Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2025

5969 GI/2025 (1)
REGD. No. D. L.-33004/99 xxxGIDHxxx xxxGIDExxx EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
Securities and Exchange Board of India
Mumbai, 8th September, 2025
Securities and Exchange Board of India
[Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2025 No. SEBI/LAD-NRO/GN/2025/265.—In exercise of the powers conferred by sub-section (1) of Section 30 read with sub-section (1) of Section 11, clause (ba) and clause (c) of sub-section (2) of Section 11 and sub-section (1) and (1B) of Section 12 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) (Second Amendment) Regulations, 2025.

2. These Regulations 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, –

No. 617] NEW DELHI, MONDAY, SEPTEMBER 8, 2025/BHADRA 17, 1947 CG-MH-E-09092025-266022

2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]

I. In sub-regulation (1) of Regulation 2,
clause (cc) shall be replaced by the following clause, namely, – “(cc) “co-investment” means – an investment made by the manager or sponsor or investor of an AIF [Alternative Investment Fund / Open-ended Investment Fund] of Category-I or Category-II in the listed securities (securities) of such investee companies (in which investment is made) through such Category-I or Category-II AIF co-investing;”

i) After clause (cc), the following clause shall be inserted, namely, – “(cc) “co-investment scheme” means – such scheme of an AIF of Category-I or Category-II through which the AIF makes investment in the listed securities (securities) of such investee company through any scheme of the AIF co-investing, in which the AIF is co-investing or has co-invested;”

ii) After clause (d), the following clause shall be inserted, namely, – “(dd) “Repayment Placement Memorandum” means – the Placement Memorandum filed with the Board regarding the introduction of co-investment schemes (co-investment schemes) by the AIF;”

iii) In clause (y), the word, comma, figure and letter “under Chapter-III-C as prescribed in Annexure A and” shall be deleted.

II. In Regulation 3, in sub-regulation (4), in clause (a), the words, commas and figures ““Category I Alternative Investment Fund (AIF)” which invests (invests) in early stage or venture capital or social enterprises or SMEs or infrastructure or other sectors or areas which are considered socially or economically desirable by the Government or regulators and which include risk capital funds, SME funds, social impact funds, infrastructure funds, early stage funds and such other Alternative Investment Funds (AIFs) which shall have the responsibilities as prescribed by the Board” shall be replaced by the words, comma and figures ““such AIF of Category-I”, which invests in startups (early stage companies) or ventures [which are in early stage] or social ventures (social ventures) or SMEs or large scale structures (infrastructure / infrastructure) or other sectors or areas and which shall include – Venture Capital Funds (risk capital funds), SME Funds, Angel Funds, Social Impact Funds, Infrastructure Funds (infrastructure funds), Early Stage Funds (early stage funds) and such other AIFs as may be prescribed from time to time” shall be inserted.

III. In sub-regulation (1) of Regulation 15, clause (b) shall be deleted.

IV. After Regulation 17 and before Regulation 18, the following Regulation shall be inserted, namely, –

“Provisions related to co-investment (co-investment) made by AIFs of Category-I and Category-II

17A. (1) Co-investment (co-investment) by investors of AIFs of Category-I or Category-II shall be made through the co-investment (co-investment) scheme introduced under these Regulations or through a registered co-investment portfolio manager under the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 [SEBI (Portfolio Managers) Regulations, 2020] as may be prescribed from time to time.

(2) The investors of AIFs of Category-I or Category-II shall file a Repayment Placement Memorandum with the Board through a Merchant Banker in the manner specified by the Board from time to time before providing co-investment through the co-investment scheme, and the fee mentioned in Annexure II of these Regulations shall also be paid at the time of filing such Repayment Placement Memorandum.

(3) The summary of the Repayment Placement Memorandum filed with the Board shall be filed separately for each co-investment (co-investment) scheme introduced for each co-investment (co-investment):
Provided that no Angel Fund (AIF) shall introduce a co-investment scheme.

(4) Only Accredited Investors of AIFs of Category-I or Category-II shall be eligible to invest in the co-investment scheme.

(5) It shall invest in only one investee company for each co-investment scheme.

(6) The co-investment scheme shall not invest in the units of the AIF.

