The Securities and Exchange Board of India (SEBI) has released a revised master circular for Alternative Investment Funds (AIFs) on June 3, 2026, consolidating regulatory changes introduced over the past two years into a single framework. According to CNBC TV18, the updated circular incorporates all directions issued under the SEBI (Alternative Investment Funds) Regulations, 2012 up to May 31, 2026, replacing the previous master circular issued in May 2024. The consolidated framework captures a broad set of changes including norms for accredited investor-only funds, overseas investments by AIFs, co-investment structures, dematerialisation of units, valuation standards, investor onboarding requirements and compliance reporting. SEBI stated that the revised circular is intended to provide AIFs, custodians, depositories and other stakeholders with a single reference document containing all applicable regulatory instructions.
Capital markets regulator SEBI cancelled the registrations of five alternative investment funds (AIFs) for repeatedly failing to submit mandatory quarterly activity reports. According to reports from The Hindu BusinessLine, the cancelled entities include Exponential Innovation Fund, Florintree India Flexi Advantage Trust, Prime Realty Capital, Rudrabhishek Infrastructure Trust and Victory Investment Fund. The cancellations were implemented with immediate effect following the regulator's assessment of persistent non-compliance with regulatory requirements. As reported by NDTV, these entities were cancelled with immediate effect as per the regulator's decision.
As reported by The Hindu BusinessLine, the cancelled entities failed to file Quarterly Activity Reports (QARs) for the quarters ended March, June, September and December, 2025. According to existing rules, all AIFs are required to submit quarterly reports within 15 days from the end of every quarter through Sebi's Intermediary Portal. The regulator noted that these entities had failed to comply with reporting norms mandated by registered AIFs, leading to the establishment of violations. SEBI initiated summary proceedings under Regulation 30A of the SEBI (Intermediaries) Regulations, 2008 after the persistent failures. Show-cause notices were issued to the five entities in April 2026, asking them to explain why their registrations should not be cancelled. However, none of the entities filed any reply or submitted supporting documents within the stipulated period, prompting the regulator to proceed with cancellation.
The updated rulebook introduces operational guidelines for co-investment vehicles within the AIF structure, which allow Category I and Category II AIFs to offer co-investment opportunities to accredited investors through dedicated schemes. As reported by CNBC TV18, the framework also prescribes limits on co-investments and ring-fencing of assets across co-investment vehicles. The circular incorporates overseas investment guidelines, under which AIFs can invest in offshore venture capital undertakings subject to an overall industry-wide limit of $1.5 billion and prescribed eligibility conditions. Further provisions include norms governing investor onboarding, requiring AIF managers to undertake checks related to anti-money laundering standards, FATF compliance and international regulatory cooperation arrangements before accepting investments from foreign investors. The master circular also covers operational and prudential requirements for Category III AIFs, including leverage limits, risk-management standards, redemption norms and disclosure requirements.
