Alternative Investment Fund (AIF) Registration with SEBI
Any fund that pools money privately from investors to invest under a set policy needs a SEBI certificate before it takes money. We prepare Form A, the trust deed or charter documents and the team disclosures, and file it on the SEBI Intermediary Portal.
What it is
An Alternative Investment Fund (AIF) is a privately pooled investment vehicle set up in India as a trust, company, limited liability partnership or body corporate. It raises money from investors, Indian or foreign, and invests it under a stated policy for their benefit. Private equity, venture capital, private debt, real-estate and hedge-style funds all sit here.
The governing law is the SEBI (Alternative Investment Funds) Regulations, 2012, last amended on 14 July 2026. Regulation 3(1) says no person can act as an AIF without a certificate of registration from SEBI. The application goes in Form A under the First Schedule with a non-refundable application fee, and once granted, the certificate stays valid until the fund is wound up (Regulation 3(7)).
Who it applies to
Category I funds
Funds that invest in start-ups, early-stage ventures, social ventures, SMEs or infrastructure. Venture capital funds, angel funds and social impact funds fall here.
Category II funds
Funds that are neither Category I nor III and do not use leverage beyond day-to-day needs. Most private equity and private debt funds land here.
Category III funds
Funds that use diverse or complex trading strategies and may use leverage, including through listed or unlisted derivatives. Long-short and hedge-style strategies need this category.
Why it matters
Stay on the right side of SEBI
Picture a Faridabad industrialist pooling money from friends and suppliers to back local SMEs. Without a certificate, that breaches Regulation 3(1); SEBI can stop it and order refunds.
Keep the tax pass-through
Category I and II AIFs get pass-through status under Section 115UB of the Income-tax Act, 1961, so income other than business income is taxed in the investors’ hands. Category III does not get this.
Clear investor due diligence
Serious investors check SEBI’s list of registered AIFs before they sign a contribution agreement.
AIF categories at a glance
| Category I | Category II | Category III | |
|---|---|---|---|
| Typical strategy | Start-ups, SMEs, social ventures, infrastructure | Private equity, private debt, real estate | Complex trading, long-short, listed derivatives |
| Leverage | Not for investment purposes | Not for investment purposes | Allowed within SEBI limits |
| SEBI registration fee | ₹5,00,000 | ₹10,00,000 | ₹15,00,000 |
| Sponsor or manager’s continuing interest | 2.5% of corpus or ₹5 crore, whichever is lower | 2.5% of corpus or ₹5 crore, whichever is lower | 5% of corpus or ₹10 crore, whichever is lower |
| Tax treatment | Pass-through (Section 115UB) | Pass-through (Section 115UB) | Taxed at fund level |
Here is the catch: every category shares the same floor under Regulation 10: a corpus of at least ₹20 crore per scheme, a minimum of ₹1 crore from each investor (₹25 lakh for employees or directors of the manager) and no more than 1,000 investors in a scheme. A large value fund for accredited investors is a scheme where each accredited investor puts in at least ₹25 crore; it gets lighter treatment on several conditions.
Documents required
For the fund vehicle
- Registered trust deed, or MoA and AoA, or LLP agreement
- Clause allowing AIF activity and barring public invitation
- PAN and registration certificate of the vehicle
- Details of trustee, where it is a trust
For the sponsor and manager
- Incorporation documents, PAN and latest financial statements
- Shareholding pattern and details of directors, partners and promoters
- Fit-and-proper declarations
- Proof of funds for the continuing interest
For the investment team
- CVs showing relevant experience
- NISM certificate held by at least one key person (Series XIX-C)
- Professional qualification in finance, accountancy, economics or a related field for at least one key person
- Draft placement memorandum describing the strategy
How it works
Choose the category and the structure
We map your strategy to a category and help you choose between a trust, company or LLP. Most Indian AIFs use a trust. A Gurugram founder group that wants to back early-stage start-ups, for example, usually fits a Category I angel fund rather than a full venture fund.
Set up the vehicle and the manager
We register the trust or incorporate the investment manager company, open bank accounts and line up the trustee, custodian and auditor.
Prepare Form A and the annexures
We draft the Form A responses and compile the sponsor, manager and team documents. In practice, the placement memorandum is your legal counsel’s document; we coordinate it so the numbers and disclosures match the application.
File on the SEBI Intermediary Portal
We file on SEBI’s SI portal with the ₹1,00,000 application fee, answer SEBI’s queries and pay the registration fee when SEBI calls for it.
