SEBI Creates New AIF Class for Accredited Investors, Eases LVF and Compliance Norms

The Securities and Exchange Board of India (SEBI) has rolled out major reforms for Alternative Investment Funds (AIFs) to expand participation by accredited investors. The changes were announced through the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2025, notified on November 18.

The regulator aims to create a more flexible and streamlined ecosystem for high-ticket investors and customised fund strategies. The amendments simplify compliance norms while enabling greater capital mobilisation across specialised fund structures.

New AIF Category Exclusively for Accredited Investors

SEBI has introduced a dedicated class called the “Accredited Investors Only Fund.”

• All investors must be accredited investors, except the sponsor, manager, directors, or employees.
• The category offers a focused framework for sophisticated investors seeking customised strategies.
• Existing Large Value Funds for Accredited Investors (LVFs) have been merged into this new category to form a unified regime.
• Existing AIFs and schemes may transition to this category, subject to SEBI’s approval and compliance conditions.

LVF Corpus Requirement Reduced to ₹25 Crore

In a key relaxation, SEBI has lowered the minimum corpus requirement for Large Value Funds:

• Previous requirement: ₹70 crore
• New requirement: ₹25 crore

This change aims to reduce entry barriers and support specialised AIF strategies catering to accredited investors. Existing AIFs that meet the revised norms will be allowed to convert into LVFs.

Governance Changes: Manager Assumes Trustee Responsibilities

To simplify operations and reduce administrative complexity, trustee duties for accredited-investor-only funds will now be performed by the fund manager in order to streamline governance structures and speed up decision-making. SEBI has also exempted LVFs from certain governance rules under Regulation 20(8), easing compliance for funds targeting sophisticated capital pools.

Read More: SEBI Considers Netting Settlements for FPIs to Reduce Costs.

Conclusion

SEBI’s latest reforms mark a significant shift in India’s AIF landscape, expanding flexibility for accredited investors and lowering barriers for specialised fund structures. By reducing LVF corpus requirements, merging investor-focused categories and easing governance obligations, the regulator aims to deepen capital participation in sophisticated investment products.

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