Chapter II · Registration of Alternative Investment Funds
Regulation 3
Registration of Alternative Investment Funds
Chapter II · Registration of Alternative Investment Funds
SEBI (Alternative Investment Funds) Regulations, 2012
In plain English
In plain English
No one can act as an Alternative Investment Fund without a certificate of registration from SEBI. The fund applies in one category: Category I (start-ups, SMEs, social ventures, infrastructure and other areas the government treats as desirable, including venture capital, angel, social impact and special situation funds), Category II (funds that are not Category I or III and do not borrow except as allowed, such as private equity and debt funds) or Category III (funds using diverse or complex trading strategies, which may use leverage, such as hedge funds). The application is made in Form A with the fee in the Second Schedule.
Where this sits
Regulation 3 is in Chapter II — Registration of Alternative Investment Funds of the SEBI (Alternative Investment Funds) Regulations, 2012.
Provisos, explanations and conditions
Quoted from the regulation text. These qualify or carve out exceptions to the main rule.
Provided that an existing fund falling within the definition of Alternative Investment Fund which is not registered with the Board may continue to operate for a period of six months from commencement of these regulations or if it has made an application for registration under sub-regulation (5) within the said period of six months, till the disposal of such application:
Provided further that the Board may, in special cases, extend the said period up to a maximum of twelve months from the date of such commencement:
Provided further that existing schemes will be allowed to complete their agreed tenure, such funds shall not raise any fresh monies other than commitments already made till registration is granted under regulation 6:[Provided further that such existing funds, which do not propose to accept any fresh commitments after commencement of these regulations shall not be required to obtain registration under these regulations subject to submission of information on their activities to the Board in the manner as may be specified]
Provided further that if such existing funds are not able to comply with conditions specified under these regulations, they may apply for exemption to the Board from strict compliance with these regulations and the Board upon examination may provide such exemptions or issue such instructions as may be deemed appropriate.
Provided that the existing fund or scheme shall not increase the targeted corpus of the fund or scheme after notification of these regulations.
Provided further that venture capital funds may seek[registration under these regulations as migrated venture capital funds in terms of Chapter III-D, within twelve months from the date of notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2024]. [Provided further that the Board may specify enhanced regulatory reporting and other measures for the venture capital funds that do not seek registration as a migrated venture capital fund in terms of Chapter III-D.]
Explanation.─ For the purpose of this clause, Alternative Investment Funds which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions shall be included and such funds which are formed as trusts or companies shall be construed as “venture capital company” or “venture capital fund” as specified under sub-section (23FB) of Section 10 of the Income Tax Act, 1961.
Explanation.─ For the purpose of this clause, Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator shall be included.
Explanation.─ For the purpose of this clause, Alternative Investment Funds such as hedge funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator shall be included. (d)[specified Alternative Investment Fund under Regulation 19 of these regulations.]
What changed
No change to this regulation by the 2026 amendments (No. 303 of 16 April 2026 and No. 313 of 10 July 2026).
Words in square brackets in the official text mark earlier amendments made before 2026. Their earlier wording is not shown because it has not been verified here.
Where it connects
Provisions this regulation refers to
Related Master Circular chapters (by subject)
Chapter
Check yourself
28 practice questions on Regulation 3, each with an explanation for every option.
- Which category of AIF employs diverse or complex trading strategies and may use leverage, including through derivatives?
- True or false: an entity may act as an AIF and apply for registration within six months of starting.
- In how many categories can an AIF seek registration?
- Which of these is listed as a sub-category of Category I AIF?
- Which description fits Category I AIFs?
The regulation
3. (1) On and from the commencement of these regulations, no entity or person shall act as an Alternative Investment Fund unless it has obtained a certificate of registration from the Board:
Provided that an existing fund falling within the definition of Alternative Investment Fund which is not registered with the Board may continue to operate for a period of six months from commencement of these regulations or if it has made an application for registration under sub-regulation (5) within the said period of six months, till the disposal of such application:
Provided further that the Board may, in special cases, extend the said period up to a maximum of twelve months from the date of such commencement:
Provided further that existing schemes will be allowed to complete their agreed tenure, such funds shall not raise any fresh monies other than commitments already made till registration is granted under regulation 6:[Provided further that such existing funds, which do not propose to accept any fresh commitments after commencement of these regulations shall not be required to obtain registration under these regulations subject to submission of information on their activities to the Board in the manner as may be specified]
Provided further that if such existing funds are not able to comply with conditions specified under these regulations, they may apply for exemption to the Board from strict compliance with these regulations and the Board upon examination may provide such exemptions or issue such instructions as may be deemed appropriate.
(2) The funds registered as venture capital fund under Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 shall continue to be regulated by the said regulations till the existing fund or scheme managed by the fund is wound up and such funds shall not launch any new scheme after notification of these regulations:
Provided that the existing fund or scheme shall not increase the targeted corpus of the fund or scheme after notification of these regulations.
Provided further that venture capital funds may seek[registration under these regulations as migrated venture capital funds in terms of Chapter III-D, within twelve months from the date of notification of the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2024]. [Provided further that the Board may specify enhanced regulatory reporting and other measures for the venture capital funds that do not seek registration as a migrated venture capital fund in terms of Chapter III-D.]
(3) Any entity referred to in sub-regulation (1) who fails to make an application for grant of a certificate within the period specified therein shall cease to carry on any activity as an Alternative Investment Fund.
(4) Alternative Investment Funds shall seek registration in one of the categories mentioned hereunder and in case of Category I Alternative Investment Fund, in one of the subcategories thereof:
(a) “Category I Alternative Investment Fund” which invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, [angel funds,][social impact funds], infrastructure funds[, special situation funds] and such other Alternative Investment Funds as may be specified;
Explanation.─ For the purpose of this clause, Alternative Investment Funds which are generally perceived to have positive spillover effects on economy and for which the Board or Government of India or other regulators in India might consider providing incentives or concessions shall be included and such funds which are formed as trusts or companies shall be construed as “venture capital company” or “venture capital fund” as specified under sub-section (23FB) of Section 10 of the Income Tax Act, 1961.
(b) “Category II Alternative Investment Fund” which does not fall in Category I and III and which does not undertake leverage or borrowing other than [***]45 as permitted in these regulations;
Explanation.─ For the purpose of this clause, Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator shall be included.
(c) “Category III Alternative Investment Fund” which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.
Explanation.─ For the purpose of this clause, Alternative Investment Funds such as hedge funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator shall be included. (d)[specified Alternative Investment Fund under Regulation 19 of these regulations.]
(5) An application for grant of certificate shall be made for any of the categories as specified in sub-regulation (4) in Form A as specified in the First Schedule to these regulations and shall be accompanied by a non-refundable application fee as specified in Part A of the Second Schedule to these regulations to be paid in the manner specified in Part B thereof.
(6) The Board shall take into account requirements as specified in these regulations for the purpose of considering grant of registration.
(7) Without prejudice to the powers of the Board to take any action under the Act or regulations made there under, the certificate of registration shall be valid till the Alternative Investment Fund is wound up.
(8) The Board may, in the interest of the investors, issue directions with regard to the transfer of records, documents or securities or disposal of investments relating to its activities as an Alternative Investment Fund.
(9) The Board may, in order to protect the interests of investors, appoint any person to take charge of records, documents, securities and for this purpose, also determine the terms and conditions of such an appointment.
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 3
- Text used
- Consolidated Regulations as amended up to 19 November 2025, read with the 2026 amendments (no change to this regulation)
- Last checked
- 10 October 2026
- Official source
- www.sebi.gov.in → Legal → Regulations. The Gazette text prevails.
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