Launch the first scheme
The placement memorandum goes to SEBI through a SEBI-registered merchant banker at least 10 working days before launch. The first scheme pays no scheme fee.
Timelines
Register before you collect a rupee
You cannot pool or invest investor money as an AIF until SEBI grants the certificate.
File each scheme 10 working days ahead
File the placement memorandum for every new scheme through a merchant banker at least 10 working days before launch (Regulation 12(2)). Angel funds may now file directly.
Report to SEBI every quarter
Category I and II AIFs, and Category III AIFs without leverage, report to SEBI every quarter. Category III AIFs using leverage report every month.
What happens if you skip registration
SEBI can shut the fund down
An unregistered pool breaches Regulation 3(1). SEBI can order it to stop, refund investors and bar the people behind it from the market.
Your tax position collapses
Without a certificate there is no Section 115UB pass-through. Income gets taxed at the vehicle level instead of passing through to investors.
Investors and banks walk away
Custodians and institutions avoid funds missing from SEBI’s register.
Frequently asked questions
Who needs to register as an AIF with SEBI?
Anyone who pools money privately from investors and invests it under a defined policy must register under Regulation 3(1) of the SEBI (AIF) Regulations, 2012. That covers venture capital, private equity, private debt, real-estate and hedge-style funds. Mutual funds, family trusts, ESOP trusts, employee welfare trusts and holding companies are outside the definition. If your structure sits near the line, we test it against the exclusions before you spend on filing.
What is the minimum corpus for an AIF?
Each scheme needs a corpus of at least ₹20 crore under Regulation 10. The corpus is the total money investors have committed to the scheme, not what they have paid in on day one. Most funds draw it down in tranches as deals come up. We plan the first close so the scheme crosses ₹20 crore before it invests.
How much must each investor put in?
Each investor must invest at least ₹1 crore in a scheme. Employees or directors of the AIF or its manager can come in with ₹25 lakh. A scheme cannot have more than 1,000 investors. Large value funds for accredited investors need ₹25 crore from each investor but get relaxations in return. We check every investor ticket against these limits during onboarding.
Which category should my fund choose?
Pick the category by what the fund will do, not by the fee. Category I suits start-up, SME, social venture and infrastructure funds. Category II suits private equity and private debt funds that do not use leverage. Category III suits trading and long-short strategies that may use leverage. Your placement memorandum must match the category, and we test the strategy against all three before filing.
What does the sponsor or manager have to invest?
In Category I and II funds, the sponsor or manager must keep a continuing interest of at least 2.5% of the corpus or ₹5 crore, whichever is lower. In Category III the figure is 5% or ₹10 crore, whichever is lower. This money stays invested alongside your investors for the life of the scheme. We plan this commitment with you at the start so it is ready by the first close.
Can an AIF be set up as a company or an LLP?
Yes, an AIF can be a trust, company, limited liability partnership or body corporate. Trusts remain the usual choice: quick to set up, and the pass-through regime fits them well. A company or LLP can make sense where investors or the sponsor prefer that form. We compare the options with your tax advisers and pick the one that works for your investor base.
Who must hold the NISM certification?
At least one key person in the investment team must hold the certification SEBI specifies, which is NISM Series XIX-C for AIF managers. Regulation 4 also needs at least one key person with a professional qualification in finance, accountancy, business management, commerce, economics, capital markets or banking. One person can meet both. We check the team’s credentials before filing, so this does not turn into a SEBI query.
Do I need a merchant banker?
For most schemes, yes: the placement memorandum is filed with SEBI through a SEBI-registered merchant banker at least 10 working days before launch. Since the July 2026 amendment, angel funds can file directly, and accredited-investor-only funds are exempt from SEBI’s comment process. We coordinate with the merchant banker you appoint so the filing goes in on time.
How long is the AIF certificate valid?
The certificate stays valid until the fund is wound up, under Regulation 3(7). There is no periodic renewal. You still need to pay scheme fees for later schemes, file regular reports and keep the fund within its investment conditions. After registration we set up a compliance calendar, so nothing slips.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
SEBI’s own fees: an application fee of ₹1,00,000 with Form A, and a registration fee of ₹5,00,000 (Category I), ₹10,00,000 (Category II) or ₹15,00,000 (Category III). A scheme fee of ₹1,00,000 applies to each scheme after the first; the first scheme is exempt.
Ready to begin?
Tell us your strategy and target corpus, and we will map the category, structure and SEBI filing plan for your fund.