SEBI AIF Amendment 2026: New Accredited Investor Eligibility and Dispute Rules

Who qualifies as an accredited investor in India? SEBI has changed the answer for several categories of investors, including individuals, LLPs and corporate entities.

Through the SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2026, the Securities and Exchange Board of India has introduced new eligibility routes based on securities-market exposure. The amendment also changes certain provisions relating to foreign investors, accreditation and the handling of disputes between investors and Alternative Investment Funds (AIFs).

The notification was issued on 9 October 2026, and published in the Official Gazette on 15 October 2026.

For AIF managers, the changes call for a review of investor accreditation and fund expense arrangements. For investors, the revised criteria may provide an additional way to qualify for accredited investor status.

SEBI AIF Third Amendment Regulations 2026: Notification at a Glance

The amendment modifies Regulation 2(1) (ab), and Regulation 25 of the SEBI (Alternative Investment Funds) Regulations, 2012.

The notification does not introduce a separate AIF registration framework. Its main focus is on investor accreditation and dispute-related provisions within the existing regulations.

What Has Changed Under the SEBI AIF Amendment 2026?

Earlier, accredited investor eligibility depended primarily on specified income, net-worth and financial-asset conditions. These requirements differed depending on whether the applicant was an individual, corporate entity, trust or partnership.

SEBI has now added securities-market exposure as an alternative qualifying criterion for several categories.

The amendment also provides for accreditation through certain SEBI-regulated entities and revises Regulation 25 concerning investor disputes.

Old vs New SEBI AIF Requirements

The most substantial changes concern eligibility alternatives and the treatment of manager-related expenses. The dispute resolution mechanism itself is not entirely new.

Revised Accredited Investor Eligibility Criteria Under SEBI AIF Rules

An accredited investor is an investor who satisfies the eligibility conditions prescribed under the applicable SEBI framework and is recognised in accordance with the regulations.

The 2026 amendment adds new financial criteria, but these do not replace every existing requirement.

• New Eligibility Criteria for Individual Investors

Regulation 2(1) (ab) allows individuals, Hindu Undivided Families (HUFs), family trusts and sole proprietorships to qualify if they meet the prescribed financial criteria.

The earlier framework provided three alternatives:

1. Annual income: At least Rs 2 crore.
2. Net worth: At least Rs 7.5 crore, including not less than Rs 3.75 crore in financial assets.
3. Combined income and net worth: Annual income of at least Rs 1 crore, and net worth of at least Rs 5 crore, including not less than Rs 2.5 crore in financial assets.

SEBI has now added a fourth route.

New criterion: Securities-market exposure of at least Rs 5 crore, as specified by SEBI.

This means qualifying applicants may have an additional way to establish eligibility beyond the existing financial tests.

Holding securities or investments worth Rs 5 crore does not automatically make an applicant eligible. The investments must meet SEBI's prescribed criteria.

• Revised Accreditation Criteria for LLPs

The amendment introduces a specific eligibility provision for Limited Liability Partnerships established under the Limited Liability Partnership Act, 2008.

An LLP may satisfy the financial eligibility conditions through any one of the following routes:

1. Net-Worth Route: The LLP has a net worth of at least Rs 50 crore.
2. Securities-Market-Exposure Route: The LLP has securities-market exposure of at least Rs 20 crore, measured in accordance with SEBI's specifications.
3. Independent Partner Eligibility: Every partner independently satisfies the accredited investor eligibility criteria under the regulations.

These are alternative conditions. An LLP is not required to meet all three financial tests together.

The independent partner route is particularly relevant when assessing an LLP that does not qualify through its own net worth, or securities-market exposure.

• Revised Eligibility for Body Corporates

For body corporates other than LLPs, the amended regulations provide two financial alternatives:

1. Net worth of at least Rs 50 crore.
2. Securities-market exposure of at least Rs 20 crore, as specified by SEBI.

The Rs 50 crore net-worth requirement was already part of the earlier eligibility framework. The Rs 20 crore securities-market-exposure criterion is the additional qualifying route.

Corporate applicants should confirm which condition they intend to rely on and whether they can establish eligibility under the applicable SEBI requirements.

• Eligibility for Trusts and Partnership Firms

The amendment also affects trusts other than family trusts. Such trusts may qualify based on:

1. Net worth of at least Rs 50 crore, or
2. Securities-market exposure of at least Rs 20 crore, as specified by SEBI.

For partnership firms established under the Indian Partnership Act, 1932, the requirement continues to be based on the independent eligibility of each partner.

