Chapter IV · General Obligations, Responsibilities and Transparency
Regulation 29
Winding up
Chapter IV · General Obligations, Responsibilities and Transparency
SEBI (Alternative Investment Funds) Regulations, 2012
In plain English
In plain English
Regulation 29 covers winding up. Within the liquidation period, assets are sold and the proceeds distributed to investors after all liabilities are met, now subject to conditions SEBI may specify (April 2026). Investments still unsold at the end of a dissolution period are distributed in specie. New since April 2026, sub-regulation (10A) lets SEBI tag an AIF as an inoperative fund, on conditions it specifies.
What the Master Circular adds
From SEBI's Master Circular for AIFs (updated 16 June 2026). The Regulation sets the rule; the Master Circular sets how it works in practice.
- MC Ch 25
Proceeds can be retained beyond the fund's permissible life only on the conditions in Chapter 25. Retaining them for anticipated liabilities from possible litigation or a tax demand needs consent of at least 75% of investors by value, with the amount and expected period disclosed.
- MC Ch 25
Money retained for residual winding-up expenses cannot be held for more than three years from the end of the fund's permissible life. Chapter 25 also sets the conditions for tagging an AIF as an inoperative fund and surrendering registration.
- MC Ch 23
Unliquidated investments at the end of the liquidation period can be dealt with by a liquidation scheme, a dissolution period or in-specie distribution, on the conditions in Chapter 23.
Where this sits
Regulation 29 is in Chapter IV — General Obligations, Responsibilities and Transparency of the SEBI (Alternative Investment Funds) Regulations, 2012.
Amended in 2026 — see What changed.
Provisos, explanations and conditions
Quoted from the regulation text. These qualify or carve out exceptions to the main rule.
Provided that in the absence of consent of unit holders for exercising the options under sub-regulation (9) during liquidation period, such investments of the scheme of the Alternative Investment Fund shall be dealt with in the manner as may be specified by the Board from time to time.] [(9A) If the liquidation period for a scheme of an Alternative Investment Fund has expired or is expiring within three months from the date of notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2024, such schemes may be granted an additional liquidation period, subject to such conditions and in the manner as may be specified by the Board:
Provided that the additional liquidation period granted under sub-regulation (9A) shall be without prejudice to the issuance of any direction or measures in accordance with the provision of the Act and regulations framed thereunder.
What changed in 2026
Before: …shall be distributed to them after satisfying all liabilities.
Now: …shall be distributed to them after satisfying all liabilities, subject to conditions as may be specified by the Board from time to time.
SEBI can now set conditions on how liabilities are met when a fund is wound up.
Before: —
Now: An Alternative Investment Fund may be tagged as an inoperative fund, in such manner and subject to conditions as may be specified by the Board from time to time.
Introduces the concept of an inoperative fund, with the details left to SEBI.
Where it connects
Provisions this regulation refers to
Related Master Circular chapters (by subject)
- Chapter 23 · Flexibility to AIFs and their investors to deal with unliquidated investments of…
- Chapter 25 · Guidelines for winding up of AIFs with respect to retention of proceeds
Chapter
Check yourself
8 practice questions on Regulation 29, each with an explanation for every option.
- What did the Amendment Regulations, 2026 introduce in Regulation 29(10A)?
- A scheme in its dissolution period still holds investments that could not be sold before the period expired. What happens to them?
- What did the April 2026 amendment add to Regulation 29(7) on distribution of liquidation proceeds?
- What did the Amendment Regulations, 2026 (No. 303) add as Regulation 29(10A)?
- What consent is needed to retain proceeds beyond fund life for an anticipated tax demand?
The regulation
29. (1) An Alternative Investment Fund set up as a trust shall be wound up:
(a) when the tenure of the Alternative Investment Fund or all schemes launched by the Alternative Investment Fund, as mentioned in the placement memorandum is over; or
(b) if it is the opinion of the trustees or the trustee company, as the case may be, that the Alternative Investment Fund be wound up in the interests of investors in the units; or
(c) if seventy five percent of the investors by value of their investment in the Alternative Investment Fund pass a resolution at a meeting of unitholders that the Alternative Investment Fund be wound up; or
(d) if the Board so directs in the interests of investors.
