The Securities and Exchange Board of India (SEBI) has introduced a set of regulatory adjustments that streamline operations for Alternative Investment Funds (AIFs) catering exclusively to accredited investors, while tightening clarity and compliance around scheme conversions and tenure management.
The changes follow amendments to the AIF Regulations notified on November 19, 2025, and were issued through a circular from SEBI on December 8, 2025.
New schemes meant solely for accredited investors must append the label “AI only fund” to their scheme name, while Large Value Funds (LVFs) must carry “LVF” in their nomenclature. Existing schemes may convert into either category, but only after obtaining positive consent from all current investors.
After conversion, managers must rename the scheme accordingly and notify SEBI and depositories within 15 days so records can be updated.
The circular clarifies that an investor who qualified as an accredited investor at the time of entry will continue to be treated as one for the entire duration of the scheme, even if their financial position later changes. This removes any requirement for periodic revalidation and ensures operational consistency.
SEBI has also addressed fund tenure. AI-only schemes can extend their life by up to five years, but this ceiling includes any extensions already taken before conversion. The change prevents schemes from using the conversion route to reset the extension clock.
For LVFs, SEBI has granted permanent exemptions from using the standard Private Placement Memorandum (PPM) template and from the annual audit of PPM terms. These waivers, earlier dependent on investor approvals, will now apply automatically.
Trustees and sponsors must ensure that managers reflect compliance with these new requirements in their Compliance Test Reports. The circular takes effect immediately, according to SEBI.