SEBI Accredited Investor Eligibility 2026: Comparison Table

Important: All exposure-based alternatives are subject to SEBI's specifications. Investors should not treat these monetary figures alone as proof of accredited investor status.

How Has SEBI Changed the Accredited Investor Accreditation Process?

Meeting SEBI’s eligibility criteria does not, by itself, make someone an accredited investor. Applicants must also complete the accreditation process through an eligible accreditation agency.

Previously, Regulation 2(1) (ab) referred to an accreditation certificate issued by an accreditation agency.

The 2026 amendment adds another permitted route.

An investor may also be accredited by a specified SEBI-registered or regulated entity, following the eligibility conditions and procedure prescribed by SEBI.

What Does This Mean for Investors?
The revised wording broadens the types of entities through which accreditation may be recognised.

For investors and AIF managers, the following points deserve attention:

• The accreditation agency must be recognised under SEBI's rules.
• The applicant must meet the prescribed eligibility criteria.
• The accreditation process must follow SEBI's requirements.
• The amendment should not be treated as permission for every SEBI-registered intermediary to issue accreditation.

The Gazette notification does not provide a complete separate application process, documentation checklist or processing timeline for this additional route.

What Has Changed for Foreign Investors Under SEBI's AIF Amendment?

The amendment also revises the proviso relating to investors deemed to be accredited.

The changes concern the wording and categories covered under Regulation 2(1) (ab).

• Removal of Certain Investor Categories: The amendment removes the express references to:

1. Category I Foreign Portfolio Investors.
2. Sovereign Wealth Funds.

However, removing these names from the proviso does not necessarily mean that such investors lose eligibility under every applicable provision.

Their position must be assessed using the amended wording and other relevant regulatory provisions.

• Inclusion of Persons Resident Outside India: SEBI has added persons resident outside India, as defined under the Foreign Exchange Management Act, 1999, to the relevant proviso.

This makes the FEMA residency definition important when determining the scope of the amended provision.

An investor's status should be assessed under that definition rather than simply assuming that any person with a foreign address falls within the relevant category.

• Change in Accreditation Certificate Wording: The amendment also removes the earlier wording stating that the specified deemed-accredited entities may not be required to obtain a certificate of accreditation.

This change should be read with the complete amended definition.

It would be incorrect to conclude solely from this deletion that every foreign investor must immediately apply for a fresh accreditation certificate.

AIF managers dealing with overseas investors should review the amended proviso and applicable SEBI directions before changing their onboarding procedures.

SEBI AIF Dispute Resolution Rules 2026: What Has Changed?

Disputes can arise between investors and fund managers over matters connected with a fund's securities-market activities.

Regulation 25 sets out the regulatory mechanism for handling covered claims and disputes.

Before the October 2026 amendment, the regulation already required disputes to be submitted to a mechanism that included mediation, conciliation and/or arbitration in accordance with SEBI's procedure.

The new amendment retains that approach under Regulation 25(1).

Which Disputes Are Covered?
The provision applies to claims, differences or disputes between investors and an Alternative Investment Fund or its manager arising out of, or relating to, their activities in the securities market.

It is therefore important to examine the nature of the dispute and the parties involved before determining whether Regulation 25 applies.

How Will Disputes Be Resolved?
The regulation refers to three recognised methods.

1. Mediation: A neutral mediator helps the parties work towards a mutually acceptable resolution.
2. Conciliation: A conciliator assists the parties in settling their differences, including by helping them consider possible settlement terms.
3. Arbitration: An arbitrator or arbitral tribunal considers the dispute and gives a decision under the applicable framework.

The exact process is governed by the procedure specified by SEBI. The amendment does not require every dispute to go through all three methods in sequence.

Restrictions on Using AIF Assets for Managers' Dispute Expenses

One of the more significant changes appears in Regulation 25(2).

Under the earlier wording, the restriction on paying managers' losses and expenses from fund property expressly applied where the AIF was established as a trust.

The amended provision is no longer limited by that trust-specific wording.

It states that where disputes arise under Regulation 25(1), the losses, damages or expenses incurred by the manager or its officers, including expenses connected with resolving investor claims or disputes, must not be met from AIF property.

Why Does This Matter for Fund Managers?

AIF managers should distinguish between expenses properly attributable to a fund and those covered by the restriction under Regulation 25(2).

