Securities and Exchange Board of India (“SEBI”), vide its notification dated November 18, 2024, has notified the SEBI (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024 (“AIF Amendment Regulations”), thereby amending SEBI (Alternative Investment Funds) Regulations, 2012.

The key amendments are:

• Pro rata right to investors – The investors of a scheme of an Alternative Investment Fund (“AIF”) shall have rights, pro-rata to their commitment to the scheme, in each investment of the scheme and in the distribution of proceeds of such investment, except as may be specified by SEBI from time to time. However, the rights of the investors of schemes of AIF issued prior to the notification of AIF Amendment Regulations which are not pro-rata to their commitment to the scheme and not exempted by SEBI, shall be dealt with in the manner specified by SEBI. However, this shall not apply to angel funds.
• Differential rights to investors – The rights of investors of a scheme of an AIF shall be pari passu in all aspects other than the rights of the investors which are pro rata to their commitment to the scheme of AIF. SEBI has exempted Large Value Fund for Accredited Investors in this regard.

  However, differential rights may be offered to select investors of a scheme of an AIF, without affecting the interest of other investors of the scheme, in the manner as may be specified by SEBI.

  Further, any differential right already issued by an AIF prior to the notification of AIF Amendment Regulations, shall be dealt with in the manner as specified by SEBI.

To read the AIF Amendment Regulations click here

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