 15(1)(d) of AIF Regulations provides flexibility to Category III AIFs, including
LVFs of Category III AIFs, to calculate investment concentration norm based either on
investable funds or net asset value (‘NAV’) of the scheme while investing in listed equity
of an investee company, subject to the conditions specified by SEBI from time to time. In
this regard, the following is specified:
7.1.1. All Category III AIFs shall disclose the basis for calculation of investment
concentration norm in the PPM of their schemes.
7.1.2. The basis for calculating investment concentration norm shall not be changed
during the term of the scheme.
7.1.3. Category III AIFs which choose to calculate investment concentration norm based
on NAV, shall comply with the following30:
(a) The limit for investment in listed equity shall be calculated based on the NAV
of the fund on the business day immediately preceding the date on which the
Category III AIF makes such investment.
(b) NAV of the AIF shall be the sum of value of all securities adjusted for mark
to market gains/losses (including cash and cash equivalents). The NAV shall
exclude any funds borrowed by the AIF.
(c) Passive breach of concentration norm, i.e. when the market value of the
investment of Category III AIF in listed equity of an investee company
exceeds the investment limit as specified under Regulation 15(1)(d) of AIF
Regulations, shall be rectified within 30 days from the date of the breach.
7.2. Prudential requirements with respect to leverage31
All Category III AIFs which undertake leverage, whether through investment in derivatives
or by borrowing or by any other means shall comply with the following prudential
requirements:
7.2.1. For the purpose of arriving at leverage undertaken by an AIF, leverage shall be
calculated as the ratio of the exposure to the NAV of the AIF.
29 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF6/P/CIR/2022/0000000037 dated March 28, 2022
30 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF6/P/CIR/2021/663 dated Nov 22, 2021
31 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
Page 28 of 153 Back to Index
7.2.2. Leverage shall be calculated as under:
Total exposure {Longs+Shorts (after offsetting as permitted)}
Leverage=
Net Asset Value (NAV)
7.2.3. The leverage of a Category III AIF shall not exceed 2 times of the NAV of the fund.
i.e. If an AIF’s NAV is INR 100 crore, its exposure (Longs + shorts) after offsetting
positions as permitted shall not exceed INR 200 crore.
7.2.4. Category III AIFs investing in units of other AIFs may undertake leverage not
exceeding two times of the value of portfolio (NAV) after excluding the value of
investment in units of other AIFs32.
Calculation of exposure and NAV
7.2.5. The total exposure of the fund for the purpose of computing leverage shall be the
sum of the market value of all the securities/ contracts held by the fund. The total
exposure at any point of time will be a sum of exposure through instruments in both
the spot market and the derivative market.
7.2.6. Exposure shall be calculated as below:
(i) Futures (long and short) = Futures Price * Lot Size * Number of Contracts
(ii) Options bought = Option Premium Paid * Lot Size * Number of Contracts
(iii) Options sold = Market price of underlying * Lot size * Number of contracts
(iv) In case of any other derivative exposure, the exposure is proposed to be
calculated as the notional market value of the contract.
7.2.7. Idle cash and cash equivalents shall not be included in the calculation of total
exposure. Long put positions shall be considered as short exposure and short put
positions shall be considered as long exposure. Short selling of a stock through
Securities Lending and Borrowing Mechanism (‘SLBM’) shall be treated as short
exposure. Temporary borrowing arrangements which relate to and are fully covered
by capital commitments from investors need not be included in calculation of
leverage.
7.2.8. Offsetting of positions shall be allowed for calculation of leverage for transactions
entered into for hedging and portfolio rebalancing as provided in para 13.15 of
SEBI Master Circular No. HO/24/13/11(1)2026-IMD-POD-1/I/7602/2026 dated
March 20, 2026 for Mutual Funds.
32 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021
Page 29 of 153 Back to Index
7.2.9. Sum of all exposures without offsetting transactions for hedging and portfolio
rebalancing shall be termed as 'gross exposure' and the ratio of such gross exposure
and NAV shall be termed as 'gross leverage'.
7.2.10. NAV of the AIF shall be the sum of value of all securities adjusted for mark to
market gains/losses (including cash and cash equivalents). The NAV shall exclude
any funds borrowed by the AIF.
7.2.11. All the above restrictions/limits shall apply at the scheme-level.
7.3. Breach of leverage limits33
7.3.1. All Category III AIFs shall have adequate systems in place to monitor their
exposures. It shall be responsibility of the AIFs to ensure that the leverage shall not
exceed the specified limit at all times.
7.3.2. All Category III AIFs shall report to the custodian the amount of leverage at the
end of the day (based on closing prices), by the end of next working day34.
7.3.3. In case of a breach in limit:
a. Obligation of AIF:
(i) The AIF shall send a report to the custodian in case there has been any breach
of limit during the day, by the end of the same day.
(ii) The AIF shall send a report to all its investors before 10 a.m. on the next
working day stating that there is a breach in the limit along with reasons for
the same.
(iii) The AIF shall square off the excess exposure and bring back the leverage
within the specified limit by end of next working day. This shall however not
prejudice any action that may be taken by SEBI against the AIF under AIF
Regulations or the SEBI Act.
(iv) A confirmation of squaring off of the excess exposure shall be sent to all the
investors by the AIF by end of the day on which the exposure was squared
off.
b. Obligation of custodian:
(i) The custodian shall report to SEBI providing name of the fund, the extent of
breach and reasons for the same before 10 a.m. on the next working day.
33 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
34 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
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(ii) A confirmation of squaring off of the excess exposure shall be sent to SEBI
by the custodian by end of the day on which the exposure was squared off.
7.4. Risk Management and Compliance35
All Category III AIFs which employ leverage shall:
7.4.1. have a comprehensive risk management framework supported by an independent
risk management function, appropriate to the size, complexity and risk profile of
the fund.
7.4.2. have a strong and independent compliance function appropriate to the size,
complexity and risk profile of the fund supported by sound and controlled
operations and infrastructure, adequate resources and checks and balances in
operations.
7.4.3. maintain appropriate records of the trades/transactions performed and such
information should be available to SEBI, whenever sought.
7.4.4. provide full disclosure and transparency about conflicts of interest and how they
manage them from time to time, to investors, in accordance with Regulation 21 of
the AIF Regulations and any other guidelines as may be specified by SEBI from
time to time. Such conflicts shall be disclosed to the investors in the placement
memorandum and by separate correspondences as and when such conflicts may
arise. Such information shall also be disclosed to SEBI as and when required by
SEBI.
7.5. Redemption norms for open ended schemes of Category III AIFs 36
7.5.1. In case of request for partial redemption of units by an investor in an open-ended
scheme of AIF, the AIF shall ensure that after such redemption, the amount of
investment retained by the investor in the fund does not fall below the specified
minimum limit as provided under the AIF Regulations.
7.5.2. The Manager of such AIFs/schemes of AIFs shall ensure adequate and sufficient
degree of liquidity of the scheme/ fund in order to allow it, in general, to meet
redemption obligations and other liabilities.
7.5.3. The Manager shall establish, implement and maintain an appropriate liquidity
management policy and process to ensure that the liquidity of the various
underlying assets is consistent with the overall liquidity profile of the fund/scheme
while making any investment.
35 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
36 SEBI Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013
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7.5.4. The Manager of such AIFs shall clearly disclose the possibility of suspension of
redemptions in exceptional circumstances to investors, in the PPM.
7.5.5. Suspension of redemptions by the Manager shall be justified only:
(a) in exceptional circumstances provided that such suspension is exclusively in
the best interest of investors of the AIF, or
(b) if the suspension is required under the AIF regulations or required by SEBI.
7.5.6. The Manager of such AIFs shall build the operational capability to suspend
redemptions in an orderly and efficient manner. During the suspension of the
redemptions, the Manager shall not accept new subscriptions.
7.5.7. The decision by the Manager to suspend redemptions, in particular the reasons for
the suspension and the planned actions shall be appropriately documented and
communicated to SEBI and to the investors.
7.5.8. The suspension shall be regularly reviewed by the Manager. The Manager shall
take all necessary steps in order to resume normal operations as soon as possible
having regard to the best interest of investors.
7.5.9. The Manager of such AIFs shall keep SEBI and investors informed about the
actions undertaken by the manager throughout the period of suspension. The
decision to resume normal operations shall also be communicated to SEBI and the
investors as soon as possible.
7.6. Breach in corpus of open ended schemes of Category III AIFs37
For the purpose of Regulation 10(b) of AIF Regulations, in case the corpus of an open-
ended scheme falls below INR 20 crore:
7.6.1. The AIF shall intimate to SEBI within 2 working days of receiving request for
redemption from the client.
7.6.2. The AIF shall take necessary action to bring back the scheme size to INR 20 Crore
within 3 months from the date of such breach.
7.6.3. In case the AIF fails to bring back the corpus within the specified period, it shall
redeem entire units of all investors and wind up the scheme in terms of Regulation
29 of AIF Regulations.
7.6.4. In case of repeated violations by the AIF, SEBI may take action against the AIF, as
may be appropriate.
37 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
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Chapter 8 - Operational and prudential norms for Angel Funds38
AIF Regulations have been amended and notified on September 09, 2025, to prescribe the revised
regulatory framework for Angel Funds under Chapter III-A of the AIF Regulations. In this
context, the specific conditions and modalities with respect to various provisions pertaining to
Angel Funds are prescribed in this chapter.
Fund raising by Angel Funds –
8.1. In terms of Regulation 19D(1) of AIF Regulations, Angel Funds shall raise funds only
from Accredited Investors by way of issue of units, in the manner as may be specified by
SEBI from time to time. In this regard, the following is specified –
8.1.1. Angel Funds which are granted registration by SEBI post September 10, 2025, shall
on-board and offer investment opportunities to Accredited Investors only.
8.1.2. Angel Funds registered with SEBI on or before September 10, 2025 shall comply
with the following –
(a) Such Angel Funds shall implement the aforesaid mandate on or before
September 08, 2026 and shall not offer investment opportunity to more than
200 non-Accredited Investors during this period.
(b) Such Angel Funds shall not accept contribution for investment in an investee
company from non-Accredited Investors, post September 08, 2026.
(c) Existing investors of such Angel Funds shall continue to hold their
investments already made in the Angel Fund as per the terms of the PPM
and/or fund documents of the Angel Fund.
8.1.3. Managers of Angel Funds shall ensure that, at the time of accepting contribution
for investment in an investee company, the investor providing contribution
qualifies as an Accredited Investor, either by holding a valid accreditation
certificate or by meeting the criteria for deemed Accredited Investor as specified in
Regulation 2(1)(ab) of AIF Regulations.
8.2. In terms of Regulation 19D(6) of AIF Regulations, an Angel Fund shall on-board at least
five Accredited Investors before declaring its first close in the manner as may be specified
by SEBI from time to time. In this regard, the following is specified –
8.2.1. The first close of an Angel Fund shall be declared not later than 12 months from
the date on which the AIF becomes eligible to launch its scheme as stated at para
2.4.1 of this Master circular39.
38 SEBI circular dated SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/128 dated September 10, 2025 and SEBI circular
dated SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/136 dated October 15, 2025
39 SEBI circular No. HO/19/19/11(2)2026-AFD-RAC2 I/10624/2026 dated April 30, 2026
Page 33 of 153 Back to Index
8.2.2. Existing Angel Funds as on September 10, 2025, which have not yet declared first
close, shall do so on or before September 08, 2026.
8.2.3. In case the first close of an Angel Fund is not declared within the timeline specified
above, the Angel Fund shall refile the PPM with SEBI as per applicable provisions
of AIF Regulations by paying requisite fee to SEBI.
Investments by Angel Funds –
8.3. In terms of Regulation 19E of AIF Regulations, an Angel Fund shall not launch any
schemes for soliciting funds from angel investors or making any investments. Accordingly,
the following is specified –
8.3.1. Investments in investee companies shall be made directly by Angel Funds, without
the requirement of launching a scheme for this purpose.
Consequently, the provisions of AIF Regulations which are applicable to a scheme
of an AIF, shall be applicable to the Angel Fund at fund level, unless stated
otherwise.
8.3.2. The requirement of filing term sheet with SEBI for launching scheme and making
investment has been discontinued with. However, Angel Funds shall maintain
records of term sheets for each investment, including the list of investors who
participate in that investment and their contribution to the investment.
8.4. In terms of proviso to Regulation 19F(1) of AIF Regulations, Angel Funds may make
additional investments in their existing investee companies which are no longer start-ups
(‘follow-on investments’), subject to the conditions as may be specified by SEBI from time
to time. In this regard, the following conditions are specified –
8.4.1. Follow-on investment shall be allowed to the extent the post-issue shareholding
percentage of the Angel Fund in the investee company does not exceed the pre-
issue shareholding percentage.
8.4.2. The total investment in an investee company by an Angel Fund, including follow-
on investments, shall not exceed INR 25 Crore.
8.4.3. Angel Funds shall accept contribution for follow-on investment only from the
investors who had contributed to the existing investment in the investee company
and pro-rata to their contribution in the existing investment. However, in case an
investor opts not to participate in the follow-on investment to the extent of its pro-
rata rights, the same may be offered to the remaining investors who had contributed
to the existing investment.
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8.5. In terms of Regulation 19F(3) of AIF Regulations, investment by an Angel Fund in an
investee company shall be subject to lock-in period as may be specified by SEBI. In this
regard, the following is specified –
8.5.1. Investment by an Angel Fund in an investee company shall be locked-in for a period
of one year.
8.5.2. The aforesaid lock-in requirement shall be for a period of six months if the exit
from the investment by Angel Fund is by way of sale to a third party, that is,
excluding buy-back by the investee company or purchase by its promoters or their
associates. Any such sale shall be subject to terms of Articles of Association of the
investee company.
8.6. In terms of Regulation 19F(7) of AIF Regulations, Angel Funds may invest in the securities
of companies incorporated outside India subject to such conditions or guidelines that may
be stipulated or issued by the Reserve Bank of India and SEBI from time to time. In this
regard, the following is specified –
8.6.1. For the purpose of overseas investments, the 25% limit as prescribed under para
5.1.3 of this Master Circular shall be calculated based on the total investments (at
cost) held by the Angel Fund as on date of the application to SEBI for overseas
investment.
8.6.2. All other conditions and modalities specified under Chapter 5 -of this Master
Circular continue to remain applicable to Angel Funds.
Offering and allocation of investment opportunities by Angel Funds -
8.7. In terms of Regulation 19G(4) of AIF Regulations, the manager shall disclose a defined
methodology in the PPM of the Angel Fund for the purpose of allocating the investment
among angel investors who provide approval for such investment, in the manner as may
be specified by SEBI from time to time. In this regard, the following is specified –
8.7.1. The manager of Angel Fund shall strictly adhere to the such methodology for
allocating the investment among consenting investors.
8.7.2. The methodology for allocation disclosed in the PPM shall not provide any
discretion to manager for allocation of investment on case-to-case basis.
8.8. In terms of Regulation 19G(6) of AIF Regulations, the investors of an Angel Fund shall
have rights in an investment of the Angel Fund and in the distribution of proceeds of the
investment, pro-rata to their contribution to such investment, except in cases as may be
specified by the Board from time to time.
In this regard, it is specified that the requirement of maintaining pro-rata rights of investors
in distribution of proceeds of investments of a scheme, shall not be applicable to the extent
returns or profit on the investments is shared by an investor with the manager or sponsor
Page 35 of 153 Back to Index
of the AIF or the employees/directors/partners of the manager of AIF (by whatever name
it is called, such as carried interest/additional return), in terms of contribution agreement
executed between them.
Other obligations -
8.9. All existing Angel Funds shall be considered to be registered as Category I AIF – Angel
Funds, instead of being a sub-category under Category I AIF – Venture Capital Funds.
8.10. The requirement of carrying out annual audit of compliance with terms of PPM, as per the
norms prescribed in para 21.3 of this Master circular, shall be applicable to Angel Funds
that have made total investments (at cost) exceeding INR 100 crore.
8.11. Angel Funds shall report necessary information including investment wise valuation and
cash flow data to the benchmarking agencies, for the purposes of performance
benchmarking as per the norms prescribed in Chapter 22 -of this Master Circular. In the
PPM as well as in any marketing or promotional or other material, where past performance
of the Angel Fund is mentioned, the performance versus benchmark report provided by the
benchmarking agencies for such fund shall also be provided.
8.12. The requirements of carrying out PPM audit as given at para 8.10 above and reporting
information to benchmarking agencies as given at para 8.11 above shall be applicable to
Angel Funds from Financial Year 2025-26 onwards.
8.13. Unless specified otherwise, any limit/condition applicable to Angel Funds under AIF
Regulations and circulars issued thereunder and calculated based on corpus/ investable
funds, shall be calculated based on the total investments made by the Angel Fund (at cost).
8.14. In this regard, with respect to Chapter 20 -of this Master Circular on ‘Specific due-
diligence of investors and investments of AIFs’, it is further clarified that the thresholds
specified in para 20.3.2(a), 20.4.2(a), 20.5.1(a) and 20.7.2(a) of the said chapter shall be
calculated at each investment level, based on contribution of investors to a particular
investment (instead of calculating based on corpus at fund level).
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Chapter 9 - Norms for Special Situation Funds40
Chapter III-B of Regulation 19 of AIF Regulations prescribes the framework for Special
Situation Fund (‘SSF’), a sub-category under Category I AIF, which shall invest in ‘special
situation assets’. In this regard, the following is specified:
9.1. Each scheme of SSF shall have a corpus of at least INR 100 crore.
9.2. SSF shall accept an investment of value not less than INR 10 crore from an investor. In
case of an accredited investor, the SSF shall accept an investment of value not less than
INR 5 crore. Further, in case of investors who are employees or directors of the SSF or
employees or directors of the manager of the SSF, the minimum value of investment shall
be INR 25 lakh.
9.3. SSF intending to act as a resolution applicant under the Insolvency and Bankruptcy Code,
2016 shall ensure compliance with the eligibility requirement provided thereunder.
9.4. Further, in respect of SSF acquiring stressed loan in terms of Clause 64 of Reserve Bank
of India (Commercial Banks - Transfer and Distribution of Credit Risk) Directions, 2025,
Clause 62 of Reserve Bank of India (Non-Banking Financial Companies - Transfer and
Distribution of Credit Risk) Directions, 2025, Clause 62 of Reserve Bank of India (All
India Financial Institutions - Transfer and Distribution of Credit Risk) Directions, 2025
and Clause 62 of Reserve Bank of India (Small Finance Banks – Transfer and Distribution
of Credit Risk) Directions, 2025 (collectively referred as ‘RBI Directions for Transfer and
Distribution of Credit Risk), the following is specified:
9.4.1. SSF may acquire stressed loan in terms of the RBI Directions for Transfer and
Distribution of Credit Risk upon inclusion of SSF in the class of entities to which
lenders are permitted to transfer stressed loan exposures as given in the said
Directions.
9.4.2. Stressed loan acquired by SSF in terms of the RBI Directions for Transfer and
Distribution of Credit Risk shall be subject to a minimum lock-in period of six
months. The lock in period shall not be applicable in case of recovery of the stressed
loan from the borrower.
9.4.3. SSF acquiring stressed loans in terms of the RBI Directions for Transfer and
Distribution of Credit Risk shall comply with the same initial and continuous due
diligence requirements for its investors, as those mandated by RBI for investors in
Asset Reconstruction Companies.
40 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2022/009 dated Jan 27, 2022
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E. ACCREDITATION OF INVESTORS
Chapter 10 - Framework for Accreditation of Investors41
Under the framework for Accredited Investors (AIs), AIs may avail flexibility in minimum
investment amount (‘Lower ticket size’) or concessions from specific regulatory requirements
applicable to investment products, subject to conditions applicable for specific products/ services
under SEBI (Alternative Investment Funds) Regulations, 2012, SEBI (Portfolio Managers)
Regulations, 2020 and SEBI (Investment Advisers) Regulations, 2013. The framework and
modalities for accreditation are given in this chapter.
10.1. Accreditation Agency
10.1.1. Persons desirous of being reckoned as AIs shall approach an Accreditation Agency
for accreditation. Accreditation Agencies shall be responsible for:
a) Verification of documents submitted by applicants for accreditation,
b) Timely processing of applications for accreditation and issuance of
accreditation certificate,
c) Maintaining data of accredited investors,
d) Verification of accreditation status,
e) Maintaining confidentiality of investor information at all times, and
f) Any other responsibilities as may be specified by SEBI from time to time.
10.1.2. Accreditation Agencies shall have the requisite infrastructure including systems
and manpower to fulfill their responsibilities as specified under para 10.1.1 above.
10.1.3. The following entities are eligible to carry out the accreditation process:
(a) Subsidiaries of recognized Stock Exchanges, provided the Stock Exchange
meets the following criteria:
(i) Minimum 20 years presence in Indian securities market,
(ii) Minimum net worth of INR 200 crore,
(iii) Presence of nation-wide terminals,
(iv) Having Investor grievance redressal mechanisms in place, including
arbitration,
(v) Presence of Investor Service Centers (ISCs) in at least 20 cities, and
(vi) Any other criteria as specified by SEBI from time to time.
(b) Subsidiaries of Depositories.
41 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF9/P/CIR/2021/620 dated August 26, 2021 and SEBI Circular No.
SEBI/HO/AFD/PoD1/CIR/2023/189 dated December 18, 2023
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10.1.4. The framework for AIs shall be made available on the websites of accreditation
agencies.
10.1.5. Accreditation Agencies, which are also KYC Registration Agencies (KRAs), may
access Know Your Customer (KYC) documents of applicants available with them
in capacity of KRA and may also access the same from the database of other KRAs,
for the purpose of accreditation.
10.1.6. The Accreditation agencies shall grant accreditation solely based on the KYC and
the financial information of the applicants.
10.1.7. To this effect, the accreditation certificate issued by accreditation agencies shall
include the following disclaimer:
“the assessment of the applicant for accreditation is solely based on the
applicant’s KYC and financial information and does not in any manner exempt
market intermediaries and pooled investment vehicles from carrying out
necessary due diligence of the accredited investors at the time of on-boarding
them as their clients.”
10.2. Eligibility Criteria for Accredited Investors
10.2.1. The following persons shall be eligible to be considered as Accredited Investor
(‘AI’):
(a) Individuals, HUFs, Family Trusts and Sole Proprietorships, which meet the
criteria as under:
(i) Annual Income ≥ INR 2 Crore; OR
(ii) Net Worth ≥ INR 7.5 Crore, out of which at least INR 3.75 Crore
is in the form of financial assets; OR
(iii) Annual Income ≥ INR 1 Crore + Net Worth ≥ INR 5 Crore, out of
which at least INR 2.5 Crore is in the form of financial assets.
(b) Partnership Firms set up under the Indian Partnership Act, 1932 in which
each partner independently meets the criteria for accreditation.
(c) Trusts (other than family trusts) with net worth greater than or equal to INR
50 Crore.
(d) Body Corporates with net worth greater than or equal to INR 50 Crore.
10.2.2. Foreign investor incorporated/established in form other than those mentioned at
para 10.2.1 above shall be subject to eligibility criteria as applicable to Body
Corporates.
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10.2.3. In case of accreditation of individual investors, HUFs and Sole Proprietorships, the
value of the primary residence of the individual, Karta of HUF and the Sole
Proprietor respectively, shall not be considered for calculation of net worth.
10.2.4. In case of investments held jointly by more than one individual, the following
conditions shall apply for eligibility as AI:
(a) Where the joint holders are parent(s) & child(ren), at least one person should
independently fulfil the eligibility criteria for AI.
(b) Where the joint holders are spouses, their combined income/ net worth should
meet the eligibility criteria for AI.
10.2.5. For the purpose of reckoning eligibility criteria, net worth of Body Corporates shall
be calculated as under:
𝑁𝑒𝑡 𝑤𝑜𝑟𝑡ℎ = (𝐶𝑎𝑝𝑖𝑡𝑎𝑙 + 𝑓𝑟𝑒𝑒 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠) − (𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑙𝑜𝑠𝑠𝑒𝑠 +
𝑑𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒 𝑛𝑜𝑡 𝑤𝑟𝑖𝑡𝑡𝑒𝑛 𝑜𝑓𝑓)
10.2.6. For the purpose of reckoning eligibility criteria, net worth of Trusts shall be
calculated as under:
𝑁𝑒𝑡 𝑤𝑜𝑟𝑡ℎ = (𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑎𝑙𝑙 𝑎𝑠𝑠𝑒𝑡𝑠,𝑜𝑡ℎ𝑒𝑟 𝑡ℎ𝑎𝑛 𝑖𝑛𝑡𝑎𝑛𝑔𝑖𝑏𝑙𝑒 𝑎𝑠𝑠𝑒𝑡𝑠) −
(𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠)
10.2.7. The eligibility of foreign investors to be accredited shall be determined on the basis
of the rupee equivalent of their income and/ or net worth as applicable.
10.3. Procedure for Accreditation
10.3.1. For accreditation, the prospective AI (“Applicant”) shall make an application to the
Accreditation Agency in the manner specified by the Accreditation Agency.
