SEBI adds securities-exposure tests to AIF investor accreditation

SEBI has amended its alternative-investment-fund rules to add securities-market exposure as an investor-accreditation criterion and permit accreditation by specified SEBI-registered or regulated entities. The change puts eligibility assessment closer to the investment manager’s onboarding process.[1]

Posted by SEBI on 15 October, the notification is dated 9 October and appears in a Gazette issue dated 14 October. It takes effect on Gazette publication.[1][4]

The additional exposure threshold is ₹5 crore for individuals, Hindu Undivided Families, family trusts and sole proprietorships; it is ₹20 crore for companies, LLPs and other trusts. LLPs also qualify where each partner independently meets the accreditation criteria. The amendment leaves the exposure calculation and accreditation procedure to SEBI specifications.[1]

The September board decision explains the intended operating model: AIF managers, managers of specialised investment funds and portfolio managers may accredit investors, while accreditation agencies continue as an alternative. The approved design provides three-year validity and portability across AIF, SIF and portfolio-management products within the same group, subject to safeguards.[2]

The decision also extends deemed accreditation to persons resident outside India under the Foreign Exchange Management Act, including foreign portfolio investors. For groups serving international clients, residency classification therefore becomes directly relevant to the route used to establish eligibility.[2]

Accreditation is commercially consequential because it can unlock product access and exemptions from ordinary minimum investment requirements. SEBI’s August consultation describes the existing two-stage process: an agency verifies eligibility, then the manager checks the certificate during onboarding. Bringing those activities together can reduce duplicate documentation, but also places assessment with a business that benefits from securing the investment.[3]

That makes the evidence behind the classification important. The consultation identifies consistency, record-keeping, investor consent and accountability as central safeguards. For an intermediary, the practical opportunity is a more integrated onboarding service, supported by a demonstrable eligibility decision rather than an assumption that a sufficiently large account automatically qualifies.[3]

The amendment separately bars managers from charging fund property for losses, damage or expenses they or their officers incur in investor disputes. This assigns those costs away from the investment pool, alongside the changes to who can qualify to enter it.[1]

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