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

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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