Detailed documentation required for accreditation is provided at Annexure 11.
10.3.2. The Accreditation Agency shall issue the Accreditation Certificate to the Applicant.
Each Accreditation Certificate shall have a unique accreditation number, name of
the Accreditation Agency, PAN of the Applicant, validity of accreditation (start
date and end date).
10.4. Validity of Accreditation
10.4.1. If the applicant meets the eligibility criteria for preceding one financial year, the
accreditation certificate issued shall be valid for a period of two years from the date
of issuance.
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10.4.2. If the applicant meets the eligibility criteria in each of the preceding two financial
years, the accreditation certificate issued shall be valid for a period of three years
from the date of issuance.
10.4.3. If the applicant is a newly incorporated entity, which does not have financial
information for the preceding financial year but meets the applicable net-worth
criteria as on the date of application, the accreditation certificate issued shall be
valid for a period of two years from the date of issuance.
10.5. Procedure to avail benefits linked to accreditation
10.5.1. Prospective investors shall, inter-alia, submit a copy of the Accreditation
Certificate and an undertaking to the investment service provider to the effect that:
(a) The prospective investor ‘consents’ to avail benefits under the AI framework.
(b) The prospective investor has the necessary knowledge and means to
understand the features of the investment Product/service eligible for AIs,
including the risks associated with the investment.
(c) The prospective investor is aware that investments by AIs may not be subject
to the same regulatory oversight as applicable to investment by other
investors.
(d) The prospective investor has the ability to bear the financial risks associated
with the investment.
10.5.2. The investment service provider shall independently verify the status of
accreditation of the prospective investor from the concerned Accreditation Agency.
Further, investment service providers may obtain additional undertakings from
prospective investors, provided they do not dilute or contravene the undertakings
in terms of para 10.5.1 above.
10.5.3. Prior to entering into a client agreement with an AI, the investment service provider
shall disclose to the AI, details of the relevant conditions and regulatory
concessions available for the proposed investment, applicable under the AI
framework.
10.5.4. The client agreement between the investment service provider and AI shall, inter-
alia, provide the following:
(a) details of regulatory concessions agreed upon between the investor and the
investment service provider, and the conditions for availing the same, and
(b) consequences, if any, in the event of the investor becoming ineligible to be an
AI during the tenure of the said agreement.
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10.5.5. Pending receipt of certificate from an accreditation agency, based on the manager’s
assessment of the investor’s eligibility criteria, the manager of an AIF may
finalise/execute the contribution agreement, and initiate related operational
procedures, subject to the following conditions42:
(a) Any commitment made by such investor shall not be included in calculation of
corpus of the scheme until such investor obtains accreditation certificate from
an accreditation agency. This is to maintain sanctity of several prudential
norms for AIFs which are based on corpus.
(b) Schemes of AIFs shall receive funds from such investors only after they obtain
accreditation certificate from an accreditation agency.
10.6. Flexibility to investors to withdraw ‘Consent’
10.6.1. Accredited Investors shall have the flexibility to withdraw their ‘Consent’ and
discontinue benefits of accreditation, subject to the following:
(a) An investor who withdraws ‘Consent’ after availing the benefit of lower ticket
size shall be required to increase the investment to the minimum amount that
is stipulated under the applicable regulatory framework for the particular
investment product, within the timeframe specified in the client agreement.
(b) If an investor who has availed concessions to the regulatory framework
withdraws the ‘Consent’ furnished to the investment provider before the expiry
of the client agreement, the investments already made shall be ‘grandfathered’
i.e. such investments shall continue to be reckoned as investments by an AI.
With effect from the date of withdrawal of consent, any further transaction
shall be in accordance with the regulatory framework applicable to investors
other than AIs.
10.6.2. Investors in pooled investment products which are launched exclusively for AIs, in
which concessions to regulatory framework have been availed, shall not have the
flexibility to withdraw their Consent.
10.6.3. The client agreement between the investment service provider and AI shall, inter-
alia, provide the modalities for withdrawal of ‘Consent’ and consequences of the
investor withdrawing the ‘Consent’.
42 SEBI circular no. HO/19/34/11(9)2025-AFD-POD1/I/2286/2026 dated January 09, 2026
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F. OPERATIONAL MODALITIES
Chapter 11 - Dematerialisation of units and investments of AIFs and collection of stamp
duty on units of AIFs
11.1. Issuance of units of AIFs in dematerialised form43:
In terms of Regulation 10(aa) of AIF Regulations, AIFs shall issue units in dematerialised
form subject to the conditions specified by SEBI from time to time. In this regard, it is
specified that the terms of transfer of units of AIF held by an investor in dematerialised
form shall continue to be governed by the terms of PPM, agreements entered between the
AIF and the investors and any other fund documents.
11.2. Credit of units of AIFs in dematerialised form44:
11.2.1. The following timeline and requirement was mandated with respect to issuance and
credit of units of AIFs in demat form, for AIFs/schemes of AIFs as on December
11, 2023:
Schemes with corpus < INR
Schemes with corpus ≥ 500 crore as on Oct 31, 2023
Details INR 500 crore as on Oct 31, and schemes launched after
2023 Oct 31, 2023 irrespective of
corpus
Investors who Units issued after Oct 31, Units issued after Apr 30,
have provided 2023, shall be in demat form 2024, shall be in demat form
their demat and credited only to and credited only to investors
account details investors demat accounts. demat accounts.
Investors who For investors on-boarded For investors on-boarded prior
have not prior to Nov 01, 2023, units to May 01, 2024, units shall be
provided their shall be credited in credited in Aggregate Escrow
demat account Aggregate Escrow Demat Demat Account temporarily,
details Account temporarily, till till investors provide their
investors provide their demat demat account details.
account details.
Completion of
credit of demat
units to
Latest by Jan 31, 2024 Latest by May 10, 2024
a) demat
accounts of
investors who
43 SEBI Circular No. SEBI/HO/AFD/PoD1/CIR/2023/96 dated June 21, 2023
44 SEBI circular no. SEBI/HO/AFD/PoD1/CIR/2023/186 dated December 11, 2023
Page 43 of 153 Back to Index
Schemes with corpus < INR
Schemes with corpus ≥ 500 crore as on Oct 31, 2023
Details INR 500 crore as on Oct 31, and schemes launched after
2023 Oct 31, 2023 irrespective of
corpus
have provided
demat account
details and
b) Aggregate
Escrow Demat
Account, for
those who have
not provided
demat account
details
11.2.2. In cases where investors had not provided demat account details to AIFs within the
timeline given above, the process to be followed for dematerialising/crediting the
units issued, is specified as under -
(a) Managers of AIFs shall continue to reach out to such existing investors to
obtain their demat account details and credit the units issued to them to their
respective demat accounts. Depositories shall also aid in this process as
advised by SEBI. In this regard, AIF industry and depositories shall adopt
implementation standards as formulated by the SFA, along with the two
depositories, in consultation with SEBI. The standards shall detail steps to be
taken by AIF managers and depositories to reach out to investors and
facilitate conversion and credit of their units in demat form.
(b) Units already issued by schemes of AIFs to such existing investors who have
not provided their demat account details, shall be credited to a separate demat
account named “Aggregate Escrow Demat Account”. This account shall be
opened by AIFs for the sole purpose of holding demat units of AIFs on behalf
of such investors. New units to be issued in demat form shall be allotted to
such investors and credited to the Aggregate Escrow Demat Account.
(c) As and when such investors provide their demat account details to the AIF,
their units held in Aggregate Escrow Demat Account shall be transferred to
the respective investors’ demat accounts within 5 working days. No transfer
of units of AIFs from/within Aggregate Escrow Demat Account shall be
allowed, other than for the aforesaid purpose.
Page 44 of 153 Back to Index
(d) Units of AIFs held in Aggregate Escrow Demat Account can be redeemed
and proceeds shall be distributed to respective investors’ bank accounts with
full audit trail of the same.
(e) Managers of AIFs shall maintain investor-wise KYC details of units held in
Aggregate Escrow Demat Account, including name, PAN and bank account
details, along with audit trail of the transactions. The same shall also be
reported to Depositories and Custodians on a monthly basis.
(f) For this purpose, AIF industry shall adopt implementation standards as
formulated by the SFA and depositories jointly, in consultation with SEBI,
for compliance with the provisions of this Chapter. Such standards shall,
inter-alia, include formats for information/ records to be maintained by
managers of AIFs with respect to investor-wise holding/ transactions in the
Aggregate Escrow Demat Account and reporting of the same to Depositories
and Custodians.
(g) Managers of AIFs shall adhere to such implementation standards formulated
by the SFA in consultation with SEBI. Such standards are published on
websites of Depositories and the industry associations which are part of the
SFA, i.e., Indian Venture and Alternate Capital Association (IVCA), PEVC
CFO Association and Trustee Association of India.
11.3. Reporting of value of units of AIFs to Depositories45:
To leverage the depository infrastructure for enhancing transparency and operational
efficiency, and to facilitate system readiness of AIFs, Registrars and Transfer Agents
(RTAs) and Depositories, the following is specified:
11.3.1. AIFs, through their RTAs, shall upload the latest available NAV corresponding to
each ISIN of units of the AIF in the depository system within 30 days from the date
of valuation of the investment portfolio.
11.3.2. For the purpose of aforesaid mandate, the valuation date shall be considered as
under:
(a) In case the valuation is carried out by independent valuers –Date of valuation
report.
(b) In case the valuation is carried out by an Internal valuers – Date on which the
valuation is documented in the internal records of the fund.
45 SEBI Circular no. HO/19/34/11(8)2025-AFD-POD1/I/4335/2026 dated February 06, 2026
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11.3.3. The manager of the AIF shall be responsible for ensuring timely and accurate
uploading of NAV.
11.4. Directions to depositories46:
The Depositories have been directed to:
11.4.1. make necessary amendments to the relevant Bye-laws, Rules and Regulations for
the implementation of the provisions of this chapter, including facilitation of
Aggregate Escrow Demat Account for AIFs;
11.4.2. put in place a system to facilitate that any transfer of units of AIF held in
dematerialised form, which requires approval of the AIF/manager of AIF in terms
of PPM or agreements entered between the AIF and the investors or any other fund
documents, is carried out accordingly i.e. only after approval of AIF/manager of
the AIF;
11.4.3. build necessary infrastructure for uploading of NAV by RTAs and for reflection of
the same in the depository system;
11.4.4. incorporate the following disclaimer wherever AIF NAV is being displayed:
“Net Asset Value (NAV) being shown is on the basis of valuation methodology and
accounting practice followed by your respective AIF. This is an indicative NAV.
For more details, please refer to your statement of accounts and fund documents.”
11.4.5. bring the provisions of this chapter to the notice of their members / participants and
also disseminate the same on their websites.
11.5. Collection of stamp duty on issue, transfer and sale of units of AIFs47
11.5.1. Government vide Gazette notification S.O.116(E) dated January 08, 2020 notified
the “Registrars to an Issue and/or Share Transfer Agents” (RTA) registered under
the Securities and Exchange Board of India (Registrars to an Issue and Share
Transfer Agents) Regulations, 1993 as a “depository” for the limited purposes of
acting as a “collecting agent” under the Indian Stamp Act, 1899 and the Rules made
thereunder, only in case of instruments of transaction otherwise than through a
recognized stock exchange or depository.
11.5.2. In this regard, AIFs have been mandated to comply with the applicable provisions
of the Indian Stamp Act, 1899 and the Rules made thereunder regarding collection
46 SEBI Circular No. SEBI/HO/AFD/PoD1/CIR/2023/96 dated June 21, 2023, SEBI circular no.
SEBI/HO/AFD/PoD1/CIR/2023/186 dated December 11, 2023 and SEBI Circular no. HO/19/34/11(8)2025-AFD-
POD1/I/4335/2026 dated February 06, 2026
47 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/113 dated June 30, 2020
Page 46 of 153 Back to Index
of stamp duty on sale, transfer and issue of units of AIFs with effect from July 01,
2020.
11.5.3. RTA appointed by AIFs shall collect the stamp duty on issue, transfer and sale of
units of AIFs as stated in para 11.5.1 and 11.5.2 above, in compliance with the
applicable provisions of the Indian Stamp Act, 1899 and the Rules made
thereunder.
11.5.4. As regards transactions (issue, transfer and sale of units of AIFs in demat mode)
through recognized Stock Exchange or Depository as defined under Securities
Contract (Regulation) Act, 1956 and Depositories Act, 1996 respectively, the
respective Stock Exchange/authorized Clearing Corporation or a Depository is
empowered to collect stamp duty as per the amended Indian Stamp Act, 1899 and
the Rules made thereunder.
11.6. Holding investments of AIFs in dematerialised form48
In terms of Regulation 15(1)(i) of AIF Regulations, AIFs shall hold their investments in
dematerialised form, subject to such conditions as may be specified by the Board from time
to time. The said requirement does not apply, inter-alia, to such investments by AIFs and
such schemes of AIFs as may be specified by SEBI from time to time. In this regard, the
following is specified:
11.6.1. Any investment made by an AIF on or after July 01, 2025 shall be held in
dematerialised form only, irrespective of whether the investment is made directly
in the investee company or is acquired from another entity.
11.6.2. The investments made by an AIF prior to July 01, 2025 are exempted from the
requirement of being held in dematerialised form, except in the following cases:
(a) Investee company of the AIF has been mandated under applicable law to
facilitate dematerialisation of its securities;
(b) The AIF, on its own, or along with other SEBI registered
intermediaries/entities which are mandated to hold their investments in
dematerialised form, exercises control over the investee company.
For the purpose of the aforesaid clause, the definition of ‘control’ shall be
construed with reference to Regulation 2(1)(f) of AIF Regulations.
48 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2024/5 dated January 12, 2024 and SEBI circular no.
SEBI/HO/AFD/PoD-1/P/CIR/2025/17 dated February 14, 2025
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Chapter 12 - Timeline for first close and calculation of tenure of AIFs
12.1. Timeline for declaration of First Close of schemes of AIFs (Validity of PPM)49
In terms of Regulation 12(4) of AIF Regulations, the first close of the scheme shall be
declared by an AIF in the manner as may be specified by SEBI from time to time. In this
regard, the following is specified:
12.1.1. The First Close of a scheme shall be declared not later than 12 months from the
date on which the AIF becomes eligible to launch its scheme as stated at para 2.4.1
of this Master circular50.
12.1.2. In case of open ended schemes of Category III AIFs, the First Close shall refer to
the close of their Initial Offer Period.
12.1.3. Corpus of the scheme at the time of declaring its First Close shall not be less than
the minimum corpus specified in AIF Regulations for the respective category/sub-
category of the AIF.
12.1.4. The commitment provided by sponsor or manager at the time of declaration of First
Close, to the extent to meet the aforesaid minimum corpus requirement, shall not
be reduced or withdrawn or transferred, post First Close.
12.1.5. The First Close of LVF scheme shall be declared not later than 12 months from the
date of grant of registration of the AIF or date of filing of PPM of scheme with
SEBI, whichever is later.
12.1.6. In case the First Close of a scheme is not declared within the timeline specified
above, the AIF shall file a fresh application for launch of the said scheme as per
applicable provisions of AIF Regulations by paying requisite fee to SEBI.
12.2. Calculation of tenure of close-ended schemes of AIFs51:
In terms of Regulation 13(4) of AIF Regulations, the manner of calculating the tenure of a
close ended scheme of an AIF, including the manner of modification of the tenure, may be
specified by SEBI from time to time. In this regard, the following is specified:
12.2.1. The tenure of close ended schemes of AIFs shall be calculated from the date of
declaration of the First Close.
12.2.2. AIF may modify the tenure of a scheme at any time before declaration of its First
Close. Prior to declaration of the First Close, the investor may withdraw or reduce
commitment provided to such scheme of an AIF.
49 SEBI circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
50 SEBI circular No. HO/19/19/11(2)2026-AFD-RAC2 I/10624/2026 dated April 30, 2026
51 SEBI Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
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12.2.3. Schemes of AIFs which had declared their First Close as on November 17, 2022,
may continue to calculate their tenure from the date of Final Close. Such existing
schemes of AIFs, which are yet to declare Final Close, shall declare their Final
Close as per the timeline provided in the PPM of the scheme and the AIF/manager
shall not have any discretion to extend the said timeline provided in the PPM.
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Chapter 13 - Material change and change in Sponsor or Manager of AIFs
13.1. Procedure for ‘Material Change’ including change in control of manager/sponsor or
change in manager/sponsor of AIFs52 –
13.1.1. ‘Material changes’ may be construed as changes in the fundamental attributes of
the fund/scheme. In case of material changes significantly influencing the decision
of the investor to continue to be invested in the AIF, the process as mentioned
hereunder shall be complied with. Such changes shall include, but not be limited to
the following:
(a) Change in sponsor/manager (not including an internal restructuring within the
group),
(b) Change in control of sponsor/manager,
(c) Change in fee structure or hurdle rate which may result in higher fees being
charged to the unit holders.
The following process shall be followed by the AIF:
(i) Existing unit holders who do not wish to continue post the change shall be
provided an exit option. The unit holders shall be provided not less than one
month for expressing their dissent.
(ii) In case of open-ended schemes of the AIF, the exit option may be provided
by either of the following:
A. Buying out of units of the dissenting investors by the manager/ any
other person as may be arranged by the manager, valuation of which
shall be based on market price of underlying assets.
B. Redemption of units of the investors through sale of underlying assets.
(iii) In case of close-ended schemes of the AIF, the exit option may be provided
as under:
A. The exit option shall be provided by buying out of units of the
dissenting investors by the manager/ any other person as may be
arranged by the manager.
B. Prior to buying out of such units, valuation of the units shall be
undertaken by two independent valuers and the exit shall be at value
not less than average of the two valuations.
(iv) The responsibility to provide exit to the dissenting investors shall be on the
manager. The expenses for the entire process shall be borne by the
manager/sponsor/proposed new manager or sponsor and shall not be charged
to the unit holders.
(v) The entire process of exit to dissenting investors shall be completed within 3
months from the date of expiry of last date of the offer for dissent.
52 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014, SEBI Circular No. CIR/IMD/DF/16/2014
dated July 18, 2014
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(vi) The trustee of AIF (in case AIF is a trust)/ sponsor (in case of any other AIF)
shall be responsible for overseeing the process, ensuring compliance and
regularly updating SEBI on the developments.
13.1.2. With respect to para 13.1.1 above, the process for exit under the clause shall not
apply in cases where the AIF has approval of not less than 75% of unit holders by
value of their investment in the AIF with respect to sub-clauses (a) and (b).
13.2. Fee for change in control of manager/sponsor or change in manager/sponsor of
AIFs53:
In terms of Regulation 20(13) of AIF Regulations, in case of change of Sponsor or
Manager, or change in control of the AIF, Sponsor or Manager, prior approval from the
Board shall be taken by the AIF, subject to levy of fees and any other conditions as may
be specified by SEBI from time to time. In this regard, the following is specified:
13.2.1. A fee equivalent to the registration fee applicable to the respective category / sub-
category of the AIF, shall be levied in case of change in control of manager/sponsor
and in case of change in manager/sponsor. The cost paid towards such fee by
manager/sponsor shall not be passed on to the investors of the AIF in any manner.
13.2.2. In case change in control of manager/change of manager and change in control of
sponsor/change of sponsor of an AIF is proposed simultaneously, aforesaid fee
equivalent to single registration fee shall be levied.
13.2.3. The aforesaid fee shall not be levied in the following cases for change in sponsor
or change in control of sponsor:
(i) The manager is acquiring control in or replacing the sponsor and
(ii) Exit of sponsor(s) in case of AIF having multiple sponsors.
13.2.4. The aforesaid fee shall be paid within 15 days of effecting the proposed change in
manager/sponsor or change in control of manager/sponsor.
13.2.5. The prior approval granted by SEBI in this regard shall be valid for a period of 6
months from the date of SEBI communication for the approval.
13.3. Change in control of Sponsor and/or Manager of AIF involving scheme of
arrangement under Companies Act, 201354
To streamline the process of providing approval to the proposed change in control of the
Sponsor and/or Manager of the AIF involving scheme of arrangement which needs
sanction of National Company Law Tribunal (“NCLT”) in terms of the provisions of the
Companies Act, 2013, following is specified:
53 SEBI circular no. SEBI/HO/AFD-1/PoD/P/CIR/2022/155 dated November 17, 2022
54 SEBI Circular No. SEBI/HO/IMD-1/DF9/CIR/2022/032 dated March 23, 2022
Page 51 of 153 Back to Index
13.3.1. The application seeking approval for the proposed change in control of the Sponsor
and/or Manager of the AIF under Regulation 20(13) of AIF Regulations shall be
filed with SEBI prior to filing the application with the NCLT;
13.3.2. Upon being satisfied with compliance of the applicable regulatory requirements,
in-principle approval will be granted by SEBI;
13.3.3. The validity of such in-principle approval shall be three months from the date of
issuance, within which the relevant application shall be made to NCLT;
13.3.4. Within 15 days from the date of order of NCLT, applicant shall submit the
following documents to SEBI for final approval:
(i) Application for the final approval;
(ii) Copy of the NCLT Order approving the scheme;
(iii) Copy of the approved scheme;
(iv) Statement explaining modifications, if any, in the approved scheme vis-à-vis
the draft scheme and the reasons for the same; and
(v) Details of compliance with the conditions/ observations mentioned in the in-
principle approval provided by SEBI.
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Chapter 14 - Guidelines for Category I and II AIFs on borrowing and creation of
encumbrance on equity of investee companies
14.1. Borrowing by Category I and II AIFs55 -
14.1.1. In terms of Regulation 16(1)(c) and Regulation 17(c) of AIF Regulations, Category
I and Category II AIFs shall not borrow funds directly or indirectly or engage in
any leverage for the purpose of making investments or otherwise, except for
borrowing funds to meet temporary funding requirements and day-to-day
operational requirements for not more than thirty days, on not more than four
occasions in a year and not more than ten percent of the investable funds and subject
to such conditions as may be specified by SEBI from time to time.
14.1.2. In this regard, in order to facilitate ease of doing business and provide operational
flexibility, Category I and Category II AIFs have been allowed to borrow for the
purpose of meeting temporary shortfall in amount called from investors for making
investments in investee companies (‘drawdown amount’).
14.1.3. Category I and Category II AIFs may borrow for the purpose of meeting shortfall
in drawdown amount, subject to the following additional conditions:
(a) If AIF intends to borrow funds for meeting shortfall in drawdown amount,
the same shall be disclosed in the PPM of the scheme.
(b) Such borrowing shall be done only in case of emergency and as a last
recourse, when the investment opportunity is imminent to be closed and the
drawdown amount from investor(s) has not been received by the AIF before
the date of investment, in spite of best efforts by manager to obtain the
drawdown amount from the delaying investor(s).
(c) The amount borrowed shall not exceed twenty per cent of the investment
proposed to be made in the investee company, or ten per cent of the investable
funds of the scheme of AIF, or the commitment pending to be drawn down
from investors other than the investor(s) who has failed to provide the
drawdown amount, whichever is lower.
(d) The cost of such borrowing shall be charged only to investor(s) who failed to
provide the drawdown amount for making investments.
(e) The flexibility of borrowing to meet shortfall in drawdown amount shall not
be used as a means to provide different drawdown timelines to investors.
55 SEBI Circular No. SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/112 dated August 19, 2024
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(f) The manager shall disclose the details with respect to amount borrowed,
terms of borrowing and repayment to all the investors of the AIF/scheme, on
a periodic basis as per the terms of agreement with the investors of the AIF.
14.1.4. Further, all Category I and Category II AIFs shall maintain thirty days cooling off
period between two periods of borrowing as permissible under AIF Regulations.
The cooling off period of thirty days shall be calculated from the date of repayment
of previous borrowing.
14.2. Framework for Category I and II AIFs to create encumbrance on their holding of
equity of investee companies56
14.2.1. In terms of provisos to Regulation 16(1)(c) and 17(c) of AIF Regulations, Category
I and Category II AIFs may create encumbrance on equity of investee company,
which is in the business of development, operation or management of projects in
any of the infrastructure sub-sectors listed in the Harmonised Master List of
Infrastructure issued by the Central Government, only for the purpose of borrowing
by such investee company and subject to such conditions as may be specified by
SEBI from time to time.
14.2.2. In this regard, the following conditions are specified:
(a) Schemes of Category I or Category II AIFs may create encumbrance on
equity of investee company for the purpose of borrowing of the said investee
company as specified above, subject to explicit disclosure with respect to
creation of such encumbrance in this regard and disclosure of associated risks
in their PPMs.
(b) Category I or Category II AIFs shall ensure that the borrowings made by the
investee company against the equity investments encumbered by the AIFs are
utilised only for the purpose of development, operation or management of
investee company as stated in para 14.2.1 above, and not utilised otherwise
including to invest in another company. The aforesaid limitation on usage of
borrowing shall be included as one of the terms of the investment agreement
entered between the AIF and the investee company.