(7) Co-investment through any co-investment scheme shall be made in the manner specified by the Board from time to time and under the same conditions as may be prescribed by the Board from time to time.

(8) The conditions related to any co-investment made by the Manager or Sponsor or Co-investor or any co-investment scheme in any investee company shall not be more onerous than the conditions of investment of the AIF, etc.:
Provided that if the investment made by the scheme of the AIF in any investee company is sold, then the co-investment made in such investee company shall also be sold at the same time.

(9) After selling the co-investment, the co-investment scheme shall be closed in accordance with the summary of these Regulations.

(10) The provisions of clause (b) and (d) of Regulation 10, sub-regulation (2) of Regulation 11, sub-regulations (2), (3), (4) and (5) of Regulation 12, Regulation 13, clause (a), (c), (cc), (f) and (h) of sub-regulation (1) of Regulation 15, Regulation 16 and Regulation 17 shall not apply to the matter of co-investment scheme of the AIF.”

V. In Regulation 19K,

i) In sub-regulation (1), a) The words, figures and commas “under Category I – Alternative Investment Fund (AIF) risk capital fund” shall be replaced by the words, comma and figures “means – such sub-category of AIF of Category-I,” shall be inserted; b) The words and commas “which is raised from Angel Investors (investors) and which invests in accordance with the provisions of this Chapter” shall be replaced by the word “which is raised from Accredited Investors (Fund) and which invests in accordance with the provisions of this Chapter” shall be inserted;

ii) Sub-regulation (2) shall be replaced by the following sub-regulation, namely, – “(2) “Angel Investor” means – such Accredited Investor, or the Key Managerial Personnel (Key Management Personnel) or its Manager of the Board of Management of the Angel Fund, who invests in the Angel Fund.”

iii) Sub-regulation (3) shall be replaced by the following sub-regulation, namely, – “(3) “Related Party” (“Related Party” / Related Party) shall have the same meaning as provided for this purpose in clause (yy) of sub-regulation (1) of Regulation 2 of the Securities and Exchange Board of India [Listing Obligations and Disclosure Requirements] Regulations, 2015 [SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015].”

4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]

VI. In Regulation 19L,

i) In sub-regulation (1), the words and commas “The provisions of this Chapter shall apply to Angel Funds and such schemes introduced by such Angel Funds.” shall be replaced by the words and commas “The provisions of this Chapter shall apply to Angel Funds and their Managers (Managers), Sponsors (Sponsors), Angel Investors and Investors of Angel Funds:
Provided that the provisions of the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2025 shall apply to such Angel Funds which are registered with the Board from the date of notification of the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2025, and these provisions shall apply to their matter in the same manner as specified by the Board.”

ii) In sub-regulation (1), the following proviso shall be inserted, namely, – “Provided that the provisions of the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2025 shall apply to such Angel Funds which are registered with the Board from the date of notification of the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2025, and these provisions shall apply to their matter in the same manner as specified by the Board.”

iii) In sub-regulation (2), a) The comma and letters “, (cc)” shall be added after the words, figures, commas and letters “clause (a), (c) of sub-regulation (1) of Regulation 15”; b) The words, figures, commas and letters “clause (b) of sub-regulation (1) of Regulation 16” shall be replaced by the words, figures, commas and letters “clause (a) of sub-regulation (1) of Regulation 16” shall be inserted; c) The words, figures and commas “after sub-regulation (2) of Regulation 16,” the words, figures and comma “Regulation 17, Regulation 18,” shall be added.

iv) After sub-regulation (2), the following clarification shall be inserted, namely, – “Clarification: For the purpose of this sub-regulation, the provisions applicable to any scheme of the AIF shall remain applicable to the matter of Angel Fund (at the Fund level) until specifically mentioned in clause (a) and (b).”

VII. In Regulation 19M, sub-regulation (2) shall be deleted.

VIII. In Regulation 19N,

i) Sub-regulation (1) shall be replaced by the following sub-regulation, namely, – “(1) Angel Fund Units shall be redeemed only from Accredited Investors in such manner and in such manner as specified by the Board from time to time:
Provided that the Key Managerial Personnel (Key Management Personnel) or its Manager of the Board of Management of the Angel Fund may invest in the Angel Fund.”

ii) Sub-regulation (2) shall be replaced by the following sub-regulation, namely, – “(2) Any Angel Investor may invest any amount in any Angel Fund.”

iii) Sub-regulation (3) shall be deleted and the existing sub-regulation (4) shall now become sub-regulation (3).

iv) After this changed sub-regulation (3), the following two sub-regulations shall be added, namely, – “(4) Such Placement Memorandum shall be filed with the Board in the format prescribed by the Merchant Banker at the time of applying for registration as an Angel Fund.

(5) The Board may ask the Merchant Banker for additional documents (if any), and the Merchant Banker shall ensure that the Angel Fund makes the necessary changes in the Placement Memorandum before issuing the Placement Memorandum to the Angel Investors for redemption in such manner.

(6) Upon declaration by the Angel Fund to close the fund for the last time (in the same manner as specified by the Board from time to time), the investment amount shall be redeemed from Accredited Investors within at least three months.

(7) If the Angel Fund does not declare to close the fund for the last time in the manner specified above, then in such a case it shall have to file the Placement Memorandum with the Board again and also pay the necessary fee under Annexure II, only then shall it issue the Placement Memorandum to such Angel Investors and redeem their investment.”

IX. In place of Regulation 19O, the following Regulation shall be inserted, namely, –
“19O. No scheme shall be introduced by the Angel Fund for redeeming investment from Angel Investors or for making such investment.”

X. In Regulation 19P,

i) Sub-regulation (1) shall be replaced by the following sub-regulation, namely, – “(1) Angel Funds shall invest only in such Startups (Early Stage Companies) which are promoted (Promoted) or sponsored (Sponsored) or related to any such Corporate Group (Group), the turnover (Business Turnover) of which group is more than two hundred crore rupees:
Provided that Angel Funds may further invest in such investee companies [which have now become Startups (Early Stage Companies)] in which they have previously invested, but for this they shall have to comply with the conditions laid down by the Board from time to time.

Clarification-I: For the purpose of this clause, “Corporate Group (Group)” shall include – the group (Group) of Upper Corporates (Body Corporates) whose Promoter / Promoter Group (Promoter Group) is the same, any Holding Company and its Subsidiary Companies (Subsidiaries), the group (Group) of Upper Corporates (Body Corporates) whose control is in the hands of the same person / group of persons, and the group (Group) of Companies (Body Corporates) which includes its Associate Companies (Associates) / Subsidiary Companies (Subsidiaries) / Controlled (Holding) Companies.

Clarification-II: For the purpose of this clause, “Turnover of Group” shall mean – the consolidated revenue of the Corporate Group (Group).”

ii) Sub-regulation (2) shall be replaced by the following sub-regulation, namely, – “(2) The Angel Fund shall not invest less than ten lakh rupees and more than thirty-six crore rupees in any investee company.”

iii) Sub-regulation (3) shall be replaced by the following sub-regulation, namely, – “(3) The investment made by the Angel Fund in the investee company shall remain locked-in for such additional period as specified by the Board.”

iv) Sub-regulation (5) shall be replaced by the following sub-regulation, namely, – “(5) In each investment made by the Angel Fund (AIF) in the investee company, investment shall be made by at least two Accredited Investors.”

v) Sub-regulation (6) shall now become sub-regulation (7), and after this changed sub-regulation (7), the following sub-regulation shall be inserted, namely, –

“(6) The Angel Fund shall not obtain investment approval from such Angel Investors for investing in any investee company, whose related party (Related Party) has any interest in such investee company.”

XI. In Regulation 19Q,

i) Sub-regulation (1) shall be deleted, and the existing sub-regulation (2) and sub-regulation (3) shall now become sub-regulation (1) and sub-regulation (2) respectively.

ii) In this changed sub-regulation (1), a) The words and commas “Manager or Sponsor’s contribution in the Angel Fund shall be at least two and a half percent or five lakh rupees, whichever is less,” shall be replaced by the words and commas “The Manager (Manager) or Sponsor (Sponsor) shall invest and retain an investment equal to fifty percent of the minimum amount invested or five hundred thousand rupees (whichever is higher) in each investment made by the Angel Fund,” shall be inserted; b) The words and commas “and such contribution shall not be through Management Fee” shall be replaced by the words and commas “and this shall not be redeemed through such Management Fee (Management Fee)” shall be inserted.

iii) Sub-regulation (2) shall be replaced by the following sub-regulation, namely, – “(2) The Manager shall obtain investment approval from any Angel Investor for investing in the investee company only when the consent of the Angel Investor is obtained regarding such investment.”

iv) After this changed sub-regulation (2), the following two sub-regulations shall be added, namely, – “(3) The Manager shall inform all Angel Investors of the Angel Fund about every decision of investment and urge them to invest.

(4) The Manager shall specify in the Placement Memorandum of the Angel Fund what additional criteria shall be used for allocation of investment among the Angel Investors who provide consent for such investment, as specified by the Board from time to time.

(5) The Manager shall obtain investment approval from those Angel Investors who give consent for investment, in accordance with the summary of the criteria specified in the Placement Memorandum of the Angel Fund for investing in any investee company.

(6) The share of the Angel Investors in the investment made by the Angel Fund and the proceeds (Proceeds) arising from such investment shall be distributed in the same proportion as they have invested, although in such cases the Board may specify otherwise from time to time.

(7) If the Angel Fund intends to invest in any existing investee company or in any existing investee company’s related party (Related Party / Related Party), it shall be mandatory for it to obtain consent from the Angel Investors while seeking their consent for making such investment.”

XII. In Regulation 20, sub-regulation (15) shall be replaced by the following sub-regulation, namely, –
“(15) The Manager shall not provide any advisory (Advisory) services to any investor, except the investors of the co-investment (co-investment) scheme or the co-investment (co-investment) portfolio manager [as mentioned in the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020] in relation to investment in the securities (securities) of such investee companies, in which the AIF is investing whose management is done by it.”

XIII. In Annexure II, in Form C, in clause (1), in sub-clause (e), after the figures, commas and words “1. Category I Alternative Investment Fund – Risk Capital Fund (Venture Capital Fund)”, the figures, letters, commas and words “1A. AIF of Category-I (Alternative Investment Fund) – Angel Fund” shall be added.

XIV. In the Second Annexure,

i) The words, figures and commas “See sub-regulation (5) of Regulation 3, sub-regulation (2) of Regulation 6 and sub-regulation (2) of Regulation 12” shall be replaced by the words, figures and commas “See sub-regulation (5) of Regulation 3, sub-regulation (2) of Regulation 6, sub-regulation (2) of Regulation 12 and sub-regulation (2) of Regulation 17A” shall be inserted.

ii) In Part-C, a) The words and commas “From Angel Funds such Alternative Investment Funds (AIFs)” shall be replaced by the words and commas “AIFs (Alternative Investment Funds)” shall be inserted; b) After the words, commas and figures “Scheme Fee for AIFs (Alternative Investment Funds) - ₹1,00,000”, the words, commas and figures “Fee for filing Repayment Placement Memorandum for introducing co-investment schemes (co-investment schemes) - ₹1,00,000” shall be added; c) After the words, commas and figures “Registration Fee for Angel Funds - ₹2,00,000”, the words, commas and figures “Fee for re-filing Placement Memorandum of Angel Fund under Regulation 19N(7) of these Regulations - ₹1,00,000” shall be added.

Ordering, Legal Division
[File No. III/4/Exy./350/2025-26]

Note:

1. The Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] Regulations, 2012, No. L.A.D.-A.I.R.O./G.N./2012-13/04/11262, were published in the Gazette of India on 21st May 2012.
2. The Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] Regulations, 2012, as amended by –
   (a) 16th September, 2013 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2013, No. LAD-NRO/GN/2013-14/24/6573, (b) 23rd May, 2014 by the Securities and Exchange Board of India (Fee Levy) (Amendment) Regulations, 2014, No. L.A.D.-A.I.R.O./G.N./2014-15/03/1089, (c) 26th September, 2014 by the Securities and Exchange Board of India (Real Estate Investment Trust) Regulations, 2014, No. L.A.D./A.I.R.O./G.N./2014-15/11/1576, (d) 14th August, 2015 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2015, No. SEBI/L.A.D.-A.I.R.O./G.N./2015-16/011, (e) 4th November, 2017 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2016, No. SEBI/L.A.D.-A.I.R.O./G.N./2016-17/026, (f) 6th March, 2017 by the Securities and Exchange Board of India (Fee Levy and Levy Method) (Amendment) Regulations, 2017, No. SEBI/L.A.D.-A.I.R.O./G.N./2016-17/037, (g) 1st June, 2018 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2018, No. SEBI/L.A.D.-A.I.R.O./G.N./2018/19, (h) 10th May, 2019 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2019, No. SEBI/L.A.D.-A.I.R.O./G.N./2019/16, (i) 17th April, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020, No. SEBI/LAD-NRO/GN/2020/10, (j) 19th November, 2020 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2020, No. SEBI/L.A.D./A.I.R.O./G.N./2020/37, (k) 8th November, 2021 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2021, No. SEBI/L.A.D./A.I.R.O./G.N./2021/01, (l) 5th May, 2021 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2021, No. SEBI/L.A.D.-A.I.R.O./G.N./2021/21, (m) 3rd August, 2021 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021, No. SEBI/LAD-NRO/GN/2021/30, (n) 3rd August, 2021 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Third Amendment) Regulations, 2021, No. SEBI/LAD-NRO/GN/2021/33, (o) 13th August, 2021 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Fourth Amendment) Regulations, 2021, No. SEBI/L.A.D.-A.I.R.O./G.N./2021/41, (p) 9th December, 2021 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Fifth Amendment) Regulations, 2021, No. SEBI/LAD-NRO/GN/2021/57, (q) 24th November, 2022 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2022, No. SEBI/L.A.D.-A.I.R.O./G.N./2022/68, (r) 16th March, 2022 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)]
   (Second Amendment) Regulations, 2022, No. SEBI/L.A.D.-A.I.R.O./G.N./2022/75, (s) 25th July, 2022 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Third Amendment) Regulations, 2022, No. SEBI/L.A.D.-A.I.R.O./G.N./2022/89, (t) 15th December, 2022 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Fourth Amendment) Regulations, 2022, No. SEBI/L.A.D.-A.I.R.O./G.N./2022/105, (u) 9th November, 2023 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2023, No. SEBI/L.A.D.-A.I.R.O./G.N./2023/113, (v) 18th November, 2023 by the Securities and Exchange Board of India [Control over Intermediaries] (Amendment) Regulations, 2023, No. SEBI/L.A.D.-A.I.R.O./G.N./2023/115, (w) 7th February, 2023 by the Securities and Exchange Board of India (Fee Levy and Levy Method) (Amendment) Regulations, 2023, No. SEBI/L.A.D.-A.I.R.O./G.N./2023/121, (x) 15th June, 2023 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2023, No. SEBI/L.A.D.-A.I.R.O./G.N./2023/132, (y) 3rd July, 2023 by the Securities and Exchange Board of India (Technical System for Trading) (Amendment) Regulations, 2023, No. SEBI/LAD-NRO/GN/2023/137, (z) 17th August, 2023 by the Securities and Exchange Board of India (Statutory Arbitration System) (Amendment) Regulations, 2023, No. SEBI/LAD-NRO/GN/2023/146, (za) 5th November, 2024 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2024, No. SEBI/L.A.D.-A.I.R.O./G.N./2024/163, (zb) 25th April, 2024 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Second Amendment) Regulations, 2024, No. SEBI/L.A.D.-A.I.R.O./G.N./2024/168, (zc) 18th July, 2024 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Third Amendment) Regulations, 2024, No. SEBI/L.A.D.-A.I.R.O./G.N./2024/194, (zd) 6th August, 2024 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Fourth Amendment) Regulations, 2024, No. SEBI/L.A.D.-A.I.R.O./G.N./2024/198, (ze) 18th December, 2024 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Fifth Amendment) Regulations, 2024, No. SEBI/LAD-NRO/GN/2024/209, (zf) 10th February, 2025 by the Securities and Exchange Board of India (Investor Charter) (Amendment) Regulations, 2025, No. SEBI/LAD-NRO/GN/2025/228, (zg) 23rd May, 2025 by the Securities and Exchange Board of India [Alternative Investment Funds (AIFs)] (Amendment) Regulations, 2025, No. SEBI/LAD-NRO/GN/2025/248, were amended.