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With an objective to enhance ease of doing business, the Securities and Exchange Board of India ('SEBI') had in November 2025 amended the SEBI (Alternative Investment Fund) Regulations, 2012 to (i) facilitate introduction of a separate category of Alternative Investment Fund ('AIF') schemes exclusively limited to Accredited Investors ('AI-only schemes') and offering such schemes specific regulatory flexibilities in terms of lesser compliances and (ii) extend additional relaxations and flexibilities to Large Value Funds ('LVFs').
In light of the above amendments, SEBI has now issued a circular1 outlining the operational modalities for migrating AIFs to AI-only schemes, along with relaxed modalities for LVFs. These measures are designed to streamline compliance processes and enhance operational flexibility for these categories of AIFs.
The key highlights of these operational modalities have been summarized below
KEY HIGHLIGHTS
- Naming Requirements
New schemes proposed to be launched as an AI-only scheme or LVF must include 'AI only fund' or 'LVF' in their names
- Migration of existing eligible AIF Schemes to AI-only schemes / LVFs
- Migration permitted only on obtaining positive consent from all investors and meeting the requisite conditions
- Upon conversion, the
AIF Managers must :
- Modify the scheme name to include the words 'AI Only Fund' or 'LVF
- Intimate SEBI by email at aifreporting@sebi.gov.in within 15 days of the conversion
- Notify depositories within 15 days to ensure system alignment
- Investor Status
An investor classified as AI while onboarding will retain the AI status throughout the scheme's life, even if status changes later
- Tenure Extension
Maximum permissible extension for AI-only schemes is five years, inclusive of any tenure extensions prior to conversion
- Compliance Reporting
Trustees / sponsors of AIF must ensure the Compliance Test Report includes adherence to this circular
Specific relaxations for Large Value Funds (LVFs) -
LVFs shall be exempt from :
- Using the standard template of placement memorandum
- Annual audit of the placement memorandum terms
- Requirement of obtaining specific waivers from investors for the aforementioned exemptions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