(c) The duration of encumbrance created on the equity investments shall not be
greater than the residual tenure of the scheme of the Category I or Category
II AIF.
(d) Any Category I or Category II AIF with more than 50% foreign investment
or with foreign sponsor/ manager or with persons other than resident Indian
citizens as external members in its investment committee which is set up to
56 SEBI Circular No. SEBI/HO/AFD/PoD1/CIR/2024/027 dated April 26, 2024
Page 54 of 153 Back to Index
approve its decisions, shall ensure compliance with para 7.11.2 of RBI Master
Direction dated January 04, 2018 on ‘Foreign Investments in India’, as
though the AIF is a person resident outside India.
(e) In case of default by the borrower investee company, Category I or Category
II AIF shall ensure that the fund or its investors are not subject to any liability
over and above the equity of the borrower investee company encumbered by
the AIF.
(f) The aforesaid flexibility of creating encumbrance on equity investment shall
not be interpreted as allowing schemes of Category I and II AIFs to extend
any form of guarantee for investee company.
(g) Schemes of Category I or Category II AIFs shall not create encumbrance on
their investments in foreign investee companies.
14.2.3. The SFA, in consultation with SEBI, shall formulate implementation standards to
ensure that the encumbrance created on equity of investee company by Category I
or Category II AIFs, is only utilized for facilitation of debt raising at the
infrastructure sector investee company as stated in para 14.2.1 above. Managers of
such AIFs shall adopt and adhere to such implementation standards. Such standards
shall be published on websites of the industry associations which are part of the
SFA, i.e., Indian Venture and Alternate Capital Association (IVCA), PE VC CFO
Association and Trustee Association of India.
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Chapter 15 - Guidelines with respect to excusing or excluding an investor from an
investment of AIF57
15.1. An AIF may excuse its investor from participating in a particular investment in the
following circumstances:
15.1.1. If the investor, based on the opinion of a legal professional/legal advisor, confirms
that its participation in the investment opportunity would be in violation of an
applicable law or regulation; or,
15.1.2. If the investor, as part of contribution agreement or any other agreement signed
with the AIF, had disclosed to the manager that, participation of the investor in such
investment opportunity would be in contravention to the internal policy of the
investor. Manager shall ensure that terms of such agreement with the investor
include reporting of any change in the disclosed internal policy, to the AIF, within
15 days of such change.
15.2. Further, an AIF may exclude an investor from participating in a particular investment
opportunity, if the manager of the AIF is satisfied that the participation of such investor in
the investment opportunity would lead to the scheme of the AIF being in violation of
applicable law or regulation or would result in material adverse effect on the scheme of the
AIF. The manager shall record the rationale for such exclusion, along with the documents
relied upon, if any.
15.3. If the investor of an AIF is also an AIF or any other investment vehicle, such investor may
be partially excused or excluded from participation in an investment opportunity, to the
extent of the contribution of the said fund/investment vehicle’s underlying investors who
are to be excused or excluded from such investment opportunity. The manager of AIF shall
record the rationale for such excuse or exclusion along with the supporting documents, if
any.
57 SEBI Circular No. SEBI/HO/AFD-1/PoD/P/CIR/2023/053 dated April 10, 2023
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Chapter 16 - Direct plan for schemes of AIFs and trail model for distribution
commission in AIFs58
The PPM templates, as given in Annexure 1 and Annexure 2, inter-alia, provide for disclosure
with respect to Direct Plan for investors, and constituents of fees that may be charged by the
AIF/scheme of AIF, including distribution fee/placement fee. In this context, to provide
flexibility to investors for investing in AIFs, bring transparency in expenses and curb mis-selling,
following is specified:
16.1. Direct Plan for schemes of AIFs
16.1.1. Schemes of AIFs shall have an option of ‘Direct Plan’ for investors. Such Direct
Plan shall not entail any distribution fee/placement fee.
16.1.2. AIFs shall ensure that investors who approach the AIF through a SEBI registered
intermediary which is separately charging the investor any fee (such as advisory
fee or portfolio management fee), are on-boarded via Direct Plan only.
16.2. Trail model for distribution commission in AIFs
16.2.1. AIFs shall disclose distribution fee/placement fee, if any, to the investors of
AIF/scheme of AIF at the time of on-boarding, irrespective of the manner of
charging such distribution fee.
16.2.2. Category III AIFs shall charge distribution fee/placement fee, if any, to investors
only on equal trail basis i.e. no upfront distribution fee/ placement fee shall be
charged by Category III AIFs directly or indirectly to their investors. Further, any
distribution fee/ placement fee paid shall be only from the management fee received
by the managers of such Category III AIFs.
16.2.3. Category I AIFs and Category II AIFs may pay up to one-third of the total
distribution fee/placement fee to the distributors on upfront basis, and the remaining
distribution fee/ placement fee shall be paid to the distributors on equal trail basis
over the tenure of the fund.
58 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2023/054 dated April 10, 2023
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G. GOVERNANCE NORMS AND OBLIGATIONS
Chapter 17 - Obligations of manager, sponsor, investment committee and trustee of AIFs
17.1. Appointment and designation of personnel of AIF and manager59
17.1.1. In terms of Regulation 20(17) of AIF Regulations, the Manager shall appoint a
Compliance Officer who shall be responsible for monitoring compliance with the
provisions of the SEBI Act, 1992, rules, regulations, notifications, circulars,
guidelines, instructions or any other directives issued by SEBI. Further in terms of
Regulation 20(18) of AIF Regulations, the Compliance Officer shall satisfy the
eligibility criteria as may be specified by SEBI from time to time. In this regard,
the following is specified -
(a) AIFs shall ensure that Manager of AIF designates an employee or director as
Compliance Officer who shall be a person other than Chief Executive Officer
of the Manager or such equivalent role or position depending on the legal
structure of Manager.
(b) The Compliance Officer of Manager of an AIF shall obtain certification from
the National Institute of Securities Market by passing the NISM Series-III-C:
Securities Intermediaries Compliance (Fund) Certification Examination as
mentioned in the communique No. NISM/Certification/Series-III-C:
Securities Intermediaries Compliance (Fund) Certification Examination
/2025/01/November 20, 2025 issued by the National Institute of Securities
Market.
(c) Managers of AIFs shall ensure that, with effect from January 01, 2027, only
those persons who have obtained the aforesaid certification shall be appointed
as or shall continue to act as compliance officer of managers of AIFs.
17.1.2. For the purpose of provisions of AIF Regulations, ‘key management personnel’
shall mean:
(a) members of key investment team of the Manager, as disclosed in the PPM of
the fund;
(b) employees who are involved in decision making on behalf of the AIF,
including but not limited to, members of senior management team at the level
of Managing Director, Chief Executive Officer, Chief Investment Officer,
Whole Time Directors, or such equivalent role or position;
(c) any other person whom the AIF (through the Trustee, Board of Directors or
Designated Partners, as the case may be) or Manager may declare as key
management personnel.
59 SEBI Circular No. HO/19/(8)2025-AFD-POD1/I/1266/2025 dated December 30, 2025, SEBI Circular No.
SEBI/HO/AFD/RAC/CIR/2022/088 dated June 24, 2022 and SEBI Circular No. SEBI/HO/IMD-
I/DF6/P/CIR/2021/584 dated June 25, 2021
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17.1.3. AIFs shall disclose the names of all the key management personnel of the AIF and
Manager as specified in para 17.1.2 above, in their PPMs. Any change in key
management personnel shall be intimated to the investors and the Board.
17.2. Appointment of custodian for AIFs 60
17.2.1. In terms of Regulation 20(11) of AIF Regulations, the Sponsor or Manager of the
AIF shall appoint a custodian registered with the Board for safekeeping of the
securities of the AIF, in the manner as may be specified by the Board from time to
time.
17.2.2. In this regard, it is specified that the custodian for a scheme of an AIF shall be
appointed prior to the date of first investment of the scheme.
17.3. Constitution of Investment Committee61
17.3.1. In terms of Regulation 20(7) of AIF Regulations, Manager may constitute
Investment Committee (by whatever name it may be called) to approve decisions
of the AIF, subject to certain conditions. In terms of proviso to Regulation 20(8) of
AIF Regulations, there is a requirement to furnish a waiver to AIF in respect of
compliance with the said regulation pertaining to responsibility of members of
Investment Committee. The format for waiver to be furnished by the investors in
this regard is specified in Annexure 12.
17.3.2. For the purpose of Regulation 20(10) of AIF Regulations, consent of the investors
of the AIF or scheme may not be required for change in ex-officio external
members (who represent the sponsor, sponsor group, manager group or investors,
in their official capacity), in the investment committee set up by the Manager.
17.3.3. Investment Committees set up to approve the investment decisions of the AIF may
consist of internal members (employees, directors or partners of the Manager) and/
or external members. In this regard, SEBI has written to Government and RBI
seeking clarity on the applicability of clause (4) of Schedule VIII under Foreign
Exchange Management (Non-debt Instruments) Rules, 2019, to investment made
by an AIF whose Investment Committee approves investment decisions and
consists of external members who are not ‘resident Indian citizens’.
17.3.4. Pending clarification as mentioned at para 17.3.3 above, the applications for
registration of AIFs and launch of new schemes shall be dealt with as under:
60 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2024/5 dated January 12, 2024
61 SEBI Circular No. SEBI/HO/IMD-I/DF6/P/CIR/2021/584 dated June 25, 2021 and SEBI circular No.
SEBI/HO/IMD/DF6/CIR/P/2020/209 dated October 22, 2020
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(a) The applications wherein Investment Committee proposed to be constituted to
approve investment decisions of AIF includes external members who are
‘resident Indian citizens', shall be duly processed.
(b) The applications wherein Investment Committee proposed to be constituted to
approve investment decisions of AIF includes external members who are not
‘resident Indian citizens’, shall be considered only after receipt of clarification
as stated in para 17.3.3 above.
17.4. Code of conduct62
17.4.1. The AIF, manager, trustee and sponsor shall:
(a) act in the interest of unitholders of the AIF/scheme and not take any action
which is prejudicial to the interest of the unitholders and not place the interest
of the sponsor/manager/trustee of the AIF or any of their associates above the
interest of the unitholders of the scheme/AIF.
(b) maintain high standards of integrity and fairness in all their dealings and in the
conduct of the business and render at all times high standards of service,
exercise due diligence and exercise independent professional judgment.
17.5. Stewardship Code63
All categories of AIFs shall mandatorily follow the Stewardship Code as placed at
Annexure 13, in relation to their investment in listed equities.
17.6. Other obligations64
17.6.1. For the purpose of maintaining continuing interest under Regulation 10(d) of the
AIF Regulations, such interest shall be maintained pro-rata to the amount of funds
raised (net) from other investors in the AIF.
17.6.2. For the purpose of Regulation 15(1)(e) of AIF Regulations, prior to every
investment in an associate or in units of an AIF managed or sponsored by Manager,
Sponsor or associates of Manager or Sponsor, approval of the investors as specified
shall be obtained.
17.6.3. All circulars/guidelines as may be issued by SEBI with respect to KYC
requirements, Anti-Money Laundering and Outsourcing of activities shall be
applicable to AIFs and the manager of the AIF shall be responsible for compliance
with such circulars/guidelines.
62 SEBI Circular No. CIR/IMD/DF/7/2015 dated October 01, 2015
63 SEBI Circular No. CIR/CFD/CMD1/168/2019 dated Dec 24, 2019
64 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
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Chapter 18 - Standardised approach to valuation of investment portfolio of AIFs65
18.1. Manner of valuation of AIF’s investments
In terms of Regulation 23(1) of AIF Regulations, AIFs are inter-alia required to carry out
valuation of their investments in the manner specified by SEBI from time to time. In this
regard, following is specified:
18.1.1. Valuation of securities, other than unlisted securities and listed securities which are
non-traded and thinly traded, for which valuation norms have been prescribed under
SEBI (Mutual Funds) Regulations,1996 (‘MF Regulations’), shall be carried out as
per the norms prescribed under MF Regulations.
18.1.2. Valuation of securities which are not covered in para 18.1.1 above, shall be carried
out as per valuation guidelines endorsed by any AIF industry association, which in
terms of membership represents at least 33% of the number of SEBI registered
AIFs. The eligible AIF industry association shall endorse appropriate valuation
guidelines after taking into account recommendations of Alternative Investment
Policy Advisory Committee of SEBI.
In this context, an eligible AIF industry association meeting the aforesaid criteria,
endorsed the International Private Equity and Venture Capital Valuation (IPEV)
Guidelines for valuation of investment portfolio of AIFs in terms of the aforesaid
provision.
18.1.3. With respect to thinly traded and non-traded securities, it is envisaged to harmonize
the valuation norms across entities within SEBI’s regulatory purview in a time
bound manner so as to facilitate applicability of the same for valuation of
investment portfolios of AIFs.
18.1.4. The manager shall also disclose in PPM, the details of the valuation methodology
and approach adopted under the stipulated guidelines for each asset class of the
scheme of the AIF.
18.2. Responsibility of manager of AIF with regard to valuation of investments of AIF
In terms of Regulation 23(5) of AIF Regulations, the Manager and the key management
personnel of manager shall ensure that the independent valuer computes and carries out
valuation of the investments of the scheme of the AIF in the manner as specified by the
Board from time to time.
Further, in terms of Regulation 23(6) of AIF Regulations, Manager shall be responsible for
true and fair valuation of the investments of the scheme of the AIF. In terms of proviso to
65 SEBI circular no. SEBI/HO/AFD/PoD/CIR/2023/97 dated June 21, 2023 and SEBI circular no.
SEBI/HO/AFD/PoD-1/P/CIR/2024/123 dated September 19, 2024
Page 61 of 153 Back to Index
aforesaid Regulation, in case the established policies and procedures of valuation do not
result in fair and appropriate valuation, the Manager shall deviate from the established
policies and procedures in order to value the assets or securities at a fair value and
document the rationale for such deviation.
In this regard, following is specified:
18.2.1. At each asset level, in case there is a deviation of more than 20% between two
consecutive valuations or a deviation of more than 33% in a financial year, the
manager shall inform the investors the reasons/factors for the same, both generic
and specific, including but not limited to changes in accounting practices/policies,
assumptions/projections, valuation methodology and approach, etc. and reasons
thereof.
18.2.2. Change in valuation methodology/approach to comply with para 18.1 of this Master
Circular, shall not be construed as 'Material Change'.
18.2.3. Change in methodology/approach within the valuation guidelines / valuation norms
prescribed for AIFs, shall not be construed as a 'Material Change'. However, upon
such change, the valuation of the investment carried out based on valuation
methodologies / approaches, both old and new, shall be disclosed to the investors
to ensure transparency.
18.2.4. The manager shall disclose the following as part of changes in PPM to be submitted
annually to SEBI and investors:
(a) Details of changes in the valuation methodology and approach, if any, for
valuation of each asset class of the scheme of the AIF;
(b) Details of changes in accounting practices/policies, if any, of the investee
company and the scheme of the AIF; and
(c) Details of impact of the aforesaid changes in terms of valuation of the
investments of the scheme of the AIF.
18.3. Eligibility criteria for Independent Valuer
In terms of Regulation 23(4) of AIF Regulations, the Manager shall ensure that the AIF
appoints an independent valuer, which satisfies the criteria specified by SEBI from time to
time, for valuing investment portfolio of AIFs. In this regard, the following is specified:
18.3.1. The independent valuer shall not be an associate of manager or sponsor or trustee
of the AIF.
18.3.2. The independent valuer shall have at least three years of experience in valuation of
unlisted securities.
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18.3.3. The independent valuer shall fulfil one of the following criteria:
(a) The independent valuer is a valuer registered with Insolvency and
Bankruptcy Board of India and has membership of Institute of Chartered
Accountants of India or Institute of Company Secretaries of India or Institute
of Cost Accountants of India or CFA Institute; or
(b) The independent valuer is a holding company or subsidiary of a Credit Rating
Agency registered with SEBI; or
(c) Any other criteria as may be specified by SEBI from time to time.
18.3.4. For the purpose of meeting conditions specified at para 18.3.3(a), a valuer set up in
the form of a partnership entity or a company, shall fulfil criteria given as under –
(a) Such entity or company shall be a ‘Registered Valuer Entity’ registered with
Insolvency and Bankruptcy Board of India; and,
(b) the deputed/authorized person(s) of such ‘Registered Valuer Entity’, who
undertake(s) the valuation of investment portfolio of AIFs, shall have a
membership of ICAI or ICSI or ICMAI or a CFA Charter from the CFA
Institute.
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Chapter 19 - Pro-rata and pari-passu rights of investors of AIFs66
19.1. Pro-rata rights of investors of AIFs –
19.1.1. Regulation 20(21) of AIF Regulations states as under –
“The investors of a scheme of an Alternative Investment Fund shall have rights,
pro-rata to their commitment to the scheme, in each investment of the scheme
and in the distribution of proceeds of such investment, except as may be specified
by the Board from time to time:
Provided that the rights of the investors of a scheme of Alternative Investment
Fund issued prior to the notification of the Securities and Exchange Board of
India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024,
which are not pro-rata to their commitment to the scheme and not exempted by
the Board, shall be dealt with in the manner specified by the Board.”
19.1.2. In this regard, it is specified that the requirement of maintaining investors’ rights
pro-rata to their commitment to the scheme, shall not be applicable in an investment
of a scheme and distribution of proceeds of the investment to the extent –
(a) an investor has been excused or excluded from participating in the said
investment; or,
(b) an investor has defaulted on providing his/her pro-rata contribution for the
said investment.
19.1.3. Further, the requirement of maintaining pro-rata rights of investors in distribution
of proceeds of investments of a scheme, shall not be applicable to the extent returns
or profit on the investments is shared by an investor with the manager or sponsor
of the AIF (by whatever name it is called, such as carried interest/additional return),
in terms of contribution agreement executed between them.
19.1.4. Additionally, to provide flexibility in fund raising from investors with varied risk
appetite, the following entities may accept returns lesser or share losses more than
their pro-rata rights in investments of an AIF/scheme of an AIF, i.e., may subscribe
to classes of units which are junior/subordinate to other class(es) of units of the
AIF/scheme of AIF -
(a) Manager or sponsor of the AIF;
(b) Multilateral or Bilateral Development Financial Institutions;
(c) State Industrial Development Corporations;
66 SEBI Circular No.: SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/175 dated December 13, 2024 and SEBI Circular
No. SEBI/HO/AFD-1/PoD/P/CIR/2022/157 dated November 23, 2022
Page 64 of 153 Back to Index
(d) Entities established or owned or controlled by the Central Government or a
State Government or the Government of a foreign country, including Central
Banks and Sovereign Wealth Funds.
19.1.5. With respect to investment by the sponsor/manager in the AIF, the sharing of loss
by the sponsor/manager shall not be less than pro rata to their holding in the AIF
vis-à-vis other unit holders.
19.1.6. In case manager or sponsor of an AIF subscribes to junior / subordinate class(es)
of units of the AIF/scheme of the AIF, it shall be ensured that the amount invested
by the AIF/scheme of the AIF is not utilized by an investee company, directly or
indirectly, to repay any of its obligations or liabilities towards the manager or
sponsor of the AIF or their associates.
Applicability on existing AIFs/schemes of AIFs -
19.1.7. In terms of proviso to Regulation 20(21) of AIF Regulations, as referred at para
19.1.1 above, rights of investors of AIFs/schemes of AIFs issued prior to the date
of notification of the aforesaid amendment to AIF Regulations (i.e., November 18,
2024), that are not pro-rata to their commitment to the AIF/scheme and not
exempted by SEBI, shall be dealt with in the manner specified by SEBI.
19.1.8. Accordingly, it is hereby specified that existing AIFs/schemes of AIFs as on
November 18, 2024, that have adopted priority distribution model (i.e., schemes
that issued senior and junior/subordinate classes of units) and not falling under the
exemption at para 19.1.4 above, shall neither accept any fresh commitment nor
make investment in a new investee company, directly or indirectly.
19.1.9. As a consequence of compliance with the clause at para 19.1.8 above or the SEBI
circular dated November 23, 2022 on the said subject, if the investment limits
specified under AIF Regulations are breached by any AIF/scheme of AIF, such
breach may not be considered as non-compliance with applicable provisions of AIF
Regulations or circulars issued thereunder, to that extent. However, the same shall
be recorded in writing in the ‘Compliance Test Report’ prepared by the manager in
terms of para 21.2 of the SEBI Master Circular for AIFs.
19.2. Pari-passu rights of investors of AIFs –
19.2.1. Regulation 20(22) of AIF Regulations states as under –
“The rights of investors of a scheme of an Alternative Investment Fund, other
than that specified in sub-regulation (21) of this regulation, shall be pari-passu
in all aspects:
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Provided that differential rights may be offered to select investors of a scheme
of an Alternative Investment Fund, in the manner as may be specified by the
Board, without affecting the interest of other investors of the scheme:
Provided further that the requirement under sub-regulation (22) of this
regulation shall not apply to Accredited Investors only fund:
Provided further that any differential right already issued by an Alternative
Investment Fund prior to the notification of the Securities and Exchange Board
of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024,
not falling within the first proviso of sub-regulation (22) of this regulation, shall
be dealt with in the manner as specified by the Board.”
19.2.2. Accordingly, in terms of first proviso to Regulation 20(22) of AIF Regulations, it
is specified that differential rights may be offered by AIFs to select investors
without affecting the rights of other investors, based on the following guiding
principles:
(a) Any such right shall not result in any investor bearing liability accrued or
accruing to other investors of the AIF/scheme of AIF;
(b) Any such right with respect to non-monetary / non-commercial terms shall
not provide control to an investor on the decision making of the AIF/scheme
of AIF, except in cases where investor/its nominee is part of any committee
set up in terms of Regulation 20 (7) of AIF Regulations;
(c) Any such right shall not alter the right(s) available to other investors under
their respective agreements with the AIF/manager; and,
(d) Any such right and eligibility to avail the same shall be transparently
disclosed in the PPM of the AIF/scheme of the AIF.
19.2.3. In this regard, the SFA shall, in consultation with SEBI, formulate the
implementation standards for compliance with the aforesaid provision, prescribing
the positive list of specific differential rights that may be offered by AIFs. Such list
may be reviewed and updated by SFA, whenever necessary, in consultation with
SEBI.
19.2.4. The implementation standards formulated by SFA shall be published on the
websites of the industry associations which are part of SFA, i.e., Indian Venture
and Alternate Capital Association (IVCA), PE VC CFO Association and Trustee
Association of India.
19.2.5. AIFs, Managers of AIFs and their Key Management Personnel shall ensure the
following while issuing differential rights to select investors –
(a) The differential rights shall be provided only in accordance with the
implementation standards formulated by SFA.
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(b) The following shall be disclosed in the PPM -
(i) Eligibility criteria for an investor to avail each differential right; and,
(ii) Any investor meeting the specified eligibility criteria for a differential
right may opt to avail such right.
Applicability on existing AIFs/schemes of AIFs -
19.2.6. In terms of standard template for PPMs prescribed by SEBI vide its circular dated
February 05, 2020 (subsumed in Chapter 2 -of this Master Circular for AIFs), AIFs
are required to disclose to investors in their PPM that any differential right offered
to an investor(s), through separate classes of units or side letters/agreements, shall
not have any adverse impact on the economic rights or any other rights of other
investors.
19.2.7. Vide SEBI Circular No.: SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/175 dated
December 13, 2024, a one-time reporting requirement was mandated for
AIFs/schemes of AIFs whose PPMs were filed with SEBI on or after March 01,
2020, and have issued differential right(s) which do not fall under the
implementation standards formulated by SFA67.
Out of the rights reported to SEBI as per the aforesaid direction, it was directed that
the manager should immediately, post reporting, terminate/discontinue those
differential rights which are ascertained to be affecting the rights of other investors.
19.2.8. Further, LVFs whose PPMs are filed with SEBI for launch of scheme post
December 13, 2024 and AI only funds, may avail exemption from the requirement
of maintaining pari-passu rights among investors, subject to the following -
(i) Making appropriate disclosure in the PPM of the scheme; and,
(ii) Obtaining undertaking from accredited investor at the time of on-boarding to
LVF or AI only fund in terms of para 10.5.1. of this SEBI Master Circular for
AIFs, with the following clause inserted for waiver to this effect –
“The prospective investor is aware that LVF/AI only fund may avail
exemption from the requirement of maintaining pari-passu rights among
investors and therefore, may offer differential rights to select investors
which might affect interest of others investors of the LVF/AI only fund.”
19.2.9. Existing LVFs as on December 13, 2024, may avail exemption from the
requirement of maintaining pari-passu rights among investors, subject to each
investor of the scheme specifically providing the waiver to this effect as mentioned
in para 19.2.8 above.
67 SEBI Circular No.: SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/175 dated December 13, 2024 and SEBI circular
no. SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/29 dated March 03, 2025
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Chapter 20 - Specific due diligence of investors and investments of AIFs
20.1. In terms of Regulation 20(20) of AIF Regulations, every AIF, Manager of the AIF and Key
Management Personnel of the Manager and the AIF shall exercise specific due diligence,
with respect to investors and investments of the AIF, to prevent facilitation of
circumvention of such laws, as may be specified by SEBI from time to time.
