SEBI Circular on - Modalities for migration to AI only schemes and relaxations to Large Value Funds for Accredited Investors under SEBI (Alternative Investment Funds) Regulations, 2012

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Date of Issue: 08-12-2025  
         
Issuer: SEBI

Modalities for migration to AI only schemes and relaxations to Large Value Funds for Accredited Investors under SEBI (Alternative Investment Funds) Regulations, 2012
 
Highlights of  SEBI Circular dated December -08 -2025

Please refer below brief summary of the SEBI circular.

Key Highlights:

1. Introduction of AI-only Schemes

• SEBI has amended AIF Regulations to allow a separate category of schemes exclusively for Accredited Investors (AI-only schemes).
  
  
• These schemes enjoy reduced investor-protection related compliances, offering greater operational flexibility.

2. Additional Relaxations for Large Value Funds (LVFs)

• LVFs catering to accredited investors are granted further regulatory and operational relaxations.

3. Naming Requirement

• New schemes must include:
• “AI only fund” for AI-only schemes, or
• “LVF” for Large Value Funds
  at the end of the scheme name.

4. Migration of Existing Schemes

AIFs/schemes launched before November 19, 2025 may convert into AI-only schemes or LVFs, subject to:

• Obtaining positive consent from all investors, and
• Compliance with conditions specified by SEBI.
• Post-conversion requirements:
  • Update scheme name accordingly.
  • Report conversion to SEBI and depositories within 15 days.

5. Accredited Investor Status

If an investor qualifies as an Accredited Investor at onboarding, they will continue to be treated as an AI for the entire life of the scheme, even if they later lose that status.

6. Tenure Extension

• Maximum permissible tenure extension for AI-only schemes is up to 5 years in total, including any extensions granted prior to conversion.

7. Placement Memorandum & Audit Exemptions for LVFs

LVFs are exempted from:

• Following the standard template of placement memorandum.
• Annual audit of placement memorandum terms.
• These exemptions apply without needing specific investor waivers.

8. Compliance Reporting

Trustees/sponsors must ensure that the Compliance Test Report includes confirmation of compliance with this circular.

9. Effective Date

The circular comes into force immediately.

Trading Members are requested to take note of the above and ensure compliance of the same.