New Delhi, April 30 -- The Securities and Exchange Board of India (SEBI) has announced an ease-of-doing-business measure, allowing smaller alternative investment funds (AIFs) with active schemes to launch new schemes 30 days after filing their application with the regulator. This means such AIFs will not need to wait for SEBI's formal approval for new schemes beyond this period.

Earlier, this relaxation was available only to large-value funds (LVFs), which can onboard only accredited investors and require a minimum investment of Rs 25 crore. SEBI's latest circular extends this relaxation to smaller AIFs that already have active schemes.

However, AIFs launching their first scheme will still need to wait for registration approval, according to the circular issued on April 30.

The move reflects a version of the "Lodge and Launch" model, introduced by Malaysia's securities market regulator over a decade ago. It had also been referenced by the SEBI chairperson at the Indian Venture and Alternate Capital Association (IVCA) Conclave 2026 held on March 11.

Industry participants welcomed the move. Srini Sriniwasan, managing director at Kotak Alternate Asset Managers and chairperson of IVCA, said, "This important step in ease of doing business will accelerate capital formation and at the same time cast greater responsibility on managers, which the industry welcomes."

Compliance burden

The regulator has placed the burden of compliance for this on merchant bankers and the funds.

If SEBI provides comments during the 30-day period, the fund or merchant banker filing the PPM will have to ensure compliance prior to the launch of the scheme or the circulation of the PPM.

"The Merchant Banker and the Manager of the AIF shall be responsible for ensuring the accuracy and completeness of all disclosures made in the PPMs of non-LVF schemes, as well as in declarations submitted by them," the circular stated.

The PPM needs to carry a disclaimer placing the responsibility of due diligence on the merchant banker, clarifying that it has not been approved by SEBI and that the regulator does not assume any responsibility for its accuracy. The responsibility of ensuring accuracy rests with the merchant banker and the fund manager.

Documents needed to be filed

The PPM of qualifying AIF schemes needs to be filed with SEBI's intermediary portal along with the following documents:

1. Duly signed merchant banker due diligence certificate

2. Duly signed fit and proper declarations with respect to the AIF, sponsor, and manager of the AIF, as specified in Schedule II of SEBI (Intermediaries) Regulations, 2008

3. Sponsor/manager declarations with respect to minimum continuing interest commitment in the AIF/scheme

4. PAN copies of the AIF, its scheme (if available), sponsor, manager, trustee, directors/partners, and key investment team members.

The first close of such schemes must be done within 12 months from the date the AIF becomes eligible to launch the scheme.

Published by HT Digital Content Services with permission from VC Circle.