20.2. In this regard, the specific due diligence to be carried out by AIFs, managers of AIFs and
their Key Management Personnel, with respect to investors and investments of the AIF, to
prevent facilitation of circumvention of the following regulatory frameworks, are being
specified in this chapter -
I. Provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2018 (‘ICDR Regulations’), and other regulations of SEBI wherein benefits or
relaxations have been provided to entities designated as Qualified Institutional
Buyers (QIBs).
II. Provisions of the ‘Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002’ (SARFAESI Act) wherein benefits are
provided to entities designated as Qualified Buyers (QBs).
III. Prudential norms specified by Reserve Bank of India (RBI) for regulated lenders
with respect to Income Recognition, Asset Classification, Provisioning and
restructuring of stressed assets.
IV. Rule 6 of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019
(NDI Rules) for investment from countries sharing land border with India (read
with Press Note 3 dated April 17, 2020 of FDI Policy 2020).
20.3. Investors availing benefits designated for QIBs through AIFs:
20.3.1. AIFs have been designated as QIBs in terms of Regulation 2(1)(ss) of ICDR
Regulations. There are certain benefits available to QIBs under ICDR Regulations
and other SEBI Regulations.
20.3.2. In order to prevent AIFs from facilitating investors who are otherwise ineligible for
QIB status on their own, in availing benefits designated for QIBs, the following is
specified –
(a) For every scheme of AIFs having an investor, or investors belonging to the
same group, who contribute(s) 50 percent or more to the corpus of the
scheme, necessary due diligence as per the implementation standards
formulated by SFA, shall be carried out prior to availing benefits available to
QIBs under ICDR Regulations and other SEBI Regulations.
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20.4. Investors availing benefits designated for Qualified Buyers (QBs) through AIFs:
20.4.1. AIFs have been notified as QBs in terms of clause (u) of sub-section (1) of section
2 of SARFAESI Act, and therefore, are eligible to subscribe to Security Receipts
(SRs) issued by an Asset Reconstruction Company (ARC).
20.4.2. In order to prevent AIFs from facilitating investors who are otherwise ineligible for
QB status on their own, in availing benefits designated for QBs the following is
specified:
(a) For every scheme of AIFs having an investor, or investors belonging to the
same group, who contribute(s) 50 percent or more to the corpus of the
scheme, necessary due diligence as per the implementation standards
formulated by SFA, shall be carried out prior to making any investments in
SRs issued by ARCs or availing benefits designated for QBs under the
SARFAESI Act.
20.5. RBI regulated lenders/entities ever-greening their stressed loans/assets through
AIFs:
20.5.1. To address the issue of ever-greening of stressed loans/assets of RBI regulated
lenders/entities through AIFs and to prevent circumvention of norms with respect
to Income Recognition, Asset Classification, Provisioning and Restructuring of
stressed loans/assets specified by RBI for its regulated lenders, the following is
specified –
(a) For every scheme of an AIF:
(i) whose manager or sponsor is an entity regulated by RBI; or,
(ii) that has investor(s) regulated by RBI who:
I. individually or along with investors of the same group
contribute(s) 25 percent or more to the corpus of the scheme; or,
II. is an associate of the manager/sponsor of the AIF; or,
III. by itself, or through its representative(s)/nominee(s), has majority
or veto power in voting over decisions of the investment
committee set up by the manager to approve investment decisions
of the scheme;
necessary due diligence as per the implementation standards formulated by
SFA, shall be carried out. If an investor of the scheme is an AIF, or a fund set
up outside India or in International Financial Services Centres in India, then
the criteria check for investor(s) regulated by RBI shall be carried out on a
look through basis.
(b) For schemes falling under the ambit of provision at para 20.5.1(a) above, the
manager shall ensure that the scheme does not make any investment that
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would lead to the RBI regulated lender/entity acquiring or holding an
interest/exposure in the investee company indirectly (that is, through
investment in a scheme of an AIF), that they are not permitted to acquire or
hold directly.
20.6. Schemes of AIFs falling under the ambit of provisions at para 20.3.2(a), 20.4.2(a) and
20.5.1(a) above, shall proceed with the proposed investment in accordance with the
respective implementation standards as formulated by SFA. If the proposed investment
does not satisfy the due diligence checks specified by SFA for making investment:
26.1.1. either such investor or investors of same group as referred at para 20.3.2(a),
20.4.2(a) and 20.5.1(a) above shall be excluded from the investment, subject to
necessary disclosure in the PPM for exclusion of investors; or,
26.1.2. the investment shall not be made.
20.7. Investment from countries sharing land border with India through AIFs:
20.7.1. In terms of Rule 6(a) of NDI Rules, a person resident outside India may subscribe,
purchase or sell equity instruments of an Indian company in the manner and subject
to the terms and conditions specified in Schedule I of NDI rules, provided that an
entity of a country, which shares land border with India or the beneficial owner of
an investment into India who is situated in or is a citizen of any such country, shall
invest only with the approval of the Government.
20.7.2. To ascertain whether investors from countries sharing land border with India are
investing in Indian companies through AIFs, the following is specified -
(a) For every scheme of AIFs where 50 percent or more of the corpus of the
scheme is contributed by investors –
(i) who are citizens of/are from/are situated in a country which shares land
border with India, or,
(ii) whose beneficial owners, as determined in terms of sub-rule (3) of Rule
9 of the Prevention of Money-laundering (Maintenance of Records)
Rules, 2005, are citizens of/are from/are situated in a country which
shares land border with India,
necessary due diligence as per the implementation standards formulated by
SFA, shall be carried out prior to making any investment.
(b) Upon carrying out the necessary due diligence, such scheme shall report
details of its investment, which would result in the scheme holding 10 percent
or more of equity/equity-linked securities issued by an investee company (on
a fully-diluted basis), to its custodian within 30 days of investment, in the
format as may be specified by SFA. Custodians shall compile such
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information received from AIFs on a monthly basis and report to SEBI within
10 working days from the end of the month.
20.8. For the purpose of the provisions of this circular, ‘same group’ shall mean ‘related parties’
and ‘relatives’ as defined in SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
20.9. The implementation standards as mentioned in this chapter, formulated by SFA in
consultation with SEBI, shall be adopted by AIFs, Managers of AIFs and their Key
Management Personnel for compliance with the provisions of this chapter. Such
implementation standards shall be published on websites of the industry associations which
are part of the SFA, i.e., Indian Venture and Alternate Capital Association (IVCA), PE VC
CFO Association and Trustee Association of India.
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H. REPORTING AND DISCLOSURE REQUIREMENTS FOR AIFs
Chapter 21 - Periodic reporting requirements for AIFs
21.1. Reporting of investment activities by AIFs68
Under Regulation 28 of AIF Regulations, SEBI may at any time call upon the AIF to file
such reports, as SEBI may desire, with respect to the activities carried on by the AIF. In
this regard, the following reporting requirement is specified:
21.1.1. AIFs shall submit a comprehensive Annual Activity Report at the end of March of
each financial year. The Annual Activity Report shall be submitted by all AIFs
online on the SEBI Intermediary Portal (SI Portal) within 30 calendar days from
the end of March of every financial year.
21.1.2. A limited Quarterly Activity Report shall be submitted by all AIFs online on the SI
Portal in prescribed format within 15 calendar days from the end of each such
quarter. The first such report shall be submitted for the quarter ending June 2026.
No separate submission of Quarterly Activity Report will be required for quarter
ending March of every year as the Annual Activity Report includes the data points
of the Quarterly Activity Report.
21.1.3. The aforesaid reporting formats are hosted by AIF Industry Association, Indian
Venture and Alternate Capital Association (IVCA), on its website. The industry
association shall assist all AIFs in understanding the reporting requirements and in
clarifying or resolving any issues which may arise in connection with reporting, to
ensure accurate and timely reporting.
21.1.4. To keep pace with the fast-changing landscape of AIF industry and for policy and
supervision purposes, the aforesaid reporting format shall be reviewed periodically
by SFA, in consultation with SEBI. In case of any revisions in the reporting format,
revised format shall be made available on websites of industry associations which
are part of SFA, at least 1 month prior to end of the quarter.
21.2. Compliance Test Report (CTR)69
21.2.1. At end of financial year, the manager of an AIF shall prepare a compliance test
report on compliance with AIF Regulations and circulars issued thereunder in the
format as specified in the Annexure 14.
21.2.2. The CTR shall be submitted within 30 days from the end of the financial year, to
68 SEBI circular No. SEBI/HO/IMD/IMD-I/DOF6/CIR/2021/549 dated April 07, 2021, SEBI circular no.
SEBI/HO/AFD/SEC-1/P/CIR/2023/0155 dated September 14, 2023 and SEBI circular no. HO/19/28/(1)2026-
AFD-SEC3/I/6176/2026 dated March 04, 2026
69 SEBI Circular No. CIR/IMD/DF/14/2014 dated June 19, 2014
Page 72 of 153 Back to Index
(a) the trustee and sponsor, in case the AIF is a trust;
(b) the sponsor, in case of AIF set up in the form other than a trust.
21.2.3. In case of any observations/comments on the CTR, the trustee/sponsor shall
intimate the same to the manager within 30 days from the receipt of the CTR.
Within 15 days from the date of receipt of such observations/comments, the
manager shall make necessary changes in the CTR, as may be required, and submit
its reply to the trustee/sponsor.
21.2.4. In case any violation of AIF Regulations or circulars issued thereunder is observed
by the trustee/sponsor, the same shall be intimated to SEBI as soon as possible.
21.2.5. The requirements as specified at para 21.2.2 and 21.2.3 shall not be applicable to
AI only funds. The manager of such funds shall prepare CTR and in case of
observation of any violation of AIF Regulations or circulars issued thereunder,
intimate the same to SEBI as soon as possible.
21.3. Audit of terms of PPM70
21.3.1. In order to ensure compliance with the terms of PPM, it is mandatory for AIFs to
carry out an annual audit of such compliance. The audit shall be carried out either
by an internal or external auditor/legal professional.
21.3.2. Audit of compliance with terms of PPM, shall be conducted at the end of each
Financial Year and the findings of audit along with corrective steps, if any, shall be
communicated to the Trustee or Board of Directors or Designated Partners of the
AIF, Board of directors or Designated Partners of the Manager and SEBI, within 6
months from the end of the Financial Year.
21.3.3. In order to have uniform compliance standards and for ease of compliance
reporting, standard reporting format for PPM Audit Report applicable to various
categories of AIFs, has been prepared in consultation with SFA and published on
websites of AIF industry associations which are part of SFA i.e., Indian Venture
and Alternate Capital Association (IVCA), PE VC CFO Association.
21.3.4. The PPM audit reports shall be submitted by AIFs to SEBI online through SI Portal
as per the aforesaid format. The AIF industry associations shall assist all AIFs in
understanding the reporting requirements and in clarifying or resolving any issues
that may arise in connection with reporting to ensure accurate and timely reporting.
70 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated February 05, 2020, SEBI Circular No.
SEBI/HO/IMD/DF6/CIR/P/2020/99 dated June 12, 2020 and SEBI/HO/AFD/SEC-1/P/CIR/2024/22 dated April
18, 2024
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21.3.5. To keep pace with the fast-changing landscape of AIF industry and for policy and
supervision purposes, the aforesaid reporting format shall be reviewed periodically
by SFA in consultation with SEBI. In case of any revisions in the reporting format,
the revised format shall be made available on websites of the associations which
are part of SFA.
21.3.6. The audit of sections of PPM relating to ‘Risk Factors’, ‘Legal, Regulatory and Tax
Considerations’, ‘Track Record of First Time Managers’, ‘Illustration of Fees and
Expenses’ and ‘Glossary and Terms’ shall be optional.
21.3.7. The requirement of audit of compliance with terms of PPM shall not apply to AIFs
which have not raised any funds from their investors. However, such AIFs shall
submit a Certificate from a Chartered Accountant to the effect that no funds have
been raised, within 6 months from the end of the Financial Year.
21.3.8. The requirement of audit of terms of PPM shall not apply to the following:
(a) Angel Funds that have made total investments (at cost) less than or equal to
INR 100 Crore, as on end of that financial year71.
(b) AIFs/Schemes in which each investor commits to a minimum capital
contribution of INR 70 crore (USD 10 million or equivalent, in case of capital
commitment in non-INR currency) and also provides a waiver to the fund
from the requirement of annual audit of terms of PPM, in the manner
provided at Annexure 3.
(c) LVFs as defined in AIF Regulations, without the requirement of obtaining
specific waiver from investors72.
21.4. Changes in PPM73
21.4.1. Any changes in terms of PPM and in the documents of the fund/scheme shall be
intimated to investors and SEBI on a consolidated basis, within 1 month of the end
of each Financial Year. Such intimation shall specifically mention the changes
carried-out in the PPM and the documents of the fund/scheme, along with the
relevant pages of revised sections/clauses74.
21.4.2. Such intimation to SEBI for changes in terms of PPM shall be submitted through a
Merchant Banker, along with the due diligence certificate provided by the Merchant
71 SEBI circular dated SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/128 dated September 10, 2025
72 SEBI Circular No. HO/19/34/11(5)2025-AFD-POD1/I/188/2025 dated December 08, 2025
73 SEBI circular No. CIR/IMD/DF/14/2014 dated June 19, 2014, SEBI Circular No. CIR/IMD/DF/16/2014 dated
July 18, 2014 and SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2024/028 dated April 29, 2024
74 SEBI circular No. SEBI/HO/IMD/IMD-I/DOF6/CIR/2021/549 dated April 07, 2021
Page 74 of 153 Back to Index
Banker. The format of due diligence certificate for intimating the changes in the
placement memorandum is given at Annexure 15. The Merchant Banker appointed
for filing of PPM shall not be an associate of the AIF, its sponsor, manager or
trustee75.
21.4.3. The changes in such terms of PPM, as mentioned in Annexure 16, may not be
required to be submitted through a merchant banker, and may be filed directly with
SEBI.
21.4.4. Further, LVFs shall be exempted from the requirement of intimating any changes
in the terms of PPM through a merchant banker. LVFs may directly file any
changes in the terms of PPM with SEBI, along with a duly signed and stamped
undertaking by CEO of the Manager of the AIF (or person holding equivalent role
or position depending on the legal structure of Manager) and Compliance Officer
of Manager of the AIF, in a format as specified at Annexure 17.
21.5. Reporting of investments of AIFs under custody76
In terms of Regulation 20(11) of AIF Regulations, the custodian shall report or disclose
such information regarding investments of the AIF in such manner as may be specified by
SEBI from time to time. In this regard, the following is specified:
21.5.1. The SFA, in consultation with SEBI, shall formulate implementation standards for
reporting data on investments of AIFs that are under custody with the custodian.
Such standards shall specify the format and modalities of reporting of data by the
manager of AIF to the custodian and subsequently, by the custodian to SEBI.
21.5.2. Managers of AIFs and custodians shall adopt and adhere to such implementation
standards, formulated by the SFA in consultation with SEBI. Such standards are to
be published on websites of the industry associations which are part of the SFA,
i.e., Indian Venture and Alternate Capital Association (IVCA), PE VC CFO
Association and Trustee Association of India.
75 SEBI Circular No. SEBI/HO/IMD/IMD-I/DF6/P/CIR/2021/645 dated October 21, 2021
76 SEBI Circular No. SEBI/HO/AFD/PoD/CIR/2024/5 dated January 12, 2024
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Chapter 22 - Performance Benchmarking of AIFs77
22.1. Based on the request of the industry, it was considered appropriate that an industry
benchmark be developed to compare the performance of AIF industry against other
investment avenues, as well as global investment opportunities.
22.2. As the industry needs the flexibility to showcase its performance based on different criteria
and benchmarking of performance of AIFs will help investors in assessing the performance
of the AIF industry, it was decided to introduce:
(a) Mandatory benchmarking of the performance of AIFs (including Venture Capital
Funds) and the AIF industry.
(b) A framework for facilitating the use of data collected by Benchmarking Agencies
to provide customized performance reports.
22.3. Benchmarking Agency and dissemination of performance benchmarks:
22.3.1. Any association of AIFs (“Association”), which in terms of membership, represents
at least 33% of the number of AIFs, may notify one or more Benchmarking
Agencies, with whom each AIF shall enter into an agreement for carrying out the
benchmarking process.78 Association will appoint Benchmarking Agencies and
thereafter will set timeline for reporting of requisite data to Benchmarking
Agencies by all the registered AIFs.
22.3.2. The agreement between the Benchmarking Agencies and AIFs shall cover the mode
and manner of data reporting, specific data that needs to be reported, terms
including confidentiality in the manner in which the data received by the
Benchmarking Agencies may be used, etc.
22.3.3. AIFs, for all their schemes which have completed at least one year from the date of
‘First Close’, shall report all the necessary information including scheme-wise
valuation and cash flow data to the Benchmarking Agencies in a timely manner.
The form and format of reporting shall be mutually decided by the Association and
the Benchmarking Agencies.
22.3.4. Performance Benchmarking shall be done on a half yearly basis based on the data
as on September 30 and March 31 of each year.
22.3.5. Benchmarking Agencies shall compile the data received from AIFs and create
comparable industry performance benchmarks for the various categories of AIFs
i.e. Category I, II and III, separately for each year since 2012. The industry
77 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/24 dated Feb 05, 2020
78 SEBI Circular No. SEBI/HO/IMD/DF6/CIR/P/2020/99 dated June 12, 2020
Page 76 of 153 Back to Index
performance benchmarks will be disseminated in a manner that is accessible to the
public.
22.3.6. Considering the diverse investment strategies and investment avenues that can be
deployed by an AIF within the same category of AIFs, additional performance
benchmarks may be created, based on certain other parameters (besides those
covered under para 22.3.5 above). Benchmarking Agency shall ensure that such
performance benchmarking shall be based on objectively verifiable parameters like
instrument of investment, tenure/vintage of the fund, focus sectors, etc.
22.3.7. Benchmarking Agencies shall provide a Performance Benchmark Report to the
individual AIFs/ Schemes vis-à-vis the industry benchmarks. Each Benchmarking
Agency shall clearly provide the basis of benchmarking of individual AIFs/
Schemes as well as calculation of the industry benchmark, along with the
Benchmark Report.
22.4. Operational guidelines for reporting by AIFs to Benchmarking Agencies:
22.4.1. AIFs/ Schemes that have completed at least one year from First Close, shall provide
all the necessary information/data to the Benchmarking Agencies.
22.4.2. AIFs shall provide data on cash flows and valuation of their scheme-wise
investments to the Benchmarking Agencies in the form and format required by each
Benchmarking Agency, within 45 days from the end of every half-year ending on
September 30 and within 7 months from the end of every half-year ending on March
31. The format of data reporting shall mandatorily include details of valuation
principles and the name of the Valuation Agency appointed by the AIF.
22.4.3. Data provided for March 31 of every year shall be audited data and for September
30 may be unaudited data.
22.4.4. To ensure timely and appropriate reporting of valuation of investment portfolio of
AIF to performance benchmarking agencies, the following is specified79:
(a) Manager of AIF shall ensure that a specific timeframe for providing audited
accounts by the investee company to the AIF is included as one of the terms
in subscription agreement / investment agreement with the investee company,
so as to enable AIFs to report valuation based on audited data of investee
companies as on March 31 to performance benchmarking agencies within the
specified timeline of seven months, i.e., by October 31 of each year.
(b) Manager of AIF shall ensure that valuation based on audited data of investee
company is reported to performance benchmarking agencies only after the
79 SEBI circular no. SEBI/HO/AFD/PoD/CIR/2023/97 dated June 21, 2023 and SEBI circular no.
SEBI/HO/AFD/PoD-1/P/CIR/2024/123 dated September 19, 2024
Page 77 of 153 Back to Index
audit of books of accounts of the AIF in terms of Regulation 20(14) of AIF
Regulations, within the stipulated timelines.
22.4.5. Periodicity of valuation of investments shall be as provided in the AIF Regulations.
22.4.6. Valuation of investments shall be in the manner provided in the specific Scheme’s
PPM or fund documents, as the case may be. Any change to valuation principle
shall be informed to the Benchmarking Agencies in the immediate next data
submission.
22.4.7. Assets under Management (AUM) for the purpose of reporting and benchmarking
shall be the value of total capital drawn down under the Scheme.
22.4.8. The performance reporting and benchmarking shall be carried out on pre-tax Net
Asset Value (NAV) of the Scheme.
22.4.9. The performance data and benchmarks shall be reported in both INR and USD
terms.
22.5. Disclosure of performance benchmarks:
22.5.1. In the PPM, as well as in any marketing or promotional or other material, where
past performance of the AIF is mentioned, the performance versus benchmark
report provided by the benchmarking agencies for such AIF/Scheme shall also be
provided.
22.5.2. In any reporting to the existing investors, if performance of the AIF/Scheme is
compared to any benchmark, a copy of the performance versus benchmark report
provided by the Benchmarking Agency shall also be provided for such AIF/scheme.
22.5.3. If an applicant claims a track-record on the basis of India performance of funds
incorporated overseas, it shall also provide the data of the investments of the said
funds in Indian companies to the Benchmarking Agencies, when they seek
registration as AIF.
22.6. Customized Performance Reports:
22.6.1. In addition to the standard benchmark report prepared by the Benchmarking
Agencies, if any AIF seeks customized Performance Reports in a particular manner,
the same may be generated by the Benchmarking Agencies, subject to:
(a) Consent of the AIFs, whose data needs to be considered for generation of the
customized performance report.
(b) Terms and conditions, including fees, decided mutually between the
Benchmarking Agencies and the AIF.
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22.6.2. Benchmarking Agencies may create customized Performance Reports, at the
specific request of an AIF/ Scheme, in the following manner:
(a) Identification of the set of AIFs that meet the particular criteria on which
customized performance report is to be generated.
(b) Such identification may be either on the basis of self-attestation by the
relevant AIFs or by independent verification by Benchmarking Agencies.
(c) Receipt of express consent of the AIFs whose data is needed for creating such
report.
(d) Preparation of customized performance reports may be a fee-based service,
as decided mutually between the AIFs and the Benchmarking Agencies.
(e) Customized performance reports thus generated shall be called “Performance
Report” as against the nomenclature “Benchmark Report”, which shall be
used for the standard benchmark reports generated based on SEBI mandate.
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I. WINDING UP OF SCHEMES AND FACILITIES FOR DEALING WITH
UNLIQUIDATED INVESTMENTS
Chapter 23 - Flexibility to AIFs and their investors to deal with unliquidated investments
of their schemes
Regulation 2(1) (ia) of AIF Regulations states as under –
““dissolution period” means the period following the expiry of the liquidation period of the
scheme for the purpose of liquidating the unliquidated investments of the scheme of the
Alternative Investment Fund.”
Regulation 29(9) of AIF Regulations states as follows –
“Notwithstanding anything contained in sub-regulation (7), during liquidation period of a
scheme, an Alternative Investment Fund may distribute investments of a scheme which are
not sold due to lack of liquidity, in-specie to the investors or enter into the dissolution period,
after obtaining approval of at least seventy five percent of the investors by value of their
investment in the scheme of the Alternative Investment Fund, in the manner and subject to
conditions specified by the Board from time to time.
Provided that in the absence of consent of unit holders for exercising the options under sub-
regulation (9) during liquidation period, such investments of the scheme of the Alternative
Investment Fund shall be dealt with in the manner as may be specified by the Board from time
to time.”
In this regard, the following conditions are specified –
23.1. Dissolution period80:
23.1.1. Before seeking the requisite investor consent for entering into the dissolution
period, the AIF / manager shall arrange bid for a minimum of 25% of the value of
its unliquidated investments. The bid shall be arranged for units representing
consolidated value of all unliquidated investments of the scheme’s investment
portfolio. The manager may arrange bids from multiple bidders in this regard.
23.1.2. The AIF / manager shall disclose the following to investors prior to seeking their
consent –
(a) The proposed tenure of the Dissolution Period, details of unliquidated
investments, value recognition of the unliquidated investments for reporting
to Performance Benchmarking Agencies, etc.
(b) An indicative range of bid value, along with the valuation of the unliquidated
investments carried out by two independent valuers.
80 SEBI Circular No.: SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024
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23.1.3. Prior to expiry of the Liquidation Period, the AIF / manager shall intimate SEBI
about obtaining the investor consent and the investors’ decision to enter into
Dissolution Period.
23.1.4. If the AIF / manager successfully arranges bid for a minimum of 25% of the value
of unliquidated investments of the scheme, the dissenting investors of the scheme
shall be offered an option to fully exit the scheme out of the 25% bid arranged by
the AIF. After exercising the exit option by aforesaid dissenting investors, any
unsubscribed portion of the bid may be used to provide pro-rata exit to non-
dissenting investors should they opt for the same.
23.1.5. If the AIF / manager fails to arrange bid for a minimum of 25% of the value of
unliquidated investments of the scheme, the AIF can still opt for Dissolution Period,
provided that it obtains consent of at least 75% of the investors by value of their
investment in the scheme of the AIF.
