On November 07, 2025, the Securities and Exchange Board of India (“SEBI”) has issued a draft circular titled ‘Clarifications and specific modalities with respect to maintaining pro-rata rights of investors of AIFs’ for public consultation.
1. Background
1.1. The SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) were amended and notified on November 18, 2024, introducing provisions relating to the maintenance of pro-rata and pari-passu rights of investors in a scheme of an Alternative Investment Fund (“AIF”).
1.2. Pursuant thereto, SEBI issued a circular dated December 13, 2024, titled ‘Pro-rata and pari-passu rights of investors of AIFs’, which, inter alia, set out certain exemptions from the requirement to maintain pro-rata rights of investors (Part A of the said circular).
1.3. Subsequently, SEBI has received representations from the AIF industry seeking additional clarity and operational flexibility in respect of the pro-rata rights requirement.
1.4. In light of these representations, and following discussions held with the standard setting forum for AIFs, SEBI has prepared the present draft circular to provide clarifications and specific modalities concerning the maintenance of pro-rata rights of investors, in alignment with the regulatory intent underlying the 2024 amendment (“Draft Circular”). The said clarifications have been placed in annexure I of the Draft Circular.
2. Public Consultation
2.1. SEBI has invited public comments on the draft circular. Stakeholders may submit their comments on or before November 28, 2025, through the following link:
https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes
3. Key Implications
3.1. The Draft Circular seeks to operationalise and clarify the framework for maintaining pro-rata rights among investors in AIF schemes, as introduced by the 2024 amendment.
3.2. It reflects SEBI’s ongoing efforts to balance regulatory consistency and investor protection with the practical considerations faced by AIF managers in implementing the pro-rata rights requirement.
3.3. Upon finalisation, the Draft Circular is expected to provide definitive guidance on the permissible structuring of capital calls, participation rights, and related investor arrangements within AIF schemes.