SEBI Accredited Investor Amendment 2026: What the AIF (Third Amendment) Regulations Change From 15 October 2026
Quick Summary
- What is new: SEBI has amended the accredited investor definition in regulation 2(1)(ab) of the SEBI (Alternative Investment Funds) Regulations, 2012 through the SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2026 (notification No. SEBI/LAD-NRO/GN/2026/326). The changes apply with effect from 15 October 2026.
- Second route to accreditation: besides a certificate from an accreditation agency, a person may now be accredited by a specified SEBI registered or regulated entity, in the manner SEBI specifies.
- New securities market exposure test: Rs 5 crore for individuals, HUFs, family trusts and sole proprietorships; Rs 20 crore for LLPs, other body corporates and trusts other than family trusts, in each case “as specified by the Board”.
- LLPs get their own clause: net worth of at least Rs 50 crore, securities market exposure of at least Rs 20 crore, or each partner independently meeting the criteria.
- Persons resident outside India, as defined under FEMA, are now named in the list of entities deemed to be accredited investors.
The SEBI accredited investor amendment 2026 is now law. On 24 September 2026 the SEBI Board approved a review of the accredited investor framework, which we covered in our post on the Board decision. The SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2026 now write those changes into the AIF Regulations, with effect from 15 October 2026. This matters to anyone who raises money from an angel fund or an Accredited Investors only fund, to fund managers who on-board investors, and to CAs who certify income and net worth for accreditation.
What does the SEBI accredited investor amendment 2026 change?
Regulation 2(1)(ab), as amended, defines an accredited investor as any person who is granted a certificate of accreditation by an accreditation agency “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”.
So there are now two routes. The first, a certificate from an accreditation agency, continues. The second, accreditation by a specified SEBI registered or regulated entity, is new. The regulation leaves two things to SEBI: which entities may accredit, and the manner of doing it.
Eligibility before and after 15 October 2026
| Investor type | Before the amendment | From 15 October 2026 |
|---|---|---|
| Individual, HUF, family trust or sole proprietorship | (A) annual income of at least Rs 2 crore; or (B) net worth of at least Rs 7.5 crore, of which at least Rs 3.75 crore is in financial assets; or (C) annual income of at least Rs 1 crore and net worth of at least Rs 5 crore, of which at least Rs 2.5 crore is in financial assets | Tests (A) to (C) unchanged, plus a new test (D): securities market exposure of at least Rs 5 crore, as specified by the Board |
| Limited liability partnership | No separate clause. The clause read: “in case of a body corporate, has net worth of at least fifty crore rupees” | Net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore as specified by the Board, or each partner independently meets the eligibility criteria |
| Body corporate other than an LLP | Net worth of at least Rs 50 crore | Net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore as specified by the Board |
| Trust other than a family trust | Net worth of at least Rs 50 crore | Net worth of at least Rs 50 crore, or securities market exposure of at least Rs 20 crore as specified by the Board |
| Partnership firm under the Indian Partnership Act, 1932 | Each partner independently meets the eligibility criteria for accreditation | Each partner independently meets the eligibility criteria for accreditation “under these regulations” |
What is “securities market exposure”?
The regulation does not define the term. Each time it uses it, it adds “as specified by the Board”. How exposure is measured, and what counts towards it, is therefore for SEBI to specify. Before you rely on this test for a client, check SEBI’s circulars and the AIF Master Circular for the specification.
Who is deemed to be an accredited investor now?
The proviso to regulation 2(1)(ab) lists entities that are deemed to be accredited investors. As amended, it covers:
- the Central Government and the State Governments;
- developmental agencies set up under the aegis of the Central Government or the State Governments;
- funds set up by the Central Government or the State Governments;
- qualified institutional buyers as defined under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;
- multilateral agencies;
- Persons Resident Outside India as defined under the Foreign Exchange Management Act, 1999 (inserted); and
- any other entity as may be specified by the Board from time to time.
Two sets of words have been omitted. The words “Category I foreign portfolio investors, sovereign wealth funds and” are removed from the list, and the persons resident outside India entry is inserted in its place. The closing words “and may not be required to obtain a certificate of accreditation” are also removed.
What changes for AIF managers in investor disputes?
Regulation 25 has been substituted. Sub-regulation (1) keeps the rule that investor disputes with the AIF or its Manager go to a dispute resolution mechanism that includes mediation, conciliation or arbitration, as SEBI specifies. Sub-regulation (2) now provides that any loss, damage or expenses incurred by the Manager or its officers, including those in relation to resolving investor claims or disputes, “shall not be met out of property of the Alternative Investment Fund”.
Before the amendment, this bar sat in a proviso that applied only where the AIF was established as a trust. It now applies to every AIF, whether set up as a trust, a company, an LLP or a body corporate.
Who is affected?
Founders raising from angel funds
Under regulation 19D(1), an angel fund may raise funds only from accredited investors. Regulation 19A(2) defines an angel investor as an accredited investor, or key management personnel of an angel fund or its manager, who invests in an angel fund. A wider accredited investor definition therefore widens who can back an angel fund that invests in your company.
The timeline for older angel funds is unchanged by this amendment. Under SEBI’s circular of 7 September 2026, angel funds registered on or before 10 September 2025 must implement the accredited investor mandate on or before 31 March 2027, and may not accept contributions from non-accredited investors for an investment in an investee company after that date. Our post on the 31 March 2027 angel fund deadline covers this in detail.
Fund managers
Managers of angel funds and of Accredited Investors only funds (regulation 2(1)(ac)) should update their on-boarding checks for the new LLP clause, the exposure tests and the revised deemed list. Managers of every AIF should also note the substituted regulation 25(2).
Non-resident investors
A person resident outside India, as defined under FEMA, is now on the deemed list itself. Earlier the list named Category I foreign portfolio investors and sovereign wealth funds.
CAs and finance teams
Income and net worth tests (A) to (C) for individuals are unchanged. For LLPs, other body corporates and non-family trusts, there is now an alternative to the Rs 50 crore net worth test. Applying it depends on how SEBI specifies securities market exposure.
What should you do now?
- Read the amended definition, not the earlier press release. The operative text is regulation 2(1)(ab) as amended with effect from 15 October 2026.
- Re-check investor eligibility for LLPs, body corporates and non-family trusts against the new clauses (ii) to (iv).
- Track SEBI’s specifications on the accrediting entities, the manner of accreditation and the measurement of securities market exposure before relying on the new route or the exposure test.
- Angel funds registered on or before 10 September 2025: keep 31 March 2027 in view under the 7 September 2026 circular.
- AIF managers: review fund documents and expense practices against the substituted regulation 25(2).
Sources
- Source: Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended up to 15 October 2026, regulations 2(1)(ab), 2(1)(ac), 19A, 19D and 25, sebi.gov.in.
- Source: Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2026, notification No. SEBI/LAD-NRO/GN/2026/326, 15 October 2026, sebi.gov.in.
- Source: SEBI Circular HO/19/34/11(7)2025-AFD-POD1/I/20626/2026, “Relaxation in timeline with respect to Accredited Investor mandate for Angel Funds”, 7 September 2026, sebi.gov.in.
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Disclaimer: This article is for general information only and reflects the law as on the date of publication. It is not legal or tax advice. Please consult a qualified professional before acting on it.
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