23.1.6. If the bidder or its related parties are investor(s) in the scheme, such investor(s)
shall not be provided exit from the scheme out of the bid.
“Related party” shall have the same meaning as provided in Regulation 2(1)(zb) of
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
23.1.7. At the time of entering into Dissolution Period, for appropriately capturing the track
record of performance of the manager and for reporting the same to Performance
Benchmarking Agencies, the value of such unliquidated investments of the scheme
shall be calculated in the following manner –
(a) Based on bid value, if the AIF / manager arranges bid for a minimum of 25%
of the value of unliquidated investments of the scheme; or
(b) One Rupee, if the AIF / manager fails to arrange bid for a minimum of 25%
of the value of unliquidated investments of the scheme.
23.1.8. The performance of the manager during the Dissolution Period shall be captured
separately and reported to Performance Benchmarking Agencies, distinct from the
performance of the scheme before entering into Dissolution Period.
23.1.9. If the scheme of the AIF fails to sell the unliquidated investments during the
Dissolution Period, such investments shall be mandatorily distributed in-specie to
the investors. It is clarified that no further extension or Liquidation Period shall be
available to these schemes after the expiry of Dissolution Period.
23.1.10. The manager of the AIF shall not charge management fee during the Dissolution
Period.
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23.2. Information Memorandum for schemes of AIFs entering into Dissolution Period81:
In terms of Regulation 29B(2) of SEBI (Alternative Investment Funds) Regulations, 2012
(‘AIF Regulations’), scheme of an AIF entering into dissolution period shall file an
information memorandum with SEBI through a merchant banker in the manner as may be
specified by SEBI. In this regard, the following is specified –
23.2.1. The information memorandum for a scheme of an AIF entering into dissolution
period shall be submitted to SEBI before expiry of the liquidation period or
additional liquidation period of the scheme, as the case may be.
23.2.2. The format for information memorandum to be submitted by the scheme of AIF
entering into dissolution period is given at Annexure 18.
23.2.3. The format for Due Diligence Certificate by Merchant Banker to be submitted
along with the aforesaid information memorandum to SEBI is given at Annexure
19.
23.3. In-specie distribution of unliquidated investments of a scheme82
23.3.1. During the Liquidation Period of a Scheme of an AIF, if the AIF decides to
distribute unliquidated investments in-specie, the AIF shall obtain consent of 75%
of investors by value of their investment in the scheme.
23.3.2. Upon obtaining the requisite investor consent for in-specie distribution of
unliquidated investments, the AIF shall arrange bid for a minimum of 25% of the
value of the unliquidated investments. The bid shall be arranged for units
representing consolidated value of each unliquidated investment of the scheme’s
investment portfolio.
23.3.3. The AIF shall disclose the bid value along with the valuation of the unliquidated
investments carried out by two independent valuers to all the investors of the
scheme.
23.3.4. The dissenting investors of the scheme who did not consent to in-specie
distribution, shall be offered an option to fully exit the scheme out of the 25% bid
arranged by the AIF/ manager. After exercise of the exit option by aforesaid
dissenting investors, any unsubscribed portion of the bid shall be used to provide
pro-rata exit to non- dissenting investors.
23.3.5. If the bidder or its related parties are investors in the scheme, they shall not be
provided exit from the scheme out of the bid.
81 SEBI Circular No.: SEBI/HO/AFD/PoD-I/P/CIR/2024/100 dated July 09, 2024
82 SEBI Circular No.: SEBI/HO/AFD/PoD1/CIR/2023/098 dated June 21, 2023 and SEBI Circular No.:
SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024
Page 82 of 153 Back to Index
Related party shall have same meaning as provided in SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
23.3.6. Subsequently, the unliquidated investments shall be distributed in-specie. For
capturing in the track record of the manager and for reporting to Performance
Benchmarking Agencies, the value of such in-specie distribution shall be –
(a) Bid value, if the AIF/ manager arranges bid for a minimum of 25% of the
value of unliquidated investments of the scheme.
(b) One Rupee, if the AIF/ manager fails to arrange bid for a minimum of 25%
of the value of unliquidated investments of the scheme.
23.3.7. The in-specie distribution shall be carried out and the scheme shall be wound up,
prior to the expiry of the Liquidation Period of the scheme.
23.3.8. While obtaining the requisite investor consent, manager shall disclose to the
investors that the value of the unliquidated investments distributed in-specie shall
be in the manner given at para 23.3.6 above, for capturing in the track record of the
manager and for reporting to Performance Benchmarking Agencies.
23.4. Mandatory in-specie distribution of unliquidated investments83:
With regard to the proviso of Regulation 29(9) of AIF Regulations, the following is
specified –
23.4.1. During the Liquidation Period, if the AIF fails to obtain requisite investor consent
for entering into Dissolution Period or in-specie distribution, then the unliquidated
investments shall be mandatorily distributed to investors in-specie, without
requirement of obtaining consent of 75% of investors by value of their investment
in the scheme of the AIF.
23.4.2. The value of such investments distributed in-specie shall be recognised at One
Rupee for capturing the track record of performance of the manager and for
reporting to Performance Benchmarking Agencies.
23.4.3. In case any investor is not willing to take the in-specie distribution of unliquidated
investments, such investments shall be written off.
83 SEBI Circular No.: SEBI/HO/AFD/PoD1/CIR/2023/098 dated June 21, 2023 and SEBI Circular No.:
SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024
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23.5. In-specie distribution of investments of AIFs under Regulation 29(8) of AIF
Regulations84 -
With respect to carrying out in specie distribution of investments of a scheme of an AIF in
terms of Regulation 29(8) of AIF Regulations, it is clarified that such in specie distribution
(other than the aforesaid mandatory in specie distribution), shall be carried out after
obtaining approval of at least seventy-five percent of the investors by value of their
investment in the scheme of the AIF.
23.6. One-time flexibility to schemes of AIFs whose Liquidation Period has expired, to deal
with unliquidated investments, by availing additional liquidation period85 -
Regulation 29(9A) of AIF Regulations states as under –
“If the liquidation period for a scheme of an Alternative Investment Fund has expired or
is expiring within three months from the date of notification of the Securities and
Exchange Board of India (Alternative Investment Funds) (Second Amendment)
Regulations, 2024, such schemes may be granted an additional liquidation period,
subject to such conditions and in the manner as may be specified by the Board.
Provided that the additional liquidation period granted under sub-regulation (9A) shall
be without prejudice to the issuance of any direction or measures in accordance with the
provision of the Act and regulations framed thereunder.”
In this regard, the following is specified -
23.6.1. During the additional Liquidation Period, the scheme shall fully liquidate its
investments, or distribute the investments in-specie or opt for the Dissolution
Period.
23.7. Liquidation Scheme86 -
Regulation 29A(8) of AIF Regulations inserted vide SEBI (Alternative Investment Funds)
(Second Amendment) Regulations, 2024, states as under –
“No Alternative Investment Fund shall launch any new liquidation scheme under this
regulation after the notification of the Securities and Exchange Board of India
(Alternative Investment Funds) (Second Amendment) Regulations, 2024:
Provided that any liquidation scheme launched by an Alternative Investment Fund
prior to the notification of the Securities and Exchange Board of India (Alternative
Investment Funds) (Second Amendment) Regulations, 2024 shall continue to be
84 SEBI Circular No.: SEBI/HO/AFD/PoD-I/P/CIR/2024/100 dated July 09, 2024
85 SEBI Circular No.: SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024
86 SEBI Circular No.: SEBI/HO/AFD/PoD1/CIR/2023/098 dated June 21, 2023 and SEBI Circular No.:
SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024
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governed by regulation 29A and the other provisions of these regulations till such
schemes are wound up.”
In this regard, any Liquidation Scheme launched by an AIF prior to April 25, 2024 [i.e. the
date of notification of Securities and Exchange Board of India (Alternative Investment
Funds) (Second Amendment) Regulations, 2024] shall continue to be governed by the
following provisions, till such schemes are wound up –
23.7.1. During the Liquidation Period of a scheme of an AIF (‘Original Scheme’), if the
AIF decides to launch Liquidation Scheme, the AIF shall obtain consent of 75% of
investors by value of their investment in the Original Scheme.
23.7.2. The scheme launched by the AIF for this purpose shall contain the words
‘Liquidation Scheme’ in its name.
23.7.3. Upon obtaining the requisite investor consent for launching Liquidation Scheme,
the AIF shall arrange bid for a minimum of 25% of the value of the unliquidated
investments. The bid shall be arranged for units representing consolidated value of
each unliquidated investment of the Original Scheme’s investment portfolio.
23.7.4. The AIF shall disclose the bid value, along with the valuation of the unliquidated
investments carried out by two independent valuers, to all the investors of the
Original Scheme.
23.7.5. The dissenting investors of the Original Scheme who did not consent to sell the
unliquidated investments to the Liquidation Scheme, shall be offered an option to
fully exit the Original Scheme out of the 25% bid arranged by the AIF/ manager.
After exercising the exit option by aforesaid dissenting investors, any unsubscribed
portion of the bid shall be used to provide pro-rata exit to non-dissenting investors.
23.7.6. If the bidder or its related parties are investors in the Original Scheme, they shall
not be provided exit from the Original Scheme out of the bid.
Related party shall have same meaning as provided in SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
23.7.7. Subsequently, the unliquidated investments of the Original Scheme shall be sold to
the Liquidation Scheme. For capturing in the track record of the manager and for
reporting to Performance Benchmarking Agencies, the value of such sale shall be
–
(a) Bid value, if the AIF/ manager arranges bid for a minimum of 25% of the
value of unliquidated investments of the Original Scheme.
(b) One Rupee, if the AIF/ manager fails to arrange bid for a minimum of 25%
of the value of unliquidated investments of the Original Scheme.
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23.7.8. Liquidation Scheme shall allot its units to the Original Scheme for purchasing
investments from Original Scheme in the manner specified above.
23.7.9. Upon receipt of units of Liquidation Scheme, the Original Scheme shall
mandatorily distribute such units of Liquidation Scheme in-specie in lieu of its units
issued to investors.
23.7.10. The Liquidation Scheme shall be launched and Original Scheme shall be wound
up, prior to the expiry of the Liquidation Period of the Original Scheme.
23.7.11. In terms of Regulation 29A(2) of AIF Regulations, Liquidation Scheme has been
provided exemption, inter alia, from the requirement of obtaining SEBI’s
comments on the PPM. Accordingly, the tenure of the Liquidation Scheme shall be
calculated from the date of filing of PPM with SEBI and such tenure shall not be
more than the tenure of the Original Scheme excluding any permissible extension.
23.7.12. Liquidation Scheme shall not extend its tenure or sell its investments to another
Liquidation Scheme. Further, Liquidation Period, as defined in Regulation 2(1)(pb)
of AIF Regulations, shall not be available to Liquidation Scheme.
23.7.13. If an AIF (viz. A1) has invested in units of another AIF (viz. A2) and the investee
AIF (i.e. A2) has launched a Liquidation Scheme, then the investor AIF (i.e. A1)
upon expiry of its tenure or extended tenure, shall mandatorily distribute the units
of Liquidation Scheme held by it, in-specie to its investors (i.e. investors of A1).
23.7.14. Performance of Liquidation Scheme shall also be reported to Performance
Benchmarking Agencies, in terms of Chapter 22 -of this Master Circular.
23.7.15. While obtaining the requisite investor consent, manager shall disclose to the
investors that the value of the unliquidated investments sold to the Liquidation
Scheme shall be in the manner given at para 23.7.7 above, for capturing in the track
record of the manager and for reporting to Performance Benchmarking Agencies.
23.8. Responsibility for compliance87:
23.8.1. The manager, trustee and key management personnel of AIF and manager shall be
responsible for compliance with the provisions and procedure prescribed above.
23.8.2. The manager of AIF, upon exercising any of the options mentioned above, shall
submit report on compliance with the provisions of this circular on SEBI
87 SEBI Circular No.: SEBI/HO/AFD/PoD1/CIR/2023/098 dated June 21, 2023, SEBI Circular No.:
SEBI/HO/AFD/PoD-I/P/CIR/2024/026 dated April 26, 2024 and SEBI Circular No.: SEBI/HO/AFD/PoD-
I/P/CIR/2024/100 dated July 09, 2024
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Intermediary Portal in the format as specified therein and/or as part of quarterly
regulatory reporting to SEBI, as the case may be.
23.8.3. The manager of AIF shall report the value, as specified above, with regard to sale
of unliquidated investments to Liquidation Scheme or at the time of entering into
dissolution period or distribution of unliquidated investments in-specie, to
Performance Benchmarking Agencies in a timely manner for the purpose of
performance benchmarking. The manager shall also make suitable disclosure with
regard to the same in the PPMs of subsequent schemes.
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Chapter 24 - Modalities for migration of Venture Capital Funds to AIF Regulations88
24.1. Vide notification dated July 20, 2024, AIF Regulations have been amended to provide
flexibility to Venture Capital Funds (‘VCFs’) registered under the erstwhile SEBI (Venture
Capital Funds) Regulations, 1996 (“VCF Regulations”), for migrating to AIF Regulations
and to, inter-alia, avail the facility of dealing with unliquidated investments of their
schemes upon expiry of tenure.
24.2. In terms of Regulation 19V(1) of AIF Regulations, “Migrated Venture Capital Fund”
means a fund that was previously registered as a Venture Capital Fund under the VCF
Regulations and subsequently registered under AIF Regulations as a sub-category of
Venture Capital Fund under Category I - Alternative Investment Fund, in accordance with
the provisions of Chapter III - D of AIF Regulations.
24.3. Modalities and conditions for migration to AIF Regulations:
24.3.1. While opting for migration to AIF Regulations, VCFs having only schemes whose
liquidation period (in terms of Regulation 24(2) of VCF Regulations) has not
expired, shall be subject to the following conditions -
(a) The facility of migration to AIF Regulations shall be available till July 19,
2025.
(b) The tenure of scheme(s) of the Migrated VCF, upon migration, shall be
determined in the following manner:
(i) In case a definite tenure was disclosed in the PPM of the scheme(s)
under the VCF Regulations, such scheme(s) shall continue with the
same tenure upon migration.
(ii) In case a definite tenure was not disclosed in the PPM of the
scheme(s), the residual tenure of the scheme(s) of the Migrated VCF
shall be determined prior to the application for migration, with the
approval of 75 percent of investors by value of their investment in the
scheme(s).
24.3.2. While opting for migration to AIF Regulations, VCFs having at least one scheme
which has not been wound up post expiry of its liquidation period (in terms of
Regulation 24(2) of VCF Regulations), shall be subject to the following conditions
-
(a) Such VCFs may apply for registration as Migrated VCF on or before July 19,
2025, only if the VCF or any of its scheme(s) do not have any pending
investor complaint with regard to non-receipt of funds / securities as on the
date of the application.
88 SEBI Circular No. SEBI/HO/AFD/AFD-POD-1/P/CIR/2024/111 dated August 19, 2024
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(b) In terms of Regulation 19AF(4) of AIF Regulations, a one-time additional
liquidation period of one year from the date of notification of amendment to
AIF Regulation i.e., period till July 19, 202689, shall be available to scheme
of the migrated VCF, whose liquidation period (in terms of Regulation 24(2)
of VCF Regulations) has expired and is not wound up.
(c) If the VCF also has scheme(s) other than the scheme(s) stated in para
24.3.2(b) above, i.e., scheme(s) whose liquidation period (in terms of
Regulation 24(2) of VCF Regulations) has not expired, the tenure of such
scheme(s) of the Migrated VCF shall be determined as per provision at para
24.3.1(b) above upon migration.
24.3.3. Upon migration to AIF Regulations, the investors on-boarded, investments held and
units issued by the VCF or scheme(s) of the VCF registered under VCF Regulations,
shall be deemed to be that of the Migrated VCF or its scheme(s), under the AIF
Regulations.
24.3.4. The applicability of provisions of this SEBI Master Circular for AIFs to Migrated
VCFs are given at Annexure 20.
24.4. Further, with respect to VCFs registered under VCF Regulations that do not opt for
migration to AIF Regulations, the following is specified –
24.4.1. Scheme(s) of VCFs, whose liquidation period (in terms of Regulation 24(2) of VCF
Regulations) has not expired, shall be subject to enhanced regulatory reporting as
may be prescribed by SEBI in line with the regulatory reporting applicable to AIFs
under AIF Regulations.
24.4.2. VCFs having at least one scheme whose liquidation period (in terms of Regulation
24(2) of VCF Regulations) has expired shall be subject to appropriate regulatory
action for continuing beyond the expiry of their original liquidation period.
24.5. The flexibility to opt for migration to AIF Regulations shall not be available to VCFs
wherein –
24.5.1. All the schemes of the VCF have been wound up; and/or,
24.5.2. No investment has been made by schemes of the VCF which have not been wound
up.
Such VCFs shall submit an application to SEBI for surrender of their registration on or
before March 31, 2025, failing which appropriate action shall be initiated to cancel the
certification of registration.
24.6. The manager, trustee and key management personnel of the VCF/Migrated VCF and
manager shall be responsible for compliance with the provisions of this circular.
89 SEBI Circular no. SEBI/HO/AFD/SEC-3/P/CIR2025/85 dated June 06, 2025
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Chapter 25 - Guidelines for winding up of AIFs with respect to retention of proceeds
and ‘Inoperative Fund’ status90
25.1. Regulation 29 of AIF Regulations states, inter-alia, the following with respect to winding
up –
25.1.1. Regulation 29(7) - Within the liquidation period, the assets shall be liquidated, and
the proceeds accruing to investors in the AIF or the scheme of the AIF shall be
distributed to them after satisfying all liabilities, subject to conditions as may be
specified by SEBI from time to time.
25.1.2. Regulation 29(10A) - An AIF may be tagged as an inoperative fund, in such manner
and subject to conditions as may be specified by SEBI from time to time.
25.1.3. Regulation 29(11) - Upon winding up of the AIF, the certificate of registration shall
be surrendered to SEBI.
The conditions and modalities with respect to retention of proceeds beyond permissible
fund life, tagging as ‘Inoperative Fund’ and surrender of registration are being specified in
this chapter.
25.2. Retention of proceeds beyond permissible fund life -
25.2.1. AIFs/schemes of AIFs may retain liquidation proceeds beyond the liquidation
period or dissolution period (beyond “permissible fund life”), as applicable, subject
to satisfying at least one of the following conditions –
(a) Demonstrable receipt of a litigation notice or demand by the AIF/scheme of
AIF, which includes any official written communication from a tax
authority, regulatory authority, law enforcement agency, court of law, or
from an investor or counterparty in relation to litigation, which indicates a
potential tax, regulatory or legal liability. This shall include show-cause
notices, re-assessment notices, investigation summons, or similar
communications and shall not be restricted to crystallised demand notices;
(b) Consent obtained from at least seventy-five percent of the investors by value
of their investment in the scheme, in cases where proceeds are proposed to
be retained on account of anticipated liabilities arising due to a
possible/probable litigation or tax demand;
(c) Substantiation of amounts retained for meeting residual winding up related
operational expenses, through invoices, supporting documents or records of
comparable expenses incurred in previous years.
25.2.2. In cases where monies are being retained on account of anticipated liabilities as
specified in paragraph 25.2.1(b) above, the manager of AIF shall disclose the
90 Inserted with the issuance of SEBI circular no. HO/19/34/11(2)2026-AFD-POD1/I/13764/2026 dated June 16,
2026
Page 90 of 153 Back to Index
amount being retained and estimated time period for which it is proposed to be
retained to the investors of the fund while seeking their consent for retention.
25.2.3. In cases where monies are being retained for meeting residual winding up related
operational expenses as specified in paragraph 25.2.1(c) above, the time period for
such retention shall not exceed three years from the end of permissible fund life of
the AIF/scheme of AIF. Further, the implementation standards for standardising the
operational heads under which monies may be retained, shall be formulated by
SFA, in consultation with SEBI.
25.2.4. All monies retained in line with conditions at paragraph 25.2.1 above shall be
invested in accordance with Regulation 15(1)(f) of the AIF Regulations.
25.2.5. Once the liabilities are satisfied and the pending retained monies are distributed to
the investors of the fund, the scheme shall be wound up in terms of Regulation 29
of AIF Regulations.
25.3. Application for ‘Inoperative Fund’ status
25.3.1. An AIF having one or more schemes with retained monies as specified in paragraph
25.2.1 above and intending to surrender its registration, may apply for obtaining
the ‘Inoperative Fund’ status. The application shall be submitted to SEBI in the
format as specified in Annexure 21, by emailing to inoperativeaif@sebi.gov.in.
25.3.2. An AIF whose scheme(s) have not retained any monies beyond the permissible
fund life, but intending to continue with the registration solely in anticipation of a
favourable outcome of a pending litigation, may also apply for obtaining the
‘Inoperative Fund’ status.
25.3.3. Upon approval of the aforesaid application, the applicant AIF will be tagged as
‘Inoperative Fund’.
25.3.4. Such Inoperative Fund shall apply to SEBI for surrender of its certificate of
registration only after the liabilities are satisfied and the pending retained monies
are distributed to the investors in all its schemes.
25.4. Regulatory framework applicable to ‘Inoperative funds’
25.4.1. An AIF tagged as ‘Inoperative Fund’ shall be subject to the following conditions,
with effect from the date of obtaining the tag –
(a) The monies retained by scheme(s) of such AIF in terms of Paragraph 3
above, shall be invested in accordance with Regulation 15(1)(f) of the AIF
Regulations;
(b) No new scheme shall be launched under the AIF; and,
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(c) No management fees shall be charged in respect of any of its scheme(s).
25.4.2. The regulatory requirements as specified in Annexure 22 shall not be applicable to
AIFs tagged as ‘Inoperative Funds’.
25.4.3. AIFs having schemes which have retained monies in terms of paragraph 25.2.1
above and AIFs tagged as ‘Inoperative Funds’ shall submit an annual status report
on retained monies and outstanding liabilities to SEBI and to investors of the
relevant scheme(s), in the format as given at Annexure 23 of this circular. The
report shall be submitted on SEBI Intermediary portal within 30 calendar days from
the end of March of every financial year.
25.5. Applicability to erstwhile Venture Capital Funds
25.5.1. The aforesaid facility of retention of proceeds beyond permissible fund life and
availing Inoperative Fund status shall also be applicable to Venture Capital Funds
registered under erstwhile SEBI (Venture Capital Funds) Regulations, 1996. The
regulatory framework applicable to such VCFs tagged as ‘Inoperative Funds’ shall
be the same as applicable to AIFs, stated in para 25.4 above.
***
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ANNEXURES
Annexure 1 - Template for PPM for Category I and Category II AIFs
The template for PPM of AIFs raising funds under Category I and Category II is provided
here.
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Annexure 2 - Template for PPM for Category III AIFs
The template for PPM of AIFs raising funds under Category III is provided here.
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Annexure 3 - Template for waiver of compliance with SEBI prescribed template of
PPM and audit compliance with the terms of PPM
To
(Name of Manager)
Manager of (Name of AIF/ Scheme)
Sub: Waiver of compliance with SEBI template for PPM and waiver of audit of compliance
with the terms of PPM
We are considering to invest in (Name of the AIF/Scheme) managed by (Name of the Manager).
We understand that (Name of the AIF) is registered with Securities and Exchange Board of India
(SEBI) and as such is required to provide a Private Placement Memorandum in the template
prescribed by SEBI, which has two parts viz.:
Part A – Standard section for minimum disclosure
Part B – Supplementary section to allow flexibility to the Fund in order to provide any
additional information
Further, SEBI also prescribes an audit of compliance of the AIF with the terms of PPM, as
specified by SEBI from time to time.
We confirm that we have the independent ability and mechanism to carry out due diligence of
our investments, as well as to monitor the operations and compliance with the terms of PPM of
the Funds in which we invest; including (Name of the AIF/ Scheme), to the extent required by
us.
Accordingly, in terms of para 2.1.4 and/or para 21.3.8 of the Master Circular for AIFs, we hereby
grant waiver to (name of the AIF) from the requirement of providing PPM in the template format
as prescribed by SEBI and/or grant waiver to (Name of the AIF/ Scheme) from the requirement
of conducting an annual audit of compliance with the terms of the PPM furnished to us.
Notwithstanding the waiver granted herein, we understand that (name of the AIF/Scheme) is not
permitted, under SEBI Regulations, to sign a Contribution agreement/ Subscription agreement
(by any name as it may be called) that is, in any way, in contradiction with the terms of the PPM
or goes beyond the terms of the PPM furnished to us.
(Signed by two authorized signatories of the investor)
****
[Note: The template for waiver may be suitably modified if waiver is sought with respect to only
one of the two requirements i.e., for providing PPM in the template format or for conducting an
annual audit of compliance with the terms of the PPM.]
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Annexure 4 - Investor Charter for Alternative Investment Funds
A. Vision and Mission Statement:
Vision
To develop the Alternative Investment Fund (“AIF”) industry on professional and ethical
lines and maintain high standards of governance and transparency.
