Procedure for Registration of Alternative Investment Fund (AIF) with SEBI

Priya Gandhi

Priya Gandhi

Published on: Dec 5, 2025

Aakanksha Singhal

Updated on: Dec 5, 2025

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An Alternative Investment Fund (AIF) is a privately pooled Indian investment vehicle that collects funds from Indian and foreign investors for investing per a defined policy. Its mandatory registration is governed by SEBI regulations to ensure regulatory oversight, transparency, and investor protection.

Few key provisions of AIF are:

1. AIF will be Set up as a Trust, Company, or Limited Liability Partnership (LLP), with the appropriate charter documents (Trust Deed, MoA/AoA, or LLP Agreement) duly registered and containing clauses pertaining to AIF activities.
2. Can choose one of the 3 categories based on its investment strategy, as this determines regulatory requirements and fees:
   • Category I AIF: Funds investing in sectors that the government considers socially or economically desirable (e.g., Venture Capital Funds, Infrastructure Funds, Angel Funds, SME Funds).
   • Category II AIF: Funds that do not fall under Category I or III and do not undertake leverage other than to meet day-to-day operational needs (e.g., Private Equity Funds, Debt Funds).
   • Category III AIF: Funds that employ diverse or complex trading strategies and may use leverage (e.g., Hedge Funds)
3. Prohibited from conducting any business activities other than those specifically permitted by its license and the regulations
4. Must comply with the SEBI Act, the AIF regulations, Master Circular and all circulars issued by SEBI at all times.

Applicable Provisions

1. Regulation 3, 4, 5, 6, 7, 8 of SEBI (Alternative Investment Funds) Regulations, 2012
2. Para 1 of Master Circular for Alternative Investment Funds (AIFs)

Mandatory Requirements

1. Charter documents:
   • Permits to carry on the activity of an AIF
   • Explicitly prohibit inviting or soliciting the public to subscribe to its securities.
2. Applicant, Sponsor, and Manager must meet the ‘fit and proper’ criteria.
3. Manager’s key investment team must have:
   • At least one personnel with the required professional qualification and/or certification
   • At least one key personnel with professional qualification in finance, accountancy, business management, commerce, economics, capital market or banking
4. Manager/Sponsor must have the necessary infrastructure and manpower.

Entities Not Considered AIFs

Procedure

1. Filing of Application:
   • The application must be made using Form A (Application for Grant of Certificate of Registration) of the First Schedule, to SEBI, along with the supporting documents, at the weblink: https://siportal.sebi.gov.in/intermediary/index.html, and the prescribed non-refundable fee
   • The amount of the fee is specified in Form A (Amount to be Paid as Fees) of the Second Schedule which must be paid using the method specified in Part B of the Second Schedule.
   • User Manual for Registration is available at https://siportal.sebi.gov.in/intermediary/index.html
2. Regulatory Authority to Seek Clarifications:
   • SEBI can demand any extra information or detailed explanation about the Sponsor, the Manager, or how the fund operates at any time—both during the application phase and after the AIF has been registered
   • If SEBI asks for it, the applicant, Sponsor, or Manager must attend an in-person meeting or hearing with the Board
   • SEBI can reject the application if it finds grounds to do so. However, the applicant will be given a fair chance to be heard before the rejection is finalized
   • The rejection decision must be communicated to the applicant within 30 days
   • A rejected applicant must immediately stop all activities as an AIF
   • Rejection does not cancel the applicant’s existing liabilities toward its investors.
3. Grant of AIF Registration Certificate:
   • Category-Specific Approval: SEBI will grant a certificate under a specific Category (I, II, or III) only if it’s satisfied that the applicant meets all the rules outlined in the AIF regulations.
   • Final Registration: Once the applicant pays the required registration fee (as detailed in the Second Schedule), SEBI will officially grant the Certificate of Registration in Form B, which shall be valid until AIF is wound up.
   Note:
   • Conditional Registration: SEBI has the power to impose specific conditions when granting the registration if it deems them necessary.
   • In-Principle Approval:
     • SEBI can give ‘in-principle’ approval even if the applicant has not yet met requirements related to having the necessary Trust Deed/Partnership Deed.
     • Applicant must comply with the missing organizational requirements within six months of getting the in-principle approval
     • Once the compliance is confirmed, SEBI then proceeds to grant the final registration certificate.
   • Investor Commitments: An AIF with in-principle approval can accept commitments (promises of investment) from investors, but it cannot accept or draw down any actual money until the final Certificate of Registration (Form B) is issued.
   • Immediately inform SEBI in writing if any information it previously submitted is later found to be false, misleading, or if there is any major, material change to the facts previously reported.
   • Once registered under a specific Category (I, II, or III), the AIF cannot change its category afterward unless it obtains prior approval from the SEBI Board.