SEBI Notifies “Accredited Investors Only Fund” Category under Regulation 2(1) of the AIFs Regulations

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Accredited Investors Only Fund

Notification F. No. SEBI/LAD-NRO/GN/2025/274, Dated 18.11.2025

1. Overview

The Securities and Exchange Board of India (SEBI) has notified amendments to the SEBI (Alternative Investment Funds) Regulations, 2012, introducing a new category of fund titled “Accredited Investors only fund” under Regulation 2(1).

This category is designed to provide greater flexibility and customised regulatory treatment for schemes that cater exclusively to accredited investors, who meet specified financial and sophistication criteria.

2. Introduction of the “Accredited Investors Only Fund” Category

Under the amended framework:

  • An existing AIF or AIF scheme may convert into an Accredited Investors only fund,
  • Such conversion will be subject to conditions specified by SEBI, ensuring orderly transition and investor protection.

The creation of this category enables differentiated regulation based on the risk appetite and financial capability of accredited investors.

3. Exclusion of Accredited Investors From Investor Count (Regulation 10)

SEBI has clarified that accredited investors shall be excluded while computing the number of investors in a scheme under Regulation 10.

This ensures that the presence of accredited investors does not affect eligibility thresholds or compliance calculations applicable to non-accredited investor schemes.

4. Clarification on Applicability of Obligations

The amendments further specify that certain obligations applicable to AIFs shall not extend to Accredited Investors only funds.

Given the investor profile of such funds, SEBI has provided regulatory relaxation and operational flexibility, recognising that accredited investors require less prescriptive protection than retail or semi-retail participants.

5. Manager to Carry Out Trustee Responsibilities (Regulation 20)

A key insertion under Regulation 20 provides that for an Accredited Investors only fund, the manager of the fund shall discharge all responsibilities and obligations that would otherwise be undertaken by the trustee under the AIF Regulations.

This simplifies the governance architecture and aligns responsibilities directly with the entity overseeing fund operations.

6. Significance

These amendments are expected to:

  • Promote the growth of sophisticated, investor-specific fund structures,
  • Provide regulatory efficiency and flexibility for funds targeting accredited investors,
  • Reduce compliance burden for eligible fund managers, and
  • Facilitate innovation in fund design within India’s AIF ecosystem.
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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied