January 11, 2023
Alternative Investment Fund (AIF) Registration
Alternative Investment Funds (AIFs) are privately pooled investment vehicles that collect capital from high-net-worth individuals (HNIs), institutional investors, or corporates to invest in non-traditional assets such as private equity, start-ups, venture capital, hedge funds, real estate, and commodities.
Types of AIFs in India
Category | Description | Minimum Corpus Required | Sponsor Contribution |
Category I | Investments in start-ups, SMEs, social ventures, or infrastructure projects. | Rs. 10 crore | 2.5% of corpus or Rs. 50 lakhs, whichever is lesser. |
Category II | Funds like private equity and debt funds that do not fall under Category I or III. | Rs. 10 crore | 2.5% of corpus or Rs. 5 crore, whichever is lesser. |
Category III | Funds using complex trading strategies, including hedge funds and private investment in public equity. | Rs. 20 crore | 5% of corpus or Rs. 10 crore, whichever is lesser. |
Eligibility Criteria for AIF Registration
Criteria | Requirements |
Legal Incorporation | Trusts under the Registration Act, 1908; LLPs under the LLP Act, 2008; Companies under the Companies Act, 2013. |
Fit and Proper | Sponsors/managers must comply with SEBI (Intermediaries) Regulations, 2008. |
Qualified Management | Minimum 5-10 years’ relevant experience and professional qualifications like CFA/CA; NISM AIF Manager Certification. |
Infrastructure | Adequate office space (500 sq. ft.), data storage, and necessary manpower. |
Clear Investment Plan | Detailed description of investment objectives, strategy, and tenure. |
Steps for AIF Registration
1. Application Submission
Submit Form A of SEBI (AIF) Regulations, 2012.
Attach required documents:
Contact information.
Founding documents (MOA, Articles of Association, etc.).
Business strategies and private placement memorandum (PPM).
Application fees of Rs. 1,00,000.
2. SEBI Processing
SEBI reviews the application within 21 working days.
Additional clarifications or personal meetings may be requested.
Infrastructure verification may be conducted.
Principal Registration is granted within 120 working days, subject to compliance.
3. Final Fee Payment
Category | Fee |
Category I | Rs. 5,00,000 |
Category II | Rs. 10,00,000 |
Category III | Rs. 15,00,000 |
Additional Schemes | Rs. 1,00,000 |
4. Certificate Validity
The registration certificate remains valid throughout the life of the AIF.
Key Requirements and Investment Conditions
Condition | Details |
Foreign Investments | Allowed under RBI and FEMA guidelines. |
Co-Investments | Must match terms offered to AIF. |
Investment Limits | Category I & II: Up to 25% in one investee; Category III: Up to 10% in one investee. |
Uninvested Funds | Can be placed in liquid mutual funds or high-quality liquid assets. |
Leverage (Category III) | Allowed with investor consent and SEBI limits. |
Investment in Associates | Requires 75% investor approval by value. |
Minimum Investment Limits
Investor Type | Minimum Investment |
Category II & III Investors | Rs. 1 crore |
Angel Fund Investors | Rs. 25 lakhs |
AIF Employees/Directors | Rs. 25 lakhs |
Tenure of AIFs
Category | Tenure |
Category I & II | Close-ended; minimum 3 years, extendable by up to 2 years with investor approval. |
Category III | Open-ended or close-ended. |
Alternative Investment Fund (AIF) Registration in India: A Complete Guide
Disclaimer: This guide is for informational purposes only and does not constitute legal, financial, or professional advice. Readers are advised to refer to official SEBI regulations for specific guidance tailored to their circumstances. The information provided herein is based on the regulations and practices as of the date of publication and may be subject to change.
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