(2) An Alternative Investment Fund set up as a limited liability partnership shall be wound up in accordance with the provisions of The Limited Liability Partnership Act, 2008:
(a) when the tenure of the Alternative Investment Fund or all schemes launched by the Alternative Investment Fund, as mentioned in the placement memorandum is over; or
(b) if seventy five percent of the investors by value of their investment in the Alternative Investment Fund pass a resolution at a meeting of unitholders that the Alternative Investment Fund be wound up; or
(c) if the Board so directs in the interests of investors.
(3) An Alternative Investment Fund set up as a company shall be wound up in accordance with the provisions of the[Companies Act, 2013].
(4) An Alternative Investment Fund set up as a body corporate shall be wound up in accordance with the provisions of the statute under which it is constituted.
(5) The trustees or trustee company or the Board of Directors or designated partners of the Alternative Investment Fund, as the case maybe, shall intimate the Board and investors of the circumstances leading to the winding up of the Alternative Investment Fund.
(6) On and from the date of intimation under sub-regulation (5) of regulation 29, no further investments shall be made on behalf of the Alternative Investment Fund so wound up.
(7) Within[the liquidation period], the assets shall be liquidated, and the proceeds accruing to investors in the Alternative Investment Fund[or the scheme of the Alternative Investment Fund] shall be distributed to them after satisfying all liabilities, subject to conditions as may be specified by the Board from time to time.
(8) Notwithstanding anything contained in sub-regulation (7) and subject to the conditions, if any, contained in the placement memorandum or contribution agreement or subscription agreement, as the case may be,[in specie distribution of assets of the scheme of the Alternative Investment Fund], shall be made by the Alternative Investment Fund at any time,[including on winding up of the scheme of the Alternative Investment Fund], as per the preference of investors,[subject to conditions as may be specified by the Board from time to time]. (9)[Notwithstanding anything contained in sub-regulation (7), during liquidation period of a scheme, an Alternative Investment Fund may distribute investments of a scheme which are not sold due to lack of liquidity, in-specie to the investors or[enter into dissolution period], after obtaining approval of at least seventy five percent of the investors by value of their investment in the scheme of the Alternative Investment Fund, in the manner and subject to conditions specified by the Board from time to time:
Provided that in the absence of consent of unit holders for exercising the options under sub-regulation (9) during liquidation period, such investments of the scheme of the Alternative Investment Fund shall be dealt with in the manner as may be specified by the Board from time to time.] [(9A) If the liquidation period for a scheme of an Alternative Investment Fund has expired or is expiring within three months from the date of notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2024, such schemes may be granted an additional liquidation period, subject to such conditions and in the manner as may be specified by the Board:
Provided that the additional liquidation period granted under sub-regulation (9A) shall be without prejudice to the issuance of any direction or measures in accordance with the provision of the Act and regulations framed thereunder.
(10) If the scheme of an Alternative Investment Fund enters into a dissolution period as provided under regulation 29B and the unliquidated investments of the scheme are not sold by the expiry of the dissolution period, such investments shall be mandatorily distributed in-specie to the investors, in the manner as may be specified by the Board.] (10A) An Alternative Investment Fund may be tagged as an inoperative fund, in such manner and subject to conditions as may be specified by the Board from time to time.
[(11)] Upon winding up of the Alternative Investment Fund, the certificate of registration shall be surrendered to the Board.
Highlighted text: SEBI (AIF) (Amendment) Regulations, 2026 (No. 303, notified 16 April 2026).
Text from the consolidated Regulations. Square brackets and [***] mark earlier amendments and omissions, as in the official text. Check the official Gazette text before relying on it.
Last checked against source on 10 October 2026: consolidated Regulations to 19 November 2025, read with Amendment Regulations No. 303 (16 April 2026) and No. 313 (10 July 2026).
Source and verification
- Instrument
- SEBI (Alternative Investment Funds) Regulations, 2012 — Regulation 29
- Text used
- Consolidated Regulations as amended up to 19 November 2025, read with SEBI (AIF) (Amendment) Regulations, 2026 (No. 303, notified 16 April 2026)
- Last checked
- 10 October 2026
- Official source
- www.sebi.gov.in → Legal → Regulations. The Gazette text prevails.
Work with Prashant Kumar
Structuring or running an AIF?
Advice on registration, PPM filing, investor on-boarding and ongoing compliance under the AIF Regulations.