Mission
 Maintain high professional and ethical standards within the AIF industry.
 Comply with all applicable regulations and co-operate with the regulators in all aspects
of the AIF activity.
 Act in a fiduciary capacity towards the investors.
B. Details of business transacted by the organization with respect to the investors:
 To raise capital from domestic and global investors.
 To invest in portfolio companies in accordance with investment strategy stated in Fund
documents, with an objective to generate positive returns for the stakeholders including
investors.
 To distribute returns to the investors as per the fund documents.
C. Details of services provided to investors:
1. On-boarding of investors
1.1. Sharing of Private Placement Memorandum (PPM).
1.2. Account opening with the AIF:
- Completing KYC of investors and registration of KYC with KRAs.
- Sharing of copies of fund documents with investors.
- Entering into contribution agreement with investor.
2. Obtaining investor consent for material changes to fund structure
2.1. Change in the sponsor or the manager of the AIF.
2.2. Change in control of the sponsor or the manager of the AIF.
2.3. Material changes to terms of PPM such as Investment Strategy.
2.4. Winding up of Fund/ Scheme prior to expiry of tenure.
3. Dissemination of financial information of Fund
3.1. Net Asset Value of Fund/ Scheme.
3.2. Financial information of investee companies.
3.3. Information on performance of scheme/fund.
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4. Disclosures with respect to material risks associated with the fund and its portfolio
investments
4.1. Any inquiries/ legal actions by legal or regulatory bodies in any jurisdiction.
4.2. Any material liability arising during the tenure of the fund.
4.3. Any breach of a provision of the PPM or any other agreement made with the
investor or any other fund documents.
4.4. Intimation regarding any conflict of interest.
4.5. Risks associated with the portfolio, such as concentration risk, foreign exchange
risk, leverage risk, realization risk, strategy risk, reputation risk, extra-financial
risks such as social and corporate governance risks etc. at fund and investee
company level.
5. Intimation of any non-material changes in the operations of the fund
5.1. Non-material changes such as
- Bank account details
- Address of AIF or its Manager or Sponsor
- Contact details such as email-id, contact number, etc. of AIF or its Manager or
Sponsor
6. Grievance redressal
6.1. Redressal of investor complaints received directly from investors and/ or from SEBI
/ SCORES.
D. Timelines of the activity/services provided to investors:
Sr. Description of activity/services provided by Timeline for completion of activity
No. Alternative Investment Funds (AIFs) to its
investors
1. Valuation related disclosures:
a. Valuation of investment by Category I and II At least once every six months. Can be
Alternative Investment Fund extended to once a year with approval
of 75% of its investors by value of
investment.
b. Disclosure of NAV of scheme(s) of the Close ended fund - quarterly
Category III Alternative Investment Fund basis
Open ended fund - monthly basis
2. Transparency related disclosures:
a. Disclosure of financial information of
investee companies
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Sr. Description of activity/services provided by Timeline for completion of activity
No. Alternative Investment Funds (AIFs) to its
investors
b. Disclosure of Material risks: • Category I and II - within 180 days
from the year end or earlier as per
Concentration risk, foreign exchange risk at
the fund documents.
fund level and leverage risk, realization risk,
• Category III - within 60 days from
strategy risk, reputation risk at investee
the end of the quarter end or earlier
company level, extra-financial risks such as
as per the fund documents.
social and corporate governance risks etc. at
fund and investee company level
c. Financial, risk management, operational, To be disclosed periodically to
portfolio, and transactional information the investors
regarding fund investments
d. Any fees ascribed to the Manager or Sponsor;
and any fees charged to the Alternative
Investment Fund or any investee company
e. Any inquiries/ legal actions by legal or As and when occurred
regulatory bodies in any jurisdiction
f. Any material liability arising during the
Alternative Investment Fund’s tenure
g. Any breach of a provision of the placement
memorandum or agreement made with the
investor or any other fund documents
h. Intimation regarding conflict of interest in any As and when they arise or
transaction seem likely to arise
i. Any change in terms of Private Placement On consolidated basis within one
Memorandum /fund documents month of end of each Financial Year
3. Complaint handling related services:
a. Response to complaint received from Within 21 days from the date of receipt
investors of complaint
b. Redressal of investor complaint received from Within 21 days from the date of receipt
SEBI/ SCORES of complaint
E. Details of grievance redressal mechanism and how to access it:
1. Alternative Investment Funds are required to redress all investor complaints in timely
manner.
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2. All claims, differences or disputes between investors and the Alternative Investment
Fund or the Manager arising out of or in relation to the activities of the Alternative
Investment Fund or the Manager in the securities market shall be submitted to a dispute
resolution mechanism that includes mediation and/or conciliation and/or arbitration, in
accordance with the procedure specified by SEBI.
3. Investors can also approach SEBI for redressal of their complaints through SEBI
SCORES platform. On receipt of complaints, SEBI takes up the matter with the
concerned AIF.
4. Investors may send their complaints to:
Office of Investor Assistance and Education,
Securities and Exchange Board of India,
SEBI Bhavan,
Plot No. C4-A, G Block, Bandra Kurla Complex,
Bandra (E), Mumbai - 400 051.
F. Responsibilities of investors:
1. Responsibility to inform and educate yourself
1.1. Read thoroughly all fund documents including Private Placement Memorandum,
Contribution Agreement, sales literature, newsletters and understand the product.
1.2. Carefully consider all investment risks, fees, and/or other factors detailed in these
documents.
1.3. Ensure and make certain that the proposed investment in the Fund meets your
investment objective and is in alignment with your risk appetite.
1.4. Review your portfolio holdings, account statements and transaction confirmation on
regular basis to ensure that you aware of all transactions and securities where you
are invested.
2. Responsibility to timely update your KYC and information with the Intermediary
2.1. Provide complete and accurate information in your KYC documents, including
financial/ income status.
2.2. Timely updation of KYC information.
3. Responsibility to abide by the contribution agreement
3.1. The investor needs to read carefully and understand the agreement that he/she is
entering into with the Alternative Investment Fund and abide by the terms thereof.
3.2. The investor should be aware that investment terms are not guarantee of future
performance or returns of the Fund/ Scheme.
4. Responsibility to use right financial intermediaries, consultants and advisors.
4.1. Carefully consider validity and reliability of investment information obtained from
all sources, especially unsolicited information obtained over the Internet.
Page 99 of 153 Back to Index
5. Responsibility to maintain confidentiality of information.
5.1. Investors shall not disclose any material non-public information that is received by
virtue of being investors of the fund, except as may be guided by the terms of the
fund documents.
***
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Annexure 5 - Complaints Data to be displayed by AIFs for each scheme
1. Investor complaints data for the quarter ending March/June/September/December
S. Investor Pending as Received Resolved Total Pending Average
No. Complaints at the Pending complaints Resolution
received end of the at the end > 3 months time ^
from last of the (in days)
quarter quarter
1 Directly from
Investors
2 SEBI
(SCORES)
3 Other
Sources
(if any)
Total
^ Average Resolution time is the sum total of time taken to resolve each complaint in days in the
current quarter divided by total number of complaints resolved in the current quarter.
2. Investor complaints data for last three Financial Years (FY)
S. No. FY Carried forward from Received Resolved Pending at the
previous FY end of FY
1 2023-24
2 2024-25
3 2025-26
Total
***
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Annexure 6 - Format for Due Diligence Certificate to be submitted at the time of filing
PPM with SEBI
To,
Securities and Exchange Board of India
Dear Sir / Madam,
Sub.: Filing of draft placement memorandum of (name of scheme), scheme of (name of
AIF/proposed AIF)
On the basis of examination of draft placement memorandum and supporting documents
submitted by AIF/proposed AIF, discussion with AIF/proposed AIF, its manager, sponsor,
trustee, etc., we confirm that:
1. We have independently exercised due-diligence regarding information given in the
placement memorandum, including the veracity and adequacy of disclosure made
therein.
2. The AIF, its sponsor and manager are fit and proper persons based on the criteria
specified in Schedule II of the Securities and Exchange Board of India (Intermediaries)
Regulations, 2008. None of the intermediaries named in the placement memorandum
have been debarred from functioning by any regulatory authority.
3. All the material disclosures in respect of the fund raising, investment by the scheme and
management thereof have been made in the placement memorandum and are based on
latest available information.
4. We have satisfied ourselves that the proposed activities of the scheme are bona fide,
fall within the objectives of the fund as specified in the Articles of Association or Trust
Deed or Partnership Deed of the AIF and are to meet the stated investment objective.
5. The disclosures made in the placement memorandum are true, fair and necessary to
enable the investors to make an informed decision with respect to the investment in the
proposed scheme and such disclosures are in accordance with the requirements of
Securities and Exchange Board of India (Alternative Investment Funds) Regulations,
2012, circulars, guidelines issued thereunder and other applicable legal requirements.
6. We have satisfied ourselves about the capability of the sponsor or manager to fulfil the
requirement of maintaining continuing interest in the scheme as per Securities and
Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
PLACE:
DATE:
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Signature of authorised signatory of Merchant Banker
Name/designation of the authorised signatory, Name of Merchant Banker
Enclosed:
1. Annexure 6A - Details of disclosures in the placement memorandum with respect to
compliance with provisions of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, applicable to the proposed scheme
2. Annexure 6B - Information with respect to disclosures in the placement memorandum,
to be submitted along with the due diligence certificate
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Annexure 6A. - Details of disclosures in the placement memorandum with respect to
compliance with provisions of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, applicable to the proposed scheme
S. Regulation Contents of the Section/subsection (along with page number) of
No. Number Regulation the placement memorandum where the
Regulation has been complied with.
1. ---
2. ----
Note:
Regulations which are not applicable to a particular category of AIF may not be included.
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Annexure 6B. - Information with respect to disclosures in the placement
memorandum, to be submitted along with the due diligence certificate
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
1. Whether the information submitted in the
placement memorandum is consistent with the
information submitted in Form A as specified
under First schedule of AIF Regulations
2. Whether PAN has been obtained for the Scheme If yes, PAN of the scheme
may be provided
3. Whether the manager and sponsor of the scheme
are same as that of the AIF
4. Whether the manager or sponsor qualify as
foreign owned or controlled entities?
If yes, whether it is disclosed under Important
notice section that the fund and its investments
shall be subject to Foreign Exchange
Management (Non-Debt instruments) Rules,
2019 and applicable reporting norms under the
Foreign Exchange Management (Mode of
Payment and Reporting of Non- Debt
Instruments) Regulations, 2019.
5. Whether adequate disclosures are made in all
sections and subsections of the placement
memorandum in line with template placement
memorandum provided in para 2.1.3 of SEBI
Master Circular for AIFs
6. Whether the scheme seeks waiver (as per para If yes, confirm whether it is
2.1.4 of SEBI Master Circular for AIFs) from disclosed that each investor
requirement of placement memorandum as per shall commit a minimum
template prescribed in para 2.1.3 of SEBI Master capital contribution of INR
Circular for AIFs 70 crore and provide a
waiver from the
requirement of placement
memorandum in
prescribed template (Not
applicable for LVF).
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S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
7. Whether it is verified that information provided If no, highlight the
for a particular term is consistent across different respective sections/clauses
sections of the placement memorandum
8. Whether there are any clauses in the placement If yes, also highlight such
memorandum which affect the pro-rata rights of clauses and confirm
each investor in each investment of the scheme whether the same is in
compliance with para 19.1
of SEBI Master Circular
for AIFs
9. Whether the investor(s) has/have any role in
approving investment decisions of the scheme
10. Whether it is provided that the scheme does not
propose to engage in lending activity, or
extending guarantee for investee company
11. Whether the sections ‘Investment objective,
strategy and process’, ‘Governance structure’
and ‘principal terms of the fund/scheme’ contain
all material information
12. Whether it is provided in the placement
memorandum that terms of contribution/
subscription agreement shall be in line with the
terms of the placement memorandum
13. Whether tenure of the scheme/fund is clearly
disclosed and is calculated from first close of the
scheme
14. Whether timeline for conducting first close is
within 12 months from the date on which the AIF
is eligible to launch the scheme as stated at para
2.4.1 of SEBI Master circular for AIFs
Page 106 of 153 Back to Index
S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
15. Whether type of instruments proposed for If yes, provide the list of
temporary deployment of funds is in line with instruments proposed for
applicable provision of AIF Regulations temporary deployment of
funds
Whether the scheme proposes to invest in such
instruments as part of primary investment
objective of the scheme also
In case of Category III AIFs, whether the scheme
proposes to invest in such instruments also to
provide applicable margin to recognized stock
exchanges
16. Whether maximum duration for such temporary If yes, mention the duration
deployment of funds is disclosed
17. Whether the scheme intends to invest in units of If yes, confirm whether
AIFs necessary disclosures have
been made in line with para
4.1 of SEBI Master
Circular for AIFs
18. Whether names of key management personnel
are disclosed in the placement memorandum in
line with para 17.1.2 and 17.1.3 of SEBI Master
Circular for AIFs
19. Whether it is verified that all members of key
investment team are employees or partners or
directors (as applicable) of the manager
20. Whether it is verified that the key investment Name(s) of qualifying
team satisfies the NISM certification requirement member(s) to be provided
and professional qualification criteria provided
under AIF Regulations
21. Whether the manager has constituted or proposes If no, also inform whether
to constitute an investment committee (by any committee has been set
whatever name called) to approve decisions of up to provide non- binding
the scheme recommendations on
investment proposals
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S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
22. If the investment committee (as specified in
Regulation 20(7) of AIF Regulations) is
approving authority, whether:
(a) it is stated that the functioning of the
investment committee shall be in compliance
with applicable provisions of AIF
Regulations.
(b) the terms of reference of the investment
committee are disclosed in the placement
memorandum
23. If the Manager is owned or controlled by persons If answer to question (a) is
resident in India, then: yes, details of such
(a) Whether any member of the proposed members to be provided
investment committee is a non-resident / a
citizen of country other than India
(b) If yes, whether such member is an employee,
director or partner of the manager of AIF
24. Whether it is disclosed that
delegation/outsourcing of any activity of the AIF
to a third party will be in compliance with SEBI
circular no. CIR/MIRSD/24/2011 dated Dec 15,
2011
25. Under section ‘Track Record of Manager’,
whether there is provision for disclosure of
performance benchmark disseminated by a
benchmarking agency in terms of Chapter 22 -
of SEBI Master Circular for AIFs
26. Whether the eligibility criteria for each class of
unit is clearly specified and differentiated
27. Whether specific instances are disclosed, under If yes, confirm whether
which an investor may be excluded or excused such instances are in line
from a particular investment with provisions under
Chapter 15 -of SEBI
Master Circular for AIFs
28. Whether the list of commercial and non- If yes, provide and confirm
commercial terms, on which differential rights whether such differential
rights are in line with para
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S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
may be offered through side letter arrangement or 19.2 of SEBI Master
issuance of additional class of units, is disclosed Circular for AIFs
29. Whether it is disclosed that the differential rights,
if any, attached to any classes of units or given
through side letters, shall not have any adverse
impact on the economic or any other rights of
other investors
30. Whether timelines for making warehoused If yes, state the timelines
investment and transferring such investment are for warehousing and
disclosed transferring of the
warehoused investment
31. Whether timelines for intimation regarding If yes, state the timelines
warehoused investments to existing and for such intimation
prospective investors, are disclosed
32. Whether it is provided that a defaulter, i.e.,
investor who defaults in bringing drawdown
amount within the timeline specified, can no
longer participate in subsequent investments of
the scheme till the default is cured and that there
are clauses providing steps to be taken against the
defaulting investor
33. Whether specific instances are disclosed under
which in-specie distribution / distribution in kind
may be made
If yes, whether the manager has systems to ensure
that any investor, by virtue of receiving securities
due to distribution in kind, will not breach/violate
any applicable law
34. Whether it is disclosed that co-investment by
investors of AIF shall be made in compliance
with applicable provisions of AIF Regulations
and PMS Regulations
35. Whether the PPM has adequate disclosures
pertaining to valuation of the portfolio of the AIF,
in line with applicable provisions of AIF
Regulations and Chapter 18 -of SEBI Master
Circular for AIFs
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S. Particulars Yes/ Remarks
No. No (Also provide the
respective page number of
placement memorandum
wherever applicable)
36. Whether the scheme has a direct plan option such
that investors investing through direct plan are
not required to pay any placement / distribution
fees
37. Whether it is disclosed that the manager will
establish written down conflict management
policy and whether timeline for adopting such
policy has been provided
38. Whether Investor Charter and data on investor
complaints have been disclosed in terms of para
2.3 of SEBI Master Circular for AIFs
39. Whether the distribution waterfall illustrations If yes, whether it is verified
have been provided for different scenarios that the illustrations are
accurate and complete
40. Whether necessary disclosure has been made Specify pending
regarding the disciplinary history in terms of para enforcement proceedings
2.2.2 and 2.2.3 of SEBI Master Circular for AIFs initiated by SEBI, if any
Note:
(i) If any of the points above is not applicable to the proposed scheme, it may be mentioned as
“not applicable”.
(ii) Merchant banker may also provide, in similar format, additional material information
which is not covered in the above table and any other information which is necessary to be
highlighted or requires specific attention.
***
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Annexure 7 - Format for undertaking to be submitted for filing LVF PPM with SEBI
To,
Securities and Exchange Board of India
Dear Sir / Madam,
Sub: Filing of draft placement memorandum of (name of LVF scheme), scheme of
(name of AIF/proposed AIF)
Based on the placement memorandum and supporting documents submitted by AIF/proposed
AIF, we undertake that:
1. We have independently exercised due-diligence regarding information given in the
placement memorandum, including the veracity and adequacy of disclosure made therein.
2. The AIF, its sponsor and manager are fit and proper persons based on the criteria specified
in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations,
2008. None of the intermediaries named in the placement memorandum have been debarred
from functioning by any regulatory authority.
3. All the material disclosures in respect of the fund raising, investment by the scheme and
management thereof have been made in the placement memorandum and are based on latest
available information.
4. We have satisfied ourselves that the proposed activities of the scheme are bonafide, fall
within the objectives of the fund as specified in the Articles of Association or Trust Deed or
Partnership Deed of the AIF and are to meet the stated investment objective.
5. The disclosures made in the placement memorandum are true fair and necessary to enable
the investors to make an informed decision with respect to the investment in the proposed
scheme and such disclosures are in accordance with the requirements of Securities and
Exchange Board of India (Alternative Investment Funds) Regulations, 2012, circulars,
guidelines issued thereunder and other applicable legal requirements.
6. We have satisfied ourselves about the capability of the sponsor or manager to fulfil the
requirement of maintaining continuing interest in the scheme as per Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012.
7. We shall obtain copy of the Accreditation Certificate and an undertaking from the
prospective investor to the effect that:
a) The prospective investor wishes to avail benefits under the AI framework.
Page 111 of 153 Back to Index
b) The prospective investor has the ability to bear the financial risks associated with the
investment.
c) The prospective investor has the necessary knowledge and means to understand the
features of the Investment Product, including the risks associated with the investment.
d) The prospective investor is aware that the investment product is meant for AIs and
would not be subject to the same regulatory oversight as over investment products
meant for investors other than AI.
Place:
Date:
Signature: {to be signed by CEO (or equivalent role or position depending on the legal
structure) of the Manager of AIF and Compliance Officer of Manager of AIF}
Enclosed:
1. Annexure 7A - Details of disclosures in the placement memorandum with respect to
compliance with provisions of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, applicable to the proposed LVF scheme.
2. Annexure 7B - Information with respect to disclosures in the placement memorandum.
---
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Annexure 7A. - Details of disclosures in the placement memorandum with respect to
compliance with provisions of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, as applicable, to the proposed LVF Scheme
S. Regulation Contents of the Section/subsection (along with page number) of the
No. Number Regulation placement memorandum where the Regulation has
been complied with.
1. ---
2. ----
Note:
Regulations which are not applicable to a particular category of AIF may not be included.
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Annexure 7B. - Information with respect to disclosures in the placement memorandum
The format specified at Annexure 6B shall be applicable as is, along with additional query
as under –
‘Whether it is stated in the placement memorandum that the LVF scheme shall be placed
only before Accredited Investors having valid accreditation certificate from SEBI
recognized Accreditation Agency or Deemed AIs as per SEBI AIF Regulations?’.
Note:
(i) If any of the points given in Annexure 6B is not applicable to the proposed scheme,
it may be mentioned as “not applicable”.
(ii) Additional material information, in similar format, may also be provided which is
not covered in the above table and any other information which is necessary to be
highlighted or requires specific attention.
***
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Annexure 8 - Information to be submitted while filing application for allocation of
overseas investment limit
A. Details of the proposed overseas investment:
Sr. Information
Particulars Details
No. related to
a) Name of the Alternative Investment Fund (AIF)
b) Category of the AIF
c) Registration number
Applicant d) Name of the scheme
1 and its
e) Name and Address of the branch of the bank
scheme
through which Foreign Currency Transaction are
proposed to made
f) Date of filing of periodic investment report on SI
Portal for last quarter
a) Name of the overseas investee company
b) Country of the overseas investee company
c) Date of Incorporation of the overseas investee
company (also enclose copy of incorporation
certificate/document of the overseas investee
company)
Overseas
d) Whether any investor of the AIF is a connected
2 investee
person of the overseas investee company. If yes,
company
provide details of the investor and also the said
investor’s pro-rata share in the proposed
investment.
e) In case of Angel Fund, the number of investors
participating in the proposed overseas investment
a) Type of instrument(s) in which the investment is
proposed
b) Nature of investment (Primary
subscription,
secondary
Details of
3 purchase, etc.)
investment
c) Amount proposed to be invested (in USD)
d) Amount invested in previous overseas investments
(in USD)
e) Investable corpus of the scheme of the AIF (in INR)
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B. Details of overseas investments made by the Scheme in the past:
If
yes,
Date of Whether
Amount Date of Date of
Name of Date of Amount reporting the
allocated Amount Date of reporting Amou Date reporti
S. overseas SEBI surrende of the investme
by SEBI invested investmof nt of ng of
No. investee commun red (in amount nt is
(in USD) (in USD) e nt investmen receive sale/ the
company ication USD) surrender sold/
t to SEBI d (in divest sale/
ed to SEBI d ivested
USD) ment divestme
nt
C. Undertaking to be submitted by the Trustee/Board/Designated Partners of the AIF
(as applicable depending on the form of AIF):
We have carried out independent due diligence with respect to the proposed investment
in [name of the overseas investee company] by [name of the scheme and the AIF] and we
are satisfied that –
(a) the proposed overseas investment transaction is bona fide in nature,
(b) the proposed overseas investment is consistent with the investment objective of
the scheme,
(c) the proposed overseas investment is in compliance with the regulatory
frameworks for overseas investment by AIFs.
D. Undertaking to be submitted by the Manager of the AIF:
1. The manager has exercised due diligence with respect to the investment decision.
2. The proposed investment is in [name of instrument], which is an equity/equity
linked instrument.
3. [name of the overseas investee company] is an offshore venture capital undertaking
i.e. it is a foreign company whose shares are not listed on any of the recognized
stock exchange in India or abroad.
4. [name of the overseas investee company] is incorporated in a country whose
securities market regulator is a signatory to the International Organization of
Securities Commissions Multilateral Memorandum of Understanding (Appendix A
Signatories) or a signatory to the bilateral Memorandum of Understanding with
SEBI.
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5. [name of the overseas investee company] is not incorporated in a country identified
in the public statement of Financial Action Task Force (FATF) as –
(a) a jurisdiction having a strategic Anti-Money Laundering or Combating the
Financing of Terrorism deficiencies to which counter measures apply; or
(b) a jurisdiction that has not made sufficient progress in addressing the
deficiencies or has not committed to an action plan developed with FATF to
address the deficiencies.
6. The AIF shall not invest in Joint venture/Wholly Owned Subsidiary while making
overseas investments.
7. The AIF shall adhere to to FEMA, 1999, its Rules, Regulations and Directions
issued by the Government/ RBI from time to time
8. The AIF shall comply with all requirements under RBI guidelines on opening of
branches/subsidiaries/Joint venture /undertaking investment abroad by NBFCs,
where more than 50% of the funds of the AIF has been contributed by a single
NBFC.
9. In case the AIF transfers/sells the invested stake in [name of the overseas investee
company] to any entity, it shall be ensured that the entity is eligible to make
overseas investments, as per the extant FEMA guidelines.
***
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Annexure 9 - Information with respect to sale/divestment of overseas investment
Sr. Information Particulars Details
No. related to
a) Name of the AIF
1 Details of AIF b) Category of the AIF
c) Registration number
a) Date of filing of application with SEBI for
allocation of overseas investment limit for the
said investment
b) Application number provided in SEBI
Details of Intermediary portal
Investment
2 c) Name of the overseas investee company and
which has been
country of incorporation
sold/divested
d) Date of investment
e) Type of securities/instruments purchased
f) Amount invested in the overseas investee
company (in USD Million)
a) Date of receipt of sale/divestment proceeds
Details of b) Amount received (in USD Million)
3
sale/divestment
c) Proportionate cost of investment in case of
partial sale/divestment (in USD Million)
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Annexure 10 - Template for shelf placement memorandum to be filed for CIV schemes
The template for shelf placement memorandum to be filed for CIV schemes is provided here.
