The Securities and Exchange Board of India (“SEBI”) under the powers conferred by Section 30(1) read with Section 11(1), Section 11(2)(ba), Section 11(2)(c), and Section 12(1) & Section 12(1B) of the SEBI Act, 1992, vide Circular No. F. No. SEBI/LAD-NRO/GN/2025/248,[1] dated May 23, 2025, amended specific provisions of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). These amendments aim to further align the regulatory framework for Alternative Investment Funds (“AIFs”) with evolving market structures and investor protection requirements. The amended AIF Regulations shall come into effect immediately.
Key Amendments to the AIF Regulations:
Substitution of Regulation 17(a) of the AIF Regulations – Investment by Category II AIFs: Category II AIFs shall now invest in investee companies or in the units of Category I or other Category II AIFs as may be disclosed in the Placement Memorandum.
It has been decided that Category II AIF shall now on invest primarily in unlisted securities and/ or listed debt securities (including securitised debt instruments) which are rated ‘A’ or below by a credit rating agency registered with SEBI, either:
- Directly, or
- Through investment in units of other AIF, in a manner as may be specified by SEBI.
[1]https://www.sebi.gov.in/legal/regulations/may-2025/securities-and-exchange-board-of-india-alternative-investment-funds-amendment-regulations-2025_94132.html