SEBI Permits AIFs to Launch Products Exclusively for Accredited Investors

The Securities and Exchange Board of India (SEBI) has introduced a separate category of alternative investment products meant solely for accredited investors. This change follows the publication of the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2025 in the Gazette on 18 November 2025.  

The amendments adjust several compliance requirements for funds that pool high-value capital from sophisticated investors. 

New Category for Accredited-Only Funds 

A separate class called “Accredited Investors only fund” has been added to the AIF framework. Under this category, every investor in an AIF or its scheme must be an accredited investor, except the manager, sponsor, directors, or employees of the fund.  

This new category now also covers the existing “Large Value Funds for Accredited Investors” (LVFs), placing both under a single structure. SEBI has also permitted existing AIFs or their schemes to move into this category once they meet the conditions that will be set by the regulator. 

Revised Minimum Size for LVFs 

The minimum corpus requirement for LVFs has been brought down from ₹70 crore to ₹25 crore. The lower threshold is expected to make it easier for funds targeting accredited investors to launch schemes with smaller pools of capital. Existing AIFs can also switch to this structure if they follow the specified conversion rules. 

Exemption from Investment Concentration Norms 

Accredited investors under this framework will not be subject to limits on how much they allocate to a single company. Earlier restrictions on the percentage of investible funds that could be placed in one entity will not apply to this category. This exemption gives more room for investors who participate in concentrated or high-value deals. 

Shift in Trustee Responsibilities 

For accredited-only funds, the duties usually assigned to the trustee will now be handled by the fund manager. In addition, SEBI has clarified that governance requirements listed under Regulation 20(8) will not apply to LVFs, reducing the operational paperwork for these funds. 

Read More: SEBI Plans Index Inclusion for REITs, InvITs to Enhance Investor Access and Liquidity! 

Conclusion 

With these changes, SEBI has adjusted compliance norms and introduced a tighter, separate structure for accredited investors, bringing lower thresholds and a different operational framework for such AIFs. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

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