On November 18, 2025, SEBI notified amendments (‘Amendments’) to the SEBI (Alternative Investment Fund) Regulations, 2012 (‘AIF Regulations’). The Amendments introduce: (i) a new regulatory framework for Alternative Investment Fund (‘AIF’) schemes that consist exclusively of Accredited Investors (‘AI’), (‘AI-Only Funds’); (ii) additional relaxations for Large Value Funds for AIs (‘LVFs’); and (iii) certain other general modifications. Key aspects of these Amendments are summarised below.

Key provisions introduced/existing provisions amended with respect to AI-Only Funds:

i.    Scope of AI-Only Funds: AI-Only Funds can be launched as a new AIF or new scheme of an existing AIF. Further, existing AIFs can transition to an AI-Only Fund or a LVF subject to satisfaction of conditions. SEBI is yet to prescribe these conditions;

ii.   NISM Certification Exemption: Members of an AI-Only Funds’ key investment team are exempt from the mandatory National Institute of Securities Market (‘NISM’) certification requirement;

iii.  Exemption from Onus of Maintaining Pari-passu Rights of AIF Investors: AI-Only Funds are exempt from the requirement to maintain pari-passu rights of AIF investors. This flexibility, previously applicable only to LVFs, has now been extended to the broader category of AI-Only Funds;

iv.   Tenure Extension Flexibility: AI-Only Funds may extend their tenure by up to five years, subject to consent from investors holding at least two-thirds of the investment value. This flexibility, previously applicable only to LVFs, has been extended to the broader category of AI-Only Funds; and

v.    Governance Flexibility: For AI-Only Funds established as trusts, the manager will perform the responsibilities assigned to a trustee under the AIF Regulations.

Additional relaxations for LVFs:

i.    Reduction in Minimum Investment Threshold for AIs in LVFs: The minimum investment amount has been reduced from INR 700 million (approx. USD 77.91 million) to INR 250 million (approx. USD 27.82 million) to facilitate wider participation of AIs;

ii.   Compliance-related Exemption for Investment Committee of LVFs: The investment committee members are now exempted from ensuring their decisions are in compliance with the policies and procedures of the AIF. This exemption ensures that this onus falls on the manager;

iii.  Reclassification: It would be pertinent to note that AI-Only Fund is now the genus and LVF has been reclassified as a specie (e., a sub-set of AI-Only Funds). Hence, exemptions available to AI-Only Funds should also apply to LVFs; and

iv.   Other General Amendments: AIs will not be counted towards the cap on maximum of 1000 investors in an AIF, enabling managers to onboard a larger number of non-AI investors.