AIF Registration Requirements in 2025: Full List with Pro Tips

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Alternative Investment Funds (AIFs) have become a vital part of India’s financial ecosystem, allowing investors to access asset classes beyond traditional investments. With the capital markets evolving, regulatory oversight from the Securities and Exchange Board of India (SEBI) has only become sharper. If you’re planning to launch an AIF in 2025, understanding the complete AIF registration process is crucial to ensure compliance and avoid costly delays.

Whether you’re a fund manager, wealth advisor, family office, or institutional investor, this guide walks you through the latest AIF registration requirements, details from SEBI’s AIF regulations, and insider pro tips to ensure a smooth approval.

What is AIF Registration?

AIF registration refers to the process of getting approval from SEBI (Securities and Exchange Board of India) to launch and operate an Alternative Investment Fund in India. These funds pool capital from investors for investing in accordance with a defined investment strategy.

There are three categories of AIFs in India:

Category I: Invests in start-ups, early-stage ventures, infrastructure, social ventures, etc.
Category II: Private equity funds, debt funds, and other funds that do not fall under Category I or III.
Category III: Hedge funds or funds employing complex or diverse trading strategies.

Each category has specific regulatory, operational, and capital requirements under the SEBI AIF registration framework.

Who Needs AIF Registration?

You must register with SEBI as an AIF if:

You are pooling funds from investors (domestic or foreign) for investing in non-traditional asset classes.
You’re structuring your investment vehicle as a trust, company, LLP, or body corporate.
The fund is not covered under SEBI’s mutual fund or collective investment scheme regulations.

Failure to register while engaging in AIF activities can lead to legal penalties and a ban from raising capital.

AIF Registration Requirements in 2025

SEBI has made several updates over the years, and staying compliant in 2025 means understanding the full list of current requirements.

Here’s a category-wise breakdown of the main AIF registration requirements:

1. Legal Structure and Entity Setup

To apply for AIF registration, the fund must be established as:

A trust (most common)
A company (under Companies Act)
A Limited Liability Partnership (LLP)
A body corporate (if allowed by statute)

Each legal structure comes with specific documentation and compliance obligations.

Pro Tip: The trust structure is preferred for ease of setup and favorable taxation under Indian law.

2. Sponsor and Manager Requirements

SEBI mandates the presence of a Sponsor and Investment Manager for the fund. These can be the same entity or different entities.

Requirements include:

Sound financial track record
No pending regulatory actions
Fit-and-proper criteria as per SEBI guidelines

Net Worth Requirement (2025):

Minimum INR 10 crore for Category II & III managers
Minimum INR 5 crore for Category I managers

Pro Tip: Demonstrating experience in fund management and having a strong compliance framework increases approval chances.

Also Read: What are the Documents Required for NBFC Registration?

3. Capital Commitment

SEBI requires a minimum capital commitment from the sponsor to ensure “skin in the game”:

Category I & II: Minimum 2.5% of the corpus or INR 5 crore, whichever is lower
Category III: Minimum 5% of the corpus or INR 10 crore, whichever is lower

Pro Tip: For first-time fund managers, this capital commitment shows credibility and confidence to both SEBI and investors.

4. Minimum Investment from Investors

Each investor (other than employees or directors of the AIF) must commit at least:

INR 1 crore

For employees or directors of the AIF or Manager, the minimum is:

INR 25 lakh

Pro Tip: Ensure you have a solid investor pipeline during registration—it demonstrates fund viability.

5. Application to SEBI: Key Documents Required

To initiate the SEBI AIF registration process, you’ll need to prepare and submit the following:

Form A (SEBI AIF application form)
Certificate of Incorporation/Trust Deed/LLP Agreement
Details of Sponsor and Manager
Investment strategy and targeted sectors
Fund structure and governance model
Risk management and compliance systems
Background verification (KYC, net worth, PAN, DIN, etc.)

Pro Tip: Any inconsistency or lack of clarity in your fund strategy or governance plan can delay approval—have legal experts vet everything.

6. Compliance and Custodian Requirements

Custodian mandatory for Category III AIFs and for Category I/II AIFs with corpus over INR 500 crore
An independent valuer must do valuation
SEBI reporting on a quarterly and annual basis through the AIF portal

Pro Tip: Build your compliance infrastructure before registration—SEBI checks for readiness.

7. Fees for SEBI AIF Registration (as of 2025)

The non-refundable application fee varies by category:

Category I: INR 1,00,000 (application), INR 5,00,000 (registration)
Category II: INR 1,00,000 (application), INR 10,00,000 (registration)
Category III: INR 1,00,000 (application), INR 15,00,000 (registration)

Pro Tip: Budget additional legal and advisory fees. Most funds spend between INR 3-8 lakh in pre-launch compliance and setup.

8. Timelines for Approval

The SEBI approval process typically takes 6 to 12 weeks, depending on the clarity of documents and complexity of the fund structure.

SEBI may request additional information or clarification during the review process. Be responsive and transparent.

Common Mistakes to Avoid During AIF Registration

Unclear Investment Strategy
Vague or overly ambitious strategies often get flagged.
Non-compliant Trust Deed or LLP Agreement
Ensure these are aligned with SEBI regulations; errors here can lead to rejections.
Lack of an Experienced Investment Team
Even if the Sponsor is credible, the team managing the fund must show proven ability.
Inadequate Risk Framework
Without a documented risk management process, SEBI may view your proposal as risky for investors.

Expert Tips for a Smooth AIF Registration in 2025

Start early: Build in time for drafting, reviews, and possible queries.
Work with AIF registration consultants or legal advisors experienced in SEBI processes.
Get fund admin, custodian, and compliance partners on board early to show operational readiness.
Pre-onboard anchor investors to demonstrate demand and commitment.
Align the investment thesis with SEBI’s investor protection goals—this increases approval probability.

Frequently Asked Questions (FAQs)

1. Can foreign entities register an AIF in India?
Yes, foreign sponsors or managers can register an AIF in India, subject to compliance with FEMA regulations and SEBI’s fit-and-proper criteria. However, they must establish an Indian entity and structure the fund accordingly.

2. How long does SEBI take to approve AIF registration?
On average, SEBI takes 6–12 weeks to approve AIF registration, depending on the completeness of the application and responsiveness to queries.

3. What happens after AIF registration is approved?
Once approved, the AIF can start accepting investor commitments, execute agreements, and deploy funds under its investment strategy. Regular compliance filings and investor reporting are mandatory after launch.

Final Thoughts

AIF registration in 2025 requires a deeper understanding of both regulatory requirements and operational best practices. With SEBI tightening its oversight, your application needs to reflect not just technical compliance but strategic clarity, governance discipline, and investor protection.

Whether you’re launching your first fund or expanding an existing platform, a proactive and well-prepared approach can significantly improve your chances of a smooth SEBI AIF registration.

Also Read: Setting Up a WFOE in China: Process, Pros and Cons