SEBI has widened the accredited investor test under the AIF Regulations, 2012. Securities market exposure can now qualify an investor in place of net worth, and a SEBI-registered or regulated entity can accredit. Regulation 25 is replaced: investor disputes must go to mediation, conciliation or arbitration, and the Manager's costs cannot be paid from fund property. The rules apply from publication in the Gazette dated 14 October 2026.
- Accredited investor: accreditation can now also come from a specified SEBI registered or regulated entity.
- Securities market exposure of Rs 5 crore (item D of sub-clause (i)) is a new route; Rs 20 crore for LLPs and body corporates, as specified by the Board.
- LLPs and other body corporates: net worth of Rs 50 crore or exposure of Rs 20 crore.
- Regulation 25: disputes with investors go to mediation, conciliation or arbitration.
- Manager's losses and expenses, including dispute costs, cannot be met from AIF property.
What changes
1. Accredited investor (Regulation 2(1)(ab)). The definition earlier relied on a certificate of accreditation from an accreditation agency. It now also covers a person accredited as an accredited investor by a specified SEBI registered or regulated entity, on the eligibility conditions and in the manner the Board specifies from time to time.
- Sub-clause (i): a new item (D) adds securities market exposure of at least Rs 5 crore, as specified by the Board.
- LLPs (sub-clause (ii), substituted): net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore, or each partner independently meets the accreditation criteria under these regulations.
- Body corporates other than LLPs (new sub-clause (iii)): net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore.
- The renumbered sub-clause (iv), which has a Rs 50 crore net worth test, now also accepts securities market exposure of Rs 20 crore.
- The proviso no longer names Category I foreign portfolio investors and sovereign wealth funds. It now names Persons Resident Outside India as defined under the Foreign Exchange Management Act, 1999. The words saying a certificate of accreditation may not be required are also omitted.
2. Dispute resolution (Regulation 25, substituted). All claims, differences or disputes between investors and the AIF or its Manager, arising from the AIF's or Manager's activities in the securities market, must go to a dispute resolution mechanism. That mechanism includes mediation, conciliation or arbitration, as per the procedure the Board specifies. Any loss, damage or expense of the Manager or its officers, including the cost of resolving investor claims, cannot be met out of the AIF's property.
Who it applies to
AIFs and their Managers, investors in AIFs, and entities that want accredited investor status: LLPs, companies and other body corporates, and their partners and directors.
From when
- Published in the Gazette of India (Extraordinary) dated 14 October 2026; the notification is dated 9 October 2026.
- In force on the date of publication in the Official Gazette.
Background
Under the earlier definition, a person was accredited mainly through a certificate from an accreditation agency. The proviso treated certain foreign investors, including Category I foreign portfolio investors and sovereign wealth funds, as not needing a certificate. The Regulations were last amended by the Second Amendment Regulations, 2026 (No. SEBI/LAD-NRO/GN/2026/313).
Effect in practice
- An LLP or company that did not meet the Rs 50 crore net worth test may now qualify through Rs 20 crore of securities market exposure. For an LLP, it may also qualify if every partner individually qualifies.
- Accreditation can be sought from a specified SEBI registered or regulated entity. The exposure thresholds and the manner of accreditation will operate as the Board specifies, so check SEBI's circulars.
- Foreign investors previously named in the proviso should check whether they now fall under the Persons Resident Outside India wording or must meet the usual criteria.
- AIF Managers should review fund documents and the dispute procedure against Regulation 25. Costs of dispute resolution cannot be charged to the fund's property.
