Revised regulatory framework for Angel Funds under AIF Regulations
Summary
This circular amends the AIF Regulations to establish a revised regulatory framework specifically for Angel Funds, effective immediately. It mandates that Angel Funds raise funds exclusively from Accredited Investors and prohibits accepting contributions from non-Accredited Investors after September 8, 2026. The document outlines specific rules regarding fund raising, direct investments without schemes, follow-on investment limits, lock-in periods, and investor allocation methodologies.
Text
AIF Regulations have been amended to prescribe a revised regulatory framework for Angel Funds to improve ease of doing business and operational clarity.
Angel Funds registered post-issuance shall on-board and offer investment opportunities to Accredited Investors only.
Existing Angel Funds must implement the Accredited Investor mandate by September 08, 2026, allowing no more than 200 non-Accredited Investors during this period.
Existing Angel Funds shall not accept contribution from non-Accredited Investors post September 08, 2026.
Managers must ensure investors qualify as Accredited Investors via valid certificate or deemed criteria at the time of accepting contribution.
The first close of an Angel Fund shall be declared not later than 12 months from the date of SEBI communication for taking the PPM on record.
Existing Angel Funds which have not yet declared first close shall do so on or before September 08, 2026.
If the first close is not declared within the timeline, the Angel Fund shall refile the PPM with SEBI by paying the requisite fee.
Investments in investee companies shall be made directly by Angel Funds without launching a scheme; AIF scheme provisions apply at fund level unless stated otherwise.
Filing term sheets with SEBI is discontinued, but Angel Funds must maintain records of term sheets including investor lists and contributions.
Follow-on investment is allowed only if the post-issue shareholding percentage does not exceed the pre-issue shareholding percentage.
Total investment in an investee company, including follow-on investments, shall not exceed INR 25 Crore.
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Source: SecMarx — Revised regulatory framework for Angel Funds under AIF Regulations. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.