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Annexure 11 - List of Documents to be submitted for accreditation
The Applicant shall furnish self-certified copies of the following documents:
Information Document to be submitted
Proof of Identity and Address
In case of Individual/ (a) Copy of PAN Card
HUF//Sole Proprietorship (b) Copy of any ‘Officially Valid Document’
In case of Body Corporates (a) Copy of PAN card
(b) Document of Incorporation
In case of Trusts (a) Copy of PAN Card.
(b) Copy of registered trust deed
Authorization to seek accreditation
In case of body Letter from authorized signatory to apply for accreditation.
corporates/trusts
Proof of financial information
In case of Individual / a) Copies of Income Tax Return(s) or ITR Acknowledgement
HUF/Sole Proprietorship/ Body (Only in case of individuals/HUF/Family Trust/Sole
Corporates/Trusts Proprietorship),
or;
(Number of years for which
b) Copies of audited Financial Statements, or;
financial information is
c) Copies of Audited Financial Statements prepared by the
provided shall determine the
statutory auditor for the current financial year
validity of the accreditation)
(Only in case the entity is incorporated in the same
financial year), or;
d) Net worth Certificate from practicing chartered accountant.
The latest net-worth certificate shall not be older than 6
months.
It is optional for the chartered accountant to specify the
actual net-worth in the net-worth certificate, while
certifying whether it meets the specified threshold.
Undertaking
In case of Individual / HUF/ Declaration from Applicant that:
Sole Proprietorship/ Body
The submissions made to the Accreditation Agency are true and
Corporates/Trusts
correct and if found incorrect, the application may be rejected.
Other Documents*
*Accreditation Agency may seek other documents to verify the genuineness of the
information/documents submitted by the applicants and in cases where the information submitted
by applicants appears to be contradicting/suspicious /fictitious.
***
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Annexure 12 - Format of waiver to be provided by investors in respect of responsibility
of investment committee members
To
(Name of Manager), Manager of (Name of AIF/ Scheme)
Sub: Waiver in respect of compliance with Regulation 20(8) of Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012
1. We are considering to invest/ have invested in (Name of the AIF/Scheme) managed by
(Name of the Manager).
2. We understand that (Name of the AIF) is registered with Securities and Exchange Board of
India (SEBI) and as such is required to comply with Regulation 20(8) of SEBI (AIF)
Regulations, 2012, which defines the responsibilities of members of investment committee
(by whatever name called), constituted by the manager to approve decisions of the AIF.
3. We understand that (Name of Manager) has constituted/may constitute an investment
committee to approve the decisions of (Name of the AIF/Scheme).
4. In this regard, we confirm that we have the independent ability and mechanism to carry out
due diligence of our investments. Hence, in terms of para 17.3.1 of SEBI Master Circular for
AIFs, we hereby grant waiver to (name of the AIF) from the requirement of compliance with
Regulation 20(8) of SEBI (AIF) Regulations, 2012.
5. We understand that, by providing this waiver, the members of Investment Committee shall
not be responsible for ensuring that the decisions of the Investment Committee are in
compliance with the policies and procedures laid down in terms of Regulation 20(3) of SEBI
(AIF) Regulations, 2012.
6. We also understand that (Name of Manager), the manager of (name of the AIF/Scheme)
shall be responsible for ensuring that every decision of (Name of the AIF/Scheme) is in
compliance with the policies and procedures laid down for the (Name of the AIF/Scheme)
in terms of Regulation 20(3) of SEBI (AIF) Regulations, 2012, and other internal policies of
the (name of the AIF/Scheme), as applicable.
7. Notwithstanding the waiver granted herein, if any contractual responsibility is cast on the
members of investment committee in terms of the provisions of the fund documents, they
shall not be absolved from such responsibilities.
8. Further, we understand that (Name of Manager), the manager of (name of the AIF/Scheme)
shall at all times be responsible for ensuring that the investments of (name of the
AIF/Scheme) are in compliance with the provisions of SEBI (AIF) Regulations, the terms of
the placement memorandum, agreement with the undersigned, other fund documents and
applicable laws.
(Signed by the investor or two authorized signatories of the investor)
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Annexure 13 - Stewardship Code
Principle 1
Institutional Investors should formulate a comprehensive policy on the discharge of their
stewardship responsibilities, publicly disclose it, review and update it periodically.
Guidance
Stewardship responsibilities include monitoring and actively engaging with investee companies
on various matters including performance (operational, financial, etc.), strategy, corporate
governance (including board structure, remuneration, etc.), material environmental, social, and
governance (ESG) opportunities or risks, capital structure, etc. Such engagement may be through
detailed discussions with management, interaction with investee company boards, voting in
board or shareholders meetings, etc.
Every institutional investor should formulate a comprehensive policy on how it intends to fulfil
the aforesaid stewardship responsibilities and disclose it publicly. In case any of the activities
are outsourced, the policy should provide for the mechanism to ensure that in such cases,
stewardship responsibilities are exercised properly and diligently.
The policy should be reviewed and updated periodically and the updated policy should be
publicly disclosed on the entity's website. A training policy for personnel involved on
implementation of the principles is crucial and may form a part of the policy.
Principle 2
Institutional investors should have a clear policy on how they manage conflicts of interest in
fulfilling their stewardship responsibilities and publicly disclose it.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should formulate a
detailed policy for identifying and managing conflicts of interest. The policy shall be intended
to ensure that the interest of the client/beneficiary is placed before the interest of the entity. The
policy should also address how matters are handled when the interests of clients or beneficiaries
diverge from each other.
The conflict of interest policy formulated shall, among other aspects, address the following:
1. Identifying possible situations where conflict of interest may arise. E.g. in case of investee
companies being associates of the entity.
2. Procedures put in place by the entity in case such conflict of interest situations arise which
may, inter alia, include:
a. Blanket bans on investments in certain cases
b. Having a 'Conflict of Interest' Committee to which such matters may be referred
to.
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c. Clear segregation of voting function and client relations/ sales functions.
d. Policy for persons to recuse from decision making in case of the person having
any actual/ potential conflict of interest in the transaction.
e. Maintenance of records of minutes of decisions taken to address such conflicts.
3. Periodical review and update of such policy and public disclosure.
Principle 3
Institutional investors should monitor their investee companies.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should have a policy on
continuous monitoring of their investee companies in respect of all aspects they consider
important which shall include performance of the companies, corporate governance, strategy,
risks etc.
The investors should identify the levels of monitoring for different investee companies, areas
for monitoring, mechanism for monitoring etc. The investors may also specifically identify
situations where they do not wish to be actively involved with the investee companies e.g. in
case of small investments.
The investors should also keep in mind regulations on insider trading while seeking information
from the investee companies for the purpose of monitoring.
Accordingly, the institutional investors shall formulate a policy on monitoring specifying, inter-
alia, the following:
1. Different levels of monitoring in different investee companies. E.g. companies where
larger investments are made may involve higher levels of monitoring vis-à-vis companies
where amount invested in insignificant from the point of view of its assets under
management.
2. Areas of monitoring which shall, inter-alia, include:
a. Company strategy and performance - operational, financial etc.
b. Industry-level monitoring and possible impact on the investee companies.
c. Quality of company management, board, leadership etc.
d. Corporate governance including remuneration, structure of the board (including
board diversity, independent directors etc.) related party transactions, etc.
e. Risks, including Environmental, Social and Governance (ESG) risks
f. Shareholder rights, their grievances etc.
3. Identification of situations which may trigger communication of insider information and
the procedures adopted to ensure insider trading regulations are complied with in such
cases.
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Principle 4
Institutional investors should have a clear policy on intervention in their investee companies.
Institutional investors should also have a clear policy for collaboration with other institutional
investors where required, to preserve the interests of the ultimate investors, which should be
disclosed.
Guidance
Institutional investors should have a clear policy identifying the circumstances for active
intervention in the investee companies and the manner of such intervention. The policy should
also involve regular assessment of the outcomes of such intervention. Intervention should be
considered even when a passive investment policy is followed or if the volume of investment is
low, if the circumstances so demand.
Circumstances for intervention may, inter alia, include poor financial performance of the
company, corporate governance related practices, remuneration, strategy, ESG risks, leadership
issues, litigation etc.
The mechanisms for intervention may include meetings/discussions with the management for
constructive resolution of the issue and in case of escalation thereof, meetings with the boards,
collaboration with other investors, voting against decisions, etc. Various levels of intervention
and circumstances in which escalation is required may be identified and disclosed. This may
also include interaction with the companies through institutional investor associations (E.g.
AMFI). A committee may also be formed to consider which mechanism to be opted, escalation
of matters, etc. in specific cases.
Principle 5
Institutional investors should have a clear policy on voting and disclosure of voting activity.
Guidance
To protect and enhance wealth of the clients/ beneficiaries and to improve governance of the
investee companies, it is critical that the institutional investors take their own voting decisions
in the investee company after in-depth analysis rather than blindly supporting the management
decisions.
This requires a comprehensive voting policy to be framed by the institutional investors including
details of mechanisms of voting, circumstances in which voting should be for/against/abstain,
disclosure of voting, etc. The voting policy, voting decisions (including rationale for decision),
use of proxy voting/voting advisory services, etc. should be publicly disclosed.
The voting policy shall, inter-alia, include the following:
1. Mechanisms to be used for voting (e.g. e-voting, physically attending meetings, voting
through proxy, etc.)
2. Internal mechanisms for voting including:
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a. Guidelines on how to assess the proposals and take decision thereon
b. Guidelines on how to vote on certain specific matters/ circumstances including
list of such possible matters/circumstances and factors to be considered for a
decision to vote for/ against/ abstain
c. Formulation of oversight committee as an escalation mechanism in certain cases
d. Use of proxy advisors
e. Policy for conflict of interest issues in the context of voting
3. Disclosure of voting including:
a. Periodicity of disclosure
b. Details of actual voting for every proposed resolution in investee companies i.e.
For, Against or Abstain
c. Rationale for voting
d. Manner of disclosure — e.g. in annual report to investors, quarterly basis on
website etc.
4. In case of use of proxy voting or other voting advisory services, disclosures on:
a. Scope of such services
b. Details of service providers
c. Extent to which the investors rely upon/use recommendations made by such
services
Principle 6
Institutional investors should report periodically on their stewardship activities.
Guidance
Institutional investors shall report to their clients/ beneficiaries periodically on how they have
fulfilled their stewardship responsibilities as per their policy in an easy-to-understand format.
However, it may be noted that the compliance with the aforesaid principles does not constitute
an invitation to manage the affairs of a company or preclude a decision of the institutional
investor to sell a holding when it is in the best interest of clients or beneficiaries.
Institutional investors shall report periodically on their stewardship activities in the following
manner:
1. A report may be placed on website on implementation of every principle. Different
principles may also be disclosed with different periodicities. E.g. Voting may be
disclosed on quarterly basis while implementation of conflict of interest policy may be
disclosed on an annual basis. Any updation of policy may be disclosed as and when done.
2. The report may also be sent as a part of annual intimation to its clients/ beneficiaries.
***
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Annexure 14 - Format of Compliance Test Report (CTR)
Name of the AIF:
Category:
CTR for the Year:
Contact details of the compliance officer:
Sr. No Compliance with respect to Details of Any other
compliance comments
1. Regulation 7(1)(c):
During the year, whether the AIF has informed the
Board in writing, if any information or particulars
previously submitted to the Board are found to be
false or misleading in any material particular or if
there is any material change in the information
already submitted.
2. Regulation 9(2):
Whether there has been any material alteration to the
fund strategy during the year and in such case,
whether consent of at least two-thirds of unit holders
by value of their investment in the AIF has been
obtained.
3. Regulation 10(b):
Whether each scheme of the AIF has corpus of at
least twenty crore rupees;
4. Regulation 10(c):
Whether the AIF has added any new investors during
the year. If yes, whether the AIF has accepted from
an investor, an investment of value not less than one
crore rupees.
5. Regulation 10(d):
Whether the Manager or Sponsor has a continuing
interest in the AIF of not less than two and half
percent of the corpus or five crore rupees, whichever
is lower, in the form of investment in the AIF and
such interest is not through the waiver of
management fees.
In case of Category III AIF, whether the continuing
interest is not less than five percent of the corpus or
ten crore rupees, whichever is lower.
Page 126 of 153 Back to Index
Sr. No Compliance with respect to Details of Any other
compliance comments
6. Regulation 10(e):
Whether the Manager and Sponsor have disclosed
their investments in the AIF to the investors of the
AIF.
7. Regulation 10(f):
Whether each scheme of the AIF has not more than
one thousand Investors.
8. Regulation 10(g):
Whether the AIF has solicited or collected funds
only by way of private placement.
9. Regulation 11(2):
Whether the placement memorandum contains all
information as specified in Regulation 11(2)
10. Regulation 12:
Whether the AIF has launched any new scheme
during the year and in such case, whether the
placement memorandum has been filed with SEBI at
least thirty days prior to launch of scheme along with
the scheme fees.
11. Regulation 13(5) & 13(6):
Whether there has been any extension of the tenure
of the close ended AIF. If yes, whether the same is
not more than two years and approved by two-thirds
of the unit holders by value of their investment in the
AIF.
12. Compliance with every clause of Regulation 15
(Separate compliance for every clause shall be
provided)
13. Compliance with every clause of
Regulation 16/17/18/19, as
applicable
(Separate compliance for every clause shall be
provided)
14. Compliance with every clause of Regulation 20
(Separate compliance for every clause shall be
provided)
Page 127 of 153 Back to Index
Sr. No Compliance with respect to Details of Any other
compliance comments
15. Regulation 21:
In case of any conflict of interests that have arose
during the year, whether Regulation 21 has been
complied with.
16. Regulation 22:
Whether the AIFs have disclosed information
contained in the clauses under Regulation 22 to the
investors.
17. Regulation 23:
(Separate compliance for every clause shall be
provided)
18. Regulation 28:
Whether reports to be submitted the SEBI during the
year have been submitted in the manner as specified
by SEBI.
19. Regulation 29:
In case the AIF has wound up during the year,
whether Regulation 29 has been complied with.
20. Compliance with provisions of this Master
Circular
(Chapter-wise compliance shall be provided)
21. Compliance with any other relevant circular as
issued/ may be issued by SEBI
[Note:
(i) The aforesaid list of regulations and circular is only an indicative list. It shall be
ensured at the time of filing CTR that the same is updated to include compliance with
provisions of latest amended AIF Regulations and circulars issued thereunder.
(ii) The CTR shall clearly provide compliance information for each scheme of the AIF
separately]
***
Page 128 of 153 Back to Index
Annexure 15 - Format for Due Diligence Certificate to be submitted while intimating
changes in terms of PPM to SEBI
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sir / Madam,
Sub.: Intimating changes in terms of placement memorandum of (name of scheme),
scheme of (name of AIF) for FY 20_-_
On the basis of examination of updated placement memorandum and supporting documents
submitted by AIF, discussion with AIF, its manager, sponsor and trustee etc., we confirm that:
1. We have independently exercised due-diligence regarding changes carried out in the
placement memorandum during the FY 20_-_, including the veracity and adequacy of
disclosure in the respective sections of the placement memorandum wherein the changes
have been carried out.
2. All changes carried out in the placement memorandum are based on latest available
information and are in compliance with Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012 and circulars issued thereunder.
3. We confirm that, with respect to the changes made in the placement memorandum,
wherever applicable, the fund has complied with provisions of Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012 and circulars issued
thereunder.
4. The disclosures in the respective sections of the placement memorandum wherein the
changes have been carried out are true, fair and adequate and such disclosures are in
accordance with the requirements of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, circulars, guidelines issued thereunder and other
applicable legal requirements.
PLACE:
DATE:
Signature of authorised signatory of Merchant Banker
Name/designation of the authorised signatory, Name of Merchant Banker
***
Page 129 of 153 Back to Index
Annexure 16 - Terms of PPM for which changes are not required to be filed through
Merchant Banker and may be filed directly with SEBI
Table 1 - Sections of PPM where any change carried out is not required to be filed
through Merchant Banker
S.No. Particulars
1. Write-up on Market Opportunity/ Indian Economy/ Industry Outlook (Section II
of the template PPM)
2. Track record of investment manager (Section VI of the template PPM)
3. Risk factors (Section X of the template PPM)
4. Legal regulatory and tax Consideration (Section XI of the template PPM)
Table 2 - Specific changes in PPM which are not required to be filed through
Merchant Banker
S.No. Particulars
1. Change in contact details (address, phone number etc.) of AIF, sponsor,
manager, trustee or custodian (except such changes for which regulatory
approval is required or if the new contact details of sponsor or manager of AIF is
of a foreign jurisdiction)
2. Change of auditor, RTA, legal advisor or tax advisor
3. Change in size of the Fund/Scheme
4. Change in information related to Affiliates
5. Change in commitment period
6. Changes in Key Investment Team of the manager subject to at least one key
personnel fulfilling the requirement mentioned under Regulation 4(g) of SEBI
(AIF) Regulations, 2012 (‘AIF Regulations’)
7. Changes in Key Management Personnel of AIF or the Manager (except if
changes are due to change in control of manager or sponsor)
8. Change in advisory board/advisory committee/investment committee or any
other committee (except if such committees are set up to approve the decisions
of the AIF)
9. Reduction in any of the expense or fee or cost charged to fund/investors
(including management fee)
10. Inclusion of new disclosure or change in existing disclosure pursuant to a
regulatory mandate, such as mandate to include investor charter in PPM,
updation of investor complaints data for last three financial years, etc.
11. Other factual and routine updates, such as change in designation or qualification
of members/directors, compliance officer, operating partners, portfolio company
advisor, glossary, etc.
Page 130 of 153 Back to Index
Annexure 17 – Format for filing changes in terms of LVF PPM to SEBI
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sir / Madam,
Sub.: Intimating changes in the terms of placement memorandum of (name of scheme),
scheme of (name of AIF) for FY 20_-_
With reference to intimating changes in the terms of placement memorandum of (name of
scheme), scheme of (name of AIF) for FY 20_____, we hereby confirm that:
1. We have independently exercised due-diligence regarding changes carried out in the
placement memorandum during the FY 20_-_, including the veracity and adequacy of
disclosure in the respective sections of the placement memorandum wherein the changes
have been carried out.
2. All changes carried out in the placement memorandum are based on latest available
information and are in compliance with Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012 and circulars issued thereunder.
3. We confirm that, with respect to the changes made in the placement memorandum, wherever
applicable, the fund has complied with provisions of Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012 and circulars issued thereunder.
4. The disclosures in the respective sections of the placement memorandum wherein the
changes have been carried out are true, fair and adequate and such disclosures are in
accordance with the requirements of Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012, circulars, guidelines issued thereunder and other
applicable legal requirements.
Place:
Date:
Signature:
{to be signed by CEO of the Manager of the AIF (or person holding equivalent role or position
depending on the legal structure of Manager) and Compliance Officer of Manager of the AIF}
***
Page 131 of 153 Back to Index
Annexure 18 - Format for information memorandum to be filed with SEBI for
availing dissolution period
Sr. Particulars Information
No
1. Name of the AIF
2. Category of the AIF
3. Registration no. of the AIF
4. Name of the Trustee/Board of Directors/Designated
Partners of the AIF (as per the legal structure of the
AIF)
5. Name of the Sponsor
6. Name of the Manager
7. Name of the scheme of AIF availing the dissolution
period
8. PAN No. of Scheme (if available)
9. Date of initial closing of the Scheme (in dd/mm/yyyy)
10. Date of final closing of the Scheme (in dd/mm/yyyy)
11. Tenure of the Scheme (in years)
12. Extension of tenure availed, if any (in years)
13. End date of tenure of the Scheme (including extension
of tenure availed, if any)
(in dd/mm/yyyy)
14. End date of liquidation period of the Scheme (in
dd/mm/yyyy)
15. Cumulative investments made by the Scheme during its
tenure (at Cost, in INR Crore)
16. Details of unliquidated investments held by scheme at
the time of entering into dissolution period
- Number of investments held
- Cumulative (total) amount invested (at cost, in
INR Crore)
- Total value of investments as per latest
valuation (in INR Crore)
17. Tenure of the Dissolution Period (in years)
18. Percentage of investors consent/approval by value of
investment, received to avail dissolution period
19. Date of intimation to SEBI about the aforesaid investor
consent/approval and about opting for the Dissolution
Period
20. Percentage of value of unliquidated investments of the
scheme, for which bid has been arranged by the
AIF/manager
Page 132 of 153 Back to Index
Annexure 19 - Format for Due Diligence Certificate to be submitted along with
Information Memorandum to SEBI for availing dissolution period
To,
SECURITIES AND EXCHANGE BOARD OF INDIA
Dear Sir / Madam,
Sub.: Filing of information memorandum for availing dissolution period for (name of scheme),
scheme of (name of AIF)
On the basis of examination of information memorandum for availing dissolution period, private
placement memorandum (PPM) of the scheme, supporting documents submitted by AIF and
discussions held with AIF, its manager, sponsor, trustee, etc., we hereby confirm that:
1. We have independently exercised due-diligence regarding compliance of the AIF/aforesaid
scheme of AIF with Regulation 29 of SEBI (Alternative Investment Funds) Regulations,
2012 (‘AIF Regulations’) to exercise the option for entering into dissolution period,
including the veracity and adequacy of disclosures made in the information memorandum.
2. The information provided by the AIF to verify compliance with Regulation 29 of AIF
Regulations and disclosures made in the information memorandum are true, fair, based on
latest available information and in accordance with the requirements of Securities and
Exchange Board of India (Alternative Investment Funds) Regulations, 2012, circulars,
guidelines issued thereunder and other applicable legal requirements.
PLACE:
DATE:
Signature of authorised signatory of Merchant Banker
Name/designation of the authorised signatory, Name of Merchant Banker
Enclosed:
Annexure 19A - Information with respect to compliance with Regulation 29 of AIF
Regulations and disclosures in the information memorandum submitted for (name of
scheme) availing dissolution period, to be submitted along with the due diligence certificate.
Page 133 of 153 Back to Index
Annexure 19A
Information with respect to compliance with Regulation 29 of AIF Regulations and
disclosures in the information memorandum submitted for (name of scheme) availing
dissolution period, to be submitted along with the due diligence certificate
S.No. Particulars Yes/No Remarks
1. Whether the AIF / manager has disclosed the
following details to investors prior to seeking their
consent for opting of dissolution period by the
scheme of AIF –
(i) Proposed tenure of the Dissolution Period,
(ii) Details of unliquidated investments,
(iii) An indicative range of bid value arranged for a
minimum of 25% of the value of its
unliquidated investments,
(representing consolidated value of all
unliquidated investments of the scheme’s
investment portfolio)
(iv) Valuation of the unliquidated investments
carried out by two independent valuers.
2. Whether investors of the scheme have been informed
regarding the following before seeking consent for
dissolution period –
(i) After obtaining approval of at least seventy-
five percent of the investors by value of their
investment in the scheme for entering into
dissolution period, in case the manager fails to
arrange bid for a minimum of 25% of the value
of its unliquidated investments, the scheme can
still opt for dissolution period
(ii) No further extension or Liquidation Period
shall be available to the scheme after the expiry
of Dissolution Period
(iii) If the scheme of the AIF fails to sell the
unliquidated investments during the
Dissolution Period, such investments shall be
mandatorily distributed in-specie to the
investors
(iv) The manager of the AIF shall not charge
management fee during the Dissolution Period
(v) The scheme of the AIF shall not accept any
fresh commitment from any investor and shall
not make any new investment during the
Dissolution Period.
Page 134 of 153 Back to Index
S.No. Particulars Yes/No Remarks
3. Whether approval of at least seventy five percent of
the investors by value of their investment in the
scheme of the AIF has been obtained for entering
into dissolution period?
4. Whether the AIF/manager intimated SEBI about
obtaining investor consent and investors’ decision to
enter dissolution period prior to expiry of liquidation
period of the scheme?
5. Whether the tenure of the dissolution period of the
scheme more than original tenure of the scheme?
6. Whether the AIF/manager arranged bid for a
minimum of 25% of value of unliquidated
investments of the scheme?
7. Whether dissenting investors were offered option to
exit the scheme out of the bid arranged?
8. Whether unsubscribed portion of the bid, if any, after
offering exit to dissenting investors, has been used to
provide pro-rata exit to non-dissenting investors, in
case they opted for exit?
9. Whether the bidder or its related party, who are also
investors of the scheme, have been provided exit out
of the bid from the bidder?
10. In case the scheme availed additional liquidation
period in terms of Regulation 29(9A) of AIF
regulations, whether the scheme had any pending
investor complaint w.r.t non-receipt of
funds/securities at the time of availing
additional/fresh liquidation period?
