Summary: The Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2026, through Notification No. SEBI/LAD-NRO/GN/2026/326 dated 9 October 2026. The amendment modifies the SEBI (Alternative Investment Funds) Regulations, 2012, principally concerning the eligibility and accreditation of accredited investors and the resolution of disputes between investors, Alternative Investment Funds (AIFs) and their managers. The regulations come into force on the date of publication in the Official Gazette. The amendments introduce additional securities market exposure-based eligibility criteria and expand the framework for recognising investor accreditation by specified SEBI-registered or regulated entities.
Under the amended Regulation 2(1)(ab), an individual may qualify for accreditation through securities market exposure of at least ₹5 crore, subject to the manner specified by SEBI. For a limited liability partnership, eligibility includes net worth of at least ₹50 crore, securities market exposure of at least ₹20 crore, or independent qualification of every partner. For a body corporate other than an LLP, the amended criteria provide for net worth of at least ₹50 crore or securities market exposure of at least ₹20 crore. Corresponding changes are made to other categories covered by the definition. The proviso is also revised to include persons resident outside India as defined under the Foreign Exchange Management Act, 1999, while removing certain earlier references and wording concerning accreditation certificates. The detailed application of these eligibility conditions remains subject to SEBI’s prescribed framework.
The amendment also substitutes Regulation 25, establishing a dispute resolution mechanism for claims, differences or disputes arising between investors and an AIF or its manager in connection with their securities market activities. Such disputes must be submitted to a mechanism incorporating mediation, conciliation and/or arbitration in accordance with procedures specified by SEBI. Importantly, the revised provision expressly prohibits losses, damages or expenses incurred by the manager or its officers, including expenses relating to investor dispute resolution, from being met out of the property of the AIF. The changes are relevant to AIF managers, accredited investors, investment platforms and compliance professionals responsible for investor eligibility, fund governance and dispute management.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 9th October, 2026
Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2026
No. SEBI/LAD-NRO/GN/2026/326.— In exercise of the powers conferred by Section 30(1) read with Section 11(1), Section 11(2)(ba), Section 11(2)(c), Section12(1) and Section12(1B) of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, namely, –
1. These Regulations may be called the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2026.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, –
I. In regulation 2(1)(ab),
i. the word and symbol “who,” appearing after the words “certificate of accreditation by an accreditation agency” shall be omitted;
ii. after the words “certificate of accreditation by an accreditation agency”, the words and symbols “or who is accredited by a specified SEBI registered/regulated entity as an accredited investor, as per the following eligibility conditions, in a manner as may be specified by the Board from time to time, -” shall be inserted;
iii. in sub-clause (i), in item (C), the symbol “.” shall be substituted with the word and symbol “; or”;
iv. in sub-clause (i), after item (C), a new item (D) shall be inserted, namely, –
“(D) securities market exposure of at least five crore rupees, as specified by the Board.”;
v. sub-clause (ii) shall be substituted with the following, namely, –
“(ii) in case of a limited liability partnership set up under the Limited Liability Partnership Act, 2008, has net worth of at least fifty crore rupees or securities market exposure of at least twenty crore rupees, as specified by the Board, or each partner independently meets the eligibility criteria for accreditation under these regulations;”;
vi. the existing sub-clauses (iii) and (iv) shall be renumbered as (iv) and (v) respectively;
vii. after sub-clause (ii), a new sub-clause (iii) shall be inserted, namely, –
“(iii) in case of a body corporate other than a limited liability partnership, has net worth of at least fifty crore rupees or securities market exposure of at least twenty crore rupees, as specified by the Board;”
viii. in sub-clause (iv) so renumbered, after the words “net worth of at least fifty crore rupees”, the words “or securities market exposure of at least twenty crore rupees, as specified by the Board” shall be inserted;
ix. in sub-clause (v) so renumbered, after the words “eligibility criteria for accreditation”, the words “under these regulations” shall be inserted;
x. in the proviso, the words and symbol “Category I foreign portfolio investors, sovereign wealth funds and” shall be omitted;
xi. in the proviso, after the words “multilateral agencies” the words, symbols and numbers “, Persons Resident Outside India as defined under Foreign Exchange Management Act, 1999” shall be inserted;
xii. in the proviso, the words “and may not be required to obtain a certificate of accreditation” shall be omitted.
II. regulation 25 shall be substituted with the following, namely, –
“25. (1) All claims, differences or disputes between investors and the Alternative Investment Fund or the Manager arising out of or in relation to the activities of the Alternative Investment Fund or the Manager in the securities market shall be submitted to a dispute resolution mechanism that includes mediation and/or conciliation and/or arbitration, in accordance with the procedure specified by the Board.
(2) Where claims, differences or disputes between investors and the Alternative Investment Fund or the Manager arise under sub-regulation (1), then any loss or damage or expenses incurred by the Manager or officers of the Manager, including those in relation to resolution of claims or disputes of investors, shall not be met out of property of the Alternative Investment Fund.”
AMIT PRADHAN, Executive Director
[ADVT.-III/4/Exty./389/2026-27]
Note: The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 was published in the Gazette of India on May 21, 2012 vide notification No. SEBI/LAD-NRO/GN/2012-13/04/11262 and was last amended by the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2026 vide No. SEBI/LAD-NRO/GN/2026/313.