The amendment makes it important to examine:

• Expense Allocation: Whether relevant manager-related expenses are being allocated to the fund.
• Investor Dispute Costs: How costs arising from covered investor claims are treated.
• Fund Documents: Whether existing expense provisions and related arrangements remain consistent with the amended regulation.
• Internal Controls: Whether appropriate review and approval arrangements are in place for payments involving fund property.

This does not mean that every expense arising from a dispute is automatically prohibited. The restriction must be applied to the circumstances specifically described in Regulation 25(2).

When Did the SEBI AIF Third Amendment Regulations, 2026 Come into Effect?

The notification was issued on 9 October 2026. The Gazette issue is dated 14, October 2026, and the official e-Gazette publication is dated 15 October 2026.

As stated in the amendment, it comes into force on the date of publication in the Official Gazette.

Therefore, the publication record dates 15 October 2026 as the effective date.

The notification does not specify a separate general compliance deadline or provide for a transitional period.

It also does not direct every existing accredited investor to undergo fresh accreditation immediately.

Affected entities should nevertheless review their arrangements against the amended regulations and applicable SEBI directions.

How Will the SEBI AIF Amendment 2026 Affect Investors and Businesses?

The impact depends on the type of investor, the legal structure of the investing entity and its existing accreditation arrangements.

Impact on Individual Investors
Individuals who do not meet the criteria for income and net worth would now be able to consider the definition of securities market exposure.

Eligibility is evaluated by regulatory authorities on a case by case basis.

Impact on LLPs and Corporate Investors
LLPs and corporate entities have additional financial eligibility alternatives.

These entities should determine which route is applicable and ensure that any accreditation assessment is based on the relevant legal conditions.

Impact on AIF Managers
Managers may need to review the way they assess investor eligibility, recognise accreditation and maintain supporting records.

The changes to Regulation 25 also make a review of dispute-related expense arrangements particularly relevant.

Impact on Foreign Investors
Foreign investors should examine whether the amended deemed-accredited-investor proviso applies to them.

For fund managers accepting overseas capital, understanding the revised wording is important before changing existing procedures.

What Should AIF Managers and Investors Do Next?

The notification does not prescribe a new general application process for every affected investor. However, reviewing existing arrangements is a sensible compliance measure.

• Review Investor Eligibility: Identify the applicable investor category. 

Check whether the applicant satisfies an existing income or net-worth criterion or intends to rely on a new securities-market-exposure alternative.

Examine Accreditation Requirements: Confirm the permitted accreditation route and the relevant SEBI procedure.

Where accreditation is undertaken through a specified SEBI-registered or regulated entity, ensure that the entity is authorised under applicable directions.

• Check the Relevant Supporting Records: Investors relying on a financial eligibility criterion should review the information needed to substantiate it.

The exact evidence must follow the applicable accreditation requirements. The October amendment does not itself prescribe a new universal document checklist.

• Review Dispute Resolution Arrangements: AIF managers should examine relevant investor agreements and internal procedures to determine whether they remain consistent with Regulation 25.
• Review Fund Expense Policies: Examine how manager-related losses, damages and dispute expenses are handled, especially where payments could be made from AIF property.
• Follow SEBI's Subsequent Directions: The operation of certain amended provisions depends on SEBI's specifications. Investors and fund managers should refer to the latest applicable directions before making procedural decisions.

These are practical review measures, not additional registration obligations created by this notification.

How Corpseed Can Help with Alternative Investment Fund Compliance

The amended SEBI rules highlight the importance of understanding the regulatory requirements that apply to an Alternative Investment Fund and its investors.

Corpseed offers Alternative Investment Compliance services covering relevant regulatory compliance and related business requirements.

For businesses planning to establish an investment fund, Corpseed also offers Alternative Investment Funds Registration assistance.

Its service offerings are relevant to organisations looking for professional support with AIF registration requirements and regulatory compliance.

Before seeking assistance, businesses should identify their fund structure, investor categories and the particular SEBI provisions that affect them.

Looking for Alternative Investment Fund compliance services or AIF registration assistance in India?

Connect with Corpseed to discuss your regulatory requirements.

Website: www.corpseed.com
Contact: +91 75586 40644

Key Takeaways

The SEBI AIF Amendment 2026 introduces new standards of securities-market-exposure for accredited investors and amends certain provisions relating to accreditation.

It alters the deemed-accredited-investor proviso and replaces Regulation 25, retaining the existing dispute resolution mechanism, and amending the restriction on the manager-related expenses paid out of AIF property.

For investors, the key is to verify their eligibility for the relevant category. For AIF managers, amendment requires to be cautious with respect to the accreditation procedures and relevant fund expenses.