| Provision | Before | Now | What it means |
|---|---|---|---|
| Regulation 2(1)(ab) - route to accreditation | Accreditation by certificate from an accreditation agency | Also accreditation by a specified SEBI registered/regulated entity, on conditions specified by the Board | Another channel to obtain accredited investor status. |
| Regulation 2(1)(ab)(i), new item (D) | - | Securities market exposure of at least Rs 5 crore, as specified by the Board | Exposure becomes an alternative qualifying test under sub-clause (i). |
| Regulation 2(1)(ab)(ii) - LLPs | - | Net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore, or each partner independently qualifies | LLPs get an exposure test and a partner-by-partner route. |
| Regulation 2(1)(ab)(iii), (iv), (v) | Net worth test of Rs 50 crore in (iv) | New (iii) for body corporates other than LLPs: net worth Rs 50 crore or exposure Rs 20 crore; (iv) also accepts exposure of Rs 20 crore; (v) refers to criteria 'under these regulations' | Companies and other body corporates can qualify through exposure as well as net worth. |
| Regulation 2(1)(ab), proviso | Named Category I foreign portfolio investors and sovereign wealth funds; certificate of accreditation may not be required | Those words omitted; Persons Resident Outside India under FEMA, 1999 added | The exempt list of foreign investors changes; the certificate wording is removed. |
| Regulation 25 | Earlier regulation 25 replaced in full | Investor disputes go to mediation, conciliation or arbitration; Manager's losses and expenses not met from AIF property | Mandatory dispute route, and dispute costs cannot be charged to the fund. |
3. In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, – I. In regulation 2(1)(ab), i. the word and symbol “who,” appearing after the words “certificate of accreditation by an accreditation agency” shall be omitted; ii. after the words “certificate of accreditation by an accreditation agency”, the words and symbols “or who is accredited by a specified SEBI registered/regulated entity as an accredited investor, as per the following eligibility conditions, in a manner as may be specified by the Board from time to time, -” shall be inserted; iii. in sub-clause (i), in item (C), the symbol “.” shall be substituted with the word and symbol “; or”; iv. in sub-clause (i), after item (C), a new item (D) shall be inserted, namely, - “(D) securities market exposure of at least five crore rupees, as specified by the Board.”; v. sub-clause (ii) shall be substituted with the following, namely, - “(ii) in case of a limited liability partnership set up under the Limited Liability Partnership Act, 2008, has net worth of at least fifty crore rupees or securities market exposure of at least twenty crore rupees, as specified by the Board, or each partner independently meets the eligibility criteria for accreditation under these regulations;”; vi. the existing sub-clauses (iii) and (iv) shall be renumbered as (iv) and (v) respectively; vii. after sub-clause (ii), a new sub-clause (iii) shall be inserted, namely, - “(iii) in case of a body corporate other than a limited liability partnership, has net worth of at least fifty crore rupees or securities market exposure of at least twenty crore rupees, as specified by the Board;” viii. in sub-clause (iv) so renumbered, after the words “net worth of at least fifty crore rupees”, the words “or securities market exposure of at least twenty crore rupees, as specified by the Board” shall be inserted; ix. in sub-clause (v) so renumbered, after the words “eligibility criteria for accreditation”, the words “under these regulations” shall be inserted; x. in the proviso, the words and symbol “Category I foreign portfolio investors, sovereign wealth funds and” shall be omitted; xi. in the proviso, after the words “multilateral agencies” the words, symbols and numbers “, Persons Resident Outside India as defined under Foreign Exchange Management Act, 1999” shall be inserted; xii. in the proviso, the words “and may not be required to obtain a certificate of accreditation” shall be omitted. II. regulation 25 shall be substituted with the following, namely, - “25. (1) 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 the Board. (2) Where claims, differences or disputes between investors and the Alternative Investment Fund or the Manager arise under sub-regulation (1), then any loss or damage or expenses incurred by the Manager or officers of the Manager, including those in relation to resolution of claims or disputes of investors, shall not be met out of property of the Alternative Investment Fund.”
- Accredited investor
- An investor who meets the eligibility conditions in the AIF Regulations and is accredited, as the Regulations provide.
- Net worth
- The value of what a person or entity owns less what it owes.
- Securities market exposure
- The amount a person has in the securities market, as the Board specifies.
- Body corporate
- A company or other incorporated entity; here the term excludes an LLP.
- Official Gazette
- The Government's official publication; rules usually take effect from their publication in it.
This update summarises an official document for general information. It is not legal advice; please consult us before acting on it.