Page 135 of 153 Back to Index
Annexure 20 - Applicability of chapters and provisions of the Master circular for
AIFs to Migrated VCFs
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
The application for migration to AIF
Regulations shall be filed through SEBI
Requirements and clarifications Intermediary (SI) portal.
pertaining to registration of AIFs
No application or registration fee is
 Online Filing System for AIFs applicable for migration to AIF
Regulations.
 Certification requirement for key
Chapter 1. investment team of manager of AIF Not applicable -
- Certification requirement for key
 In-principle approval
investment team of manager of AIF
 Change in category of AIF
- In-principle approval
 Classification of Corporate Debt
- Change in category of AIF
Market Development Fund as
Category I AIF - Classification of Corporate Debt
Market Development Fund as
Category I AIF
Not applicable -
- Template for PPM and Disclosure of
Filing of PPM for launch of scheme
distribution waterfall and disciplinary
history in PPM (However, the
 Template(s) for PPM disclosures in PPM shall be in line
with Regulation 19AC of AIF
 Disclosure of distribution waterfall
Regulations)
and disciplinary history in PPM
- Modalities for filing of PPM and
 Disclosure of Investor Charter and
launch of non-LVF schemes
Chapter 2. Investor complaints in PPM
- Modalities for filing of PPM and
 Modalities for filing of PPM and
launch of LVF schemes
launch of non-LVF schemes
- Modalities for conversion into AI
 Modalities for filing of PPM and
only schemes
launch of LVF schemes
Applicable –
 Modalities for conversion into AI
- Disclosure of Investor Charter and of
only schemes
Investor complaints in PPM
Page 136 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
Applicable -
- Eligibility for on-boarding investors
On-boarding of investors by AIFs to AIFs
 Eligibility for on-boarding investors - Para 3.2.1 to 3.2.3 under ‘Conditions
Chapter 3.
to AIFs for fund raising by AIFs’
 Conditions for fund raising by AIFs Not applicable -
- Para 3.2.4 to 3.2.7 under ‘Conditions
for fund raising by AIFs’
Investment instrument/security Not applicable –
specific conditions for AIFs
- Investment in units of AIFs
 Investment in units of AIFs
- Participation of AIFs in Credit
 Participation of AIFs in Credit Default Swaps
Default Swaps
- Clarifications related to investments
Chapter 4.
by AIFs
 Transaction in Corporate Bonds
through Request for Quote (RFQ) Applicable -
platform
- Transaction in Corporate Bonds
 Clarifications related to investments through Request for Quote (RFQ)
by AIFs platform
Guidelines for overseas investments
by AIFs and related reporting
 Investment conditions
Chapter 5. Applicable
 Allocation of overseas investment
limit
 Reporting of overseas investments
Framework for AIFs to make co-
Chapter 6. Applicable
investment within the AIF structure
Operational and prudential norms
Chapter 7. Not applicable
for Category III AIFs
Operational and prudential norms
Chapter 8. Not applicable
for Angel Funds
Page 137 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
Chapter 9. N orms for Special Situation Funds Not Applicable
Framework for Accreditation of
Investors
 Accreditation Agency
 Eligibility Criteria for Accredited
Investors Not applicable
Chapter 10.  Procedure for Accreditation
 Validity of Accreditation
 Procedure to avail benefits linked to
accreditation
 Flexibility to investors to withdraw
‘Consent’
Applicable –
Dematerialisation of units and
- Issuance of units of AIFs in
investments of AIFs and collection of
dematerialised form - applicable for
stamp duty on units of AIFs
fresh drawdowns
 Issuance of units of AIFs in
- Collection of stamp duty on issue,
dematerialised form
transfer and sale of units of AIFs
 Credit of units of AIFs in
- Reporting of value of units of AIFs to
dematerialised form
depositories
Chapter 11.  Reporting of value of units of AIFs
Not applicable –
to depositories
- Credit of units of AIFs in
 Directions to depositories for dematerialized form
dematerialisation of units of AIFs
(Flexibility of crediting AIF units to
 Collection of stamp duty on issue, aggregate escrow demat account not
transfer and sale of units of AIFs applicable for units issued against
fresh drawdowns)
 Holding investments of AIFs in
dematerialised form - Holding investments of AIFs in
dematerialised form
Timeline for first close and
Chapter 12. Not Applicable
calculation of tenure of AIFs
Page 138 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
 Timeline for declaration of First
Close of schemes of AIFs (Validity
of PPM)
 Calculation of tenure of close-ended
schemes of AIFs
Material change and change in
Sponsor or Manager of AIFs
 Procedure for ‘material change’
including change in control of
manager/sponsor or change in
manager/sponsor of AIFs
Chapter 13. Applicable
 Fee for change in control of
manager/sponsor or change in
manager/sponsor of AIFs
 Change in control of Sponsor and/or
Manager of AIF involving scheme
of arrangement under Companies
Act, 2013
Guidelines to Category I and II AIFs
for borrowing and for creating
encumbrance on their equity holding
 Borrowing by Category I and II
Not applicable
Chapter 14. AIFs
 Framework for Category I and II
AIFs to create encumbrance on their
holding of equity of investee
companies
Guidelines with respect to excusing
Chapter 15. o r excluding an investor from an Applicable
investment of AIF
Direct plan for schemes of AIFs and
Chapter 16. t rail model for distribution Not applicable
commission in AIFs
Page 139 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
 Direct Plan for schemes of AIFs
 Trail model for distribution
commission in AIFs
Applicable –
 Para 17.1.2 and 17.1.3 under
‘Appointment and designation of
Obligations of manager, sponsor,
personnel of AIF and manager’
investment committee and trustee of
 Constitution of Investment
AIFs
Committee
 Appointment and designation of
 Code of conduct
personnel of AIF and manager
 Stewardship Code
 Appointment of custodian for AIFs
Chapter 17.
 Para 17.6.1 and 17.6.3 under ‘Other
 Constitution of Investment
obligations’
Committee
Not applicable –
 Code of conduct
 Para 17.1.1 under ‘Appointment and
 Stewardship Code
designation of personnel of AIF and
 Other obligations
manager’
 Appointment of custodian for AIFs
 Para 17.6.2 under ‘Other obligations’
Applicable –
Standardised approach to valuation
of investment portfolio of AIFs
 Manner of valuation of AIF’s
 Manner of valuation of AIF’s investments
investments
 Responsibility of manager of AIF
Chapter 18.  Responsibility of manager of AIF with regard to valuation of
investments of AIF
with regard to valuation of
investments of AIF Not applicable –
 Eligibility criteria for Independent  Eligibility criteria for Independent
Valuer Valuer
Pro-rata and pari-passu rights of
investors of AIFs
Chapter 19. Applicable
 Pro-rata rights of investors of AIFs
Page 140 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
 Pari-passu rights of investors of
AIFs
Specific due diligence of investors
and investments of AIFs
 Investors availing benefits
designated for QIBs through AIFs
 Investors availing benefits
designated for Qualified Buyers
Chapter 20. Applicable
(QBs) through AIFs
 RBI regulated lenders/entities ever-
greening their stressed loans/assets
through AIFs
 Investment from countries sharing
land border with India through AIFs
Applicable –
Periodic reporting requirements for
 Reporting of investment activities by
AIFs
AIFs
 Reporting of investment activities
 Compliance Test Report (CTR)
by AIFs
 Compliance Test Report (CTR)
Chapter 21.
Not applicable –
 Audit of terms of PPM
 Audit of terms of PPM
 Changes in PPM
 Changes in PPM
 Reporting of investments of AIFs
under custody  Reporting of investments of AIFs
under custody
Performance Benchmarking of AIFs
 Benchmarking Agency and
dissemination of performance
Chapter 22. Applicable
benchmarks
 Operational guidelines for reporting
by AIFs to Benchmarking Agencies
Page 141 of 153 Back to Index
Chapter Extent of applicability of the Chapter
Title of Master Circular Chapters
no. to Migrated VCFs
 Disclosure of performance
benchmarks
 Customized Performance Reports
Flexibility to AIFs and their investors
to deal with unliquidated investments
of their schemes#
 Dissolution period
 Information Memorandum for
schemes of AIFs entering into
Dissolution Period
 In-specie distribution of
unliquidated investments of a
Chapter 23. Applicable
scheme
 Mandatory in-specie distribution of
unliquidated investments
 In-specie distribution of
investments of AIFs under
Regulation 29(8) of AIF
Regulations
 Liquidation Scheme
 Responsibility for compliance
Modalities for migration of Venture
Capital Funds to AIF Regulations
Chapter 24. Applicable
Modalities and conditions for migration
to AIF Regulations
Guidelines for winding up of AIFs
Chapter 25. w ith respect to retention of proceeds Applicable
and ‘Inoperative Fund’ status
Page 142 of 153 Back to Index
Annexure 21 - Information to be submitted while filing application for
‘Inoperative Fund’ status
S. No. Particulars Details
Part A - Details of AIF
1. Name of the AIF
2. Category of the AIF
3. Registration Number of the AIF
4. Name of the trustee
5. Name of the Sponsor
6. Name of the Manager
7. No. of schemes launched under the AIF
8. No. of schemes where proceeds have
been retained to meet liabilities
Part B - Details of schemes of AIF
(Information shall be submitted at scheme level, separately for each scheme of the AIF)
9. Name of scheme
10. Date of initial closing of the fund
(dd/mm/yyyy)
11. Date of final closing of the fund
(dd/mm/yyyy)
12. Tenure of the fund (in years, as
disclosed in PPM of the fund)
13. Extension of tenure availed, if any (in
years)
14. Dissolution period availed, if any (from
dd/mm/yyyy to dd/mm/yyyy)
15. End Date of permissible fund life (end
of liquidation period or dissolution
period as applicable in dd/mm/yyyy
format)
16. Corpus of the scheme (in INR Crore)
Cumulative investments made by
17.
the scheme (at Cost, in INR Crore)
Date of liquidation of last investment of
18.
the scheme (in dd/mm/yyyy format)
Liquidation proceeds accrued to the
19.
fund (in INR Crore)
Liquidation proceeds distributed to the
20.
investors (in INR Crore)
Date of payment of last tranche of
21. proceeds to investors (aside from
proceeds retained) (in INR Crore)
Page 143 of 153 Back to Index
S. No. Particulars Details
Liquidation proceeds retained by the
22.
fund (in INR Crore)
Winding up of the fund on account of - a) Tenure of the fund as mentioned in PPM
is over; or,
b) Opinion of trustee that the fund be
23. wound up in the interest of the investors
c) Resolution for winding up, by seventy
five percent of the investors by value of
their investment in the fund
Amounts retained/’Inoperative fund’ a) Pending litigation or tax / regulatory
status sought on account of - demand (Demonstrable
Receipt/Official communication to be
enclosed)
b) Anticipated litigation or tax demand
(Document recording the details of
investor consent obtained to be
enclosed)
c) Residual operational expenses
24.
(Supporting invoices / comparable
expense statement from previous years
to be enclosed)
d) No retained monies; continuing with
registration solely in anticipation of
favourable litigation outcome
(Supporting documents in form of
notices/official communication to be
enclosed)
Expected timeline for resolution and
distribution of any pending retained
25.
amount to investors (End date in form
of dd/mm/yyyy)
Proposed instruments for investment of
26.
retained monies
27. Details of pending enforcement actions
Part C - Undertaking to be submitted by the Manager of the AIF
1. The information supplied in this application for obtaining Inoperative Fund for [Name of
AIF], including the attachment sheets, is complete and true. The Manager of the AIF
[Name of AIF] has exercised due diligence with respect to the claims made in this
application.
2. The scheme(s) [Names of scheme(s)] of the AIF has completed its investment activity and
all the assets/investments of the scheme(s) have been liquidated.
Page 144 of 153 Back to Index
S. No. Particulars Details
3. The monies retained are solely on account of [specify applicable ground(s): pending
litigation/tax demand | anticipated litigation/tax demand with investor consent | residual
operational expenses | anticipation of favourable litigation outcome], and supporting
documentation is enclosed.
4. No new scheme shall be launched and no management fees shall be charged from the
investors from the date of obtaining Inoperative Fund status.
5. The retained monies shall be invested only in accordance with Regulation 15(f) of the AIF
Regulations.
6. An annual status report shall be submitted to SEBI and to the investors of the relevant
scheme(s) until all liabilities are resolved and a NIL bank balance is achieved.
7. The retention proceeds pending after meeting the liabilities and any proceeds received
pursuant to a favourable litigation outcome, shall be distributed to the investors of the fund
in accordance with terms of its PPM.
For and on behalf of [Name of Manager], manager of [Name of AIF]
Authorized signatory
Part D - Undertaking to be submitted by the Trustee / Board of Directors/ Designated
Partners of the AIF (as applicable depending on the form of AIF)
We, [Name of entity], trustee/Board of Directors/Designated Partners of the AIF, have reviewed
the circumstances of [Name of the AIF] and we are satisfied that the application for ‘Inoperative
Fund’ status is bona fide in nature and the amounts retained, if any, are solely on account of the
ground(s) specified in the application.
For and on behalf of [Name of Entity], trustee/Board of Directors/Designated Partners of [Name
of AIF]
Authorized signatory
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Annexure 22 - Exemption from certain regulatory requirements for Inoperative Fund
S. No. Regulatory requirements Effective date of non-applicability
1. Limited Quarterly Activity Report and Limited Quarterly Activity Report - From the
Annual Activity Report quarter subsequent to the quarter in which the
(Para 21.1 under Chapter 21 of this AIF is tagged as Inoperative Fund
Master Circular for AIFs) Annual Activity Report - From the Financial
Year subsequent to the Financial Year in which
the AIF is tagged as Inoperative Fund
2. Audit of terms of PPM
(Para 21.3 under Chapter 21 of this
Master Circular)
3. Intimation of changes in PPM
(Para 21.4 under Chapter 21 of this
Master Circular)
From the Financial Year subsequent to the
4. Compliance Test Report (CTR)
Financial Year in which the AIF is tagged as
(Para 21.2 under Chapter 21 of this
Inoperative Fund.
Master Circular)
5. Reporting of information, including
scheme-wise valuation and cash flow
data to the Benchmarking Agencies for
performance benchmarking
(Chapter 22 -of this Master Circular)
6. NISM certification requirement for the Date of obtaining Inoperative Fund status
key investment team of the fund
(Regulation 4(g)(i) of AIF Regulations)
7. Requirement of custodian for Date of obtaining Inoperative Fund status
safekeeping of securities of AIF
(Regulation 20(11) of AIF Regulations)
8. Periodic disclosure to investors Date of obtaining Inoperative Fund status
regarding fund investments in terms of
Regulation 22(a) of AIF Regulations
9. Annual (Category I and II AIFs) From the Financial Year/Quarter subsequent to
/Quarterly reports (Category III AIFs) to the Financial Year/Quarter in which the AIF is
investors in terms of Regulation 22(g) tagged as Inoperative Fund.
and 22(h) of AIF Regulations
10. Valuation of investments of AIFs Date of obtaining Inoperative Fund status – The
(Regulation 23(2) and 23(3) of AIF valuation shall be reported to investors as part of
Regulations) annual retention status report and accordingly,
the updated Net Asset Value of the AIF units
shall also be reported to depositories within 30
calendar days from the end of March of every
financial year.
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Annexure 23 - Format for Annual Retention Status Report
(To be submitted to SEBI and investors within 30 calendar days from the end of March of every
financial year)
Details of AIF and its scheme(s)
Information
S. No. Particulars Details
related to
a) Name of the AIF
b) Category of the AIF
c) Registration Number
1.
Details of AIF
d) Date of obtaining ‘Inoperative
Fund’ status
(If applicable)
a) Name of the scheme(s)
b) End date of permissible fund life
(end of liquidation period or
dissolution period as applicable in
dd/mm/yyyy format)
c) Reason(s) for non-winding up of
scheme before end of permissible
fund life
(Provide specific reason for non-
winding up/ retention of
proceeds)
Details of
d) Amounts retained/’Inoperative (i) Pending litigation or
2. scheme(s)
fund’ obtained on account of – tax / regulatory demand
with retained
(Demonstrable
(Choose one of the options given
monies*
Receipt/Official
herein)
communication to be
enclosed)
(ii) Anticipated litigation
or tax demand
(Document recording
the details of investor
consent obtained to be
enclosed)
(iii) Residual operational
expenses (Supporting
invoices / comparable
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Information
S. No. Particulars Details
related to
expense statement
from previous years to
be enclosed)
(iv) No retained monies;
continuing with
registration solely in
anticipation of
favourable litigation
outcome
e) Total amount retained (in INR)
f) Amount distributed as on date to
investors out of the retained
amount (in INR)
g) Amount retained as on reporting
date (in INR)
h) Present status of the reason(s)
mentioned at row (c) above
i) Expected timeline for resolution
(in dd/mm/yyyy)
Note - *Scheme wise information to be provided separately.
Details of investment made with monies retained in terms of regulation 15(f) of AIF
Regulations
S. Name of Name of Cost of Holding Latest Value of Type of Provide
No. Scheme* Instrument/ as at the end of Holding as at the Security details, if
Investee the reporting end of the [Refer Note Type of
Company period (Rs. Cr) reporting period 4] Security
[Refer Note [Refer Note 2] (Rs. Cr) chosen is
1] [Refer Note 3] ‘Others'
Note 1: Each Mutual Fund Scheme, T-bill, G-sec etc. should be stated separately.
Note 2: Cost of temporary investments held as at the end of the reporting period is to be provided
Note 3: Valuation considered for calculation of Scheme's latest NAV is to be provided.
Note 4: Liquid Mutual Fund, Other than Liquid Mutual Funds, Bank deposits, T-bills, TREPS,
CPs, CDs and Others
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Annexure 24 – List of Rescinded Circulars
S. No. Date of Circular No. Subject of circular Rescission
circular Status
I. Oct 01, 2015 CIR/IMD/DF/7/2015 Guidelines on overseas
investments and other
issues/clarifications for
AIFs/VCFs
II. Jul 03, 2018 SEBI/HO/IMD/DF1/CIR Overseas Investment by
/P/2018/103/2018 Alternative Investment Funds
(AIFs) / Venture Capital
Funds (VCFs)
III. May 21, 2021 SEBI/HO/IMD/DF6/CIR Enhancement of overall limit
/P/2021/565 for overseas investment by
Partially
Alternative Investment Funds
rescinded to
(AIFs)/Venture Capital Funds
the extent
(VCFs)
they pertain
IV. Aug 17, 2022 SEBI/HO/AFD- Guidelines for overseas
to AIFs
1/PoD/CIR/P/2022/108 investment by Alternative
Investment Funds (AIFs)
/Venture Capital Funds
(VCFs)
V. Aug 04, 2023 SEBI/HO/AFD/PoD/CIR Validity period of approval
/P/2023/137 granted by SEBI to
Alternative Investment Funds
(AIFs) and Venture Capital
Funds (VCFs) for overseas
investment
VI. May 07, 2024 SEBI/HO/AFD-1/AFD- Master Circular for Complete
1- Alternative Investment Funds
PoD/P/CIR/2024/39SEBI (AIFs)
/HO/AFD/PoD1/P/CIR/2
023/130
VII. Apr 18, 2024 SEBI/HO/AFD/SEC- Circular on Standardization of Complete
1/P/CIR/2024/22SEBI/H the Private Placement
O/AFD- Memorandum (PPM) Audit
1/PoD/P/CIR/2023/053 Report
VIII. Apr 26, 2024 SEBI/HO/AFD/PoD- Flexibility to Alternative Complete
I/P/CIR/2024/026SEBI/ Investment Funds (AIFs) and
HO/AFD/PoD/CIR/2023/ their investors to deal with
054 unliquidated investments of
their schemes
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S. No. Date of Circular No. Subject of circular Rescission
circular Status
IX. Apr 26, 2024 SEBI/HO/AFD/PoD1/CI Framework for Category I and Complete
R/2024/027SEBI/HO/AF II Alternative Investment
D/PoD1/CIR/2023/96 Funds (AIFs) to create
encumbrance on their holding
of equity of investee
companies
X. Apr 29, 2024 SEBI/HO/AFD/PoD/CIR Relaxation in requirement of Complete
/2024/028SEBI/HO/AFD intimation of changes in the
/PoD/CIR/2023/97 terms of Private Placement
Memorandum of Alternative
Investment Funds through
Merchant Banker
XI. May 13, 2024 SEBI/HO/AFD-1/AFD- Certification requirement for Complete
1- key investment team of
PoD/P/CIR/2024/42SEBI manager of AIF
/HO/AFD/PoD-
I/P/CIR/2023/098
XII. July 09, 2024 SEBI/HO/AFD-1/AFD- Information to be filed by Complete
1- schemes of AIFs availing
PoD/P/CIR/2024/100SE dissolution period/additional
BI/HO/AFD/SEC- liquidation period and
1/P/CIR/2023/0155 conditions for in-specie
distribution of assets of AIFs
XIII. Aug 19, 2024 SEBI/HO/AFD/AFD- Modalities for migration of Partially
POD- Venture Capital Funds rescinded to
1/P/CIR/2024/111SEBI/ registered under erstwhile the extent it
HO/AFD/PoD/CIR/2023/ SEBI (Venture Capital Funds) pertains to
054 Regulations, 1996 to SEBI AIFs
(Alternative Investment
Funds) Regulations, 2012
XIV. Aug 19, 2024 SEBI/HO/AFD/AFD- Guidelines for borrowing by Complete
POD-1/P/CIR/2024/112 Category I and Category II
AIFs and maximum
permissible limit for extension
of tenure by LVFs
XV. Sept 19, 2024 SEBI/HO/AFD/PoD- Modification in framework Complete
1/P/CIR/2024/123 for valuation of investment
portfolio of AIFs
XVI. Oct 8, 2024 SEBI/HO/AFD/AFD- Specific due diligence of Complete
POD-1/P/CIR/2024/135 investors and investments of
AIFs
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S. No. Date of Circular No. Subject of circular Rescission
circular Status
XVII. Dec 13, 2024 SEBI/HO/IMD/PoD2/P/ Classification of Corporate Complete
CIR/2024/174 Debt Market Development
Fund (CDMDF) as Category I
Alternative Investment Fund
XVIII. Dec 13, 2024 SEBI/HO/AFD/AFD- Pro-rata and pari-passu rights Complete
POD- of investors of AIFs
1/P/CIR/2024/175SEBI/
HO/AFD/PoD1/
CIR/2024/2
XIX. Feb 14, 2025 SEBI/HO/AFD/PoD- Relaxation in timelines for Complete
1/P/CIR/2025/17SEBI/H holding AIFs’ investments in
O/AFD/PoD/CIR/2024/5 dematerialised form
XX. Mar 03, 2025 SEBI/HO/AFD/AFD- Relaxation in timeline for Complete
POD-1/P/CIR/2025/29 reporting of differential rights
issued by AIFs
XXI. May 13, 2025 SEBI/HO/AFD/AFD- Extension of timeline for Complete
POD-1/P/CIR/2025/066 complying with the
certification requirement for
the key investment team of the
Manager of AIF
XXII. Jun 06, 2025 SEBI/HO/AFD/SEC- Extension of timeline of Complete
3/P/CIR/2025/85 additional liquidation period
for VCFs migrating to SEBI
(Alternative Investment
Funds) Regulations, 2012
XXIII. Sep 09, 2025 SEBI/HO/AFD/AFD- Framework for AIFs to make Complete
POD-1/P/CIR/2025/126 co-investment within the AIF
structure under SEBI
(Alternative Investment
Funds) Regulations, 2012
XXIV. Sep 10, 2025 SEBI/HO/AFD/AFD- Revised regulatory Complete
POD-1/P/CIR/2025/128 framework for Angel Funds
under AIF Regulations
XXV. Oct 15, 2025 SEBI/HO/AFD/AFD- Relaxation in timeline for Complete
POD-1/P/CIR/2025/136 disclosure of allocation
methodology by Angel Funds
XXVI. Dec 08, 2025 HO/19/34/11(5)2025- Modalities for migration to AI Complete
AFD-POD1/I/188/2025 only schemes and relaxations
to Large Value Funds for
Accredited Investors under
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S. No. Date of Circular No. Subject of circular Rescission
circular Status
SEBI (Alternative Investment
Funds) Regulations, 2012
XXVII. Dec 3 0, 2025 HO/19/(8)2025-AFD- Certification requirement for Complete
POD1/I/1266/2025 Compliance Officers of
Managers of AIFs
XXVIII. Jan 0 9, 2026 HO/19/34/11(9)2025- Simplification of Complete
AFD-POD1/I/2286/2026 requirements for grant of
accreditation to investors
XXIX. Feb 06, 2026 HO/19/34/11(8)2025- Reporting of value of units of Complete
AFD-POD1/I/4335/2026 Alternative Investment Funds
(AIFs) to Depositories
XXX. Mar 04, 2026 HO/19/28/(1)2026-AFD- Regulatory Reporting by AIFs Complete
SEC3/I/6176/2026
XXXI. Apr 30, 2026 HO/19/19/11(2)2026- Fast-Track Mechanism for Complete
AFD-RAC2 Processing of Placement
I/10624/2026 Memorandum of AIFs filed
with SEBI
***
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