Description

SEBI simplifies accreditation requirements for AIF investors, allowing investment managers to finalize contribution agreements pending accreditation certificate, and removes detailed net-worth break-up requirement.

Summary

SEBI has issued a circular simplifying the requirements for grant of accreditation to investors under the Alternative Investment Funds (AIF) Regulations. Key changes include: (1) Investment managers can now finalize contribution agreements based on their assessment of investor eligibility before receiving the accreditation certificate, subject to conditions that funds cannot be received and commitments cannot be counted toward corpus until accreditation is obtained; (2) The requirement to submit detailed net-worth break-up as an annexure to the net-worth certificate has been removed, and chartered accountants can now simply certify whether the threshold is met without specifying actual net-worth.

Key Points

  • Investment managers may finalize/execute contribution agreements pending receipt of accreditation certificate based on their assessment of investor eligibility
  • Investor commitments cannot be included in scheme corpus calculation until accreditation certificate is obtained
  • AIF schemes can only receive funds from investors after they obtain accreditation certificate from an accreditation agency
  • Detailed break-up of net-worth (as Annexure to net-worth certificate) requirement has been eliminated
  • Chartered accountants can optionally specify actual net-worth in certificate, or simply certify whether it meets specified threshold
  • Modified Annexure A provided for list of documents to be submitted by applicant for accreditation
  • Circular applies to all Alternative Investment Funds (AIFs) and all recognized accreditation agencies

Regulatory Changes

The circular amends the operational framework for accredited investor accreditation under SEBI (AIF) Regulations 2012. Previous requirements mandated that investment managers wait for accreditation certificate before finalizing contribution agreements. The new framework allows operational flexibility by permitting managers to proceed with agreements based on their assessment, while maintaining safeguards through restrictions on fund receipt and corpus calculation.

The net-worth certification process has been simplified by removing the mandatory requirement for detailed break-up of net-worth calculations. This reduces documentation burden on chartered accountants while maintaining the core verification that investors meet prescribed thresholds.

Compliance Requirements

  • Investment managers must assess investor eligibility criteria before finalizing contribution agreements
  • Investment managers must ensure investor commitments are not included in corpus calculation until accreditation certificate is received
  • AIF schemes must not receive funds from investors until accreditation certificate from an accreditation agency is obtained
  • Trustee/sponsor/manager of AIF must ensure Compliance Test Report prepared per Chapter 15 of Master Circular includes compliance with provisions of this circular
  • Applicants for accreditation must furnish self-certified copies of documents as per modified Annexure A (PAN Card, proof of address/identity, incorporation documents for body corporates, trust deed for trusts, and authorization letters)
  • Chartered accountants issuing net-worth certificates may certify threshold compliance without providing detailed net-worth break-up

Important Dates

  • Circular Reference Date: January 09, 2026
  • Effective Date: Immediate effect from date of circular issuance
  • Circular Number: HO/19/34/11(9)2025-AFD-POD1/I/2286/2026

Impact Assessment

This circular is expected to have a positive operational impact on Alternative Investment Funds and their investors by streamlining the accreditation process. The ability to finalize contribution agreements before receiving formal accreditation certificates will reduce processing time and administrative delays, while safeguards ensure prudential norms are maintained.

For investors seeking accreditation based on net-worth criteria, the removal of detailed break-up requirements simplifies documentation and reduces compliance burden. This is particularly beneficial for high-net-worth individuals who may have complex asset portfolios.

The circular maintains investor protection through continued requirement for formal accreditation before funds can be received or commitments counted toward corpus, ensuring that only eligible accredited investors participate in AIF schemes. Overall market impact is limited to the AIF ecosystem and does not affect broader securities market operations.

Impact Justification

Procedural simplification for AIF accreditation process that eases operational requirements without changing fundamental eligibility criteria. Affects AIFs and accreditation agencies but does not impact broader market structure or trading operations.